By Cowles Liipfert

By Cowles Liipfert

If you die without a Will and you are a resident of North Carolina, the assets owned by you personally on the date of death (i.e., not owned jointly with someone else who has survivorship rights), and not including assets payable to a named  beneficiary at your death, will pass under the North Carolina Intestate Succession Act.

(If a person dies with a Will, he or she is said to have died “testate;” without a Will, he or she is said to have died “intestate”)

Many people assume that a married person’s estate will automatically pass to his or her spouse at death, if there is no will. 

That can occasionally happen under the right fact situation, but in North Carolina, usually a decedent’s estate will not automatically pass to the surviving spouse.

It is important to know that many assets may be owned in a manner which will automatically pass ownership to a survivor upon someone’s death, instead of passing under the Intestate Succession Act. 

This can happen with assets such as bank accounts or other assets owned by two or more persons jointly with right of survivorship, but the proper papers must be signed by the co-owners.

A person may also designate someone else as beneficiary in the event of the owner’s death, of assets such as retirement accounts or life insurance policies, or even bank or brokerage accounts which are owned strictly by one person during his or her lifetime, but payable to a named beneficiary upon the owner’s death. 

The owner must sign the beneficiary designation forms for the appointment of beneficiaries to be effective.

Real estate conveyed during their marriage to a husband and wife in both names is usually owned by them “as tenants by the entirety,” a unique form of ownership which passes to the surviving spouse, free of the claims of creditors of the deceased spouse, upon the death of the other spouse.  

A very common mistake is made nowadays when a couple acquires real estate in their joint names before their marriage; they may acquire the property as “tenants in common” which means that each of them would own a separate one-half ownership in the property without survivorship, or they may acquire title as “as joint tenants with right of survivorship.” 

When they subsequently marry, their ownership is not automatically converted into a tenancy by the entirety, unless the property is re-deeded by both of them to themselves as tenants by the entirety. 

Unless there is a new deed, they do not benefit from (1) survivorship, if they own separate one-half interests as tenants in common, or (2) the unique protection against creditor claims which they would have under a tenancy by the entirety. 

The best practice would be for the new deed to recite that the purpose of the deed is to convert their ownership into a tenancy by the entirety.   

The Intestate Succession Act, when applicable, is complicated, and leaves assets the way that the North Carolina General Assembly has determined – and not the way that you would likely want.

If you want your assets to pass as you intend, it would be better for you to have a will expressing your wishes, to insure that your assets will pass exactly as you want, instead of passing the way someone else has determined .

North Carolina law generally does not allow one spouse to disinherit the other spouse completely,  or generally to leave the surviving spouse less that he or she would have received under the Intestate Succession Act. 

If a surviving spouse would otherwise receive a smaller share under the will and other survivorship documents than under the Intestate Succession Act, the survivor can apply with the probate court for an elective share.

Please note that the Intestate Succession Act has slightly different inheritance provisions for real property (i.e., land and improvements – commonly called “real estate”) than for personal property (i.e., any property other than real estate – including furniture and household furnishings, motor vehicles, jewelry, tools, equipment and other “things” plus intangible property, such as money, bank and brokerage accounts stock in a corporation or ownership interests in partnerships and LLCs, etc.).

Unless a decedent leaves a Will, the North Carolina Intestate Succession Act determines the shares of heirs and the distribution of the decedent’s estate, as follows:

Decedent survived by spouse and two or more children

1. Spouse receives first $60,000 of personal property, one-third of personal property in excess of that $60,000, and one-third of real estate.
2. Children divide two-thirds of the personal property in excess of $60,000, and two-thirds of the real estate, and the shares of minor children are payable to a court-appointed guardian, to be used as approved by the Court until the child is age 18, at which time the assets are transferred into the child’s name, regardless of the maturity level of the child.

Decedent survived by spouse and one child

1. Spouse receives first $60,000 of personal property, one-half of personal property in excess of $60,000, plus one-half of real estate.
2. Child receives other one-half of the personal property in excess of $60,000, and one-half of the real estate.  The share of a minor child is payable to a court-appointed guardian.

