Small Estate ≠ Simple Estate

Kathleen R. Rodberg

December 5, 2017

By: Kathleen Rodberg

Many people have heard about the probate process and are frequently anxious about the prospect of administering an estate.  In brief, “probate” (as it is often called) is the court-supervised process of authenticating a last will and testament (if any) and supervising the distribution of assets to the beneficiaries if there is a valid will, or to the heirs if there is not a valid will.

Kathleen R. Rodberg

Not all assets go through the probate process.  In North Carolina, assets owned jointly with right of survivorship (e.g. a bank account), beneficiary designation (e.g. life insurance), or pay-on-death/transfer-on-death designations (e.g. a brokerage account) typically pass to a named beneficiary outside of the probate process.  Thus, it is possible that no court-supervised probate will be needed.

However, this leaves many people wondering how to handle any miscellaneous funds that come payable to the deceased individual (a/k/a decedent) after his or her death.  This can include partial refunds from a long-term care facility, utilities, etc.  Clients often come to our firm requesting assistance after first attempting to cash a check payable to the decedent or the decedent’s estate at the bank, only to discover that they are unable to do so.

This is because those refunds usually do not have designated individual entitled to receive the check after the decedent’s death.  Thus, the refund check must be made payable to the decedent’s estate to ensure that the personal representative or affiant of the estate (e.g. executor or collector by affidavit) is able to control those funds and pay them out appropriately according to the probate process.  This typically means those funds are available to pay creditors and costs of administration, with any remaining funds going to the appropriate beneficiaries or heirs.

Check ImageMany wonder: Why can’t they just make the refund payable to the surviving spouse or children?  The answer is that the company issuing the refund is not in a position to know whether a decedent had a will, if they did have a will whether that will was valid, if they did not have a will who all of the heirs are, if there are claims against the estate, etc.  In short, there should only be one office responsible for supervising the estate administration process—that is the estates division of the county clerk of superior court in North Carolina.  Consolidating this process under one umbrella ensures consistent and supervised administration of estates.

If the value of all refunds and other probate assets is less than $20,000 if the decedent is not married at the time of death, or $50,000 if the decedent is married at the time of death, then there are alternatives to a full probate administration that can be utilized.  Discussing these options with an attorney may help you determine what options are available and how to proceed.

Attorney Lisa Rothman supervises the administration of trusts and estates at McGuire Wood & Bissette Law Firm.  If you have questions about the estate administration process, please contact a member of our trusts, estates, and elder law team at (828) 254-8800.

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