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When a
loved one dies, a family member is often
named personal representative. If you
have been named personal
representative, you need to learn about
the probate process and your duties.
This publication is not intended as a do-it-yourself guide. It will, however, give you an idea of what is involved. Often you may need to seek professional advice for detailed assistance in settling an estate. Another invaluable help is the staff in the office of the clerk of the Superior Court in your county. The testate estate |
If a will has been left, you will be dealing with a testate estate. Your first task is to make a thorough search of the decedent's home, office, safety deposit boxes and many other places to find the will and codicils (amendments) to the will.
If you are willing to serve as personal representative, your next step is to apply to the court to probate the will. Most wills written in recent years are self-proving. This means that the testator and the witnesses signed a sworn affidavit before a notary public or someone else authorized to administer oaths. If the will is not self-proving, the two witnesses to the testator's signature must be located and they must testify to the genuineness of the testator's handwriting.
You must post a bond if the will requires it. A non-resident of North Carolina may serve as personal representative, but he or she must appoint a resident process agent to receive papers filed in settling the estate.
If a person dies without a will, a decision must be made as to who will serve as personal representative. A personal representative must be over 18, mentally competent, and literate and otherwise suitable in the eyes of the clerk.
The law ranks potential personal representatives in the following order:
The surviving spouse is usually the personal representative, but he or she may ask that another serve.
Bond is generally required to administer an intestate estate unless the personal representative is to inherit all of the property. Bond is also not required if the personal representative lives in North Carolina, all the heirs are over 18 and mentally competent and all heirs agree to forego the bond.
The bond is usually 125 percent the value of all the decedent's personal property, although the clerk of court may limit it to 110 percent in certain cases.
If the surviving spouse is the sole beneficiary under the will, or the sole heir if there is no will, he or she may file a petition for summary administration with the clerk of superior court. If the clerk finds that summary administration is proper, the clerk enters an order to that effect and no further administration of the estate is necessary.
Once you have been named personal representative and the will has been properly probated, you apply for Letters Testamentary. If you are personal representative for someone who has died without a will, you apply for Letters of Administration. You will be required to list the approximate value and location of all personal and real property in either case. These forms are filed at the clerk's office. The clerk will have you take an oath of office and officially appoint you personal representative. The Letters Testamentary or of Administration are then issued. This is known as qualification of the personal representative.
Now your job is to settle the estate as quickly as possible while conserving the assets. North Carolina law gives you broad powers, although these may be altered in the will. You are personally liable for negligence, acting in bad faith or intentionally mishandling the property.
You may be paid a commission unless the will states otherwise. If the will does not provide for a commission, state law limits such fees to not more than 5 percent of receipts and disbursements not made to beneficiaries.
Once you are qualified you will begin notifying and paying creditors, opening an estate account, gathering assets, distributing property to heirs, filing tax returns and closing the estate.
You must notify all possible creditors that they must present their claims to you within the next six months. Notice is published in a newspaper having general circulation in the county. In addition to the newspaper publication, you must either personally deliver or mail first class a copy of the notice to each known creditor. You must make reasonable efforts to discover the decedent's creditors in order to send the proper notice. Claims not submitted by the date published in the notice usually will be barred.
You must review claims as they come in to determine if they are valid. You may dispute or reject doubtful claims. If you reject a claim, the creditor must sue within three months of receiving the notice of rejection or forget the claim.
Some of the estate's assets may need to be sold to pay off debts. Debts are paid in a priority determined by the law. If you pay off someone "lower on the list" first and run out of money before all creditors are paid off, you may be personally liable to some of the creditors. If there is any question about the solvency of the estate, you should not pay any debts until the six-month filing period has expired. You may also wish to require all creditors to file an affidavit that the claim is due and that no payments have been made. At any rate, be very careful in paying off decedent's debts.
In most cases, you cannot withdraw funds from the decedent's bank accounts or transfer most stocks or bonds without an inheritance tax waiver from the North Carolina Department of Revenue and current dated Letters Testamentary or Letters of Administration. An exception to this rule applies if the account is a joint account between a husband and wife.
Once waivers have been received, open a new checking account for the estate. Transfer money from the decedent's solely owned accounts and the decedent's portion of jointly owned accounts. Some jointly owned accounts may be payable entirely to the surviving co-owner. In this case, you may have to ask the surviving co-owner for a portion of the money to cover certain claims against the estate, if necessary.
You should properly invest any cash not needed to meet the cash requirements of the estate. You may want to seek professional help if there is a large amount of money to be invested since you are responsible for protecting the estate's assets.
You must also obtain a taxpayer identification number for the estate. This number is used on investments so the income is reported under the estate's identification number, not the decedent's social security number.
You have inventoried the safety deposit box contents and must assemble and inventory all other assets. Locate bank accounts, demand the last paycheck, claim social security death benefits, file for health and life insurance payments and check through tax returns and personal papers to see if the decedent owned any stocks and bonds. Transferring securities to the name of the estate may be in order.
You must also locate all real property, noting liens and other debts. Check the insurance. Decide whether it is in the best interest of the estate for you to control the property.
Some property is owned in tenancy by the entirety. This real estate passes directly to the surviving spouse. You need not be concerned with this property, other than for filing tax returns.
Within 90 days of qualification, file an accurate inventory of all of this property with the clerk's office. Make the inventory as complete as possible. Supplemental inventories must be filed if errors are discovered or additional property is received. Detailed annual accounts with vouchers are due each year until the final account has been filed.
You may distribute immediately any personal property as long as you are sure it will not have to be sold to pay off debts or administration expenses. If there is any question, it may be best to wait until the six-month creditor's claim period is ended.
After payment of the costs of administration, taxes and other valid claims, the remaining assets are distributed according to the directions in the decedent's will or the provisions of the Intestate Succession Act.
Federal and state income tax returns must be filed by April 15 of the year following the date of death.
The federal estate tax return must be filed within nine months of the date of death. The North Carolina estate tax return is due when the federal estate tax return is due. You may need professional help in preparing returns to settle the estate.
A final account is due one year from your date of qualification or within six months after receiving the Estate Tax Certificate, whichever is later. The Estate Tax Certificate is a statement by the Department of Revenue that North Carolina estate taxes have been settled. It will usually not be issued until a closing letter has been received from the Internal Revenue Service. This letter from the IRS is evidence that the federal estate tax return was accepted.
Some estates take years to settle. This is because closing often depends on filing estate tax returns. But, estates sheltered by the applicable credit amount usually do not require a federal estate tax return. If the estate you are handling falls into this category, it may be possible to settle it within a year.
Preparing the final account includes providing payment of final expenses such as attorney's fees and your own commission. Final distributions to heirs are made, and, after approving the final account, the clerk of court will discharge you from further liability. The clerk will reopen the estate only if other property is discovered or under exceptional circumstances.
Again, this is simply an overview of the tasks of a personal representative. Securing professional help may save time and money in the long run.
For more information about the administration of estates in Wake County, North Carolina, see the Web site of the Wake County Superior Court.
Prepared by Carol A. Schwab, J.D., LL.M., Professor and Extension Specialist, NC State University.
This publication is provided as a public service and is designed to acquaint you with certain legal issues and concerns. It is not designed as a substitute for legal advice, nor does it tell you everything you may need to know about this subject. Future changes in the law cannot be predicted, and statements in this publication are based solely on the laws of North Carolina in force on the date of publication.
Date: December 2, 1999
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