What Expenses Should Not Be Paid Out of a Probate Estate in North Carolina?
Detailed Answer
When you administer a probate estate in North Carolina, you must use estate funds only for debts and expenses that benefit the estate or arise from the decedent’s obligations. North Carolina law outlines which costs you can pay out of estate assets and which you cannot.
Under N.C. Gen. Stat. § 28A-18-2, the personal representative may pay funeral expenses, debts entitled to preference, claims presented within deadlines, reasonable administrative costs and taxes owed by the decedent. The law also authorizes allowances to a surviving spouse and dependent children under N.C. Gen. Stat. § 28A-13-3.
Any cost that does not meet those criteria is not chargeable to the estate. Paying improper expenses can expose the personal representative to personal liability under N.C. Gen. Stat. § 28A-19-1 and may delay closing the estate under N.C. Gen. Stat. § 28A-13-2.
Key Categories of Disallowed Expenses
Below are the main categories of expenses you should not pay from probate assets:
- Personal debts of beneficiaries: Debts or bills belonging to heirs or devisees—such as personal credit card balances—do not fall on the estate.
- Post-distribution costs: Once assets pass out of probate, any expense related to those assets (repairs, taxes) is not estate responsibility.
- Non-binding charitable pledges: Promises to give to charities not included in the will or not legally enforceable cannot be charged.
- Personal income taxes of heirs: The estate may pay the decedent’s final income tax, but not taxes owed by beneficiaries on their inheritance.
- Improvements to estate property: Only reasonable repairs and maintenance necessary to preserve value qualify—upgrades or renovations do not.
- Costs of personal lawsuits: If an heir sues over personal matters unrelated to the estate, legal fees and judgments do not come from estate funds.
- Executor’s personal legal fees: Fees for matters other than estate administration (for example, defending a contest of the executor’s appointment) are not allowable.
- Unapproved allowances: Any distributions to family or dependents exceeding the statutory limits under N.C. Gen. Stat. § 28A-13-3 require court approval.
How to Protect Yourself as Personal Representative
Before you pay any claim, verify it in writing. File each creditor’s claim under N.C. Gen. Stat. § 28A-18-3. Send notice to known and potential creditors, and wait the required time. For any questionable expense, seek court guidance through a petition for instructions under N.C. Gen. Stat. § 28A-19-3. That way, you avoid personal exposure.
Checklist of Commonly Misunderstood Expenses
- Personal medical bills of beneficiaries
- Homeowners association fees after distribution
- Credit card charges of heirs
- Non-binding charitable commitments
- Executor’s personal disputes unrelated to estate
- Property improvements beyond necessary repairs
- Post-closing tax obligations of beneficiaries
Conclusion & Next Steps
Administering an estate requires careful attention to North Carolina’s probate laws. Paying improper expenses can lead to delays, disputes and personal liability. Pierce Law Group’s probate attorneys guide personal representatives through every step. Contact our team today for clear advice on which expenses an estate can and cannot cover.
Call us at (919) 341-7055 or email intake@piercelaw.com for a consultation.
