Small Estate Administration
When a person passes away in North Carolina, there is typically some amount of property that needs to go through the court-supervised estate administration process. While North Carolina’s version of this process is reasonably straightforward, it does take time and effort (and money) that most families would rather not spend, especially in the wake of the loss of a loved one. Thankfully, the law has a number of alternative processes that may be available in certain circumstances. One such process is available when the deceased person’s estate has a value below a certain dollar amount. This particular process is known as “Small Estate Administration” or, more formally, “Administration by Affidavit.”
The standard estate administration process can take months or years to complete. Thankfully, in cases where an estate has few assets worth relatively little, the law offers Small Estate Administration as something of a shortcut. Instead of taking months or years, Small Estate Administration is required to conclude within 90 days (unless an extension of no more than one year is granted by the Clerk of Court). There are other time-saving differences between Small Estate Administration and typical estate administration:
No 90-Day Inventory Required. While normal estate administration requires the filing of a detailed inventory of the deceased’s assets within 90 days of beginning the process, there is no such requirement under Small Estate Administration. Instead, a simpler version of an inventory is filed at the beginning of the process.
No Final Account Required. Normal estate administration concludes after the executor or administrator files a detailed accounting of all of the money that has come into and out of the estate. This accounting has to be supported by receipts so that the Clerk of Court can audit the accounting. Small Estate Administration asks for something much less tedious – just a final affidavit summarizing the property collected and disbursed without receipts to support every amount going in and out.
No Notice to Creditors Required. When administering an estate the typical way, it is required that a notice to creditors be run in the newspaper. There is no such requirement under Small Estate Administration. There are benefits to running a notice to creditors, though, and in some cases, it may make sense to run the notice even though it isn’t required by law under Small Estate Administration.
Other Formalities Not Required. Under normal estate administration, the executor or administrator has to take an oath and, in some cases, may need to provide a bond in order to qualify as executor or administrator. However, in Small Estate Administration, these requirements do not exist. Not having to spend time working with a bonding agency to meet the bonding requirement can be a time and cost savings.
Small Estate Administration is only available if two conditions are met. First, the deceased person must have passed away at least thirty days prior to beginning the process. Second, the personal property in the deceased person’s estate (minus liens and encumbrances) must have a value of less than $20,000. This number gets increased to $30,000 if the deceased person’s surviving spouse is the estate’s only beneficiary. Note again that the threshold number is the value of the deceased person’s personal property, meaning the value of real property (i.e., the person’s residence and other real property) is not counted for purposes of determining whether it’s possible to use Small Estate Administration. Also note that personal property passing outside of the deceased person’s estate is not counted, so assets passing by beneficiary designation or right of survivorship will not count toward the $20,000 or $30,000 limit.
Many people are eager to proceed with Small Estate Administration when they learn that it is available. After all, who doesn’t like to save time and money? But there are times when it makes sense to administer an estate under normal methods rather than Small Estate Administration, even though Small Estate Administration is an option. For example, if there is tension among the beneficiaries of an estate, a standard estate administration may be the way to go, as this method of administration involves much more oversight from the Clerk of Court, and this may give the beneficiaries some extra assurance that things have been done correctly and fairly. It may also be a good idea to opt into standard estate administration when there are concerns about creditors of the deceased person’s estate. A personal representative in a standard estate administration can run a notice to creditors and can also take steps to sell real estate owned by the deceased person to pay debts if needed.
When a person dies, it’s important to consider all of the options for administering their estate. It may be that time and money can be saved by a more efficient version of estate administration such as Small Estate Administration. On the other hand, it may be better to proceed with a full estate administration even though more efficient options are available. If you have been tasked with administering an estate and want to get a better understanding of your options, I hope you will get in touch to schedule a free consultation. The Law Office of Ryan A. Layton, PLLC is experienced in both estate planning and estate administration and can help you proceed in the most ideal manner.
The information contained in this blog post is intended only as general legal information and should not be construed as formal legal advice on any matter, nor should its presentation be construed as intent on the part of The Law Office of Ryan A. Layton, PLLC to form an attorney-client relationship with any user of this website. For more information, please see this disclaimer.