Probate proceedings are a prospect many families face with dread, and one that many individuals preparing their estate plans therefore seek to avoid. Generally speaking, it is possible to avoid probate for specific assets; avoiding probate for the entire estate can be more complicated, but North Carolina law does offer a few avenues for streamlining the probate procedures. At King Law Offices, our attorneys bring a combined 350 years of legal experience, and we are happy to advise North Carolina residents on their estate planning options. Call our office at 888-748-5464 to schedule a consultation.
Is Probate Always Required in North Carolina?
All estates require some form of administration. Usually, the purpose of setting up a trust to avoid probate is to eliminate the “probate estate,” or reduce it to a level that allows for a form of simplified or expedited probate proceedings. Although trusts are among the most common estate planning tools used for this purpose, a trust is not the only way to ensure that specific assets avoid probate in North Carolina, and numerous other estate planning tools may be used, with or without a trust, to reduce the size of the probate estate so that it qualifies for an expedited process.
Summary of Avoiding Probate with a Trust
Avoiding probate without a trust in North Carolina is possible for certain assets and, in limited situations, for an entire estate through statutory simplified procedures.
- North Carolina law permits probate to be streamlined through the collection of personal property by affidavit or summary administration when specific eligibility requirements are met.
- Summary administration under N.C.G.S. § 28A-28-1 is available only when a surviving spouse is the sole inheritor, regardless of whether the decedent died testate or intestate.
- Many financial assets, including retirement accounts, securities, bank accounts with rights of survivorship, and life insurance proceeds, may pass outside probate through valid beneficiary designations.
King Law Offices assists individuals across North Carolina with estate planning, probate administration, and strategies designed to reduce administrative complexity under state law.
Strategies for “Limiting” Probate
When people who are not engaged in the practice of probate law on a daily basis think of probate, they typically call to mind a lengthy and elaborate proceeding that unfolds over many months. Probate definitely can be this type of protracted affair. However, if your primary motive for wanting to avoid probate is to ensure that your loved ones are not unduly burdened with the “bookkeeping” tasks of estate administration in the weeks and months after your passing, you may find it useful to aim at one of North Carolina’s simplified procedures for the administration of decedents’ estates. These procedures are available primarily to estates with relatively limited assets and no disputes over their disposition.
North Carolina has two of these protocols:
- Collection of personal property by affidavit
- Summary administration
Estates must meet specific eligibility criteria for either of these to be an option, so often individuals who are keen to avoid probate frustrations for their families will make it a priority to organize their estate planning tools to make sure that their estates will qualify for either administration by affidavit or summary administration. The affidavit process is only an option in a fairly limited situation and cannot be used for the transfer of real estate; on the other hand, summary administration can be used to effect the transfer of any type of property, but only when the surviving spouse is the sole inheritor or devisee (N.C.G.S. § 28A-28-1).
What Is Summary Administration?
Summary administration is only available to a surviving spouse (if you want to use old-fashioned terminology, this would be the deceased person’s widow or widower). N.C.G.S. § 28A-28-1 allows for a surviving spouse to petition for summary administration regardless of whether the deceased partner died testate, meaning he or she left behind a valid Last Will and Testament (Will) or intestate (without a Will). The procedure is even available if the decedent died partially testate, which typically means that the individual left behind a valid Will, but the Will failed to account for all assets in the estate. The “catch” is that, regardless of whether the estate is to be administered via probate of the Will, North Carolina’s intestacy laws, or a combination of the two, the surviving spouse must be the only party designated in the Will and the only party legally entitled to inherit any property not included in the Will.
One of the more interesting aspects of North Carolina law with respect to your options for avoiding probate is that, in this state, attempting to leave property to your spouse outside of probate by placing property in a trust that designates him or her as a beneficiary will disqualify the estate from summary administration. If you are considering your options for simplifying probate for your spouse in case he or she survives you, you may wish to consider having a conversation with one of our North Carolina estate planning attorneys at King Law Offices to discuss which of the possible procedures for estate administration in North Carolina will result in the simplest process for your partner. Alternatively, if you wish to leave property to another loved one as well as your spouse, we may be able to help you develop an estate plan that simplifies administration for your loved ones by ensuring that specific assets pass outside of probate.
Non-Probate Transfers of Property
There are several methods for making sure that specific assets, rather than your estate, will avoid probate. Most of these rely on some form of beneficiary designation: either a transfer-on-death (TOD) designation or a payable-on-death (POD) designation, depending on the type of asset involved. Unlike some other states, North Carolina does not allow for the non-probate transfer of real estate through TOD deeds; financial assets, on the other hand, are typically held in a manner that will allow for one of these types of beneficiary designations.
