How to Navigate Intestate Probate in North Carolina

When a loved one passes away without a valid will, their estate enters a legal process known as intestate probate. A recent survey found that at least 32% of Americans still need an effective estate plan, leaving many families subject to the challenges of an intestate court proceeding. In North Carolina, intestate probate can be a complex process that requires careful attention to legal procedures and financial acumen. Keep reading for a step-by-step overview of how to navigate an intestate probate proceeding in North Carolina.

What is Intestate Probate in North Carolina?

Intestate probate is the legal process of dispersing the assets of a deceased individual who did not have a legally valid will at the time of their death. When an estate goes through intestate probate, the probate judge determines how the assets will be distributed to the decedent’s heirs in accordance with North Carolina law. These assets often go to the closest surviving family members, such as the decedent’s spouse, children, or siblings. The state will escheat the assets if the court cannot locate any heirs. 

When beginning an intestate probate proceeding, the court will typically appoint a family member or friend of the deceased individual as the personal representative of the estate. This appointed person is called an “administrator” if there’s no will, or an “executor” if there is one. Administrators and executors are fiduciaries and must always act in the best interests of the deceased individual’s estate. The steps below outline the appointment process in North Carolina and the personal representative's duties according to state law.

A Step-by-Step Overview

Step 1: Identify the Personal Representative

The first step in an intestate probate proceeding is to identify the decedent’s family members and appoint an administrator to manage the estate. In North Carolina, the probate judge must approve the administrator's appointment, including reviewing the petitioner’s background and qualifications. North Carolina law prohibits anyone under 18, previously convicted of a felony, or otherwise unsuitable, from serving as an administrator. The court prefers to appoint the closest living family member to the deceased, starting with the surviving spouse or any adult children of the deceased.

Step 2: File a Petition for Probate

The next step is to apply for letters of administration with the superior court in the county where the deceased person resided or owned property. The application (also known as a petition) is a legal document that officially opens the probate case and initiates the court-supervised estate administration process. The prospective administrator must include a list of all surviving heirs to the estate and a preliminary inventory of the decedent’s assets, including any real estate, bank accounts, investments, and personal property. Before applying to open an estate, many families consult an attorney or an estate planning service like Trust & Will for help getting started.

All administrators must provide a probate surety bond with their petition unless:

1. the administrator is the sole heir to the estate, or

2. all adult heirs sign a written bond waiver

For estates worth less than $100,000, the bond amount must equal 125% of the estimated value of the personal property in the estate. For estates worth more than $100,000, the bond amount is 110% of the estate’s personal property. Real estate should not be included when calculating the total value of an estate’s assets, and administrators do not have authority over any real estate without special approval from the court. If an administrator needs to sell real estate, they must increase their probate surety bond to cover the additional cash in the estate.

Step 3: Obtain Letters of Administration

The court will review the filed petition and issue Letters of Administration to the petitioner if they are approved and qualified. Appointed administrators must also take an oath with the Clerk of the Superior Court to carry out their duties faithfully and honestly. Once these letters are issued, the administrator can collect assets, pay claims, and distribute the estate property to settle the estate. Letters of Administration can be presented to banks and insurance companies to show that the administrator has legal authority over estate assets. 

Step 4: Notify Creditors and Create Inventory

Within three months of receiving letters, administrators must publish a notice to estate creditors in a county newspaper to submit claims. Creditors typically have three months from the date of the notice to file a claim against the estate. Administrators must also personally mail or deliver a notice to all known creditors about how to file claims against the estate within 75 days of receiving their letters of administration. 

In that same 3-month window, the court requires administrators to file a comprehensive inventory of the deceased person's assets, including real estate, bank accounts, personal property, and other valuable items. For non-liquid assets, the administrator should have the items appraised to determine their fair market value.

Step 5: Pay all Creditors’ Claims and Taxes

Once the administrator has received all claims, they can begin paying creditors. Administrators may also apply for a year’s allowance for the surviving spouse. The spouse's claim takes priority over any other creditor claims. If an estate is insolvent, the administrator must pay off creditor claims in the following priority order:

1. Any claims involving specific liens on property, such as tax liens

2. Funeral and burial expenses

3. All federal debts, taxes and other claims

4. All state debts, taxes and other claims

5. Certain court judgments and Medicaid claims

6. Unpaid wages of the decedent’s employees and medical expenses

7. Equitable distribution for spouses and farm operation expenses

8. All other claims, such as credit card debt

Depending on the gross value of the decedent's estate, the estate may also be subject to state and federal taxes. The administrator should contact the state and federal tax offices to determine if any tax is due. Administrators must submit proof to the Clerk of the Superior Court that no taxes were due or all relevant tax liabilities have been satisfied. The administrator should pay any attorney’s fees at this time and may take an approved commission of up to 5% of the estate’s net value for their work as administrator. Attorney’s fees and commissions are considered an expense to the estate, but the Clerk must approve these disbursements.

Step 6: Distribute Remaining Assets to Beneficiaries

Once the administrator pays all debts, taxes, and fees, they can distribute the remaining assets to the heirs according to North Carolina's intestate succession laws. The Clerk of the Superior Court approves the distribution plan before the administrator makes any payments.

In intestate probate in North Carolina, the title to real property is bestowed directly to the surviving heirs at the time of death and generally does not go through probate. It’s important to note that administrators cannot use estate funds to pay real property expenses. If the administrator must sell real property to pay off creditor claims, then and only then will the real estate go through probate. 

Step 7: Finalize the Probate Process

Once the administrator has paid all liabilities and distributed all assets, the administrator can settle the estate by filing a final accounting with the Clerk of the Superior Court. The final accounting should include all financial transactions related to the estate, including costs paid directly by the administrator, such as burial expenses or surety bond premiums. The administrator must sign the final accounting under oath with the court. Once the Clerk of the Superior Court approves this accounting, the clerk will enter an order discharging the administrator from their duties and any further liability in the estate. The discharge should be sent to the surety bond company to release the surety from future liability.

Proactive Estate Planning is the Solution

Starting intestate probate in North Carolina involves a series of legal steps that can be challenging to navigate. Administrators will often seek the guidance of an attorney or an estate planning service to ensure they comply with all court rules and regulations. The complexities of intestate probate in North Carolina demonstrate the importance of prioritizing your estate planning today. Drafting a will or setting up an adequate estate plan is the only way to guarantee that your estate is handled specifically to your wishes.

At Trust & Will, we understand that navigating the probate process can be overwhelming– but we're here to help.  Our plans provide clear, county-specific guidance and support from probate experts so you can stay on top of the process. Learn more about our probate offerings.

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