What Assets Can Avoid Probate in North Carolina
Assets that can avoid probate in North Carolina are typically those that pass directly to beneficiaries or joint owners outside of the probate process. Avoiding probate can streamline the transfer of assets to heirs and beneficiaries, often making the process faster and less costly. Here are some assets that can avoid probate in North Carolina:
- Jointly Owned Property with Right of Survivorship: Assets held in joint tenancy with rights of survivorship (JTWROS) automatically pass to the surviving joint owner(s) when one owner dies. Common examples include real estate and bank accounts held in joint tenancy.
- Payable-on-Death (POD) Accounts: Bank accounts, including checking and savings accounts, can be designated as POD accounts. When the account holder passes away, the funds in the account go directly to the named beneficiary without the need for probate.
- Transfer-on-Death (TOD) Accounts: Similar to POD accounts, investment accounts like stocks and bonds can be set up as TOD accounts. Upon the account holder’s death, the assets are transferred to the designated beneficiary without probate.
- Life Insurance Policies with Named Beneficiaries: Life insurance policies that have specific beneficiaries named receive the proceeds directly upon the policyholder’s death, bypassing probate.
Retirement Accounts with Named Beneficiaries: Individual Retirement Accounts (IRAs), 401(k)s, and other retirement accounts can have named beneficiaries. These beneficiaries inherit the accounts directly without going through probate. - Real Estate Held in a Living Trust: Real property placed in a revocable living trust during the owner’s lifetime can pass to the trust beneficiaries outside of probate. The trust document specifies how the property is distributed.
- Assets with Beneficiary Designations: Certain financial assets, such as annuities or certificates of deposit (CDs), can have beneficiary designations. Upon the owner’s death, these assets pass directly to the named beneficiaries.
- Community Property with Right of Survivorship: North Carolina recognizes community property with the right of survivorship for married couples. When one spouse dies, their share of community property automatically passes to the surviving spouse without probate.
- Small Estates: In North Carolina, estates with a total value under a certain threshold (as determined by state law) may qualify for a simplified or abbreviated probate process, which can be faster and less expensive.
It’s essential to review and update beneficiary designations and asset ownership to ensure they align with your estate planning goals. Keep in mind that while these assets may avoid probate, they can still be subject to other estate-related taxes, such as estate taxes or inheritance taxes, depending on the specific circumstances and the value of the estate. Consulting with an estate planning attorney can help you create a comprehensive plan that minimizes probate and addresses all relevant legal and financial considerations.
If you need assistance contact the Law Offices of Austin Vandeveer. We welcome the opportunity to serve you and your family.