Estates Law from a Probate Clerk’s PerspectiveEstates Law from a Probate Clerk’s Perspective...

Estates Law from a Probate Clerk’s Perspective

Presented by: Tiffany S. Tyler, Assistant Clerk of Superior Court

Buncombe County Estates Division

Mariah D. McKinney, Attorney Patla, Straus, Robinson & Moore, P.A.

28 TH JUDICIAL DISTRICT BAR CLE

January 23, 2015

Important Terms

Personal representative: Includes both an executor and an administrator, but does not include a collector. (N.C. G.S. § 28A-1-1)

Collector: Any person authorized to take possession, custody, or control of the personal property of the decedent for the purpose of executing the same duties as a personal representative under direction of the Clerk as outlined in G.S. 28A-11-3. (N.C.G.S. § 28A-1-1)

Collector by Affidavit: A person authorized to take possession, custody, and control of the personal property of the decedent under authority granted by the Affidavit of Collection, AOC-E-203B.

Executor: The person who serves as personal representative if the decedent dies testate.

Administrator: The person appointed by the court to serve as personal representative if the decedent dies intestate.

Administrator CTA: A person appointed by the court to serve as personal representative if the decedent dies testate but the executor is not appointed. (2012 North Carolina Clerk of Superior Court Procedures Manual, Vol. 2, 73.2)

Administrator DBN: A person appointed by the court to serve as personal representative when an administrator qualified but died, resigned, or was removed before administration was complete. (2012 North Carolina Clerk of Superior Court Procedures Manual, Vol. 2, 73.3)

Administrator CTA, DBN: A person appointed by the court to serve as personal representative when an executor qualified but died, resigned, or was removed before administration was complete. (2012 North Carolina Clerk of Superior Court Procedures Manual, Vol. 2, 73.2)

Devisee: Any person entitled to take real or personal property under the provisions of a valid, probated will. (N.C.G.S. § 28A-1-1) A Devisee may also be referred to as a beneficiary.

Heir: Any person entitled to take real or personal property under intestacy. (N.C.G.S. § 28A-1-1)

Lineal descendants: All children of such person and successive generations of children of such children. (N.C.G.S. 29-2)

Tenancy by the entirety: A form of co-ownership between husband and wife in which they hold the property with a right of survivorship. (2012 North Carolina Clerk of Superior Court Procedures Manual, Vol. 2, 78.1) See also, G.S. § 39-13.3(b.)

Joint tenancy: A form of co-ownership in which two or more persons each own an undivided interest in the whole property. May be held with or without a right of survivorship. (2012 North Carolina Clerk of Superior Court Procedures Manual, Vol. 2, 78.2)

Tenancy in common: A form of co-ownership in which two or more persons hold equal or different interests without a right of survivorship. (2012 North Carolina Clerk of Superior Court Procedures Manual, Vol. 2, 78.3)

Per stirpes: A method of dividing an intestate estate proportionally between beneficiaries according to their deceased ancestor’s share. (2012 North Carolina Clerk of Superior Court Procedures Manual, Vol. 2, 81.14)

Per capita: A method of dividing an intestate estate equally among all individuals in the same class. (2012 North Carolina Clerk of Superior Court Procedures Manual, Vol. 2, 81.14)

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ESTATES LAW FROM A PROBATE CLERK’S PERSPECTIVE 28TH JUDICIAL BAR CLE

JAN 23, 2015

Wills & Probate

Attested Written Will G.S. § 31-3.3

(a) An attested written will is a written will signed by the testator and attested by at least two competent witnesses as provided by this section.

(b) The testator must, with intent to sign the will, do so by actually signing the will or by having someone else in the testator's presence and at the testator's direction sign the testator's name thereon.

(c) The testator must signify to the attesting witnesses that the instrument is the testator's instrument by signing it in their presence or by acknowledging to them the testator's signature previously affixed thereto, either of which may be done before the attesting witnesses separately.

(d) The attesting witnesses must sign the will in the presence of the testator but need not sign in the presence of each other.

Holographic Will G.S. § 31-3.4 (a) A holographic will is a will

(1) Written entirely in the handwriting of the testator but when all the words appearing on a paper in the handwriting of the testator are sufficient to constitute a valid holographic will, the fact that other words or printed matter appear thereon not in the handwriting of the testator, and not affecting the meaning of the words in such handwriting, shall not affect the validity of the will, and

(2) Subscribed by the testator, or with the testator's name written in or on the will in the testator's own handwriting, and

(3) Found after the testator's death among the testator's valuable papers or effects, or in a safe-deposit box or other safe place where it was deposited by the testator or under the testator's authority, or in the possession or custody of some person with whom, or some firm or corporation with which, it was deposited by the testator or under the testator's authority for safekeeping.

(b) No attesting witness to a holographic will is required.

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JAN 23, 2015

Self-Proved Wills G.S. § 31-11.6 (a) How attested wills may be made self-proved.

(a) Any will may be simultaneously executed, attested, and made self-proved, by acknowledgment thereof by the testator and affidavits of the witnesses, each made before an officer authorized to administer oaths under the laws of the state where execution occurs and evidenced by the officer's certificate, under official seal, in the following form, or in a similar form showing the same intent:

"I, ________, the testator, sign my name to this instrument this ____ day of ______, ____ and being first duly sworn, do hereby declare to the undersigned authority that I sign and execute this instrument as my last will and that I sign it willingly (or willingly direct another to sign for me), that I execute it as my free and voluntary act for the purposes therein expressed, and that I am eighteen years of age or older, of sound mind, and under no constraint or undue influence.

