What Is a Spousal Allowance in North Carolina Probate?

When a loved one passes away, managing their estate and ensuring the family is taken care of can be overwhelming. One of the legal provisions designed to help surviving family members, particularly the spouse and dependent children, during this difficult time is known as a Spousal or Year’s allowance in North Carolina. This allowance provides immediate financial support from the decedent’s estate to cover living expenses while the estate is being administered.

In this article, we’ll explore what a year’s allowance is, who qualifies, how much it provides, and the process for obtaining it. Understanding this legal provision can help families receive timely financial assistance after the loss of a loved one.

What Is a Year’s Allowance?

A year’s allowance, also known as the spousal allowance, is a statutory benefit in North Carolina that allows the surviving spouse or dependent children to receive a specific amount of money from the decedent’s estate. This allowance is intended to provide for their immediate support and maintenance for one year following the decedent’s death. A year’s allowance is a statutory benefit provided to the surviving spouse and children of a decedent to meet their immediate financial needs.

This provision ensures that surviving family members are not left without resources during the probate process, which can sometimes be lengthy.  This allowance helps ensure that dependents are supported while the estate is being administered. For estates of decedents dying on or after March 1, 2024, the spousal allowance remains at $60,000, while the child’s allowance has been increased from $5,000 to $10,000. The year’s allowance has priority over claims against the estate, which means it must be satisfied before creditors or other claimants are paid. This statutory benefit ensures that those closest to the decedent are financially secure during the sometimes lengthy probate process.

Who Is Eligible for a Year’s Allowance?

In North Carolina, the year’s allowance is primarily available to:

1. The surviving spouse of the decedent.

2. Dependent children of the decedent, if there is no surviving spouse or if the surviving spouse has waived the right to the allowance.

According to G.S. 30-15, the spouse has the first right to claim the year’s allowance. If the spouse does not survive the decedent or has waived the allowance, dependent children under the age of 18 or children who are enrolled in full-time education may claim it.

Example:

Suppose that John dies without a will, leaving behind his wife, Mary, and two minor children. Mary can claim the year’s allowance for herself, which will take precedence over other claims against the estate, ensuring that she has immediate funds to support herself and her children.

How Much Is the Year’s Allowance?

The amount of the year’s allowance in North Carolina is set by statute. The statute defines the amount as $60,000 for the surviving spouse. This means that the surviving spouse can claim up to $60,000 of personal property from the estate and have those funds protected from most creditors.

These amounts are updated periodically by the state legislature to reflect changes in the cost of living. The year’s allowance is paid out of the personal property of the estate, such as bank accounts, vehicles, or personal belongings, rather than real estate. If you are research or investigating an older estate, the year’s allowance might be lower under a former statute.

Example:

Let’s say Mary is the surviving spouse and John’s estate includes personal property worth $100,000. Mary can claim her year’s allowance of $60,000, leaving $40,000 in personal property for the estate to distribute according to North Carolina law.

How to Claim the Year’s Allowance

To receive a year’s allowance, the surviving spouse or children must file a petition with the Clerk of Superior Court in the county where the decedent resided. This petition is typically filed as part of the estate administration process, and it must be done within one year of the decedent’s death.

Here’s how the process works:

1. Complete the Petition for Year’s Allowance: The surviving spouse or guardian of the dependent children must fill out a petition (form AOC-E-100), providing information about the decedent, the estate’s assets, and the surviving family members.
2. Submit the Petition: The petition is filed with the Clerk of Superior Court. There may be a small filing fee, depending on the county.
3. Receive Approval: The Clerk will review the petition to ensure it meets the legal requirements. Once approved, the Clerk will issue an order granting the year’s allowance. If the estate has enough personal property to cover the allowance, the funds will be set aside for the spouse  immediately.
4. Receive Payment: Once the order is granted, the administrator of the estate will distribute the year’s allowance to the spouse or dependent children, either in cash or by transferring ownership of assets equivalent to the allowance amount.

