Jan302026
Probate Q&A Series

Can an executor take out a loan against the estate, and can heirs find out what was borrowed and why? – North Carolina

Short Answer

In North Carolina, a personal representative (executor) may be able to borrow money in the estate’s name or pledge estate property as collateral, but only if doing so is a proper part of administering the estate and is handled with the care required of a fiduciary. Even if heirs did not approve the borrowing, heirs can usually learn about it because the executor must file accountings with the Clerk of Superior Court that show estate receipts, disbursements, and many transactions. If the estate is already closed, heirs can often still obtain the filed inventory and accountings from the estate file and review what was borrowed and how the money was used.

Understanding the Problem

Under North Carolina probate law, the key question is whether a personal representative can create new debt during administration by taking out a loan tied to estate assets, and what transparency heirs have after the estate has been opened and later closed. The decision point is whether the borrowing was done as part of the executor’s job of paying valid expenses and debts and preserving estate property, or whether it was outside proper estate administration. The related question is how heirs can confirm the amount borrowed and the stated purpose by reviewing what was filed with the Clerk of Superior Court in the estate proceeding.

Apply the Law

In North Carolina, an executor is a fiduciary. That means the executor must gather estate assets, pay lawful debts and expenses, and distribute what remains under the will, while acting in good faith and with the care a prudent person would use with their own property. Borrowing can be permissible when it is a reasonable tool to administer the estate (for example, to cover necessary expenses while waiting to liquidate an asset), but it can create problems if it is unnecessary, risky, self-serving, or poorly documented. Transparency usually comes through the required estate filings (inventory and accountings) with the Clerk of Superior Court, which are commonly available in the estate file.

Key Requirements

  • Proper estate purpose: The loan should be tied to a legitimate administration need (paying allowed expenses, preserving assets, or handling timing gaps), not personal convenience or a side deal.
  • Fiduciary care and no self-dealing: The executor must act prudently, avoid conflicts, and keep estate money separate from personal money, with clear records showing where the borrowed funds went.
  • Accounting and documentation: The executor must be able to show the amount borrowed, the terms, the payments made, and the reason the borrowing benefited (or was intended to benefit) the estate.

What the Statutes Say

Analysis

Apply the Rule to the Facts: Here, a parent died with a later will naming one sibling as executor, and the estate was opened and later closed. If the executor borrowed money during administration, the borrowing generally needed to serve a legitimate estate purpose and be handled prudently with clean records. If the loan proceeds were used to pay estate expenses, carry property costs, or cover timing gaps before assets were collected or sold, it is more likely to fit within proper administration than borrowing for personal reasons. Because the estate is closed, the most practical way to learn what was borrowed and why is usually to review the estate file for the inventory and accountings that should reflect the transaction and its impact on distributions.

Process & Timing

  1. Who requests information: An heir or other “interested person.” Where: The Estates Division (estate file) in the Clerk of Superior Court in the county where the estate was administered. What: Request copies of the Inventory and all Annual Accounts and the Final Account (and any supporting statements filed with them). When: After qualification and throughout administration; even after closing, the filed documents are typically still available in the estate record.
  2. What to look for in the filings: Entries showing loan proceeds as a receipt, loan payments as disbursements, and any payoff at closing. Also look for explanations in the accounting narrative and for unusual payments to lenders or transfers that do not match ordinary estate expenses.
  3. If the filings are unclear: Consider a written request for supporting documentation (loan note, payoff statement, bank statements for the estate account, closing statement if real property was involved). If cooperation is not forthcoming and there are red flags, the next step can be a court request through the Clerk of Superior Court for appropriate relief based on the estate record and the fiduciary duties involved.

Exceptions & Pitfalls

  • Borrowing that benefits the executor: Loans that look like they were taken to help the executor personally (or a business the executor controls) can raise self-dealing concerns, even if the executor later repaid the estate.
  • “Against the estate” can mean different things: Sometimes the “loan” is not a bank loan at all (for example, an advance from a family member, or a refinance/loan tied to a specific asset). The accounting should still show the money in and out, but the paperwork may be outside the court file unless it was filed as an exhibit.
  • Incomplete paper trail: A common problem is mixing estate funds with personal funds or paying expenses from the wrong account. Even when the underlying expense is legitimate, poor recordkeeping can create disputes and delay closing.

Conclusion

In North Carolina, an executor may be able to borrow money during probate if the borrowing serves a proper estate purpose and is handled prudently under the executor’s fiduciary duties. Heirs can usually find out what was borrowed and why by obtaining the estate’s inventory and annual and final accountings from the Clerk of Superior Court and reviewing receipts, disbursements, and any narrative explanations. The most direct next step is to request copies of the Final Account and any Annual Accounts from the estate file and compare them to lender payments and distributions.

Talk to a Probate Attorney

If there are concerns that an executor borrowed against an estate and the records do not clearly explain the amount, terms, or purpose, a probate attorney can help review the estate file, identify missing documentation, and explain options through the Clerk of Superior Court. 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: Pierce Law

Pierce Law Group is a North Carolina law firm focused on probate administration, real estate partition matters, and surplus funds claims across North Carolina. We know these situations often come with stress, family dynamics, and time-sensitive decisions—so we prioritize clear communication, steady guidance, and a practical plan from day one. Our goal is to make a complicated process feel manageable, while protecting what matters most to you.