__________________________________ Testator

We ________, ________, the witnesses, sign our names to this instrument, being first duly sworn, and do hereby declare to the undersigned authority that the testator signs and executes this instrument as his last will and that he signs it willingly (or willingly directs another to sign for him), and that each of us, in the presence and hearing of the testator, hereby signs this will as witness to the testator's signing, and to the best of our knowledge the testator is eighteen years of age or older, of sound mind, and under no constraint or undue influence.

__________________________________ Witness

__________________________________ Witness

THE STATE OF ______. COUNTY OF ______.

Subscribed, sworn to and acknowledged before me by ________. the testator and subscribed and sworn to before me by ________ and ________, witnesses, this ____ day of ________ (SEAL)

(SIGNED) _________________________ (OFFICIAL CAPACITY OF OFFICER)"

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JAN 23, 2015

Requirements Subsequent to Attestation G.S. § 31-11.6 (b)

(b) An attested written will executed as provided by G.S. 31-3.3 may at any time subsequent to its execution be made self-proved, by the acknowledgment thereof by the testator and the affidavits of the attesting witnesses, each made before an officer authorized to administer oaths under the laws of this State, and evidenced by the officer's certificate, under official seal, attached or annexed to the will in form and content substantially as follows: "STATE OF NORTH CAROLINA "COUNTY/CITY OF ________ "Before me, the undersigned authority, on this day personally appeared ________, and ________, known to me to be the testator and the witnesses, respectively, whose names are signed to the attached or foregoing instrument and, all of these persons being by me first duly sworn. The testator, declared to me and to the witnesses in my presence: That said instrument is his last will; that he had willingly signed or directed another to sign the same for him, and executed it in the presence of said witnesses as his free and voluntary act for the purposes therein expressed; or, that the testator signified that the instrument was his instrument by acknowledging to them his signature previously affixed thereto.

The said witnesses stated before me that the foregoing will was executed and acknowledged by the testator as his last will in the presence of said witnesses who, in his presence and at his request, subscribed their names thereto as attesting witnesses and that the testator, at the time of the execution of said will, was over the age of 18 years and of sound and disposing mind and memory.

__________________________________ Testator

__________________________________ Witness

__________________________________ Witness

__________________________________ Witness

Subscribed, sworn and acknowledged before me by ________, the testator, subscribed and sworn before me by ________, ________ and ________ witnesses, this ____ day of ______, A.D. ____ (SEAL)

(SIGNED) _________________________ (OFFICIAL CAPACITY OF OFFICER)"

Additional Self-Proving Wills G.S. § 31-11.6 (c)

(c) The sworn statement of any such witnesses taken as herein provided shall be accepted by the court as if it had been taken before such court.

(d) Any will executed in another state and shown by the propounder to have been made self-proved under the laws of that state shall be considered as self-proved.

(e) A military testamentary instrument executed in accordance with the provisions of 10 U.S.C. § 1044d(d) or any successor or replacement statute shall be considered as self-proved.

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JAN 23, 2015

Basic Self-Proving Checklist

(will must substantially comply with G.S. § 31-11.6 or satisfy other statutory requirements for probate)

o Original Will

o Signed by Testator

o Signed by/Witnesses by at least two competent witnesses

o Testator Affidavit

o Witnesses’ Affidavit (Testator & Witnesses’ Affidavits may be combined into one)

o Notary Attestation Clause attests to Testator and at least two witnesses signatures

Testator Affidavit … Witnesses’ Affidavit …

declares instrument to be the last will and testament

signs willingly or directs another to sign for Testator

execute will as free and voluntary act at least eighteen years of age or older of sound mind not under any constraint or undue influence

declares that the Testator signs the document as the last will and testament willingly or directs another sign for Testator

each witness in the presence and hearing of the Testator signs the will as witnesses

witness the Testator’s signing of the will and to the best of the witnesses’ knowledge

the Testator is at least eighteen years of age, of sound mind, and not under any constraint or undue influence

The Notary Attestation … State and county where notarized (where notary commissioned??) Subscribed, sworn, and acknowledged before the notary, the Testator’s name Witnesses names Notary seal must be affixed with county and State where Notary is commissioned Printed name and signature of Notary Notary commission expiration date must be provided (date of notary commission

expiration date must be after the date of execution of the will)

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JAN 23, 2015

Testate Decedent’s Estate Qualification & Probate of the Last Will & Testament (LW&T) in a Formal or “Full” Estate

Form Title Form Number

Estate Action Cover Sheet AOC-E-650

Application for Letters Testamentary or Letters of Administration, cta AOC-E-201

Original Self-Proved Decedent’s LW&T

If not self-proved use Affidavit Forms AOC-E-300 and/or AOC-E-301

to probate the will as a holographic/handwritten will AOC-E-302

Certificate of Probate AOC-E-304

Oath AOC-E-400

Order Authorizing Issuance of Letters AOC-E-402

Letters Testamentary or Administration, cta AOC-E-403

Other Forms which may be required or allowed

Bond (unless bond not required by will/statute or waiver of bond is allowed and obtained) AOC-E-401

Waiver of Personal Representative Bond (when allowed in lieu of Bond) AOC-E-404

Renunciation of Right to Qualify for Letters when required AOC-E-200

Appointment of Resident Process Agent (when the applicant for letters is an out-of-state resident)

AOC-E-500

Application & Assignment of Year’s Allowance (when there is a surviving spouse and/or minor or dependent children)

AOC-E-100

Deficiency Judgment –goes with Year’s Allowance AOC-E-101

Renunciation & Waiver of Spouse’s Year’s Allowance (spouse wishes to waive entitlement) AOC-E-213

Probate w/out Administration AOC-E-199

Addendum to Application for Probate of Out-of-State Will or Codicil

AOC-E-309 (attach to form 199 or 201)

