A question I am often asked is: “Is probate necessary?” A good attorney’s answer to this question (and of course, most other questions!) is: “It depends!”
The purpose of probate is to distribute a person’s estate after his/her death according to the directives in the Will or to family members according to North Carolina law if there is no Will. When a person dies, with or without a valid Will, the person’s probate assets and property must first be used to satisfy debts, such as funeral expenses, credit card debt, and hospital expenses. After the administrative fees and all debts are paid, the remaining probate assets and property are distributed among persons named in the Will or, if the person died without a Will, distributed among the family members specified by North Carolina law.
If the person who died (aka “decedent”) did not have any property to transfer, probate is usually not necessary. If the decedent had less than $20,000.00 in property, then a full probate may not be required and the Executor or Administrator can file a small administration and save some time and money. The deceased person’s survivors may decide to open a probate if there are debts owed or if there is a need to set a deadline for creditors to file claims.
What about real estate? Real estate passes to the beneficiaries in the Will or to the heirs instantaneously upon a person’s death, so probate is not required to transfer the real estate. However, if the heirs want to sell or refinance the property or transfer title to someone else within two years of the decedent’s death, probate is generally required.
Does all property go through probate when a person dies? No. The term “probate estate” refers to any property subject to the authority of the Clerk of Superior Court. Assets distributed outside the probate process are part of a person’s “non-probate estate.” These include assets with direct beneficiaries like retirement accounts, life insurance policy proceeds, bank accounts with payable on death designations, and assets that are titled with another person with the right of survivorship.