Insurance, typically, is not an asset which will be part of the probate. That is because insurance policies will generally name a person or several persons as beneficiaries under the policy. So, insurance is not usually a part of the probate process.
Terms to Know
Probate differs from one state to the next. In North Carolina, the person who administers the estate is the Executor (in case there is a Will), or the Administrator (where there was no Will). In either case, the term “Personal Representative” can refer to either Executor or Administrator.
If a person dies leaving no Will, that individual is said to have died intestate.
If a person dies and has a Will, that individual is said to have died testate.
Sometimes, the terms will have an archaic spelling to denote the gender of the person appointed to serve as Executor (Executrix, for a female Executor), or Administrator (Administratrix). In today’s world, most often the archaic spellings are no longer used.
What you should know about Probate:
Probate can be a time-consuming and confusing process. Some simple estates without many assets or with few beneficiaries can be handled by the Executor without the assistance of an attorney. This is recommended only if you are willing to be held accountable for certain deadlines, and you are good at filling out the required forms at appointed times during the probate process.
Probate will be a matter of public record: everything you file in probate is available to the general public. Nothing in probate is considered private information. That is the reason that some families have estate plans which avoid or minimize probate. If privacy is a concern for you or your family, consider asking an estate planning attorney to assist you with preserving your privacy in an estate plan.
During probate, if property has an existing mortgage on it, that property is given to the heirs or beneficiaries subject to the mortgage. The same is true for taxes. In fact, in North Carolina, not one cent can be given out towards bequests until all debts of the estate (including tax debt) has been paid.
If an Executor or Personal Representative gives out property of the estate before paying the debts or taxes, if there is a shortfall, the Executor personally becomes responsible for the unpaid taxes or debt.
Probate requires an Inventory be filed. In North Carolina, an estate inventory is filed twice, first, with the initial application for probate paperwork, and then a final inventory is filed about 90 days following the publication of a creditor’s notice.
What will be probated?
Only assets which were solely in the name of the decedent and did not have a “payable on death” or “transfer on death” beneficiary. Other assets which will not go through probate include assets which were jointly owned with right of survivorship, tenants by the entirety real estate, and assets that have beneficiary designations such as life insurance, IRAs, and transfer on death accounts.
Real property is subject to state-specific rules. In North Carolina, if a husband and wife owned property together in their lifetime, and it was purchased or conveyed to them as husband and wife, that property will usually be “tenants by the entirety” property, meaning that the surviving spouse will have the entire interest in the property, no Will required.
Real property can be confusing, as it sometimes passes outside of probate.
The time to administer an estate from start to finish varies according to the complexity involved. Some estates can be administered in as little as 4 months. Others can last many years due to issues that arise, such as unknown beneficiaries, underage beneficiaries, or challenges to the Will. In North Carolina, the usual time to administer an uncomplicated estate will be about 4 – 6 months.
The Probate Court in North Carolina is responsible for oversight in all estate matters, including probate. The Clerk of Court in the county where the probate is filed serves as the judge of probate. The Clerk of Court must approve the final accounting by the Personal Representative before the estate can be closed.
Administering an estate can cost the estate money. If the estate is solvent (there is sufficient assets to pay the debts of the estate), the cost will be taxed to the estate. Attorney fees can range from $2,000 to $5,000 or greater if the estate is complicated or negotiated settlements or litigation arises.
Court fees range from approximately $200 to $400 in a typical estate. These costs are taxed against the estate. In some instances, the probate fee can be as high as $6,000, based on a fee of 0.04 charged against all personal property of the estate.
An Administrator or Personal Representative should never be required to pay any debts of the estate or the costs of administration.