Transfer-on-Death (TOD) Designations
Several types of financial accounts allow for TODs. Some of the most commonly used TODs will be for retirement accounts of various kinds; the exact procedures used to designate a beneficiary will depend on the company managing the account, but individuals preparing their estate plans can generally expect to find options similar to those offered by North Carolina’s retirement plans for state employees. If you have non-retirement investment accounts, many of those may offer TODs as an option as well; N.C.G.S. § 41-48 explicitly establishes that “securities” with valid beneficiary designations are eligible to avoid probate via nontestamentary transfer on death.
Payable-on-Death (POD) Designations
If you share, as many people do, a joint savings or checking account with your partner or another member of your family, you and the other person on the account can establish “joint tenancy with right of survivorship” by signing a form with the banking institution. N.C.G.S. § 41-2.1 governs the formation of “right-of-survivorship” accounts. Note, however, that joint tenancy with right of survivorship (JTWRS) means that the entire account will become the property of the remaining owner or owners once any owner passes away. North Carolina banking laws will also allow for the creation of “tenancy in common” accounts, but many banks do not offer POD options for accounts held by tenancy in common. An attorney may be able to advise you of the options most appropriate to your situation.
Life Insurance
Depending on how you think about life insurance policies, you may or may not want to consider them as TOD accounts in your estate planning. The essential thing to note is that life insurance policies typically allow the policyholder significant control over the number as well as the identity of designated beneficiaries, and life insurance payouts avoid probate by design.
Do You Have Questions About How To Avoid Probate in North Carolina?
If you are preparing your estate plan with the intention of sparing your loved ones the potential stress and frustration of an extended probate process, there are a few options open to you. The most appropriate options will depend on how many beneficiaries you wish to receive a portion of your estate, and the types of property you will leave behind. Contact one of our knowledgeable North Carolina estate planning and probate attorneys by calling King Law Offices at 888-748-5464.
Vital FAQs About Trusts, Wills, and Avoiding Probate in North Carolina
Listed below are some of the commonly asked questions about avoiding probate with a trust in North Carolina.
Is Probate Always Required in North Carolina?
All estates require some form of administration under North Carolina law. However, not every estate must go through a full, formal probate process. Certain estates may qualify for simplified procedures that significantly reduce time and administrative burdens.
Can Probate Be Avoided Without Creating a Trust?
Probate can be avoided for specific assets without a trust through beneficiary designations and survivorship arrangements. Avoiding probate for an entire estate is more limited and generally depends on estate size, asset structure, and beneficiary alignment. Trusts remain one tool, but they are not the only option.
What Is Summary Administration in North Carolina?
Summary administration is a simplified probate process available only to a surviving spouse who is the sole heir or devisee. It applies whether the decedent left a valid will, no will, or a partially effective will. The procedure allows for faster transfer of property with fewer administrative requirements.
How Does Collection of Personal Property by Affidavit Work?
This procedure allows certain personal property to be collected without formal probate when statutory conditions are satisfied. It is generally limited to small estates and cannot be used to transfer real estate. Eligibility depends on asset value and the absence of disputes.
Do Beneficiary Designations Allow Assets to Avoid Probate?
Many financial assets can pass outside probate through transfer-on-death or payable-on-death designations. Retirement accounts, investment accounts, and life insurance policies commonly use this method. Properly completed designations are treated as non-testamentary transfers under North Carolina law.
Can Real Estate Transfer Without Probate in North Carolina?
North Carolina does not permit transfer-on-death deeds for real estate. As a result, real property typically becomes part of the probate estate unless held jointly with rights of survivorship or placed into a qualifying trust. Ownership structure plays a significant role in determining whether probate is required.
How Do Joint Accounts Affect Probate?
Joint accounts with rights of survivorship pass automatically to the surviving account holder. This transfer occurs outside probate by operation of law. Individuals should understand that survivorship accounts transfer full ownership, not a proportional share.
How Can King Law Offices Assist With Probate Avoidance and Estate Planning?
Attorneys at King Law Offices work to ensure individuals understand how North Carolina probate laws apply to their assets and family circumstances. The team could help clarify available avenues for simplified administration and non-probate transfers. Consider visiting with an experienced attorney at King Law Offices to learn more about estate planning options and probate procedures.