Estate Procedure Pamphlet AOC-E-850

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JAN 23, 2015

Intestate Decedent’s Estate Qualification in a Formal or “Full” Estate

Form Title Form Number

Estate Action Cover Sheet AOC-E-650

Application for Letters of Administration AOC-E-202

Oath AOC-E-400

Order Authorizing Issuance of Letters AOC-E-402

Letters of Administration AOC-E-403

Other Forms which may be required or allowed

Bond (unless waiver of bond is allowed and obtained)

AOC-E-401

Waiver of Personal Representative Bond (when allowed in lieu of Bond) AOC-E-404

Renunciation of Right to Qualify for Letters AOC-E-200

Appointment of Resident Process Agent (when the applicant for letters is an out-of-state resident)

AOC-E-500

Application & Assignment of Year’s Allowance (when there is a surviving spouse and/or minor or dependent children)

AOC-E-100

Deficiency Judgment –goes with Year’s Allowance

AOC-E-101

Renunciation & Waiver of Spouse’s Year’s Allowance (when spouse wishes to waive entitlement)

AOC-E-213

Estate Procedure Pamphlet AOC-E-850

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JAN 23, 2015

Priority to Qualify for Letters G.S. § 28A-4-1. Order of persons qualified to serve.

(a) Letters Testamentary. - Letters testamentary shall be granted to the executor or executors named or designated in the will, or if no such person qualifies, to any substitute or successor executor named or designated in the will. If no person so named or designated qualifies, letters testamentary shall be granted to some other person nominated by a person upon whom the will expressly confers the authority to make such nomination. If none of the foregoing persons qualifies, the clerk shall grant letters of administration in accordance with subsection (b) of this section.

(b) Letters of Administration. - Letters of administration shall be granted to persons who are qualified to serve, in the following order, unless the clerk of superior court in the discretion of the clerk of superior court determines that the best interests of the estate otherwise require:

(1) The surviving spouse of the decedent; (2) Any devisee of the testator; (3) Any heir of the decedent; (3a) Any next of kin, with a person who is of a closer kinship as computed pursuant to

G.S. 104A-1 having priority; (4) Any creditor to whom the decedent became obligated prior to the decedent's

death; (5) Any person of good character residing in the county who applies therefor; and (6) Any other person of good character not disqualified under G.S. 28A-4-2.

When applicants are equally entitled, letters shall be granted to the applicant who, in the judgment of the clerk of superior court, is most likely to administer the estate advantageously, or they may be granted to any two or more of such applicants.

(c) Any interested person may file a petition pursuant to Article 2 of this Chapter alleging that all or any of the persons described in subsection (b) of this section is disqualified in accordance with G.S. 28A-4-2. G.S. § 28A-4-2. Persons disqualified to serve as personal representative.

No person is qualified to serve as a personal representative who: (1) Is under 18 years of age; (2) Has been adjudged incompetent in a formal proceeding and remains under such

disability; (3) Is a convicted felon, under the laws either of the United States or of any state or

territory of the United States, or of the District of Columbia and whose citizenship has not been restored;

(4) Is a nonresident of this State who has not appointed a resident agent to accept service of process in all actions or proceedings with respect to the estate, and caused such appointment to be filed with the court; or who is a resident of this State who has, subsequent to appointment as a personal representative, moved from this State without appointing such process agent;

(5) Is a corporation not authorized to act as a personal representative in this State; (6) Repealed by Session Laws 1999-133, s. 1. (7) Has lost that person's rights as provided by Chapter 31A; (8) Is illiterate; (9) Is a person whom the clerk of superior court finds otherwise unsuitable; or (10) Is a person who has renounced either expressly or by implication as provided in G.S.

28A-5-1 and 28A-5-2

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JAN 23, 2015

Bond G.S. § 28A-8-1. Bond required before letters issue; when bond not required.

(a) Except as otherwise provided in subsection (b) of this section, every personal representative, before letters are issued, shall give bond, conditioned as provided in G.S. 28A-8-2.

(b) No bond shall be required of: (1) A resident executor, unless the express terms of the will require a resident executor

to give bond; (2) A nonresident executor (or a resident executor who moves from this State

subsequent to that executor's appointment) who has appointed a resident agent to accept service of process as provided in G.S. 28A-4-2(a) [28A-4-2(4)], when the express terms of the will excuse a nonresident executor from giving bond;

(3) A nonresident executor, when there is a resident executor named who has qualified as coexecutor unless the express terms of the will require them to give bond, or the clerk of superior court finds that such bond is necessary for the protection of the estate; or

(4) A personal representative appointed solely for the purpose of bringing an action for the wrongful death of the deceased until such time as the personal representative shall receive property into the estate of the deceased; or

(5) A personal representative that is a trust institution licensed under G.S. 53-159; (6) A personal representative of an intestate who resides in the State of North Carolina

when all of the heirs of the decedent are over 18 years of age and file with the clerk of superior court a written waiver instrument agreeing to relieve the personal representative from the necessity of giving bond; or

(7) A personal representative where the personal representative receives all the property of the decedent;

(8) An administrator with the will annexed who resides in the State of North Carolina when all of the devisees of the decedent are over 18 years of age and file with the clerk of superior court a written waiver instrument agreeing to relieve the administrator with the will annexed of the necessity of giving bond.

