Short Answer

Yes—if the home sits in a revocable trust that became irrevocable at death, those trust assets are available to pay valid estate debts in North Carolina. But do not bypass the estate’s creditor process. Have a personal representative (full or limited) publish notice to creditors, determine which claims are valid, and pay in the statutory priority. A trustee usually does not need a court order to sell trust real estate, but coordination with the personal representative is essential before using sale proceeds to pay claims.

Understanding the Problem

You are the trustee of a trust that holds title to a family home. The easement issue is resolved, and you want to sell the property and use the proceeds to pay estate creditors. You are unsure whether you need a court petition because the trust—not the estate—owns the house, and you need to understand the total debt, timing, and sale steps to plan next moves.

Apply the Law

Under North Carolina law, assets in a revocable trust (now irrevocable at the settlor’s death) remain available to satisfy the settlor’s debts. The personal representative (PR) of the estate—not the trustee—runs the creditor process: publishing and mailing notices, receiving and allowing or rejecting claims, and paying them by legal priority. Trustees generally may sell trust property under the trust’s terms without a court order, but should not pay claims until the creditor window closes and the PR confirms amounts and priority. The main forum for the creditor process is the Clerk of Superior Court in the county of the decedent’s domicile, and the core deadline is the claims bar date (at least three months from first publication of notice).

Key Requirements

• Trust assets subject to settlor’s debts: If the trust was revocable at death, its property can be used to pay valid estate claims.
• Creditor process through a PR: A personal representative (full or limited) must give notice to creditors, receive claims, and determine validity and priority.
• Payment by statutory priority: Pay costs of administration and higher-priority claims first; general unsecured claims share pro rata and cannot be preferred within their class.
• Wait for the claims window: Do not pay before the claims period closes unless the estate is clearly solvent; early payments risk personal liability if funds run short.
• Trustee sale authority: Trustees typically may sell trust real estate without a court order if the trust instrument authorizes it; use a certification of trust at closing and keep detailed records.

What the Statutes Say

• North Carolina Gen. Stat. § 36C-5-505 (Trust assets subject to settlor’s creditors) – Trust property of a revocable trust is available to satisfy the settlor’s debts.
• North Carolina Gen. Stat. § 28A-14-1 (Notice to creditors) – The PR must publish and, for known creditors, mail notice to start the claims period.
• North Carolina Gen. Stat. § 28A-19-3 (Non-claim statute) – Sets the deadlines that bar untimely claims against the estate.
• North Carolina Gen. Stat. § 28A-19-6 (Order of payment) – Lists the required priority for paying claims.

Analysis

Apply the Rule to the Facts: Because the home is titled to a revocable trust that became irrevocable at death, you can use sale proceeds to pay valid estate debts after the creditor process runs. A PR (full or limited) should publish and mail required notices so you know the claim amounts and deadlines. Once the claims window closes, coordinate with the PR to pay allowed claims in the statutory order using the trust proceeds. You generally will not need a court order to sell the trust home if the trust grants sale authority.

Process & Timing

1. Who files: A personal representative (executor/administrator or limited PR). Where: Clerk of Superior Court in the decedent’s county of domicile. What: Open an estate (full or limited PR) and publish notice to creditors; file the Affidavit of Notice to Creditors (AOC-E-307). When: Publish promptly; creditors must have at least three months from first publication to present claims, and known creditors who receive mailed notice have 90 days if that date is later.
2. Trustee sale: List and sell the trust-owned home using the trustee’s authority in the trust. Provide a certification of trust at closing, resolve any liens, and hold proceeds in the trust pending the end of the claims period and PR direction. Timing for marketing and closing follows normal real estate practice.
3. Payment and wrap-up: After the claims window closes, the PR identifies allowed claims and their priority. Use trust proceeds to pay approved claims in order; reserve for taxes and expenses; document payments; then proceed with trust distributions per the trust terms.

Exceptions & Pitfalls

• If the trust was not revocable at death, creditor reach can be limited; confirm the trust’s status and terms before paying claims.
• Paying before the claims period closes risks underfunding higher-priority or later-filed claims; trustees and PRs can face personal liability for misapplied payments.
• Some claims (federal/state taxes, perfected liens) have special treatment; satisfy secured or higher-priority claims first.
• Do not prefer one general unsecured creditor over another; if funds are short, they share pro rata within the class.
• Keep proceeds segregated in a fiduciary account and maintain detailed records; provide the PR with invoices and proof of payment.

Talk to a Probate Attorney

If you’re dealing with a trust-owned home and need to pay estate creditors, our firm has experienced attorneys who can help you understand your options and timelines. 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.