Can someone living in a trust-owned house use the trust checking account to pay bills without the other beneficiaries’ approval? – North Carolina

Short Answer

Usually not—unless that person is the trustee (or an authorized co-trustee/agent) and the trust terms allow the payment. In North Carolina, the trustee controls the trust checking account and must use trust money only for proper trust purposes and in the beneficiaries’ interests. A beneficiary who is simply living in trust property generally has no right to spend trust funds without trustee authority, even if they have online access to the account.

Understanding the Problem

In a North Carolina trust administration, can a beneficiary who is living in a trust-owned house pay ongoing bills from the trust checking account without the other beneficiaries’ approval? The key decision point is whether the person paying bills has legal authority to act for the trust (for example, as trustee or authorized signer) versus being only an occupant/beneficiary with access. The question also turns on whether the payments are legitimate trust expenses (like property taxes and insurance) or personal expenses that should not be charged to the trust.

Apply the Law

Under North Carolina law, the trustee administers the trust and controls trust property, including bank accounts. The trustee must follow the trust document, act in good faith, and manage trust assets for the benefit of the beneficiaries—not for one beneficiary’s personal convenience. Beneficiaries can request information and an accounting, and the clerk of superior court can handle certain “internal affairs” trust proceedings such as compelling accountings and reviewing trustee fees, while damages-type claims (like breach of fiduciary duty) generally belong in superior court.

Key Requirements

• Authority to spend trust funds: The person paying bills must have actual legal authority (typically as trustee, co-trustee, or properly authorized agent/signer) to make payments from the trust account.
• Proper trust purpose: Payments must be reasonable and connected to administering the trust or preserving trust property (for example, insurance, property taxes, necessary utilities, or repairs), not personal living expenses unless the trust clearly authorizes that benefit.
• Accountability and records: The trustee must keep records and be prepared to explain and document trust expenditures through reporting/accounting when required by the trust, by statute, or by court order.

What the Statutes Say

• N.C. Gen. Stat. § 33B-15 (Accounting by custodial trustee) – In custodial trust situations, allows beneficiaries and other interested persons to seek accountings and permits court oversight of the trustee’s acts.
• N.C. Gen. Stat. § 33B-7 (General duties of custodial trustee) – Requires recordkeeping and making records available at reasonable times in custodial trust administration.
• N.C. Gen. Stat. § 33B-9 (Use of custodial trust property) – Addresses distributions and, in limited custodial trust contexts, when a beneficiary may draw checks as distributions.

Analysis

Apply the Rule to the Facts: Here, a co-beneficiary is living in trust property and has online access to a trust checking account and is paying bills from that account. If that person is not the trustee (and not otherwise authorized to sign for the trust), paying bills from the trust account without trustee approval is typically improper because beneficiaries do not control trust funds. Even if some bills relate to the house, the trustee generally must decide what gets paid, ensure the expense is reasonable and for a trust purpose, and keep records that can be explained to the other beneficiaries.

Process & Timing

1. Who acts first: The trustee (or a beneficiary through a written request). Where: Trust administration is handled through the trustee; certain internal trust disputes (like compelling an accounting) are commonly brought before the Clerk of Superior Court in the county with proper venue. What: A written demand for records/accounting and bank statements, followed by a trust proceeding if the issue is not corrected. When: As soon as questionable spending is discovered, because delay can make tracing and recovery harder.
2. Next step: If the spending appears unauthorized, the trustee can revoke access with the bank, change online credentials, and require that all future payments go through the trustee (or through a written, pre-approved budget). The trustee can also request reimbursement if trust funds were used for non-trust purposes.
3. Final step: If the dispute continues, a beneficiary may seek court relief such as an accounting, instructions to the trustee, or other remedies aimed at stopping misuse and restoring trust funds. Depending on the claims, the matter may proceed before the clerk (internal affairs) or in superior court (damages-type claims like breach of fiduciary duty).

Exceptions & Pitfalls

• The trust terms may authorize payments: Some trusts expressly allow a beneficiary-occupant to have certain expenses paid (or to receive distributions) while living in the home. Without reading the trust, it is easy to assume a payment is “allowed” when it is not.
• Confusing “access” with “authority”: Having online login credentials or being an authorized bank user is not the same as having legal authority under the trust to treat the money as personal funds.
• Mixing personal and trust expenses: Utilities, repairs, and improvements can be gray areas. A trustee typically needs a clear paper trail showing why each payment served the trust (preserving the property, complying with insurance requirements, preventing waste) rather than subsidizing one beneficiary.
• Recordkeeping gaps: Missing invoices, unclear memo lines, and cash-like transfers can create suspicion and increase the risk of court involvement.

Related reading may be helpful when the issue involves transparency and oversight, including a copy of the trust and an accounting and what to do when trust assets may have been misappropriated.

Conclusion

In North Carolina, a beneficiary living in a trust-owned house generally cannot use the trust checking account to pay bills without proper authority from the trustee (or authority granted by the trust). The trustee controls trust funds and must ensure payments are reasonable, for a trust purpose, and properly documented. The practical next step is to request bank statements and a written accounting from the trustee and, if the issue is not corrected, file a proceeding with the Clerk of Superior Court to compel an accounting and seek instructions or other appropriate relief.

Talk to a Probate Attorney

If a trust beneficiary is living in trust property and using a trust checking account to pay bills, our firm has experienced attorneys who can help clarify who has authority, what expenses the trust can properly pay, and what steps can be taken to protect the trust and document transactions. Call us today at [CONTACT NUMBER].

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.