Amount of Bond G.S. § 28A-8-2

1.25 (one and one-fourth) X Total Part I (value of Decedent’s personal property) If the Personal Property is valued at more than $100,000, in the Clerk’s discretion, 1.10 x value of Total Part I

Buncombe County Minimum Bond Amount $25,000

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JAN 23, 2015

Post Qualification Actions Needed Next Steps Publish Notice to Creditors in the Newspaper. Obtain a taxpayer identification number (EIN) for the Estate. Open an Estate Checking Account (ECA). Determine the tax status of the Decedent, past year’s filings, if a final return is required, file a Notice of

Fiduciary Relationship with the IRS if necessary, file the return when due. Cash out all appropriate accounts in Decedent’s sole name and deposit into ECA. Determine all the assets owned by the Decedent at death and the values of same. Begin ascertaining the Decedent’s debts, liabilities, and claims against the Estate. Sell vehicles, tangible personal property, securities, and cash in bonds if not provided in the will and as

otherwise in the best interests of the Estate. Provide disclosures and information to necessary creditors, heirs/beneficiaries, and other interested

persons.

Within 90-Days (three months) - Inventory (still referred to as the 90-Day Inventory) Within three (3) months from the date of qualification (date of Issuance of Letter), file with the Clerk a

properly completed Inventory For Decedent’s Estate (Form AOC E 505). This must be a true and perfect inventory of all real and personal property owned by the Decedent at the date of death fair market value.

Attach signature cards that provide the account number and joint owners’ signatures for all joint accounts listed on inventory proving right of survivorship.

Determine Costs Due (Qualification Fee + Assessment on Inventory Total Part I-Probate Assets) File the following along with the Inventory if applicable and available – must file on or before filing of final

account. • Affidavit of Notice to Creditors (Form AOC E 307) • Estate Tax Certification (Form AOC E 212) • Paid in full funeral bill/proof of payment

Check the Clerk’s file for Claims and the Publisher’s Affidavit from the newspaper

Within 1 Year - Annual/Final Account Final Account due within one year from the date of qualification or within six months after receipt of the

tax closing letter, whichever is later. G.S. § 28A-21-2. If a Final Account cannot be filed for good reason, a request for extension of time should be filed along

with an Annual Account. The Annual Account by statute must not extend for more than twelve months, but may be for a shorter period of time. See G.S. § 28A-21-1. Automatic Extensions of time for the first Annual Account in fiscal year accounting periods are available upon request to and approval by the Clerk.

All claims must be released, rejected, satisfied and proof provided w/final. To the satisfaction of the Clerk, provide proof of Receipts & Disbursements (cancelled checks or third party

receipts) these should include administrative expenses and debts of the decedent only. Provide proof of Distributions to Heirs/Beneficiaries in accordance with the will, intestacy, or otherwise

provided by law or court order (receipts with original signatures, Form AOC E 521 may be used.) Provide proof of closed accounts for ALL Estate Accounts

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JAN 23, 2015

Alternatives to Formal Administration (Small Estates)

1. Year’s Allowances 2. Affidavit for Collection – Small Estate Affidavit 3. Assignment of Title 4. Probate without Qualification 5. Summary Administration 6. Limited Personal Representative

(Notice to Creditors without Estate Administration) 7. Payments to CSC-Admin by CSC

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JAN 23, 2015

Year’s Allowance N.C.G.S. Chapter 30

Summary

A quick and simple manner in which to transfer the Decedent’s personal property assets to the surviving spouse, minor children, and qualifying dependent children.

Who Benefits & How Much

For Decedent’s dying on or after January 1, 2014,

• $30,000 for the Surviving Spouse ($20,0000 in 2013); and • $5,000 for each minor child, each child 21 years of age and under who is a full-time

student, and each disabled child 21 years of age and under. (most Clerks require proof of full-time enrollment or proof of disability for children over 18 years of age)

Most Common Type of Assets

Cars, trucks, mobile homes, and any other motor vehicle having a NC DMV title Checking, savings, money market accounts in the Decedent’s sole name Uncashed or refund checks made payable to the Decedent or Decedent’s Estate Unclaimed funds from the State Treasurer and any other money due the Decedent

or Estate which does not exceed the allowance amount Cash and household furnishings

Applicable Forms

AOC-E-650, Estates Action Cove Sheet

AOC-E-100, Application and Assignment Year’s Allowance

AOC-E-101, Deficiency Judgment

AOC-E-212, Estate Tax Certification (some Clerks require)

AOC-E-213, Renunciation and Waiver of Spousal Year’s Allowance

Timing & Procedure

Must be properly filed and approved by the Clerk (or Magistrate) no later than one year from the Decedent’s date of death Allowable in connection with both testate and intestate estates, along with Affidavits for Collection, and with Summary Administration and Probate without Qualification in the Clerk’s discretion

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JAN 23, 2015

, Application for Year’s Allowance, AOC-E-100 copied for training purposes from www.nccourts.org

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JAN 23, 2015

, Application for Year’s Allowance, AOC-E-100 copied for training purposes from www.nccourts.org

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JAN 23, 2015

Deficiency Judgment, AOC-E-101 copied for training purposes from www.nccourts.org

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JAN 23, 2015

Affidavit for Collection of Personal Property of Decedent Article 25

Summary

An informal type of administration of the Decedent’s personal property up to a maximum amount. Allowable in connection with both testate and intestate estates, with the Year’s Allowances, and Limited Personal Representative.


Refer to the applicable forms to determine the maximum amount that may be administered which largely depends on the date of the Decedent’s death, the amount of the year’s allowances allowed, and whether the surviving spouse is the sole heir.


• no statutory requirement of bond • no statutory requirement to publish notice to creditors in the newspaper


Same as the year’s allowance, but often a larger amount may be administered by combining the year’s allowance(s) and this affidavit for Decedent’s dying on or after January 1, 2012.

