Top 5 Strategies to Avoid Probate in North Carolina (2024)
Losing a loved one is difficult enough without having to deal with the slow, public process of probate. Probate is the court-supervised process of distributing a deceased person’s estate according to their will or state law. It can take over a year in some cases, and probate records become public documents that anyone can access.
Fortunately, with careful planning, many North Carolina families can avoid the hassles of probate altogether. As experienced estate planning attorneys, we frequently help families use strategies to keep assets out of probate. Doing so allows your loved ones to access funds and property quickly and privately after your passing.
To keep more money in your family’s pockets, we’ll explain when an estate typically has to go through probate in North Carolina. We’ll also overview the most common assets that can skip the probate process. Finally, we’ll discuss five top ways our clients legally avoid probate with their estate plans.
When Does an Estate Go to Probate in North Carolina?
In North Carolina, any estate valued over $20,000 generally must go through a full administration probate if you die without a valid will. The same is true if you have a will but own assets in your individual name. Those need to pass through probate for your will to take effect.
However, certain assets can avoid probate if properly planned. For instance, life insurance funds and retirement accounts with named beneficiaries will go directly to those people. Property owned jointly with rights of survivorship also passes to the surviving owner and never enters probate.
Below, we’ll explore the most common probate-avoidance strategies available under North Carolina law. With the right plan, you can ensure your loved ones don’t have to deal with this stressful and public process.
What Assets Get to Skip Probate in North Carolina?
Many assets can legally skip the probate process if properly titled or assigned:
- Life insurance proceeds and retirement accounts with named beneficiaries
- Bank accounts owned jointly with rights of survivorship
- Real estate titled in joint tenancy with rights of survivorship
- Assets placed in a revocable living trust during your lifetime
- Investments and bank accounts that designate transfer-on-death beneficiaries
- Real estate is transferred through a transfer-on-death deed
This list covers most people’s valuable assets. With the right planning, you can avoid probate and ensure quick, private transfers to your loved ones. Now, let’s discuss how to put some of these strategies into action.
How to Avoid Probate in North Carolina
Create a Revocable Living Trust
One of the most comprehensive ways to avoid probate in North Carolina is creating a revocable living trust. These legal arrangements place your assets into trust during your lifetime. You still control and benefit from the assets while living.
Upon your death, your named trustee manages the distribution of the trust assets directly to beneficiaries. This avoids the courts and probate entirely. It also keeps the details of your estate completely private.
Over half of our clients opt for revocable trusts as their core estate plan. The upfront effort of re-titling assets saves your family immense hassle later on. Maintaining a living trust does require some monitoring to keep assets titled correctly. But you gain major probate avoidance and privacy.
Name Beneficiaries for Accounts and Assets
Naming beneficiaries on financial accounts is another simple way to avoid probate. Bank accounts, life insurance policies, retirement plans, and investments all allow beneficiary designations. The assets are then passed directly to those beneficiaries after the original owner dies.
For example, designating your spouse and children as beneficiaries of an IRA will let them claim the funds directly. The assets never enter into probate or become public records. Filling out the beneficiary forms takes only minutes, so take advantage of this easy probate bypass.
Joint accounts also qualify here if you name “with rights of survivorship.” The surviving co-owner automatically becomes the sole owner at your death. The assets entirely avoid probate. Just be cautious about risks if co-owners have debts or get divorced.
Own Property Jointly
Owning real estate and financial accounts jointly with rights of survivorship is another way to legally avoid probate. When the first joint owner passes away, property ownership automatically transfers to the surviving joint owner. No court approval is needed, so probate is avoided.
This strategy is most common among married couples buying real estate together. If both your names are on the deed as joint tenants with rights of survivorship, the house will pass directly to the surviving spouse outside of probate. Simply be mindful of potential risks depending on your specific situation and goals.
Make Lifetime Gifts
Another probate avoidance strategy is to gift assets during your lifetime. Under North Carolina law, you can gift up to $15,000 per year to as many individuals as you want without incurring gift taxes. Larger gifts may owe taxes but still avoid probate.
Lifetime gifting lets you see your loved ones benefit from the assets while you’re still alive. The gifted assets also avoid probate after your death. Strategic gifting can significantly reduce the size of your probate estate over the years. Just be sure to properly document gifts over $15,000.
Use Transfer-on-Death Deeds
North Carolina has allowed transfer-on-death (TOD) deeds since 2011. TOD deeds let you keep full ownership and use of real estate during life. At death, the named beneficiary files paperwork to claim ownership outside of probate. This option avoids probate hassles and expenses for families.
We generally recommend TOD deeds as a supplement to, not replacement for, proper estate planning. Make sure you also have healthcare documents like a living will in place. But TOD deeds are a simple way to transfer real property while avoiding the probate process.
Take Control with an Estate Plan
With the strategies above, most North Carolina residents can exempt the majority of their assets from cumbersome probate procedures. This saves families time, money, and privacy during an already challenging time.
At Donaldson Law, our experienced estate planning attorneys are ready to help craft a personalized plan that meets your needs and goals. Contact us today if you have any questions or need guidance on avoiding probate through proper planning. We offer a free initial consultation at your convenience.