What is estate administration and when is it necessary?

The process of settling the estate of a deceased loved one can be quite involved, and for family members who are not prepared for probate, it can be overwhelming. The process, however, will run smoothly even amidst the grief and reflection of this difficult time if they know what is to come.

If a member of the family is the named personal representative (PR), it is a big responsibility that encompasses a fiduciary role to oversee the distributions of assets to beneficiaries as well as the settling of the estate, including debt, and taxes. In North Carolina, smaller estates may go through an affidavit process rather than probate, and estate administration can also be streamlined if the surviving spouse is the sole heir.

What is probate?

Probate is the legal process of estate administration that takes place when the decedent of an estate passes away. Probate refers both to estate administration and authentication of the will. If there is no will, the estate will still go through probate, only the court will appoint an executor to administer it and take court costs out of the estate. There are important steps to follow in the administering of the estate:

  1. Determine if there is a valid will. If there is a will, it will most likely name a PR, whose duty is to petition the court to validate the will and to give the PR legal authority to administer the estate. Executors from out of state must post bond, and the Clerk of Superior Court has the discretion to require a bond of the PR.
  2. Notice to creditors. The PR must give notice to creditors in a county legal newspaper for four consecutive weeks with deadlines and delivery of notice on how to file claims against the estate.
  3. Inventorying the estate and filing. An accounting of all assets and debt must take place to distribute assets and pay debts against the estate, and the inventory must be filed within three months.
  4. Filing of individual and estate tax returns.
  5. Distribution of assets and payment of claims.
  6. Closing of the estate and discharge of the PR.

Probate and non-probate assets

Probate assets may include cash, investments and tangible property such as cars, boats, artwork or jewelry. Assets held with rights to survivorship or bequeathed to a beneficiary do not go through probate, and may include life insurance, annuities, real property, or retirement accounts.

Estate administration and probate can be quite complex, so it can help to have informed counsel to help the family prepare for what lies ahead, and possibly minimize some probate administration through smart estate planning.