Applicable Forms

AOC-E-650, Estates Action Cover Sheet

AOC-E-203B, Affidavit for Collection of Personal Property of Decedent (for Decedent’s dying on or after January 1, 2012)

AOC-E-204, Affidavit for Collection, Disbursement and Distribution (Final Affidavit due within 90-days of filing the 203 form unless an extension is granted by the Clerk)

AOC-E-212, Estate Tax Certification (most Clerks require)

AOC-E-203A, Affidavit for Collection (for Decedent’s dying prior to January 1, 2012)

Many Clerks also require Renunciation of Right to Qualify (AOC-E-200) and Waiver of Bond for Personal Representative (AOC-E-404)

Resident Process Agent (AOC-E-500), for non-state resident affiant

Certificate of Probate (AOC-E-304), when a will is being probated

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JAN 23, 2015

Affidavit for Collection, AOC-E-203B copied for training purposes from www.nccourts.org

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JAN 23, 2015

, Affidavit for Collection, AOC-E-203B copied for training purposes from www.nccourts.org

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JAN 23, 2015

Affidavit for Collection, Disbursement, and Distribution AOC-E-204 copied for training purposes from www.nccourts.org

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JAN 23, 2015

, Affidavit for Collection, Disbursement, and Distribution AOC-E-204 copied for training purposes from www.nccourts.org

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JAN 23, 2015

Assignment of Title G.S. § 20-77(b)

Summary

Transfer of title of low value motor vehicle(s) in the Clerk’s discretion and the Clerk determines the estate does not justify the expense of probate and administration.


• Surviving Spouse, Intestate Heirs, and sometimes other entitled creditor or lienholder in the Clerk’s discretion

• Typically only vehicles with a value of less than $3,500, $5,000, or more in the Clerk’s discretion

• Clerk will generally only allow one vehicle to be transferred


• Mobile homes • Cars, trucks, flat bed trailers • Any motor vehicle having a NC-DMV title

Applicable Forms

DMV-MVR 317

In the Clerk’s and DMV’s discretion, the Probate Without Qualification Procedure and forms may also be used here in order to transfer title to one vehicle owned by the Decedent to the beneficiary(ies) under the will

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JAN 23, 2015

Affidavit for Authority to Assign Title (MVR-317) FORM OVERVIEW Side 1

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JAN 23, 2015

FORM OVERVIEW: Affidavit for Authority to Assign Title (MVR-317), continued

Side 2

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JAN 23, 2015

Probate without Qualification Chapter 28A, Article 2A

Summary Transfer of title of real estate owned by the Decedent at death to the beneficiaries who inherit the real property under the will without a formal administration.

• No limit on value of real property or number of properties transferred under the will. • Should be no assets subject to probate and no intent for avoidance of creditors. • May be used along with Year’s Allowance and DMV MVR-317 in the Clerk’s discretion.

Applicable Forms


Modified AOC-E-201, Application for Probate

AOC-E-199, Probate Without Qualification

AOC-E-399, Addendum

AOC-E-304, Certificate of Probate

Drafted Affidavit in compliance with G.S. § 28A-2A-5 in Clerk’s discretion

Summary Administration Article 28

Summary Alternative full and complete administration of the Decedent’s testate or intestate Estate for the Surviving Spouse when the spouse is the sole heir by intestacy or sole beneficiary under the probated Last Will & Testament.

Unique Features • Surviving Spouse only • No limit to the amount of assets or type of assets administered • No publication of notice to creditors required • Some Clerks will also allow the spouse to file a Year’s Allowance along with • Spouse assumes debt, G.S. § 28A-28-6

Applicable Forms


AOC-E-212, Estate Tax Certification (most Clerks require)

AOC-E-304, Certificate of Probate

AOC-E-905M, Application for Probate & Petition for Summary Administration

AOC-E-906M, Petition for Summary Administration Estate Without a Will

AOC-E-904, Order of Summary Administration

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JAN 23, 2015

Limited Personal Representative Article 29

Summary

Limited letters of authority to publish the notice to creditors for the primary purpose of clearing title to real property or property transferred to living trust prior to the Decedent’s death. This is not a type of administration of assets and is not available if there are probate assets unless authorized by statute. It is available also when assets are administered by an Affidavit for Collection, Summary Administration, or Assignment of Title. The statute does not specifically authorize the spouse to do so solely by way of filing the Year’s Allowance. See G.S. § 28A-29-2(a)(3).

Applicable Forms


A non-AOC form drafted Petition

AOC-E-420, Letters of Appointment as Limited Personal Representative

AOC-E-308, Affidavit of Notice to Creditors by Limited PR

AOC-E-212, Estate Tax Certification (some Clerks require)

AOC-E-506, Final Account showing zero assets, if required by the Clerk (some Clerk’s allow a final affidavit setting forth no assets where discovered)

Payments to the Clerk – Small Estates Administered by Clerk G.S. § 28A-25-6

Summary A Clerk administered estate where the Clerk receipts into the Clerk’s office $5,000.00 or less due and payable to the Decedent or Decedent’s Estate. The most common uses of this type of administration by the Clerk is to close out small bank accounts, make payments towards the funeral bill, or reimburse those who paid the funeral bill.

Applicable Forms

AOC-E-432, Application for Administration by Clerk

AOC-E-431, Authorization for Payment of Money Owed a Decedent

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JAN 23, 2015

What Type of Estate if...?

Scenario I

Decedent died intestate this year with a Surviving Spouse, and owning a $23.00 refund check from utility company, 2012 car worth approx. $15,000.00 with a loan still owing in the amount of $5,000.00 owned ½ by decedent and ½ SS.

The Decedent owned all bank accounts joint with right of survivorship, all real property by tenants by the entireties, and all life insurance and retirement benefits are payable to designated beneficiaries.

Questions

1. What type(s) of alternate or small estate(s) are best? 2. What if the Decedent died also leaving $35,000 in life insurance payable to the estate

and the SS is the sole heir? 3. What if instead the Decedent died also leaving $35,000 in life insurance payable to

the estate and the SS is not the sole heir and the Decedent was also survived by 2 minor children?

