Probate is a legal process that some estates must pass through before the assets are transferred to the heirs. A will is admitted to probate, and the probate court also provides supervision when someone passes away without any estate planning documents at all.
Each respective state has its own probate laws, but 18 states utilize the Uniform Probate Code (UPC). It was created by the National Conference of Commissioners on Uniform State Laws, and the first completed version came out in 1969.
The idea was to create a code that every state in the union would utilize, but it has never been fully adopted. However, most states use some portions of the UPC. North Carolina has adopted parts of the Uniform Probate Code.
Simple Affidavit
Under Chapter 28A of the North Carolina Code, it is possible to use a relatively simple affidavit to avoid the full probate process under some circumstances. If you are an inheritor and you qualify for this process, you draw up a statement explaining why you are entitled to the money.
In the affidavit, you state the name and address of the decedent, along with your relationship to them. You have to attest to the fact that the estate’s value does not exceed $20,000. You state that the will has been admitted to probate, and the individual has been deceased for at least 30 days.
You file the affidavit with the probate court, and you bring the affidavit and a copy of the death certificate to the appropriate institution, such as the deceased individual’s bank. If everything is in order, they would release the funds to you. You would then be required to pay any debts of the deceased individual and distribute the remaining funds in a way that is consistent with the estate plan.
Spouse’s Year’s Allowance
If there is a surviving spouse, the spouse can claim up to $60,000 in personal property (not real estate) from the estate with a Year’s Allowance. The order for the Year’s Allowance must be approved by the court.
Probate Avoidance
Probate serves a purpose, but most people try to avoid it because it can be time-consuming and potentially expensive. Inheritances are delayed while the process is underway, and probate opens a window of opportunity for anyone that wants to challenge the will.
A revocable living trust will facilitate asset transfers outside of probate. Many people think that you no longer have access to assets that you convey into a trust, but this is not the case with a revocable living trust. In fact, you would act as the trustee so you would have complete control.
The successor you name in the document would administer the trust after you are gone. You can also give this individual or entity the ability to manage the trust in the event of your incapacity. This is important because cognitive impairment is common among elders.
If you have minor children, a revocable living trust can be ideal because there would be an adult in place to manage the assets on behalf of minors. A trust can be the beneficiary of a life insurance policy so this can be a good solution for young families.
You have flexibility with regard to the way the assets will be distributed to the beneficiaries after you are gone. You can set up any type of incremental arrangement that you want, and the trust can potentially remain active for years to provide ongoing income.
There are other types of asset transfers that do not go through probate. A payable on death account at a bank or a transfer on death brokerage is an account with the beneficiary, and the probate court is not involved when the transfer takes place.
An ownership interest in property that is held in joint tenancy passes outside of probate. Life insurance proceeds and individual retirement account transfers fall into this category as well if they have beneficiary designations.
Attend a Free Webinar!
We conduct webinars periodically that cover some essential estate planning and nursing home asset protection topics. There is no charge to attend the sessions, and they couldn’t be any more convenient, so you should definitely take advantage of the opportunity.
You can see the dates and obtain registration information if you visit this page: Charlotte, NC estate planning webinars.
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
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