Probate Q&A Series

How Are Legal Fees Collected and Trust Funds Managed During North Carolina Probate Administration?

1. Detailed Answer

Collection of Legal Fees in Probate

When someone dies in North Carolina, a personal representative steps in to handle probate. The representative hires an attorney to guide the estate through court processes. To pay for those legal services, the estate must cover reasonable attorney fees and court costs out of its assets.

Under North Carolina law, the personal representative first gathers all estate assets, such as bank accounts, real estate proceeds, investment accounts, and personal property. The representative deposits liquid assets into an estate account at a bank. This account serves two purposes: it preserves funds for payment of debts and expenses, and it holds cash until final distribution to beneficiaries.

To secure the attorney’s fees, the personal representative files a petition with the clerk of superior court. That petition outlines the work performed, the hours spent, and the hourly rate or agreed flat fee. The court reviews the petition for reasonableness. If approved, the clerk issues an order authorizing payment from the estate account.

Statutory guidance for fees of the personal representative and attorneys can be found in Chapter 28A of the North Carolina General Statutes. Specifically:

  • G.S. 28A-15-1 sets out basic allowances for services or costs incurred.
  • G.S. 28A-15-2 details the percentage commissions a personal representative may collect and authorizes reasonable attorney fees.

Once the court signs off, the personal representative writes a check from the estate account to the law firm. The payment appears on the estate’s accounting, which the court reviews before finalizing the probate process.

Management of Trust Funds During Probate

Sometimes a will or court order requires holding money in trust rather than distributing it outright. Common examples include trusts for minor children or for beneficiaries with special needs. In those cases, the probate court may appoint the personal representative or a third-party trustee to manage the funds.

North Carolina’s Uniform Trust Code (Chapter 36C of the General Statutes) sets rules for managing any trust:

  • G.S. 36C-5-501 requires a trustee to invest and manage trust assets as a prudent person would, considering the purposes of the trust and the needs of beneficiaries.
  • Trust property must remain separate from personal funds. Most trustees open a dedicated trust account at a bank or use a corporate fiduciary.
  • Trustees must keep clear records and provide periodic accountings to the court and beneficiaries. Accountings show all income, expenses, distributions, and investment changes.

If the plaintiff chooses a corporate trustee (like a bank’s trust department), that institution follows both the Uniform Trust Code and any internal trust policies. The court oversees compliance and may remove or replace a trustee for breach of duty.

2. Key Takeaways

  • Legal fees in probate come out of the estate account after court approval of a fee petition.
  • Personal representatives use statutory guidelines in Chapter 28A to calculate commissions and attorney fees.
  • Trust funds held during probate require a separate account and strict adherence to the Uniform Trust Code (Chapter 36C).
  • Trustees owe a “prudent person” duty in selecting investments and must report regularly to the court and beneficiaries.
  • Clear record-keeping and court oversight protect assets and ensure beneficiaries receive their proper shares.

Need Help with Probate or Trust Administration?

Handling legal fees and managing trust funds during probate can feel overwhelming. Pierce Law Group’s attorneys have guided many families through this process. We know the rules, deadlines, and best practices under North Carolina law. Let us help you. Contact our team today:

We stand ready to protect the estate assets and serve your loved ones with integrity and efficiency.