If the estate does not have sufficient personal property to pay the full amount of the year’s allowance, the available personal property will be distributed up to the maximum amount possible. Any unpaid portions of the spousal allowance will be added to a Deficiency Judgment. If disputes arise over the year’s allowance, the surviving spouse or children can request a hearing before the Clerk of Superior Court to resolve the matter.

For decedents passing away before March 1, 2024, the law required that the surviving spouse or eligible child first request that the personal representative (PR) or estate collector apply to the court to assign the year’s allowance. According to G.S. 30-16 and G.S. 30-17, if a personal representative was not appointed, or if the appointed PR failed or refused to submit the application, the individual entitled to the allowance could apply directly to a magistrate or the clerk of superior court. Either the magistrate or the clerk would then assign the allowance in any county where the decedent’s property was located.

However, for decedents dying on or after March 1, 2024, two important changes take effect. First, the requirement to request the personal representative to apply for the allowance is eliminated. Second, magistrates no longer have the authority to assign a year’s allowance. Under the new rules, a person eligible to claim the allowance must file a petition directly with the clerk of superior court, who will then assign the allowance. These changes, enacted by Session Law 2023-120, section 1.2, amending G.S. 30-15(a) and G.S. 30-17(b), align with current practices already in place in many of the approximately 20,000 allowance filings that occur annually across North Carolina.

By removing the involvement of the personal representative and magistrate from this process, the law simplifies the application for a year’s allowance, making it more straightforward for surviving spouses and eligible children to secure the financial support they are entitled to. This streamlining helps ensure that claimants can file their petitions directly and efficiently, avoiding potential delays.

Timing of Allowance

The North Carolina General Assembly has recently repealed G.S. § 30-16, effective March 1, 2024. North Carolina General Statute § 30-15(b) now states and provides: “There is no time limitation on bringing a claim for an allowance except that, if a personal representative has been appointed for the decedent’s estate, the claim must be made within six months after the issuance of letters testamentary or letters of administration.”

Please note that while the one-year time limitation has been removed, a six-month limitation applies if letters testamentary or letters of administration have been issued. The surviving spouse must file the claim for the year’s allowance within six months of the issuance of these letters, which may differ from the date of the order authorizing their issuance. If no letters are issued, there is no specific time limit, but the claim must be made during the surviving spouse’s lifetime.

In practicality, the new timing rule for Year’s Allowance is a bit more nuanced. For decedents dying on or after March 1, 2024, there is no time limitation on bringing a claim for an allowance with two exceptions.

Under. the first exception is simply that the applicant seeking a year’s allowance must file a claim for the allowance during their lifetime.

Under the second exception, if a personal representative is appointed for the decedent’s estate, the claim for the allowance must be filed within six months from the date the letters testamentary (for testate estates) or letters of administration (for intestate estates) are issued. The issuance of these letters by the clerk marks the beginning of what is commonly known as “full” or “formal” estate administration. These letters grant the personal representative the authority to manage and distribute the decedent’s assets, and they trigger the six-month limitation period for filing the claim.

However, this six-month period does not apply if other types of letters or alternative forms of estate administration are used. For example, the limitation period does not begin if:

• An Article 11 Collector is appointed, and letters of collection are issued under G.S. 28A-11-1.
• A limited personal representative is appointed, and letters of appointment are issued under G.S. Chapter 28A, Article 29.
• An affiant (or collector by affidavit) is appointed to handle a small estate under G.S. Chapter 28A, Article 25.
• Payment is made to the clerk for money owed to the decedent under G.S. 28A-25-6.
• An order for summary administration is entered by the clerk under G.S. 28A-28-3.

The six-month limitation period is counted from the date the letters testamentary or administration are actually issued. It’s important to note that this is different from the date when an order authorizing the issuance of letters is entered. For example, the clerk might enter the order on December 1st but not issue the letters until January 3rd. In this case, the six-month period would begin on January 3rd, when the letters were officially issued.

