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What Assets Go Through Probate in North Carolina?

Probate in North Carolina

Assets That Go Through Probate in North Carolina

After a loved one has passed and their family is beginning the process of settling their estate, or during the Estate Planning process when families are intent on avoiding probate in North Carolina, the overarching theme in these discussion is “What Assets Go Through Probate in North Carolina?” Knowing what types of assets are susceptible to, and what assets generally avoid, probate in North Carolina helps further the settlement of the estate in an efficient manner, and guide families in how they want to structure their own Estate Plan to avoid probate. Generally speaking, probate assets are going to include the following:

Cash and Cash Equivalents

Bills, coins, undeposited checks, gold and other precious metals, etc. They are all probate assets because they are owned individually by the person who passed away on the date of their death. They are not capable of being beneficiary designated or held in non-probate manner (trusts, corporate entities, etc.). There are specific line items on the North Carolina probate forms for cash, undeposited checks, and other cash equivalents.

Bank Accounts

Accounts in the sole name of the decedent, or joint accounts without rights of survivorship will be included in probate in North Carolina. This will generally include all checking, saving, money market, or other deposit accounts. In North Carolina, there is a presumption that an account owned jointly by a married couple is owned with rights of survivorship, but the Clerk of Court will generally require signature cards to be provided showing that the account is titled with rights of survivorship. If the account is held jointly, but without rights of survivorship, the decedent’s estate will include 1/2 of the value of the account.

Vehicles

Vehicles almost always end up in Probate in North Carolina because they are generally not held in trust or owned as joint tenants with rights of survivorship, like most married couples own most joint assets. In North Carolina, unless the title to the car says both names “as joint tenants with rights of survivorship,” even co-ownership is not enough for the car to stay out of probate. In most instances, a deceased spouse will have a 1/2 interest in a vehicle included in their estate. Unfortunately vehicles are not easy to hold in trust either, because they are bought and sold so frequently, as compared to other types of assets, and titling the vehicle in the name of a trustee of a living trust will require that the owner pay a higher auto insurance premium in most instances. Even though that is the case, North Carolina provides a somewhat easy way to transfer vehicles from an estate to a beneficiary.

Personal Effects and Home Furnishings

This is basically going to include all tangible personal property that was owned by the decedent (the person who passed) and does not fit into any other asset category. This may include jewelry, clothing, furniture, guns, collectibles, and most other things you can touch and move around a house. This asset class ends up being pretty tricky, however, because if the decedent lived with someone, there’s really no telling who owned the assets – at least as far as the court filings are concerned.

Investments

Stocks, bonds, mutual funds and other non-retirement investments that are owned individually by the decedent and are not otherwise beneficiary designated will be included in probate in North Carolina. These types of assets usually end up being the probate assets with the most monetary value that can end up in probate. They can also be beneficiary designated to avoid probate entirely. Investments can also be retitled to a trust or LLC, and can be beneficiary designated to a trust as well. Either way would help those investments avoid probate in North Carolina.

Non-Designated Retirement Accounts and Life Insurance

401k’s, IRAs, and Life Insurance proceeds are generally non-probate assets, but if the plan participate fails to designate a beneficiary after their death, many plans will pay the death benefit or account balance to the decedent’s estate. This can have a significant detrimental tax consequence for qualified retirement accounts. Generally, the retirement account is liquidated when paid to the estate, which requires the entire account be taken as income and the income tax be paid on the entire account balance. This can easily cut up to 39.6% off the balance depending on the income tax bracket.

Business Interests

An ownership interest in an LLC (or Membership Interest) or a Corporation (Shares or Stock) are considered personal property for the purposes of probate in North Carolina. The assets owned by the company are not usually impacted by the death of an owner – there’s no transfer of asset ownership occurring. Instead, the ownership interest passes through probate to the beneficiaries of the decedent’s estate. If the business interest is subject to a Buy-Sell Agreement, the interest itself will still go to probate, but the Executor or Administrator of the decedent’s estate will be required to sell the interest to the other party or parties to the Buy-Sell Agreement. Unfortunately, when a solopreneur passes away without an planning to avoid probate for his or her business, the business will generally be forced into probate and the delay of probate can cause the business to fail.

Farm Products, Livestock, Equipment, and Tools

Generally anything found on a farm owned by the decedent, in the decedent’s name and not in an entity owned by the decedent, will be included in the decedent’s estate. Yes, even farm animals.

Notes, Judgments, and Other Debts Due Decedent

Promissory notes that have not yet been fully paid, as well as debts that have been reduced to a judgment against the debtor and in favor of the decedent are included in probate in North Carolina. These types of “assets” are rare in a North Carolina estate – often because the family won’t know about them and the debtor surely isn’t going to come forward with that sort of information.

No estate is the same, and there is no one-size-fits-all probate in North Carolina. Some estates can involve very complex assets and creditor claims. And while the estate administration and probate process in North Carolina is generally set up to be user-friendly, it usually does not end up that. For experienced professional help in settling a loved one’s estate, and navigating the potential minefield that is probate in North Carolina, contact our Estate Administration and Probate Lawyers for a consultation,¬†or fill out the form below and we’ll reach out to you.

 

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