When someone dies and leaves only a will - or no will at all - the estate may be opened for probate or administration by a personal representative.
Administering an estate, many times, is not too complicated. Moreover, not every estate requires a probate attorney’s assistance. However, various factors, such as living out of state or family discord, can cause personal representatives to reach out to probate attorneys for help.
Below are five common pitfalls probate attorneys observe among personal representatives who try to administer an estate without legal help:
Paying the wrong creditors at the wrong time. North Carolina law requires a personal representative to publish a notice to creditors in a newspaper. The notice must run once a week for four straight weeks and must be published in a newspaper that is qualified to publish legal advertisements. The notice effectively starts a 90-day window within which creditors must come forward with any claims against the estate. After 90 days, most creditors cannot bring a valid claim against the estate.
Often, probate attorneys learn that a personal representative failed to publish this notice. Without the notice, creditors have up to two years to file claims. Similarly, if personal representatives wait to publish the notice, the window for creditors’ claims remains open longer than necessary.
Additionally, while many people typically pay bills in the same order they arrive, personal representatives should not do this. Probate attorneys also see many personal representatives who have paid creditors before the 90-day period has ended. North Carolina law requires certain creditors to be paid in a certain order. If there is not enough money in the estate, personal representatives who pay the wrong creditors out of order or before the 90-day window expires might have to repay the estate from their own pockets or face disciplinary action.
Making distributions to heirs at the wrong time.
Personal representatives will often pay heirs too early in the administration. If heirs are paid before administrative expenses or other obligations of the estate are paid, then the personal representatives might have to pay the estate out of their own pockets.
Personal representatives also often fail to obtain a receipt or proof of a distribution to an heir. North Carolina law requires proof of receipt of payment. If there is no proof of the distribution or receipt, a personal representative may be required to repay an heir’s portion back to the estate.
Making unauthorized transactions payable from the estate
. Often personal representatives will allow unauthorized expenses to be paid by the estate. These expenses might include travel or lodging for family members to attend the funeral. This is problematic because unauthorized expenses will have to be repaid to the estate by the personal representative.
Counting real estate as an estate asset
. Personal representatives may often continue to pay maintenance expenses or the mortgage of property that is not part of the estate. As with unauthorized expenses, this is problematic because any money paid for the real property will need to be repaid back into the estate, either by the heirs/owners of the property or by the personal representative. If the real property is not being probated, the heirs - not the personal representative of an estate - are responsible for managing the real property.
Improperly handling personal property
. Probate attorneys often see personal representatives who improperly value or inventory personal property, fail to maintain control over it, or encounter problems distributing the personal property. The personal representative is responsible for this property, and if family members have access to the items, they may not go to the intended heirs. The personal representative would be held accountable for missing items.
Personal representatives can avoid many of these common traps by following the probate instructions of the county Clerk of Court. If personal representatives find they are in over their heads or prefer a neutral person’s assistance in administering the estate, it would be wise to consult a probate attorney to avoid these common mistakes.
Kara Gansmann is an attorney in the Wilmington office of Cranfill Sumner & Hartzog LLP, where her practice encompasses elder law and estate planning. Kara advises individuals and families with estate planning needs and asset protection tactics. In this role, she strategizes with clients to preserve assets for long-term care and to leave legacy gifts to family members. Kara works with elderly clients in need of Medicaid crisis planning and Medicaid applications. As part of her practice, Kara drafts wills, trusts and powers of attorney. In the courtroom, Kara represents clients in the administration of estates, guardianship/incompetency proceedings, and guardianship administration. Kara also litigates estate and trust matters, including will caveats, the modification or termination of trusts, and litigation arising from estate documents or fiduciary roles. She is a member of the North Carolina Bar Association Elder Law and Special Needs Section and serves as co-chair of the CLE Committee for that section. Kara also serves as a liaison between the North Carolina Bar Association Elder Law and Special Needs Section and the North Carolina Bar Association Estate Planning and Fiduciary Law Section.