Like many people, you have likely heard of probate; however, you may have only a vague idea of what happens during the probate of an estate. While you may never need to know about other areas of the law, it is important that you learn more than the basics about the area of probate law because you may one day be involved in the probate of a loved one’s estate. Even if you manage to avoid being directly involved in probating someone else’s estate, you still need to understand what happens during the probate process so that you can apply that knowledge to the creation of your own estate plan. A good place to start is learning more about the probate of a “testate” estate, or an estate where the decedent left behind a valid Last Will and Testament. When there is a Will, what is the probate process in the State of North Carolina?
What Is a Will and Why Do You Need One?
A Last Will and Testament is a legal document that allows the Testator (the person who creates and executes the document) to specify how his/her estate assets will be distributed upon the death of the Testator. Gifts may be specific or general. For example, you might gift your coin collection to your son as a specific bequests and/or you might gift 80 percent of your entire estate to your daughters as a general bequest. If you die without leaving behind a valid Will, your estate will be probated, and distributed, using the North Carolina intestate succession laws. In essence this means that you allow the State of North Carolina to decide what happens to the assets your worked all your life to accumulate.
What Is Probate?
Probate is the legal process that is typically required following the death of an individual. Probate serves several purposes, including:
- Ensuring that assets of the decedent are identified, located, and eventually valued.
- Allowing creditors of the estate to file claims and receive payment for debts of the estate.
- Making sure that any state and/or federal taxes owed by the estate are paid.
- Facilitating the transfer of estate assets to the intended beneficiaries and/or heirs of the estate.
Which Assets Are Involved in the Probate Process?
Assuming that you do execute a Last Will and Testament prior to your death, your estate will have to go through probate before your probate assets can be distributed to your intended beneficiaries. The first task during the probate process is to determine what assets are required to go through probate and which assets are non-probate assets. Some of the more common non-probate assets include:
- Assets held in a trust
- Certain types of jointly held property (if there are rights to survivorship)
- Assets held in a “transfer on death (TOD)” or “payable on death (POD)” account
- Proceeds of a life insurance policy
- Funds held in some retirement accounts
Creditors of the Estate
Creditors of the estate are also entitled to file claims against the estate during the probate process. The Executor of the estate must then review those claims and either pay the approved claims or deny the claims. Approved claims are paid out of estate assets.
The Terms of the Will
When the decedent left behind a valid Last Will and Testament, the terms of the Will ultimately dictate how the estate is probated as well as who will oversee the administration of the estate. One of the most important decisions the decedent made in the Will was appointing the Executor of the estate. The Executor is the person who begins the probate process and oversees the process from start to finish. After all creditors of the estate have been paid and any taxes owed by the decedent and/or the estate have been paid, the Executor can start effectuating the transfer of the remaining estate assets to the beneficiaries mentioned by the decedent in the Will. A properly drafted Will can accomplish the distribution of the entire estate of the decedent.
For additional information, please download our FREE estate planning worksheet. If you have additional questions about the probate process when a Will was left behind by the decedent, contact the experienced North Carolina estate planning attorneys at The Law Offices of Cheryl David by calling 336-547-9999 to schedule an appointment.