4. What if the Decedent was survived by 2 adult children?

Scenario II

What type of estate is required if the same Scenario 1 Decedent, but he also died owning a ¼ undivided interest in real property inherited from his mother.

Scenario III

Decedent died owning one vehicle as the sole probate asset. Everything else transferred to the Surviving Spouse by joint with right of survivorship, tenancy by entireties, and beneficiary designation.

If the spouse seeks to transfer the vehicle within a year from the Decedent’s death, which type of alternative administration should the spouse file?

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JAN 23, 2015

Questions

1. What if the value of the vehicle is $35,000? 2. What if one year has already elapsed from the date of the Deceased Spouse’s death? 3. What if five years have passed since the first spouse to die’s death and the surviving

spouse has now passed away and the vehicle was in both spouse’s names and the surviving spouse never made any attempts to transfer the vehicle out of the first spouse to die’s name? (stress timing of death and who survived the decedent and was living at the decedent’s death at that time in the past)

Scenario 4

What if the Decedent died survived by two adult children and one minor child and no spouse in late 2014 owning a home and land in Black Mountain, North Carolina and in a small town in Kentucky along with $10,000 in life insurance payable to the Estate, a couple of vehicles, a small amount of securities investments and a small amount of money in checking and savings accounts?

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JAN 23, 2015

INVENTORIES & ACCOUNTINGS

Used with permission from the NC Administrative Office of the Courts Organizational Development Division for educational purposes only.

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JAN 23, 2015

AOC-E-505 “Inventory For Decedent’s Estate” (Side 2)


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JAN 23, 2015

AOC-E-506 “Account – Annual / Final” (Side 2) Used with permission from the NC Administrative Office of the Courts Organizational Development Division for educational purposes only.

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JAN 23, 2015

Order of Payment of Claims under N.C.G.S. § 28A-19-6(a)

Year’s Allowances are typically considered to be a class of super-priority

Costs and expenses of administration are paid prior to debts of the decedent, creditor claims, and inheritance to heirs

First Class

Claims with specific lien on property not exceeding the value of such property

Second Class Funeral expenses up to $3,500 (as of 2013)

Third Class

Costs associated with gravestones and purchase of burial place up to $1,500 (as of 2013)

Fourth Class All dues, taxes, and other claims with preference under laws of U.S.

Fifth Class

All dues, taxes, and other claims with preference under laws of State of NC and its subdivisions

Sixth Class 1. Judgments of any court of competent jurisdiction within NC, docketed and in force,

to the extent to which they are a lien on the property of the decedent at the decedent’s death

2. Department of Health and Human Services claims

Seventh Class 1. Wages due to decedent’s employee 2. Claims for medical services within the 12 months preceding the decedent’s death 3. Claims for drugs and all other medical supplies necessary for treatment during the

decedent’s last illness

Eighth Class Equitable distribution claims

Ninth Class

All other claims and unsecured debts

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JAN 23, 2015

Insolvent Estates: Pro-rata calculation among classes of claims required

Step 1: Add up all debts within class

Creditor Amt Owed

1 $9,203.62

2 $11,953.47

3 $372.25

4 $5,532.00

5 $13,784.97

6 $736.06

7 $15,496.66

8 $231.14

9 $805.74

10 $7,078.61

$65,194.52

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JAN 23, 2015

Step 2: Divide amount owed to each creditor by total debt

Creditor Amt Owed Percentage

1 $9,203.62 14.12%

2 $11,953.47 18.33

3 $372.25 0.57%

4 $5,532.00 8.49%

5 $13,784.97 21.14%

6 $736.06 1.13%

7 $15,496.66 23.77%

8 $231.14 0.35%

9 $805.74 1.24%

10 $7,078.61 10.86%

$65,194.52 100.00%

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JAN 23, 2015

Step 3: Multiply creditor’s percentage by remaining assets ($8,402.78)

Creditor Amt Owed Percentage Pro Rata Share

1 $9,203.62 14.12% $1,186.47

2 $11,953.47 18.33 $1,540.23

3 $372.25 0.57% $47.90

4 $5,532.00 8.49% $713.40

5 $13,784.97 21.14% $1,776.35

6 $736.06 1.13% $94.95

7 $15,496.66 23.77% $1,997.34

8 $231.14 0.35% $29.41

9 $805.74 1.24% $104.19

10 $7,078.61 10.86% $912.54

$65,194.52 100.00% $8,402.78

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JAN 23, 2015

Per Stirpes v. Per Capita Methods of Distribution T has three children: A, B, and C. A has two children, D and E. C has one child, F. A and C predecease T. T dies. Who gets what share?

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JAN 23, 2015

Per Stirpes

NC Per Capita (at each generation)

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JAN 23, 2015

ETHICAL CONSIDERATIONS FOR ESTATE ATTORNEYS

Scenario I:

You provided estate planning services to the Decedent prior to death for which an

outstanding bill is still due to your firm. The Last Will and Testament you prepared for the

Decedent a few months prior to death is being questioned by a couple of the Decedent’s

children. The two children who were left out of the Will argue the Decedent was suffering from

a terminal disease and was not thinking clearly. Additionally, they say the Decedent was

unduly influenced by the fundraising director of the non-profit organization which received

their inheritance in the Will. The Decedent’s prior Will, which was revoked by the one you

prepared, divided the Estate among the four children equally. The last Will gives half of the

Estate to two children, half to a local non-profit organization, and leaves out the other two

children.

