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Estate Administration (Probate) 101

Updated: Jan 28, 2021

Estate Administration (Probate) 101

“Probate” is the judicial process outlined in N.C. Gen. Stat. § 28A of distributing your property at your death either (A) to those you have left it to in a Will, or (B) to those entitled by law to inherit when you have not made a Will (the inheritance scheme in non-will probate files is outlined in N.C. Gen. Stat. § 29).

NOTE: This post surveys aspects of administering traditional estates. Other, less common probate processes will be taken up in later posts such as “summary administration” (spouse is sole devisee or heir) and administration by affidavit for “small” estates (less than $20,000 personal property).

Early allowances to spouses and minor children aside, distribution to “devisees” (those inheriting under a Will) or “heirs” (those inheriting in the absence of a Will) occurs at the very end of probate. Several other steps first must occur:

Open the estate. The estate must be opened by filing an Application for Probate (form: AOC-E-201). This form lists those entitled to inherit from decedent and the known value of the estate.

Qualify the PR. The person opening the estate is the “personal representative”: (A) “executor” if through a Will; (B) “administrator” if no Will (here’s who can apply to be an administrator).

Identify and locate heirs. A Will sets forth who inherits property, and you know who inherits because they are named in the Will. When there is no will (no “last will and testament” i.e., “intestate”) the intestacy laws control and pass property through your family. Who is the family of a decedent is not always known, especially if they were unmarried, had no children, have deceased parents, and live far from (or have no) siblings. In such cases an action to determine heirs is sometimes elected by the PR.

Run the Notice to Creditors. A “notice to creditors” must be run in the local paper and a sworn affidavit (form: AOC-E-307) to that effect filed with the court.

File state/federal final tax returns. Consult with tax professionals to ensure the decedent’s “final” return is filed with state and federal taxing authorities.

Gather assets. Assets of the decedent are discovered and collected by the personal representative (usually advised to be placed in a newly opened estate account).

File the 90 Day Inventory. An Inventory (the “90 Day Inventory”) must be filed within 3 months of opening the estate (form: AOC-E-505), setting forth the date of death values of the decedent’s property. This filing is required to be “just, true and perfect” and becomes the baseline that further accountings build upon.

Pay valid claims/costs. Valid claims against the estate must be paid in order of their statutory priority. Not all claims are valid and when a PR has a good faith reason to doubt the basis of a presented claim, they can deny it. This begins a 3 month window of time where afterwards (if in 3 months no action is taken by the creditor) the claim is forever barred. There are other time restrictions and presentation restrictions affecting claim validity.

If needed, sell assets to be able to pay claims. When an estate is short on cash but has sufficient other assets, both personal property and real property may be sold under certain circumstances to raise funds to pay valid claims.

Provide Final Account & close estate. A Final Accounting must be filed (form: AOC-E-506) before the court detailing the financial paper trail from the Inventory’s “baseline” to (after payment of claims, costs of administration, and distribution) zero ($0.00). NOTE: accountings before the court can easily become complicated affairs for non-attorneys, as they require precision to the penny ($0.01) of all increases/decreases in estate asset valuations as well as *documented* proof of all expenditures of the estate.

Timeline: estate administration can range from 3 months to multiple years, depending on the complexity.

Legal counsel: while the above steps are relatively straightforward to state, their application can be daunting based on the circumstances. Complications with assets, family dynamics, claims, etc. can make the rules affecting administration sometimes peculiar and outside of what non-attorneys may expect. Even in simple estates the classic family member PR is often a full-time employee with a life of their own to live, so some helpful co-piloting from an experienced probate attorney can help reduce the stress from “what do I do?” to “tell me where to sign”.

Jones Collaborative Estates advises in all aspects of probate and is available to assist from a distance if you simply need some pointers, or to fully take the reins so you can get some sleep.

Give us a call to learn more: (919) 745-9212.

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