Short Answer

Yes. In North Carolina, estate administration costs (including reasonable attorney’s fees approved by the clerk) and taxes can be paid from estate assets before other debts. If the estate lacks cash, the personal representative may need court authority to sell or mortgage the house to raise funds. North Carolina has no state estate tax for deaths after 2012; federal estate tax applies only to very large estates.

Understanding the Problem

You want to know if the estate can cover estate taxes, property taxes, and legal fees so you can keep the home. Under North Carolina probate, the administrator handles payments from estate assets. Here, the only significant asset appears to be the decedent’s house. The core question is whether the estate can lawfully pay these charges and, if not enough cash exists, what options exist to avoid losing the home.

Apply the Law

In North Carolina, the personal representative (administrator) pays costs of administration and certain taxes before general creditors. Real property passes to heirs at death but remains subject to estate debts and liens. If there is not enough liquid money to pay higher‑priority charges, the administrator can seek court authority to sell, lease, or mortgage the real estate to generate funds. The main forum is the Clerk of Superior Court in the county where the estate is administered; a key early trigger is publishing the notice to creditors, which sets a claim deadline at least three months from first publication.

Key Requirements

• Administration costs come first: Court costs, reasonable attorney’s fees, and other necessary expenses of administration are paid before creditor claims.
• Tax and lien priority: Specific liens (like recorded property tax liens) are paid from the property or its sale proceeds before other debts.
• Order of claims: After administration costs and any year’s allowances, claims are paid by statutory priority; medical bills from the last year rank ahead of general unsecured debts.
• Notice to creditors: Publish the creditor notice and mail it to known creditors; claims not filed by the deadline are barred, subject to exceptions.
• Using the house to raise funds: If cash is short, the administrator may petition the clerk for authority to sell or mortgage the house to pay higher‑priority charges.
• Attorney’s fees approval: Legal fees are paid from the estate when reasonable and typically approved by the clerk; they are not paid in advance.

What the Statutes Say

• North Carolina Gen. Stat. § 28A-19-6 (Order of payment of claims) – Sets the priority for paying claims against the estate.
• North Carolina Gen. Stat. § 28A-14-1 (Notice to creditors) – Requires publication and mailing of notice with at least a three‑month claim window.
• North Carolina Gen. Stat. § 28A-17-1 (Sale of real property to pay debts) – Authorizes a special proceeding to sell real estate when necessary to pay estate debts.
• North Carolina Gen. Stat. § 28A-23-3 (Commissions and allowances) – Addresses personal representative compensation and approval of necessary charges (including professional fees).

Analysis

Apply the Rule to the Facts: Because the house is the only meaningful asset, administration costs (court costs and clerk‑approved attorney’s fees) and property taxes may be paid from estate assets tied to the home. If there is still a shortfall after paying higher‑priority items (including any specific liens), the administrator may need court approval to sell or mortgage the house to pay the significant hospital debt. Family waivers of inheritance do not affect creditor rights; creditors can still force use of estate assets, including the house, if needed.

Process & Timing

1. Who files: The proposed administrator (you). Where: Clerk of Superior Court in the decedent’s county of domicile. What: Application for Letters of Administration (AOC‑E‑202), death certificate, and any required bond. After qualification, publish a Notice to Creditors and later file the Affidavit of Notice (AOC‑E‑307). When: Publish promptly after qualification; the notice must set a deadline at least three months from first publication.
2. Collect information on liens and debts, including county property taxes and the hospital bill. Do not pay lower‑priority claims before the claim period closes unless the estate is clearly solvent. File the inventory within three months of qualification; then determine available funds versus debts.
3. If cash is insufficient, file a special proceeding with the clerk to sell or, if beneficial, to mortgage the house to pay priority charges. If approved, complete the transaction, pay costs and liens in the proper order, and proceed to final accounting.

Exceptions & Pitfalls

• Heir waivers do not cut off creditor rights; the house remains subject to valid claims and liens.
• Property tax liens attach to the land and are paid before most other debts; ignoring them risks tax foreclosure.
• Do not pay claims out of order; paying a lower‑priority claim first can expose the administrator to personal liability.
• Send personal notice to known creditors (like the hospital and county tax office); failing to do so can keep claims alive beyond the publication deadline.
• If liquidity is the only issue, consider asking the clerk to authorize a mortgage or lease of the property rather than a sale.
• North Carolina does not impose a state estate tax for post‑2012 deaths; federal estate tax applies only to large estates, but filing obligations can change—confirm current requirements.

Talk to a Probate Attorney

If you’re trying to cover taxes and fees from the estate to keep a family home, our firm can help you assess priorities, timelines, and court options. Call us today.

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.