What Assets Are Subject to Probate in North Carolina

Probate is the legal process of administering a deceased person’s estate. It is overseen by the probate court and generally involves appointing an estate executor or personal representative who identifies and inventories the deceased person’s assets, pays their legally enforceable debts and taxes, and distributes the remaining assets to the deceased person’s heirs and beneficiaries. Understanding which assets are subject to probate court jurisdiction and which ones are exempt is crucial to understanding the probate process.

What Assets Are Subject to Probate, and Which Ones Pass Directly to Survivors?

Probate assets require court approval before being transferred to the deceased person’s heirs. In contrast, non-probate assets transfer directly to the beneficiary without probate court supervision through a beneficiary designation, joint ownership, or a trust.

Probate Assets

In North Carolina, property titled solely in the deceased person’s name is generally subject to probate. Probate assets do not have a co-owner or designated beneficiary. Common probate assets include:

• Real property titled solely in the name of the deceased person or as tenants in common
• Personal property, such as jewelry, furniture, and automobiles
• Bank accounts held solely in the deceased person’s name
• Any interest the deceased person had in a partnership, corporation, or limited liability company that is not addressed by the business entity’s succession plan
• Life insurance policies or brokerage accounts that name the deceased person or their estate as the beneficiary

Non-Probate Assets

Non-probate assets have a co-owner, beneficiary, or a transfer on death (TOD) or payable on death (POD) designation. They are not subject to probate court jurisdiction. Examples of non-probate assets include:

• Property held in joint tenancy with a right of survivorship or as tenants by the entirety
• Bank or brokerage accounts held in joint tenancy or having POD or TOD beneficiaries
• Life insurance, retirement, or brokerage accounts that list someone other than the deceased person or their estate as the beneficiary
• Property held in a trust

When an asset is jointly owned with a right of survivorship, ownership transfers to the co-owner(s) without the need for probate court oversight. Tenancy by the entirety is a form of joint ownership in North Carolina that offers a limited amount of asset protection.

Assets with designated beneficiaries transfer directly to the beneficiary outside of probate and not according to the terms of the Will. Small amounts of personal property valued below certain dollar amounts may qualify for simplified procedures rather than full probate.

Asset Titling and a Trust as Part of Your Estate Plan

Asset titling and beneficiary designations are critical components of a sound estate plan that can help avoid probate. For example, suppose a married couple co-owns their home as joint tenants with a right of survivorship. When one spouse dies, ownership of the home transfers immediately to the surviving spouse outside of probate. Similarly, while many individuals treat beneficiary designations as an afterthought, they should be an essential piece of your estate planning strategy.

A trust is another estate planning tool that can be used to avoid probate. It is a legal arrangement in which the trust-maker transfers assets to the trustee who holds and manages them for the benefit of a third party, known as the beneficiary. Unlike a Will, which must be admitted to and approved by the probate court, assets placed in a trust are not subject to probate court jurisdiction. Different types of trusts are better suited to specific estate planning situations. Our estate planning attorneys can evaluate your circumstances and provide advice on which estate planning strategies are best for you.

Protect Your Legacy Through Sound Estate Planning

Understanding which assets pass through probate and which ones do not is an essential step towards creating a sound estate plan. The estate planning team at Carolina Tax, Trusts & Estates, a Department of Van Camp, Meacham & Newman, PLLC, can evaluate your situation and create an estate plan to minimize stress and confusion and help your family navigate the probate process. Contact us today to schedule a confidential consultation to discuss your situation and how we can assist you.