How can I cover the mortgage, utilities, taxes, and insurance on a house the heirs want to keep or rent during probate—can estate funds be used for those costs? – North Carolina

Short Answer

Often, yes—during a North Carolina probate, the executor can usually use estate funds to pay reasonable costs needed to preserve and protect estate property, including a house. That commonly includes hazard insurance, property taxes, and basic utilities, and it may include mortgage payments when paying them helps prevent default or foreclosure and protects the estate’s value. The executor should treat these payments as estate administration expenses, keep clear records, and avoid using probate funds to subsidize a beneficiary’s personal housing costs.

Understanding the Problem

In North Carolina probate, can an executor pay ongoing house expenses (mortgage, utilities, property taxes, and insurance) from estate funds while the estate is open when the beneficiaries want to keep the home or rent it out? When does paying those bills count as protecting estate property versus paying a beneficiary’s personal expenses, and what timing and documentation issues matter while the Clerk of Superior Court oversees the estate administration?

Apply the Law

In North Carolina, the executor (personal representative) has a duty to gather, manage, and protect estate assets during administration and to pay valid estate expenses and claims in the proper order before distributing inheritances. For a house that remains in the estate during probate, the executor will typically treat necessary carrying costs—like insurance and taxes—as part of preserving the property. Mortgage payments can also be appropriate when they are needed to prevent loss of the property or avoid damage to the estate, but the executor must be careful not to use estate funds to provide ongoing personal benefits to one beneficiary at the expense of others.

Key Requirements

Estate purpose (preservation, not personal benefit): The payment should protect or maintain the estate’s property (for example, keeping insurance in force or preventing a tax foreclosure), not simply cover someone’s personal living expenses.
Authority and documentation: The executor should pay from an estate account when possible, keep invoices and proof of payment, and record the reason for each payment so it can be shown on the estate accounting.
Cash-flow and priority awareness: The executor must still be able to pay higher-priority estate obligations as they come due and should not drain estate cash in a way that prevents proper administration.

What the Statutes Say

N.C. Gen. Stat. § 45-21.31 (Disposition of proceeds of foreclosure sale) – Shows that unpaid property taxes and the secured debt are addressed from sale proceeds in a foreclosure context, underscoring why keeping taxes and secured obligations current can protect the estate’s equity.
N.C. Gen. Stat. § 7A-307 (Costs in administration of estates) – Identifies court costs and other administration-related expenses that can arise in an estate and must be tracked and paid as part of administration.

Analysis

Apply the Rule to the Facts: Here, the estate includes a mortgaged house, and the executor is managing the estate for multiple beneficiaries, including minor beneficiaries. Paying hazard insurance and property taxes generally fits the executor’s job of protecting estate property. Mortgage and utilities can also be appropriate if they are needed to prevent default, keep the home in marketable condition, or support an approved plan to rent the property for the estate’s benefit, but the executor should avoid paying ongoing “living expenses” for any beneficiary who is occupying the home unless there is a clear estate benefit and a documented arrangement (for example, rent paid to the estate).

Process & Timing

Who files: The executor (personal representative). Where: The Clerk of Superior Court (Estates) in the county where the estate is opened in North Carolina. What: Open an estate account and pay property bills from that account with clear memo lines and saved invoices. When: As bills come due; insurance lapses and tax delinquency can create fast, avoidable risk.
Track and categorize each payment: Record whether the payment is (a) property preservation/maintenance, (b) a secured debt payment (mortgage), or (c) a utility/operating cost tied to safeguarding the property or producing rental income. Keep a simple ledger that matches the estate accounting categories.
Decide the “house plan” early: If the beneficiaries want to keep the home, consider whether someone will refinance or assume payments after distribution. If the plan is to rent, treat the home like an estate business asset: written lease, rent deposited to the estate account, and expenses paid from the estate account.

Exceptions & Pitfalls

Occupancy without rent: If a beneficiary (or someone connected to a beneficiary) lives in the home during probate without paying fair rent, paying utilities and mortgage from estate funds can create disputes because it can look like an unequal “advance” to that person.
Mixing probate and non-probate money: A TOD account and an IRA with named beneficiaries usually pass outside probate. Those funds are not automatically available to pay probate house expenses unless they are payable to the estate or voluntarily contributed by the recipient.
Paying the mortgage when the estate cannot afford it: If the estate lacks liquidity, continuing mortgage payments may not be sustainable. In that situation, the executor may need a different plan (sale, short-term occupancy agreement with rent, or beneficiary contributions) to avoid harming other estate obligations.
Minor beneficiaries: When minors are beneficiaries, the executor should be especially careful about documentation and fairness. Decisions that reduce the estate for the benefit of one adult beneficiary can draw scrutiny.
Unclear authority for major decisions: Renting the home can be beneficial, but it should be done in a way that is defensible on the estate accounting. When in doubt, getting guidance before committing to a long-term lease can prevent later objections.

For more on careful recordkeeping when someone has been fronting bills, see documenting and requesting reimbursement for household bills paid after death. For a broader overview of what happens next in an estate, see what the probate process looks like and the next steps.

Conclusion

In North Carolina probate, an executor can usually use estate funds to pay reasonable, necessary costs to preserve an estate-owned home—most commonly insurance and property taxes, and sometimes mortgage and utilities when they protect the property or support a legitimate rental plan. The key is purpose and documentation: the payments should protect the estate, not subsidize a beneficiary. The next step is to pay these bills from a dedicated estate account and record each payment clearly on the estate ledger for the Clerk of Superior Court accounting.

Talk to a Probate Attorney

If you’re dealing with ongoing house bills during probate and trying to keep the property while staying fair to all beneficiaries, 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.