Short Answer

In North Carolina, if an estate stays open more than one year, the personal representative must file an annual account with the Clerk of Superior Court using the AOC-E-506 form. It’s due by the 15th day of the fourth month after the estate’s selected fiscal year ends and must include all receipts, disbursements, distributions, and supporting vouchers/receipts. If estate funds covered expenses tied to property that passed outside probate, show either reimbursement to the estate or record those amounts as distributions to the rightful recipients.

Understanding the Problem

You’re the personal representative in North Carolina and must file an annual account with the Clerk of Superior Court. You also need to show how to handle estate funds used to pay property taxes on a home that passed directly to three heirs and is not part of the probate estate.

Apply the Law

North Carolina requires an annual account when an estate remains open beyond one year. The personal representative selects the estate’s fiscal year on the first annual account, and each year thereafter must file by the 15th day of the fourth month after that fiscal year ends. The account must itemize all money and property received, all payments and distributions made, and what remains on hand. You must attach vouchers or verified proof for disbursements and signed receipts for distributions. The Clerk of Superior Court audits these filings.

Key Requirements

• Trigger and deadline: If the estate is open past one year, file annually by the 15th day of the fourth month after the chosen fiscal year ends.
• Form and contents: Use ACCOUNT (AOC-E-506) and list period covered, all receipts/income, disbursements/charges, distributions, and balance remaining.
• Proof: Provide vouchers for disbursements (e.g., canceled checks, bills marked paid) or sworn proof if needed, and signed beneficiary receipts (AOC-E-521) for distributions.
• Real property nuance: Real estate often passes to heirs outside probate; if estate funds paid those expenses, treat as a distribution to the heirs or reimburse the estate and document it.
• Clerk review and fees: Clerk audits the account; fees may be due on newly reported personal property under court cost rules.

What the Statutes Say

• North Carolina Gen. Stat. § 28A-21-1 (Annual accounts) – Requires annual accounts and supporting proof; sets timing tied to fiscal year-end.
• North Carolina Gen. Stat. § 28A-21-3 (Contents of account) – Lists what every account must show, including receipts, disbursements, distributions, and balance.
• North Carolina Gen. Stat. § 28A-21-4 (Failure to account) – Authorizes the clerk to compel filing and impose remedies for noncompliance.
• North Carolina Gen. Stat. § 7A-307 (Court costs in estates) – Sets fees, including on new personal property reported.

Analysis

Apply the Rule to the Facts: You must file an annual account because the estate remains open beyond a year, using AOC-E-506, by the 15th day of the fourth month after your selected fiscal year ends. List the erroneous withdrawal and the portion returned as a receipt back to the estate. For the taxes paid on a home that passed to the heirs outside the estate, either reimburse the estate or record those payments as distributions to the three heirs, with signed receipts and affidavits explaining the transaction.

Process & Timing

1. Who files: Personal representative. Where: Clerk of Superior Court, Estates Division, in the county of administration. What: ACCOUNT (AOC-E-506) with bank statements, vouchers (receipts, canceled checks), and signed RECEIPT (AOC-E-521) forms for distributions; affidavits explaining any errors. When: File by the 15th day of the fourth month after the estate’s fiscal year ends; select the fiscal year on your first annual account.
2. The Clerk audits the account. Be ready to provide additional documentation (e.g., invoices, ledgers, affidavits) if requested. Review times vary by county.
3. After approval, the clerk records the account. If this is not the final account, continue to safeguard estate assets and file the next annual account on time until the final account is approved.

Exceptions & Pitfalls

• Choosing the fiscal year: You select the estate’s fiscal year on the first annual account; you cannot pick an end date more than 12 months from the date of death.
• Missing proof: Every disbursement needs a voucher or sworn proof; every distribution needs a signed receipt. If a voucher is lost, be ready to file a sworn statement describing the loss and contents.
• Non-estate real property: If estate funds paid expenses tied to property that passed to heirs, either reimburse the estate or treat as a distribution to those heirs and document it.
• Clerk follow-up: The clerk audits accounts and may require more information, adjust the bond, or question payments that do not align with the will or intestacy rules.
• Late filings: If you miss the deadline, the clerk can order you to account within 20 days and may remove you or hold you in contempt if you do not comply.

Talk to a Probate Attorney

If you’re navigating an annual estate accounting and need to correct or document transactions, our firm has experienced attorneys who can help you understand your options and timelines. Call us today.

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.