Since you prepared the Will, you are convinced that the Decedent had good reason to

leave out the two children and that the Decedent was of sound mind in executing the Will. You

are currently holding the original Will in your safe at your law firm. One of the children who

was left out of the Will has contacted you demanding information relating to the preparation of

the Will, the Decedent’s capacity at the time of making the will, and that you immediately turn

over the Will to the child. You knew the Decedent very well as the Decedent was a longtime

client of yours. The Decedent was adamant that you be the attorney who handles the Estate

administration.

Discussion Questions for Scenario I:

1. To whom may you deliver the Last Will and Testament?

2. What, if any, information may you divulge and to whom?

3. Should you take on the administration of the Estate as the Attorney for the Estate?

4. What considerations are relevant with regard to the outstanding bill for legal services rendered on behalf of the Decedent prior to death?

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JAN 23, 2015

Applicable NC State Bar Rules of Professional Conduct to Consider

Client-Lawyer Relationship

Rule 1.6 Confidentiality of Information

(a) A lawyer shall not reveal information acquired during the professional relationship with a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b). (b) A lawyer may reveal information protected from disclosure by paragraph (a) to the extent the lawyer reasonably believes necessary:

(1) to comply with the Rules of Professional Conduct, the law or court order;

(2) to prevent the commission of a crime by the client;

(3) to prevent reasonably certain death or bodily harm;

(4) to prevent, mitigate, or rectify the consequences of a client's criminal or fraudulent act in the commission of which the lawyer's services were used;

(5) to secure legal advice about the lawyer's compliance with these Rules;

(6) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client; to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved; or to respond to allegations in any proceeding concerning the lawyer's representation of the client;

(7) to comply with the rules of a lawyers' or judges' assistance program approved by the North Carolina State Bar or the North Carolina Supreme Court; or

(8) to detect and resolve conflicts of interest arising from the lawyer’s change of employment or from changes in the composition or ownership of a firm, but only if the revealed information would not compromise the attorney-client privilege or otherwise prejudice the client.

(c) A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client. (d) The duty of confidentiality described in this Rule encompasses information received by a lawyer then acting as an agent of a lawyers' or judges' assistance program approved by the North Carolina State Bar or the North Carolina Supreme Court regarding another lawyer or judge seeking assistance or to whom assistance is being offered. For the purposes of this Rule, "client" refers to lawyers seeking assistance from lawyers' or judges' assistance programs approved by the North Carolina State Bar or the North Carolina Supreme Court.

Rule 1.7 Conflict of Interest: Current Clients

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to another client; or

(2) the representation of one or more clients may be materially limited by the lawyer's responsibilities to another client, a former client, or a third person, or by a personal interest of the lawyer.

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(Rule 1.7 continued from prior page)

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.

Rule 1.9 Duties to Former Clients

(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.

(b) A lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client

(1) whose interests are materially adverse to that person; and

(2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter; unless the former client gives informed consent, confirmed in writing.

(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:

(1) use information relating to the representation to the disadvantage of the former client except as these Rules would permit or require with respect to a client, or when the information has become generally known; or

(2) reveal information relating to the representation except as these Rules would permit or require with respect to a client.

Advocate Rule 3.7 Lawyer as Witness (a) A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness unless:

(1) the testimony relates to an uncontested issue; (2) the testimony relates to the nature and value of legal services rendered in the case; or (3) disqualification of the lawyer would work substantial hardship on the client.

(b) A lawyer may act as advocate in a trial in which another lawyer in the lawyer's firm is likely to be called as a witness unless precluded from doing so by Rule 1.7 or Rule 1.9. RPC 142 a lawyer may not represent an estate in litigation against a claimant where the lawyer’s testimony may be necessary to resolve the validity of the claim.

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JAN 23, 2015

North Carolina General Statute Section 28A-19-6 Order of payment of claims.

(a) After payment of costs and expenses of administration, the claims against the estate of a decedent must be paid in the following order:

First class. Claims which by law have a specific lien on property to an amount not exceeding the value of such property.

Second class. Funeral expenses to the extent of three thousand five hundred dollars ($3,500). This limitation shall not include burial place or gravestone. The preferential limitation herein granted shall be construed to be only a limit with respect to preference of payment and shall not be construed to be a limitation on reasonable funeral expenses which may be incurred; nor shall the preferential limitation of payment in the amount of three thousand five hundred dollars ($3,500) be diminished by any Veterans Administration, social security or other federal governmental benefits awarded to the estate of the decedent or to the decedent's beneficiaries.

Third class. Costs associated with gravestones and reasonable costs for the purchase of a suitable burial place as provided in G.S. 28A-19-9 to the extent of one thousand five hundred dollars ($1,500). The preferential limitation herein granted shall be construed to be only a limit with respect to preference of payment and shall not be construed to be a limitation on reasonable gravestone or burial place expenses which may be incurred; nor shall the preferential limitation of payment in the amount of one thousand five hundred dollars ($1,500) be diminished by any Veterans Administration, social security or other federal governmental benefits awarded to the estate of the decedent or to the decedent's beneficiaries.

Fourth class. All dues, taxes, and other claims with preference under the laws of the United States.

Fifth class. All dues, taxes, and other claims with preference under the laws of the State of North Carolina and its subdivisions.

Sixth class. Judgments of any court of competent jurisdiction within the State, docketed and in force, to the extent to which they are a lien on the property of the decedent at the decedent's death. The Department of Health and Human Services is a sixth-class creditor for purposes of determining the order of claims against the estate; provided, however, that judgments in favor of other sixth-class creditors docketed and in force before the Department seeks recovery for medical assistance shall be paid prior to recovery by the Department.

