If an investment account names the trust, does it bypass probate and stay off the estate’s accounting? – North Carolina

Short Answer

In North Carolina, an investment or brokerage account that is properly titled or registered in the name of a living trust, or that designates a trust as a transfer-on-death (TOD) or payable-on-death (POD) beneficiary, usually passes outside formal probate. However, the personal representative may still need to disclose the account in the estate file for information or creditor issues, and trust-held assets are not reported on the estate’s inventories and annual accounts unless they actually pass through the estate.

Understanding the Problem

The narrow question is whether an investment account that names a trust avoids probate in North Carolina and whether that account must appear on the estate’s official accounting. Families often assume that if an investment firm shows “TOD to [Trust]” or titles the account in the name of a revocable living trust, the clerk of superior court and the estate’s creditors never see it. The concern is whether the personal representative can treat the account as completely separate from the probate estate and leave it off the inventories and annual accounts filed with the clerk.

Apply the Law

Under North Carolina law, assets that are validly owned by a trust before death, or that pass by contract to a trust at death (such as POD/TOD designations), are generally nonprobate transfers. The clerk of superior court oversees probate estates and requires inventories and accounts for assets that come into the personal representative’s hands, while most inter vivos trust assets are administered privately unless a statute or the trust instrument requires court oversight. Separate statutes also confirm that certain transfer-on-death registrations and POD accounts are effective outside of a will, even though they remain reachable in limited ways for creditor claims.

Key Requirements

Proper titling or beneficiary designation: The investment account must either be titled in the name of the trust during life or registered with a valid TOD/POD designation in favor of the trust under the institution’s rules and North Carolina statutes.
Asset does not pass under the will: If the account passes by contract or trust instrument at death, and never becomes property the personal representative collects or controls, it is treated as a nonprobate asset and is not part of the estate’s distributable probate property.
Inventory and accounting limited to estate assets: The personal representative’s inventories and annual/final accounts filed with the clerk generally cover only assets that come into the estate’s possession; trust assets and properly completed TOD/POD accounts normally are accounted for by the trustee, not in the estate’s probate filings.

What the Statutes Say

N.C. Gen. Stat. § 41-48 (Nontestamentary transfer on death) – provides that a transfer-on-death registration of securities is effective by contract and is not a will-based (testamentary) transfer, while still leaving the transferred interest liable for the decedent’s debts if the estate is insufficient.
N.C. Gen. Stat. § 54B-130.1 (POD accounts at savings and loan associations) – confirms that properly established POD accounts pass to the named beneficiaries at death and are not controlled by the will, subject to the personal representative’s limited right to pursue funds if the estate lacks assets to pay debts.
N.C. Gen. Stat. § 54C-166.1 (POD accounts at savings banks) – contains similar rules for POD accounts at savings banks, again treating the transfer as outside the will but subject to limited collection rights.

Analysis

Apply the Rule to the Facts: With no specific facts given, consider two common situations. First, if an individual creates a revocable living trust and retitles a brokerage account into the name of the trustee of that trust while alive, the account belongs to the trust at death. The personal representative does not collect it and does not list it as an estate asset in the probate inventory; the trustee accounts for it under trust law. Second, if an investment account stays in the individual’s name but is registered TOD to a trust, the account passes by contract at death. In that case, the personal representative usually lists it only, if at all, as an informational nonprobate item but does not treat it as estate property in the formal accounting, even though creditors may in some circumstances reach its value if estate assets are insufficient.

Process & Timing

Who files: The personal representative (executor or administrator). Where: Office of the Clerk of Superior Court in the North Carolina county where the estate is opened. What: Initial inventory of the decedent’s estate assets on the clerk’s standard inventory form, followed by annual and final accounts for assets that passed through the estate. When: The initial inventory is generally due within a set number of days after qualification, and follow-up accounts are due on the schedule set by Chapter 28A and local clerk practice.
The trustee, if a separate living trust exists, collects and manages any account titled in the trust’s name or payable to the trust as TOD/POD beneficiary, following the trust document’s terms. In North Carolina, trustees are usually not required to file accountings with the clerk unless the trust instrument or a statute requires it, so this process is often private and driven by the trust language.
The personal representative evaluates whether creditors have been or can be paid from probate assets. If the estate is insolvent and substantial nonprobate transfers (including to a trust) occurred, the personal representative may pursue recovery from beneficiaries or transferees under applicable statutes and common-law principles, but those collected amounts then appear in the estate accounting when received.

Exceptions & Pitfalls

If an account was never actually retitled to the trust or the TOD/POD paperwork was incomplete or inconsistent with North Carolina law or the institution’s requirements, the asset may still be treated as a probate asset that must be inventoried and accounted for.
Even when an account validly passes to a trust or other beneficiary outside probate, the value of that transfer can still matter for creditor claims; ignoring large nonprobate transfers in an insolvent estate can lead to disputes and possible surcharge claims against the personal representative.
For testamentary trusts (created under a will), North Carolina law can require the trustee to qualify and account with the clerk in some situations, so assets in such a trust may appear in the court file even though they are no longer part of the probate estate’s own accounts.

Conclusion

In North Carolina, an investment account that is correctly titled in the name of a living trust or properly designated TOD or POD to a trust generally bypasses formal probate and does not show up as a probate asset on the estate’s inventories and annual accounts. The personal representative reports only assets that actually come into the estate. The key step is to confirm how the account was titled or registered and then reflect that status accurately in the first inventory filed with the clerk of superior court.

Talk to a Probate Attorney

If an estate involves investment accounts, trusts, or transfer-on-death designations and there are questions about what must go on the North Carolina probate inventory or accounts, our firm has experienced attorneys who can help clarify what belongs in the estate file and what does not. 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 any specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If there is a deadline, act promptly and speak with a licensed North Carolina attorney.