Is the Probate Process Always Required?

If you have experienced the recent death of a loved one or family member, you may be wondering about how the probate process works. Do you need to go through the probate process? When is the probate process necessary? Probate is a legal process in which a probate court will pay a deceased individual’s debts and distribute his or her property to heirs. When the deceased individual has a valid will, his or her assets will be distributed according to the will. When a deceased individual dies without a will, otherwise known as dying intestate, his or her assets will be distributed according to North Carolina law.

North Carolina's probate process is similar to many other states’. Some assets are considered probate assets, while other assets transfer to other people automatically without a court order, avoiding the probate process. We will discuss which types of assets must go through the probate process below.

North Carolina probate courts only have jurisdiction over probate assets. The personal representative must list all probate assets and their value and submit the list to the probate court. Probate assets typically include the following types of things:

• Real estate, vehicles, and other assets are owned solely by the deceased individual.
• Assets owned by the deceased individual as a tenant in common with another person without rights of survivorship.
• Personal possessions and household items, such as furniture, clothing, jewelry, and collections.

The probate court does not have jurisdiction over non-probate assets. Non-probate assets include the following:

• With a property that has a named beneficiary, the named beneficiary will automatically own the property when the original owner passes away. Common examples of these types of assets include IRAs, 401ks, life insurance policies, and pensions.
• Bank accounts with a payable on death (POD) designation. The assets in the bank account will automatically transfer to the person designated to receive them. Other types of assets can also include a transfer on death designation, such as vehicles or even real estate.
• Property owned jointly with the right to survivorship. Many married couples choose to own their property jointly with survivorship rights. When one spouse passes away, the other spouse will automatically own the deceased spouse's interest in the property. For example, when one spouse passes away, the surviving spouse will automatically own the entire property without going through the probate process. The title will say that the property is owned by two or more people in joint tenancy with the right of survivorship or by tenancy by the entirety.

Assets owned by a trust or designating a trust as the beneficiary may bypass probate. Many people create a trust for the specific purpose of avoiding probate. When the person who creates a trust transfers ownership of the asset into the trust, the trust owns the property. Therefore, the probate court does not have authority over the property. Instead, the trustee named in the trust agreement is authorized to carry out the trust instruction. According to the terms in the trust agreement, the trustee, not the probate court, will distribute the trust assets to the deceased individual’s beneficiaries.

Creating a trust is one of the best ways to avoid the probate process while retaining control of your assets. You can create many different types of trust in North Carolina, including living trust and irrevocable trust. Each type of trust has a specific purpose, and we can help you decide which type of trust works best for your estate plan. For example, suppose you have an adult child with special needs. In that case, a special needs trust may work best for your family.

You may want to transfer ownership of your life insurance policy into a trust so your surviving spouse can access it quickly on your death. Or you may want to create an irrevocable trust to help you qualify for long-term nursing care benefits through Medicaid. Whatever your goal, we can help you.

Are you concerned about how your loved ones will receive your property after you are gone? Would you like them to avoid a complicated and costly probate process? If so, the experienced estate planning lawyers at Arnold & Smith, PLLC are here to help. Contact us today to schedule your free initial consultation to learn more about our estate planning services. We can discuss your case and answer questions about how we can help you avoid the probate process.