What is Probate and Why Avoid It
Probate is the court supervised administration of a decedent’s estate in North Carolina. Probate is the process by which the court oversees that a decedent’s assets are distributed in accordance with law, either under a Will or the laws of intestacy.
An estate must go through probate when there are assets that were owned by the decedent at death and which do not pass automatically by operation of law. For example, if Jane Green died owning a bank account in her sole name, that account would be part of Jane’s probate estate. However, if Jane owned a bank account joint with right of survivorship with another person, and then Jane died first, that bank account would automatically pass to the surviving joint owner rather than under Jane’s Will.
Assuming the bank account is is part of Jane’s probate estate, her estate must be probated by having the will, if any admitted to the Clerk of Court’s Office and approved. Then a personal representative will be appointed to administer Jane’s estate. The personal representative is called an Executor for an estate with a Will; if there was not Will then the representative is called and Administrator.
The personal representative must gather all assets, pay valid debts, and report to the Court about his or her actions. There is also a Notice to Creditors to publish and pay for. In addition, there are court costs of $4 per thousand to pay.
Many people prefer to avoid probate, to simplify the estate administration. Avoiding probate generally saves the family money because of the court costs and reducing red tape, delays and frustration. Moreover, assets that avoid probate do not have to reported to the court, which avoids having your estate information becoming part of the public record. You don’t have to let your neighbors or practically any other person who looks, to be able to find out exactly how much you had in the bank, or what your children will be inheriting.
One way of avoiding probate is by creating and funding a living trust. That trust could be either revocable or irrevocable. Just having a trust does not avoid probate. Instead, the trust needs to be funded during the decedent’s lifetime.