What is Probate? Understanding the Basics
Probate is a term that often comes up in discussions about estate planning and the distribution of assets after someone passes away. If you have been named as an heir, beneficiary or an executor of a loved one’s estate, you may be asking yourself, “What is probate?” At Carolina Estate Planning, our attorneys help you understand the basics of probate so that you are informed and empowered. After reading What is Probate? Understanding the Basics, you will be able to grasp the key players, how to initiate probate, the inventory and valuation process, settling debts and expenses, the distribution of assets, the closing of the estate, and more.
What is Probate?
Probate is the legal process through which the assets of a deceased person, known as the decedent, are distributed to their heirs or beneficiaries. The court oversees this process to ensure that the decedent’s debts are paid and that the remaining assets are distributed according to their wishes (if there’s a will) or state intestacy law (if there’s no will).
Key Players in Probate
Executor or Administrator:
If the decedent had a will, they likely named an executor. If there’s no will or the named executor is unavailable, the court appoints an administrator. Both roles manage the estate through the probate process. In North Carolina, the term “personal representative” is actually used to encompass both roles, the executor and the administrator.
Heirs and Beneficiaries:
Heirs is a term for people who can receive items or money from the person who passed away under the state’s intestacy laws if there’s no will. Beneficiaries are those named in the will to receive specific assets.
Creditors:
Creditors are individuals or entities to whom the decedent owed money. The probate process includes addressing and settling these debts.
Initiating Probate
The probate process in North Carolina typically begins in the county where the decedent lived at the time of their death. Here are the general steps involved:
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Filing a Petition:
The executor or administrator files a petition with the probate court to initiate the process.
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Proving the Will:
If there’s a will, it needs to be approved by the court. This involves presenting the will to the court, and if there are no objections, the court will accept it. For a will to be accepted, it must follow the requirements according to North Carolina law. The individual must have been 18 years of age or older and of sound mind to make the will. Also, the will must be signed by the individual and two witnesses who are not named in the will. Out-of-state wills are considered valid as long as they follow the aforementioned requirements.
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Appointment of Executor/Administrator:
The court officially appoints the executor (if there’s a will) or administrator (if there’s no will).
Inventory and Valuation
Once the probate process is underway, the executor or administrator must describe what the decedent had at the time of their death. There are two steps to the inventory and evaluation process in probate:
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Identify Assets:
Create an inventory of the decedent’s assets, including real estate, bank accounts, investments, personal property, and more.
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Appraise Assets:
Assign a fair market value to each asset. This step is crucial for determining the overall value of the estate.
Settling Debts and Expenses
When someone passes away, their debts and expenses simply don’t vanish. Probate ensures that these obligations are addressed properly. This includes notifying creditors and paying any debts the decedent owes.
Creditor Notification:
Informing creditors that the person has passed away, allowing them to make claims against the estate for any debts owed to them.
Debt Payment:
After creditors are notified, the debts must be paid. It is important to know the order in which debts and expenses are paid from the estate, as not all claims hold the same priority. The estate uses its assets to settle legitimate debts before distributing them to beneficiaries. The executor or administrator uses estate funds to pay off valid debts, including funeral expenses, outstanding bills, and taxes.
Distribution of Assets
There are two scenarios for asset distribution, depending on if there is or isn’t a will. While a will is not required for probate, it helps streamline the process.
Following the Will (If Applicable):
If there’s a valid will, the executor distributes the assets according to the decedent’s wishes as outlined in the document.
Intestacy Laws (If No Will):
If there’s no will, North Carolina’s intestacy laws determine the distribution of assets among heirs.
Closing the Estate
Closing the estate in probate refers to the final stage of the probate process where the court officially concludes its supervision of the administration of a deceased person’s estate. This step marks the end of the probate proceedings and signifies that the executor or administrator has completed the necessary tasks outlined by the court.
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Final Accounting:
The executor or administrator provides a final accounting to the court, detailing all financial transactions and distributions.
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Court Approval:
The court reviews the final accounting, and if everything is in order, approves the distribution of remaining assets.
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Closing the Estate:
With court approval, the court officially closes the estate, and it discharges the executor or administrator from their duties with no more steps required.
What is the Timeline for Probate?
Probate timelines can vary based on factors such as the complexity of the estate, the presence of disputes, and court schedules. In North Carolina, a relatively straightforward probate process can take several months, while more complex cases may extend over a year.
Challenges and Considerations
Going through probate may not always be easy, and there are some challenges and considerations that may come up throughout. Working with an attorney can help alleviate some of these challenges. Some examples of the challenges and considerations are:
Will Contests:
Disputes may arise over the validity of the will, leading to legal challenges. These challenges often occur if the will does not follow broad requirements under North Carolina Law.
Creditor Claims:
Creditors have a specific period to file claims, and the estate must have sufficient funds to cover valid debts.
Complex Assets:
Estates with intricate assets or ownership structures may require more time to settle.
Do All Assets Go Through Probate?
Not all assets are subject to probate. Assets held in a living trust, life insurance policies with designated beneficiaries, and certain types of jointly owned property may bypass probate and transfer directly to beneficiaries.
Importance of Estate Planning
To streamline the probate process and provide clarity on asset distribution, individuals are encouraged to engage in comprehensive estate planning. This may involve creating a will, establishing trusts, designating beneficiaries on accounts, and considering other tools to effectively manage and distribute assets.
After You Understand the Basics of Probate, Seek Legal Assistance
While this article provides a general understanding of the basics of probate, the process can be intricate, and legal advice is invaluable. Please get in touch with our office to discuss your situation.
Conclusion
Probate is a necessary process to ensure the orderly distribution of a decedent’s assets. In North Carolina, understanding the key players, steps, and timelines involved in probate can empower individuals to navigate this process more confidently. Whether you are an executor, heir, or beneficiary, seeking legal guidance ensures a smoother probate experience, honoring the wishes of the departed and preserving family legacies.
If you have any further questions regarding what probate is or would like assistance, schedule an appointment or call us now at 336-790-5107.
