When someone passes away in North Carolina, one of the biggest questions for families is what happens to their real estate. The answer depends on how the property is owned and whether there are legal tools in place to transfer it. Understanding how probate works for real estate can save time, avoid disputes, and help families make informed decisions.
What Is Probate?
Probate is the legal process that confirms a will’s validity, inventories assets, notifies creditors, pays debts and taxes, and distributes property to beneficiaries. If a person dies with a will, the court makes sure their wishes are carried out. Without a will, the state decides how assets, including real estate, are divided. The court appoints an executor or administrator to manage the estate and ensure all legal steps are followed.
Not all estates need a full probate process. In North Carolina, estates with total assets under $20,000, excluding real estate, may use simplified probate procedures. This can save time and reduce court involvement.
When Real Estate Must Go Through Probate
Real estate typically goes through probate if it is owned solely in the deceased person’s name without co-owners or designated beneficiaries. Probate is required when the property must be sold to pay debts or when the will directs its distribution. During probate, the executor or administrator will inventory the property, manage it while the estate is settled, and potentially sell it with court approval.
Managing real estate during probate can include maintaining the property, collecting rental income, or preparing it for sale. Selling property often involves listing it, accepting an offer, and holding a court confirmation hearing. Proceeds are used to pay debts first, and any remaining funds are distributed to heirs.
Situations Where Probate Can Be Avoided
Some ownership structures and planning tools allow real estate to transfer without going through probate:
- Joint Ownership with Rights of Survivorship: If a property is owned jointly, it automatically passes to the surviving owner without probate.
- Transfer-on-Death Deed: This deed lets property go directly to a named beneficiary when the owner dies.
- Revocable Living Trust: Real estate held in a trust avoids probate because the trust already holds legal title to the property.
These options help families transfer property efficiently and avoid court delays.
The Probate Process for Real Estate
When probate is required, the process usually follows these steps:
- Validating the Will: The court confirms the will is genuine.
- Appointing an Executor or Administrator: This person manages the estate, pays debts, and oversees property.
- Inventory and Appraisal: Real estate is listed and valued to determine the estate’s total worth.
- Paying Debts and Taxes: Any outstanding obligations are settled before assets are distributed.
- Managing or Selling Real Estate: The property may be rented or sold according to the will or court instructions.
- Distributing Proceeds: After debts, remaining funds or property are given to heirs.
These steps ensure the estate is handled legally and fairly.
The Impact of Mortgages and Federal Law
The Garn St. Germain Depository Institutions Act of 1982 affects how real estate transfers work if the property has a mortgage. The law protects certain transfers from triggering a due-on-sale clause. This means that a mortgage cannot be called due immediately when a property passes to a relative, spouse, child, or a living trust after the owner dies. Families can assume the mortgage under existing terms, which can prevent forced sales and maintain financial stability.
Why Understanding Probate Matters
Even if the process seems complex, understanding probate protects both heirs and the estate. Properly managing real estate ensures assets retain value and are distributed according to the decedent’s wishes. It also helps reduce disputes among family members and keeps the process as smooth as possible during a difficult time.
Get Help From a Probate Lawyer
Handling probate, especially when real estate is involved, can be challenging. A probate lawyer can guide you through each step, from validating the will to managing or selling property. They can also advise on options to avoid probate for future planning. Getting legal guidance ensures the estate is handled correctly and that the family can focus on moving forward.
If you are dealing with real estate in an estate, call our Wilmington probate lawyer to discuss your situation and protect your interests.