If no letters testamentary or administration are issued and both the surviving spouse and eligible children are still living, there is no time limit for filing a claim for the allowance. This flexibility can be particularly beneficial in cases where the decedent passes away on or after March 1, 2024, and no personal property initially requires estate administration. If additional property, such as a bank account, car, or other asset, is discovered years later, the surviving spouse or eligible children can still claim the allowance to cover that property up to the statutory limit.

Year’s Allowance vs. Other Estate Payments

The year’s allowance is distinct from other payments made from the estate. Here are some key differences:

• Priority: The year’s allowance takes priority over most other claims against the estate. This means that before most creditors are paid, the surviving spouse or children receive their allowance.
• Timing: Please refer to the statute and speak with an experience probate lawyer as this statute was recently been amended as discussed above.
• Non-Taxable: In many cases, the year’s allowance is not considered taxable income, making it a significant benefit for the surviving family. However, it is advisable to seek tax advise specifically for this issue.

Priority Between and Among the Spousal and Child’s Allowances

A key change introduced by Session Law 2023-120 affects the priority between spousal and child allowances. For estates where the decedent died before March 1, 2024, the allowances for the spouse and children were of equal priority. In cases where the estate did not have enough assets to cover both allowances, the assets would be prorated between the spouse and the children.

However, for estates of decedents who pass away on or after March 1, 2024, the law has shifted significantly. Under N.C.G.S. § 30-20(a), the surviving spouse’s allowance now takes priority over the child’s allowance. This means that the surviving spouse’s claim will be fully satisfied before any remaining assets are allocated to eligible children. This means spousals are given a higher priority over children for allowance purposes.

Example: If a decedent dies on April 1, 2024, with $40,000 in personal property and leaves behind a spouse and one eligible child, the spouse will receive the entire $40,000 as part of their year’s allowance. Unfortunately, in this scenario, the child’s allowance will not be fulfilled, as the spouse’s claim takes priority. This can leave the eligible child with nothing from the estate.

Key Takeaways for Managing Spousal and Child’s Allowances in Probate

For those navigating probate in North Carolina, it is crucial to understand the following:

1. Spousal Allowance Priority: The surviving spouse’s allowance will be satisfied first, which can impact the assets available for children.
2. Time to Apply: Under the revised law, there is no longer a strict one-year time limit to apply for the allowance, although certain exceptions apply if letters testamentary or administration are issued.
3. Potential for No Child’s Allowance: If the estate has insufficient assets, the child’s allowance may be reduced or eliminated entirely if the spouse’s claim depletes the estate.

These changes underscore the importance of planning ahead to ensure that all dependents are protected. A well-crafted estate plan can help avoid conflicts and ensure a fair distribution of assets.

Frequently Asked Questions (FAQs) About Year’s Allowance

1. What happens if the estate doesn’t have enough money to cover the year’s allowance?

If the estate lacks sufficient personal property to cover the full year’s allowance, the available assets will be distributed to the spouse or children. Unfortunately, the allowance cannot be paid out of real property or other assets not classified as personal property. Any deficiency or short fall in payment will be added to a “deficiency judgment.”

2. Can the year’s allowance be waived?

Yes, the surviving spouse can choose to waive the year’s allowance. Waiver may also occur if the spouse declines to claim it within the statutory time limit.

3. Can creditors challenge the year’s allowance?

In most cases, creditors cannot challenge the year’s allowance. This benefit is protected by law and is designed to ensure the surviving family has the resources they need before other debts are paid.

4. Does the year’s allowance affect Medicaid eligibility?

Claiming a year’s allowance could impact Medicaid eligibility, as it may be considered income for certain benefit programs. It is important to consult with an attorney to understand how claiming the allowance could affect public assistance eligibility.

Moving Forward

Navigating probate can be complex, and the changes to North Carolina’s year’s allowance laws may leave some families at a disadvantage. Whether you are administering an estate or planning your own, it’s important to understand how these laws affect you and your loved ones. If you need assistance with probate administration or estate planning, contact Pierce Law Group today for experienced and compassionate legal guidance.

Our team can help you navigate the probate process, protect your family’s financial future, and ensure that your estate is managed according to your wishes. Call us now for a consultation and let us help you find peace of mind.