In North Carolina, probate is the legal process of administering the estate of a deceased person. This involves identifying and inventorying the deceased person’s assets, paying their outstanding debts and taxes, and distributing the remaining assets to their beneficiaries. The probate process is typically overseen by a court and can involve various legal procedures, depending on the specific circumstances of the estate.
Since probate can be a long, drawn-out process, many people prefer to try to understand North Carolina laws in order to plan ahead. In this article, we will provide an overview of the different kinds of assets that are exempt from probate in North Carolina and some strategies that testators can use to pass on assets to their loved ones without having them go through probate.
What Are Some Common Ways by Which To Avoid Probate in North Carolina?
Avoiding probate in North Carolina is possible through various methods, such as creating a will, establishing a trust, or taking advantage of the state’s small estate laws.
Creating a Will
One way to avoid lengthy probate in North Carolina is to create a will. A will is a legal document that outlines how a person wants their assets to be distributed after their death. In North Carolina, a will must be signed by the person making the will (the “testator”) and two witnesses who are present at the signing. If the will is executed correctly, it can make the North Carolina probate process easier by providing clear instructions for the distribution of assets.
Establishing a Trust
A way to totally skip the probate process in North Carolina is to establish a trust. A trust is a legal arrangement in which one person (the “grantor”) transfers ownership of their assets to another person (the “trustee”) to hold and manage for the benefit of a third person (the “beneficiary”). The trust agreement outlines the terms of the trust, including how the assets will be managed and distributed. In North Carolina, a trust can be used to avoid probate by transferring ownership of the grantor’s assets to the trustee before their death.
Taking Advantage of North Carolina’s Small Estate Laws
North Carolina also has small estate laws that allow certain assets to be transferred outside of probate. If the deceased person’s estate is valued at less than $20,000, their assets may be able to be transferred to their heirs without going through probate. This process is called “administration by affidavit” and is available in North Carolina if the deceased person has been dead for at least 30 days and all debts have been accounted for.
What Other Assets Do Not Go Through Probate in North Carolina?
In North Carolina, certain assets may not need to go through the probate process. This can save time and expense for the beneficiaries of the estate. Here are some examples of assets that may not need to go through probate in North Carolina:
Jointly-Owned Assets With the Right of Survivorship
In North Carolina, certain types of jointly-owned assets, such as bank accounts and real estate, may pass directly to the surviving owner or owners when one of the owners dies. This is known as the right of survivorship. In order for this to apply, the joint owners must have specifically designated the right of survivorship when the asset was created.
Payable-on-Death (POD) Accounts
Payable-on-death accounts, also known as Totten trusts, are a type of bank account where the account owner can designate a beneficiary who will receive the funds in the account upon the owner’s death. The funds in a POD account do not need to go through probate; they will pass directly to the designated beneficiary.
Transfer-on-Death (TOD) Securities
In North Carolina, certain types of securities, such as stocks and bonds, can be registered as transfer-on-death (TOD) securities. This means that when the owner of the securities dies, they will pass directly to the designated beneficiary without the need for probate.
Speak to a North Carolina Estate Planning Attorney
In conclusion, there are many reasons why you may want to avoid probate and several ways to do so in North Carolina. However, it is always a good idea to consult with an experienced attorney who can help determine the best course of action for a particular estate.
If you need help avoiding probate for your North Carolina estate, speak to us. We are experts on probate avoidance in North Carolina and can help you and your loved ones avoid going through the long process of probate court proceedings.