Jan22026
Probate Q&A Series

What happens if an heir took money from the decedent’s account before the estate was settled—can that be treated as an early inheritance and deducted from their share? – North Carolina

Short Answer

Sometimes, but not automatically. In North Carolina, a lifetime gift can be treated as an “advancement” (an early inheritance) and charged against an heir’s intestate share, but the law has specific requirements and it usually turns on proof of intent and documentation. If the money was taken without authority (especially while the decedent was incapacitated), it may be treated as a debt owed back to the estate rather than an early inheritance.

Understanding the Problem

In a North Carolina estate administration, can a court-appointed administrator treat money an heir withdrew from the decedent’s bank account before the estate was settled as an “early inheritance” and reduce that heir’s later distribution by the same amount? The decision point usually turns on whether the transfer was a true lifetime gift meant to count against inheritance, or whether it was an unauthorized withdrawal that should be returned to the estate before any shares are calculated. Timing often matters because creditor claims and estate expenses must be addressed before final distributions.

Apply the Law

North Carolina recognizes the concept of an “advancement” in intestate estates (estates with no will, or where some property passes by intestacy). An advancement is a lifetime transfer from the decedent to an heir that is counted against that heir’s intestate share when the estate is distributed. Separately, if someone took estate money without authority, the administrator generally treats it as an estate asset that should be recovered (or treated as a debt/offset) so the estate can pay valid expenses and creditor claims. The main forum for disputes is typically the Clerk of Superior Court handling the estate, and timing is driven by the estate’s creditor-claim process and the administrator’s duty to file accountings before closing the estate.

Key Requirements

  • Was it a true lifetime transfer by the decedent (not a “taking”): An advancement starts with the decedent giving property during life. If the facts show the heir withdrew funds without authority, the issue shifts from “advancement” to recovery/repayment.
  • Intestacy connection: Advancements apply to an heir’s intestate share. If the estate is governed by a will (or the asset passes outside probate), different rules may control whether an offset is allowed.
  • Valuation and effect on distribution: The amount treated as an advancement is counted when computing shares. If it equals or exceeds the heir’s intestate share, the heir can be excluded from further distribution (without having to refund the excess as an advancement issue).

What the Statutes Say

Analysis

Apply the Rule to the Facts: The estate administration involves identifying bank accounts, filing an inventory, and addressing creditor claims. If an heir withdrew money from the decedent’s checking account while the decedent was incapacitated, the administrator generally needs to determine whether the decedent actually intended a lifetime gift that should be treated as an advancement, or whether the withdrawal was unauthorized and should be brought back into the estate (or offset as a debt) before distributions. Because creditor claims (like medical bills and secured debt) may need to be paid first, the administrator typically cannot treat the withdrawal as “just an early inheritance” without confirming the estate can still satisfy valid claims and expenses.

Process & Timing

  1. Who files: The administrator (personal representative). Where: The estate file with the Clerk of Superior Court in the county where the estate is being administered in North Carolina. What: Use the estate accounting/inventory process and, if needed, a petition or motion in the estate proceeding to approve an offset, compel information, or address disputed transactions. When: Before making final distributions and before filing the final account to close the estate; timing often depends on the creditor-claim period and whether disputes require a hearing.
  2. Gather proof: bank statements, signature cards, online access logs if available, and any power of attorney records or other authority the heir claims. Document whether the decedent authorized the withdrawals or intended them as gifts.
  3. Decide the treatment: if the facts support a lifetime gift meant to be charged against inheritance, propose treating it as an advancement against the heir’s intestate share; if the facts support an unauthorized taking, pursue repayment or a court-approved offset before distribution, and reflect it in the accounting presented to the Clerk.

Exceptions & Pitfalls

  • “Advancement” is not a catch-all label: If the decedent did not actually make a lifetime gift, calling it an “early inheritance” can create conflict and may not hold up if challenged.
  • Incapacity raises red flags: Withdrawals made while the decedent was incapacitated often trigger questions about authority, undue influence, or misuse of access. Those issues commonly require documentation and may require court involvement to resolve.
  • Probate vs. non-probate funds: Some accounts pass by contract (for example, certain joint accounts with survivorship or payable-on-death designations). Those funds may not be distributed under intestacy rules, even though in some situations they can be pulled back in to pay estate claims if probate assets are not enough. Treating a withdrawal as an “advancement” may not fit if the asset is not part of the intestate distribution.
  • Paying heirs too early: Early distributions can expose the administrator to risk if later claims, expenses, or taxes appear. Administrators often wait until the estate’s debts and expenses are clearer before agreeing to offsets or distributions.
  • Accounting clarity: Any proposed offset should be clearly shown in the inventory/accountings so the Clerk and other heirs can understand how the numbers were calculated.

Conclusion

In North Carolina, money an heir received during the decedent’s lifetime can sometimes be treated as an advancement and deducted from that heir’s intestate share, but it depends on whether the transfer was a true lifetime gift and how it fits into intestate distribution. If the heir withdrew funds without authority—especially during incapacity—the administrator may need to treat the amount as recoverable estate property or a debt/offset. The next step is to document the withdrawals and present the proposed treatment in the estate accounting filed with the Clerk of Superior Court before the final account is submitted.

Talk to a Probate Attorney

If there are concerns about withdrawals from a decedent’s account before the estate is settled and whether the amount should reduce an heir’s share, our firm has experienced attorneys who can help explain options, documentation needs, and timelines in North Carolina estate administration. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Probate Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.