FAQ: Paying Estate Expenses and Creditor Claims Before Heirs Receive Assets in North Carolina

Detailed Answer

Under N.C. Gen. Stat. Chapter 28A, a personal representative (PR) — either an executor named in a will or an administrator appointed by the clerk of superior court — must follow a strict sequence before handing assets to heirs. Skipping steps can create personal liability for the PR and delay closing the estate.

1. Qualify and Secure Authority

• Apply for appointment. The PR files the will (if any), an application, and an oath with the clerk of superior court. After approval, the clerk issues Letters Testamentary or Letters of Administration (G.S. 28A-7-1).
• Open an estate bank account. Use the estate’s EIN, never the PR’s Social Security number.

2. Identify & Secure Estate Property

• Take control of all probate assets (real estate if the will gives a power of sale, bank accounts, vehicles, etc.).
• File the Inventory. Within three months, the PR files a verified inventory listing each asset and its value (G.S. 28A-20-1).

3. Notify Creditors

• Publish Notice to Creditors. Within 30 days of qualification, the PR must publish once a week for four consecutive weeks in a county newspaper (G.S. 28A-14-1).
• Mail notice to known creditors. Send by certified mail to anyone the PR believes has a claim.
• 90-day claim window. Creditors have three months from the first publication date to present claims (G.S. 28A-19-3).

4. Review, Classify, and Pay Claims

After the claim period closes, the PR ranks valid claims under the statutory priority list in G.S. 28A-19-6:

1. Costs of estate administration — court costs, attorney fees, PR commissions.
2. Funeral expenses (up to $4,500 unless the court allows more).
3. Year’s allowance to surviving spouse and dependent children (G.S. 30-15 et seq.).
4. Federal and state taxes.
5. Medical expenses of the last illness.
6. All other valid debts, paid pro-rata if money is short.

If assets are insufficient, the PR may need to sell personal property (G.S. 28A-15-1) or petition the clerk to sell real estate (G.S. 28A-17-2).

5. File Accountings

• Annual or Final Account. The PR must submit a verified accounting showing every receipt, disbursement, and distribution (G.S. 28A-21-1).
• The clerk audits the account, may ask for receipts, and issues an order approving it.

6. Distribute Remaining Assets to Heirs

• Once debts, taxes, and expenses are paid and the clerk approves the final account, the PR passes remaining property to beneficiaries named in the will, or to intestate heirs under G.S. 29-15 et seq.
• Obtain signed receipts and releases from each heir.

7. Close the Estate

• File a petition for discharge after the final account is approved (G.S. 28A-23-2).
• The clerk issues an order relieving the PR of further duties.

Helpful Hints

• Keep digital copies of every receipt and canceled check. The clerk can demand proof at any time.
• Never mix funds. All income and expenses must flow through the estate account.
• Calendar the 90-day creditor deadline the moment you publish notice.
• Ask the clerk’s office before selling real estate if the will lacks a power of sale.
• File tax returns on time. Failure to do so can trigger penalties that outrank heirs in priority of payment.

Need guidance? Properly handling claims protects heirs and the personal representative alike. Our North Carolina probate team can walk you through each step, prepare filings, and negotiate creditor issues. Call us at (919) 341-7055 today for a confidential consultation.