Do I need court approval before paying attorney fees or other bills out of the estate account? – North Carolina

Short Answer

Usually, a North Carolina personal representative can pay ordinary estate administration expenses and valid creditor claims from the estate bank account without getting a separate court order each time. The main exceptions are (1) payments that require the Clerk of Superior Court to set or approve the amount (most commonly personal representative commissions and certain attorney-fee situations), and (2) situations where paying too early could short higher-priority claims or create personal liability. When in doubt, many Clerks prefer a written petition and order for larger professional fees before the check is cut.

Understanding the Problem

Under North Carolina probate practice, the decision point is whether the personal representative can pay professional fees and other outstanding bills from the estate account while trying to finish administration and close the estate. The question usually comes up when there are still open creditor issues (like medical bills), the estate needs to liquidate an asset (like a vehicle) to create cash, and the personal representative wants to avoid paying something that later gets questioned by the Clerk of Superior Court during the final accounting.

Apply the Law

In North Carolina, the personal representative administers the estate under the supervision of the Clerk of Superior Court. Many payments can be made during administration, but the personal representative must (1) pay expenses and claims in the correct legal priority, (2) keep documentation for the accountings filed with the Clerk, and (3) obtain Clerk approval when the law or local practice requires it (most often for fiduciary compensation and certain attorney-fee approvals). If the estate pays the wrong claim first and later cannot pay a higher-priority claim, the personal representative can face objections and potential personal exposure.

Key Requirements

Pay in the right priority order: Estate administration costs generally come first, but the estate still must follow North Carolina’s claim-priority rules when multiple creditors exist.
Use estate funds only for estate purposes: Payments should match a legitimate estate expense or a properly handled claim, and each payment should be supported by invoices, engagement letters, and proof of payment.
Be able to justify the payment to the Clerk: Even when a separate order is not required, the payment must be reasonable and defensible when shown on an annual or final account.

What the Statutes Say

N.C. Gen. Stat. § 7A-307 (Costs in administration of estates) – Authorizes certain costs in estate administration and recognizes that counsel fees may be assessed “as provided by law.”
N.C. Gen. Stat. § 32-59 (Compensation of other fiduciaries) – Provides that certain fiduciaries are entitled to reasonable compensation upon written request to the clerk, in an amount determined by the clerk.
N.C. Gen. Stat. § 32-61 (Counsel fees allowable to attorneys serving as fiduciaries) – Allows the clerk, in the clerk’s discretion, to approve counsel fees to an attorney who is also serving as a fiduciary when the legal work is beyond ordinary fiduciary services.

Analysis

Apply the Rule to the Facts: Here, the estate has outstanding professional fees and at least one medical creditor claim, and the personal representative plans to sell a vehicle to create cash in the estate account. Paying routine, well-documented administration expenses from the estate account is commonly allowed during administration, but the personal representative should avoid making distributions to heirs until higher-priority expenses and valid claims are handled. For attorney fees and other professional fees, the safest approach is to confirm the local Clerk’s expectations (some Clerks approve through the accounting; others prefer a petition and order first), especially if the amount is significant or a dispute is possible.

Process & Timing

Who files: The personal representative. Where: The Clerk of Superior Court (Estates Division) in the county where the estate is being administered in North Carolina. What: If the county requires it for larger professional fees, a written petition requesting approval to pay counsel fees (and sometimes other professional fees) with a proposed order; otherwise, the payments are typically shown and supported in the next accounting. When: Before paying significant professional fees if local practice expects pre-approval, and in all cases before filing the final account and requesting to close the estate.
Handle creditor claims before distributions: Track the creditor-claim window, confirm which claims are accepted/denied/negotiated, and pay allowed claims in the proper priority order. If funds are limited, payments within a class are generally handled proportionally rather than picking favorites.
Close out with a final account: After administration tasks are complete (including liquidating assets like the vehicle if needed), the personal representative files a final account showing all receipts and disbursements, with supporting documentation, and requests the Clerk’s approval to close.

Exceptions & Pitfalls

Fiduciary compensation and attorney-as-fiduciary fees: When the personal representative seeks commissions or when an attorney is serving as the fiduciary and also requesting counsel fees for legal work beyond ordinary administration, the Clerk’s approval is typically required and should be documented with a written request and order.
Large or disputed professional bills: Even if a statute does not require a separate order for every invoice, a Clerk may expect a petition and order before payment when the amount is significant or an interested person is likely to object.
Paying the wrong claim first: Medical bills are usually general unsecured claims unless tied to a lien. If the estate pays lower-priority claims or makes distributions and later cannot pay higher-priority items, the personal representative may have to explain the decision to the Clerk and may face objections.
Tax timing confusion: Final income taxes and any estate income tax filings can affect when an estate is truly ready to close. Tax questions are fact-specific; a tax attorney or CPA should be consulted to confirm what returns are required and when they should be filed before final distribution.

Conclusion

In North Carolina, a personal representative can often pay ordinary estate expenses and properly handled creditor claims from the estate account without a separate court order for each payment, but the payments must be reasonable, documented, and made in the correct priority order. Clerk approval is commonly required (or strongly preferred) for fiduciary commissions and for certain attorney-fee requests, especially when the amounts are significant or could be disputed. The most practical next step is to submit a written fee-approval request to the Clerk of Superior Court before paying large professional fees and before filing the final account to close the estate.

Talk to a Probate Attorney

If you’re dealing with paying attorney fees, medical bills, and other estate expenses while trying to close a North Carolina probate estate, our firm has experienced attorneys who can help explain the options, the paperwork the Clerk may expect, and the timing issues that can delay closing. 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.