Which assets pass outside probate to a surviving spouse in North Carolina?
1. Detailed Answer
When a spouse dies in North Carolina, certain assets transfer automatically to the surviving spouse without entering the probate estate. These transfers occur by operation of law or by beneficiary or transfer-on-death designations. Understanding which assets bypass probate can help your family avoid delays, reduce costs, and ensure a smooth transfer of wealth.
Below are the primary categories of assets that pass outside probate:
- Tenancy by the Entirety: Property held in this form of ownership—available only to married couples—passes directly to the surviving spouse by right of survivorship. North Carolina recognizes and enforces this interest. See N.C.G.S. § 41-2.
- Joint Tenancy with Right of Survivorship: Real estate or personal property titled jointly with right of survivorship transfers automatically to the surviving joint tenant. Although based on common-law principles, it remains a reliable probate-avoidance tool.
- Payable-on-Death (POD) and Transfer-on-Death (TOD) Accounts: Bank and brokerage accounts may name a beneficiary to receive funds at death. These designations override a will and pass outside probate under N.C.G.S. § 54C-5-2.
- Transfer on Death Deeds: Real estate may use a TOD deed to name a beneficiary who receives the property title after death, bypassing probate. North Carolina codified this process in N.C.G.S. § 47-17.
- Life Insurance and Retirement Benefits: Policies and accounts governed by beneficiary designations (e.g., IRAs, 401(k)s) pay proceeds directly to named beneficiaries. North Carolina law defers to the plan document or contract, not probate, to distribute these assets. See N.C.G.S. Chapter 58, Article 10.
- Revocable Living Trusts: Assets titled in a living trust avoid probate because the successor trustee distributes trust property under the trust terms immediately after death.
2. Key Assets That Pass Outside Probate
- Real estate held as tenancy by the entirety
- Joint bank or investment accounts with right of survivorship
- Payable-on-Death bank and brokerage accounts
- Transfer-on-Death deeds for real property
- Life insurance policies with named beneficiaries
- Retirement plan benefits (IRAs, 401(k)s) with beneficiary designations
- Assets held in a revocable living trust
By using these tools, spouses in North Carolina can ensure a faster transfer of assets, minimize court involvement, and reduce legal costs. Proper titling and regular review of beneficiary designations are critical to avoid unintended consequences in your estate plan.
Ready to plan ahead or review your existing estate plan? The attorneys at Pierce Law Group have extensive experience guiding families through probate and estate planning. Contact us today to protect your legacy. Email us at intake@piercelaw.com or call (919) 341-7055.