Decedent survived by spouse and no children

1. If Decedent is survived by one or more parents, Spouse receives first $100,000 of personal property, one-half of personal property in excess of $100,000, and one-half of real estate.
2. The then-living parent or parents of Decedent receive other one-half of the personal property in excess of $100,000, and one-half of the real estate, in equal shares.

Decedent not survived by spouse, but is survived by one or more children or lineal descendants of deceased children

1. All personal property and real estate to be divided equally by children, with the share of a minor child payable to a court-appointed guardian.
2. If any children are deceased and leave then-living children (i.e., Decedent’s grandchildren), the deceased children’s shares are equally divided among the Decedent’s grandchildren by those deceased children, and the share of any minor grandchild is payable to a court-appointed guardian. 

Decedent not survived by spouse, children, or lineal descendants of deceased children, but is survived by one or both parents

The parents receive the entire estate, including real estate and personal property, to be divided equally between them if both are living, or all to the survivor, if only one of them is then living.

Decedent not survived by spouse, children or parents

1. The Decedent’s estate is distributed to the Decedent’s siblings equally and the descendants of deceased siblings.
2. The share of any minor beneficiary is distributed to a court-supervised guardian until the beneficiary reaches age 18.

Decedent not survived by spouse, children, parents or siblings

1. One-half the estate is distributed to the Decedent’s maternal grandparents or their descendants and the other one-half is distributed to the Decedent’s paternal grandparents and their descendants
2. The share of any minor beneficiary is distributed to a court-supervised guardian until the beneficiary reaches age 18.

Please be aware that the estate of a widow or widower under #5, 6 and 7 above will pass 100% to his or her family and nothing will go to the family of his or her spouse, if the spouse predeceased the Decedent. 

For children to inherit under the Intestate Succession Act, they must be deemed legally to be children, under the following alternatives:

1. Legally adopted children are treated the same as biological children;
2. Stepchildren and foster children who have not been legally adopted are not treated as children;
3. Biological children who have been adopted by other adoptive parents will not receive a child’s share, with one exception: where children of one spouse are adopted by the other spouse, those children will be considered children of both spouses; 
4. A child conceived before a parent’s death will receive a share if born within 10 months after death;
5. Illegitimate children born to a deceased father will not receive a share of his estate unless: (i) the child has been legitimated, (ii) the father acknowledged paternity; or (iii) the child was born within one year of the father’s death and paternity has been established through DNA testing.

All of the above can easily result in assets going to the wrong beneficiaries than the Decedent would have wanted. Two examples are as follows:

Unplanned Example A: 

Fred and Ann were married for 30+ years and had no children. 

Fred’s mother was in her nineties when Fred died without a will. 

Under #5 above, Ann received Fred’s personal property up to $100,000 and one half of his personal property in excess of that amount, and she received one-half of Fred’s real estate. 

The rest of Fred’s property went to his mother.

When she died a few years later, her estate went to her children, and nothing was left to Fred’s widow, Ann.   

Unplanned Example B: 

Bob, who is a farmer, was divorced from his first wife, and she deeded the farm property to him in the property settlement. 

He remarried and had a wife and two minor children when he unexpectedly died in an accident.

He had a farm loan which had been covered by life insurance. 

The property settlement with his former wife allowed her to keep the life insurance, and he did not get any more life insurance for his Widow.

When he died without a Will, his estate passed under #1 above, and the farm equipment went to his Widow, but the farm itself was left one-third to her and two-thirds to his children (in court-supervised guardianships). 

His ex-wife collected the life insurance.

His Widow had to deal with the farm and the mortgage, and two-thirds of any farm profits went into the children’s guardianship accounts.

Not what Bob would have wanted.

Additional Notes:

1. A surviving spouse can also apply with the probate court to be allotted a spouse’s “Year’s Allowance,” as additional protection for the surviving spouse.
2. Persons will not inherit under the Intestate Succession Act unless they survive the Decedent by at least 120 hours.
3. Half relatives are treated the same as whole relatives
4. Relatives conceived before death will inherit as though actually delivered prior to death, as long as they are delivered within 10 months after the date of death.
5. Nonresidents and noncitizens are entitled to an intestate share of a Decedent’s estate, see Nonresident and Noncitizen Beneficiaries of Estates and Trusts