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Probate: Small Estate Collection by Affidavit in North Carolina

April 12, 2016

North Carolina provides an alternate probate administration processes to the formal administration of an estate.  One such abbreviated process is known as Collection-by-Affidavit, which is used only in Small Estates.  Using this method can save time and money for both the administrator and the beneficiaries.  In this article, the requirements for qualifying as a Small Estate, the general Collection-by-Affidavit process and its benefits are discussed.

 

Although the threshold limits for Small Estate qualification are lower in preceding years, this article will focus on the limits imposed if the decedent died on or after 1/1/2012.

 

QUALIFICATION AS SMALL ESTATE

 

     Unmarried Decedent:  An estate qualifies as small If the value of the decedent's personal property, less liens and encumbrances, does not exceed $20,000.00.  The value of real property is not included in the calculation.  What this essentially means is the decedent's personal property (assets passing through probate such as bank accounts, automobiles, furniture/art/other belongings, etc.), LESS liens and encumbrances (debts of the decedent payable from estate funds such as medical bills, costs of administration, funeral bills, attorney fees, etc.) must not exceed $20,000.00.

 

     Married Decedent:  An estate qualifies as small If the value of the decedent's personal property, less liens, encumbrances, and spousal allowance, does not exceed $20,000.00.  The value of real property is not included in the calculation. What this means is all of the debts listed above are included here, but the spousal allowance ($30,000.00 currently) can also be used to reduce the "counted" personal property even further, making qualification for Collection-by-Affidavit easier.  If the surviving spouse is the "collector" and the sole heir or devisee, the threshold limit is increased even further to $30,000.00.

 

COLLECTION-BY-AFFIDAVIT PROCESS

 

If the estate is a Small Estate, as described above, and no application is pending or has been granted for appointment of a personal representative within 30 days of the decedent's death, the following steps outline the Collection-by-Affidavit procedure:

 

First, an executor, heir, creditor of the decedent or public administrator, files an Affidavit for Collection with the appropriate Clerk of Superior Court (the county in which the decedent was domiciled).  This is done using the Affidavit For Collection Of Personal Property Of Decedent form (AOC-E-203).  If approved, the Collector is given authorization to proceed with collection and administration of the estate.

 

Second, the Collector pays estate debts according their statutory priority, then distributes the remainder of the personal property, if any, to the persons entitled to it by will or according to the Intestate Succession Act.

 

Finally, the Collector files the Closing Affidavit with the Clerk of Superior Court, showing all collections (income to estate), disbursements (payment of valid estate debts) and distributions (property given to beneficiaries) of the personal property.  This form is the Affidavit Of Collection, Disbursement And Distribution (AOC-E-204).  

 

ADVANTAGES OF COLLECTION-BY-AFFIDAVIT

 

Generally a Collection-by-Affidavit saves both time and money in comparison to a formal probate administration.  For instance, notice to creditors and waiting requirements used in formal probate administrations are not required in a Collection-by-Affidavit.  In fact, the Collection-by-Affidavit process is specifically designed to be relatively quick, as evidenced by the requirement that the Closing Affidavit be filed within 90 days of the qualifying affidavit (an extension may be requested).  Further, several costs of administration necessary in a formal proceeding are not necessary in a Collection-by-Affidavit.

 

CONCLUSION

 

If the estate qualifies as a Small Estate, Collection-by-Affidavit may save both time and money.  

 

 

***Warning: if real property will likely be brought into the estate and sold to pay debts of the estate, a formal proceeding with notice to creditors may be necessary.***

 

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April 12, 2016

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