Short Answer

List the transaction on the Annual Account (AOC-E-506), attach vouchers (e.g., bank statements, canceled checks, tax bill marked paid), and show how you corrected it. Under North Carolina law, you can either reimburse the estate by depositing the funds back and documenting the receipt, or treat the payment as distributions to the heirs and obtain signed receipts (AOC-E-521) from each. Include a brief verified explanation so the Clerk understands the error and correction.

Understanding the Problem

In North Carolina probate, a personal representative must account for every estate receipt, disbursement, and distribution. Here, the personal representative paid county property taxes from an estate account on a home that passed directly to three heirs and is not part of the probate estate. The question is: how do you document the correction—either by reimbursing the estate or by recording the payment as distributions to the heirs—on the annual court accounting?

Apply the Law

North Carolina requires personal representatives to file annual accounts with the Clerk of Superior Court until the estate closes. The account must itemize receipts, disbursements, and distributions, and it must be supported by vouchers or verified proof. Real property that passes directly to heirs is generally not a probate asset; its post-death expenses are typically the heirs’ responsibility. If estate funds were used by mistake, you may either deposit a reimbursement back to the estate or classify the payment as distributions to the heirs with signed receipts.

Key Requirements

• Account the transaction: Enter the date, payee, description, and amount on the Annual Account (AOC-E-506), showing both the original withdrawal and the corrective entry.
• Provide vouchers: Attach proof for each entry (e.g., tax bill marked paid, canceled check or bank image, deposit slip, monthly statement).
• Choose a correction method: Either reimburse the estate (record as a receipt) or treat the payment as distributions to each heir (record distribution amounts for each).
• Get signed receipts for distributions: Use beneficiary receipts (AOC-E-521) acknowledging that the tax payment satisfied part of each heir’s share.
• Explain briefly under oath if needed: Provide a short verified statement describing the mistaken withdrawal and the corrective approach.
• File on time in the proper forum: File with the Clerk of Superior Court; annual accounts are due by the 15th day of the fourth month after the estate’s fiscal year closes.

What the Statutes Say

• North Carolina Gen. Stat. § 28A-21-1 (Annual accounts) – Requires annual accounts and production of vouchers.
• North Carolina Gen. Stat. § 28A-21-3 (Contents of accounts) – Lists information each account must include.
• North Carolina Gen. Stat. § 28A-21-5 (Vouchers and verified proof) – Permits verified proof if vouchers are unavailable.
• North Carolina Gen. Stat. § 28A-15-2 (Title to property of decedent) – Real property generally vests in heirs at death.

Analysis

Apply the Rule to the Facts: Because the home passed directly to the three heirs, post-death property taxes are their obligation. If the estate account paid those taxes, either (1) deposit a reimbursement back into the estate and list that deposit as a receipt with supporting bank proof, or (2) classify the tax payment as distributions to the heirs in their respective shares and collect signed receipts acknowledging the distribution was satisfied by the tax payment. Attach the tax bill marked paid and the bank documents as vouchers, plus a short verified explanation.

Process & Timing

1. Who files: Personal representative. Where: Clerk of Superior Court, Estates Division, in the county where the estate is pending. What: Annual Account (AOC-E-506) with vouchers; beneficiary receipts (AOC-E-521) if treating the payment as distributions; brief verified statement explaining the error and correction. When: File the Annual Account by the 15th day of the fourth month after the estate’s fiscal year ends.
2. Respond promptly to any follow-up from the Clerk. The Clerk audits accounts and may request additional proof or signed receipts before approval.
3. After approval, the account is recorded. Keep all vouchers and receipts; you will need the same level of documentation for the final account.

Exceptions & Pitfalls

• If real property is part of the estate: When a will or court order places the home under estate control, certain property expenses may be estate obligations—document those as estate disbursements with vouchers.
• Insolvent estates: Do not treat payments as beneficiary distributions until valid claims and expenses have priority; distributions may be improper if creditors remain unpaid.
• Missing vouchers or receipts: Without a tax bill marked paid, bank images, and signed beneficiary receipts (for distribution treatment), the Clerk may not approve the account. Use verified proof if a voucher is unavailable.
• Commingling: Avoid running non-estate property income/expenses through the estate account going forward; this invites audit issues.

Talk to a Probate Attorney

If you’re correcting an estate accounting entry and need to document a reimbursement or beneficiary distribution, our firm has experienced attorneys who can help you understand your options and timelines. Call us today to discuss your situation.

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.