Life has changed in a substantial way - someone you know and love has passed and you've been named in their will to assume a very important, fiduciary role: Executor. Here are some of the things I've learned as a Cary, NC Probate Lawyer.
Don't Panic - It's Going to Be Okay
It's not important to get the estate opened right away, so take some time to deal with life first. The funeral and burial/cremation arrangements take precedent and the estate isn't going anywhere. You have a lot going on right now and you need to take it one step at a time. After you've gotten past the services and arrangements, here is what you need to do first.
1. Death Certificates
Order more than you think you'll need - or if you're not the person ordering, instruct that person to order more than they think they'll need. Every single bank thinks they're entitled to an original, certified copy of the death certificate in order to allow bank accounts to transfer to someone else by operation of death. A copy should easily suffice, but the bank's internal policies will ultimately control what they will and will not allow. Plan for an original death certificate for every (a) bank used by the Decedent (the person who passed), (b) life insurance company where the decedent owned a policy, (c) financial advising company (think Edward Jones, Ameriprise, Wells Fargo Wealth, etc.), and (d) the Clerk of Court. Most of my clients will order 10 just to be safe.
2. Where's the Will?
Look for the will in places where the Decedent would have kept important documents (lock box, safe deposit box, closet shelf/drawer, etc.). North Carolina law presumes that if a will is not found among the Decedent's important papers, the will either never existed or was destroyed with the purpose of revoking it - either way it leads to the same result: intestacy. The original will is needed to open an estate file in North Carolina. If the original is not available, but a copy is, the copy can be submitted to probate with testimony (live or affidavit) as to the existence of the will and why the original was not found.
3. Don't Spend the Money, Yet
It's tempting to just start paying bills from whatever funds are available: "It's her bill, I'll just pay it from her money, right?" Wrong.
It depends on the nature of the bill, the nature of the funds, and the timing of the payment.
- Real Property (land, homes, etc.) passes immediately to the beneficiaries designated in the will, outside of the estate. The beneficiaries of the land take legal title as soon as the Decedent passes. Title passes for purposes of conveying good title as soon as the death certificate and will are submitted to the Clerk of Court for probate. "Thanks for the education - what's your point?" My point is that expenses for such real property cannot be paid for with estate assets because the real property is not an estate asset - it's owned by the beneficiaries. For example, it is not proper for the Executor to pay the tax bill for the home that passed to the Decedent's children. All of the expenses of the house, and even the mortgage, come with the house and become the responsibility of the beneficiaries, unless the Decedent's will directs the Executor to pay for those expenses - they usually don't.
- Hospital Bills are a claim against the assets of the estate and are treated as unsecured creditor claims. You're required to put hospitals/medical providers on actual notice of the death of the Decedent and of their ability to make a claim against the estate (more on this in Part 2), but you should not pay the bills right away. You cannot pay one creditor to the detriment of other creditors - meaning you cannot pay a claim until all claims from all potential creditors have been received (or have been barred after 90 days of Notice - again, more on this in Part 2), so there is no rush to pay these bills. The companies collecting on behalf of estate creditors are generally okay to work with and are patient (in my experience).
- Credit Card bills are treated the same as hospital bills and the same rules apply. No rush, they'll be taken care of in due time.
- Car loans can go one of two ways: 1) if the car is under water - meaning the loan is worth more than the car - you can either surrender the car and take a deficiency claim against the estate, or pay the note and hold the car as an asset for the estate (or sell and hold the proceeds); 2) if the car is not under water, you can either pay the note and hold the car/proceeds, or sell the car and pay the note with the proceeds and hold whatever is left for the estate. None of this can be done right away though - you'll need authority to do this (more on this in Part 2).
- Funeral/Burial/Cremation bills are generally paid in one of three ways: 1) the Decedent either pre-purchased a plan or pre-purchased insurance to pay for everything. If that's the case, congrats, because the Decedent gave you all a great gift by sorting that out ahead of time; 2) the Decedent did not plan ahead but left an trust account with cash in it - you can use that cash to pay for the expense if you have the authority (Successor Trustee); or 3) the family pays the bills and hopes to get reimbursed at the close of the estate. Either way, you're not allowed to use estate assets to pay for these expenses right way.
4. Don't Start Giving Everything Away
Families are generally quick to start donating cloths and furniture and other miscellaneous unwanted things to charities or give it away to other family members. Legally speaking, all of these are estate assets, meaning they are subject to probate and their value is included in the probate fee calculation.
5. Get the Documents Together
Hopefully the Decedent left behind some direction as to where she held bank accounts, who her financial team (Financial Advisor, CPA, Life Insurance Agent, etc.) consisted of, and what she owned in her own name. If not, you're going to need to start looking through her things and mail to see what there is. This should give you a good idea of what her probate estate will consist of (assets owned by the decedent on the date of her death, but are not held in a 'rights of survivorship' designation). You'll need to have a decent picture of the probate estate prior to submitting anything to the Clerk of Court.
Now that you've calmed down some, let your current situation set in, and gotten a general idea of the Decedent's estate plan and her probate estate, you're ready to get the pleadings together. Look for Part 2 of the Executor Series, where I discuss where to go from here. If you've gotten this far and are overwhelmed, its best to contact a Cary, NC Probate Lawyer for assistance.
Paul A. Yokabitus