Seventh class. Wages due to any employee employed by the decedent, which claim for wages shall not extend to a period of more than 12 months next preceding the death; or if such employee was employed for the year current at the decease, then from the time of such employment; for medical services within the 12 months preceding the decease; for drugs and all other medical supplies necessary for the treatment of such decedent during the last illness of such decedent, said period of last illness not to exceed 12 months.

Eighth class. A claim for equitable distribution.

Ninth class. All other claims.

(b) Notwithstanding subsection (a) of this section, if payment of the commissions of the personal representative under G.S. 28A-23-3(g) would cause the estate to be unable to pay all claims against the estate of a decedent, then the commissions shall be limited to the amount allowed under G.S. 28A-23-3(a).

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Scenario II:

You are the Attorney for a solvent estate where the beneficiaries of the Estate are three

charitable organizations. The Executor has received over two million dollars of personal

property assets and was directed by the will to sell the real property, convert the net proceeds to

the residuary estate, and distribute the residuary estate in equal shares as set forth in the Will to

the three charitable organizations. Because of some complex tax and litigation issues, some of

which were in existence prior to the Decedent’s death, your attorney fees are in excess of

$40,000. You have received approval from the Clerk for your attorney fees. The Executor now

would like for you to prepare a Petition for Reimbursement of Expenses and a Petition for

Payment of Commissions.

The Executor has informal documentation of a loan to the Decedent in the amount of

$50,000 prior to death for which the Executor wishes you to prepare a Petition for

Reimbursement. Additionally, the Executor wishes to be reimbursed for several nights of

overnight travel expenses which includes lodging, airfare, and meals which total the

approximate sum of $10,000. The Executor also desires a maximum five percent (5%)

commission. Such commission would be in excess of $150,000 as the Receipts and

Disbursements exceed three million dollars. After all expenses, debts, claims, and all of the

above each beneficiary will still receive approximately $800,000 each.

Discussion Questions for Scenario II:

1. Who is your client?

2. In general, what are your ethical perimeters as the Attorney for the Estate?

3. What are the ethical considerations regarding you preparing the Petitions for Reimbursement on behalf of the Executor?

4. What are the ethical considerations regarding you preparing the Petition for Commission on behalf of the Executor?

5. What are the ethical considerations relating to the amount of attorney fees billed to the Estate?

6. What potential disclosure or consent options might be available or necessary in this case?

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JAN 23, 2015

Applicable NC State Bar Rules of Professional Conduct to Consider

Rule 1.3 Diligence

A lawyer shall act with reasonable diligence and promptness in representing a client.

Comment

[4] Unless the relationship is terminated as provided in Rule 1.16, a lawyer should carry through to conclusion all matters undertaken for a client. If a lawyer's employment is limited to a specific matter, the relationship terminates when the matter has been resolved. If a lawyer has served a client over a substantial period in a variety of matters, the client sometimes may assume that the lawyer will continue to serve on a continuing basis unless the lawyer gives notice of withdrawal. Doubt about whether a client-lawyer relationship still exists should be clarified by the lawyer, preferably in writing, so that the client will not mistakenly suppose the lawyer is looking after the client's affairs when the lawyer has ceased to do so. For example, if a lawyer has handled a judicial or administrative proceeding that produced a result adverse to the client and the lawyer and the client have not agreed that the lawyer will handle the matter on appeal, the lawyer must consult with the client about the possibility of appeal before relinquishing responsibility for the matter. See Rule 1.4(a)(2). Whether the lawyer is obligated to prosecute the appeal for the client depends on the scope of the representation the lawyer has agreed to provide to the client. See Rule 1.2.

Rule 1.4 Communication

(a) A lawyer shall:

(1) promptly inform the client of any decision or circumstance with respect to which the client's informed consent, as defined in Rule 1.0(f), is required by these Rules;

(2) reasonably consult with the client about the means by which the client's objectives are to be accomplished;

(3) keep the client reasonably informed about the status of the matter;

(4) promptly comply with reasonable requests for information; and

(5) consult with the client about any relevant limitation on the lawyer's conduct when the lawyer knows that the client expects assistance not permitted by the Rules of Professional Conduct or other law.

(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.

Rule 1.5 Fees

(a) A lawyer shall not make an agreement for, charge, or collect an illegal or clearly excessive fee or charge or collect a clearly excessive amount for expenses. The factors to be considered in determining whether a fee is clearly excessive include the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

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JAN 23, 2015

(Rule 1.5 continued from prior page)

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent.

(b) When the lawyer has not regularly represented the client, the scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation. (c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall be in a writing signed by the client and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated. The agreement must clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination. (d) A lawyer shall not enter into an arrangement for, charge, or collect:

(1) a contingent fee for representing a defendant in a criminal case; however, a lawyer may charge and collect a contingent fee for representation in a criminal or civil asset forfeiture proceeding if not otherwise prohibited by law; or (2) a contingent fee in a civil case in which such a fee is prohibited by law.

(e) A division of a fee between lawyers who are not in the same firm may be made only if:

(1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation;

(2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and

(3) the total fee is reasonable.

(f) Any lawyer having a dispute with a client regarding a fee for legal services must:

(1) make reasonable efforts to advise his or her client of the existence of the North Carolina State Bar's program of fee dispute resolution at least 30 days prior to initiating legal proceedings to collect the disputed fee; and

(2) participate in good faith in the fee dispute resolution process if the client submits a proper request.

Refer to Rule 1.6

RPC 22: An attorney may not represent the Administratrix officially and personally where her interests in the two roles are in conflict without the consent of the heirs.

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JAN 23, 2015

Refer to Rules 1.7 and 1.9

Rule 1.13 Organization As Client

(a) A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.

(b) ) If a lawyer for an organization knows that an officer, employee. or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law which reasonably might be imputed to the organization, and is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher authority in the organization, including, if warranted by the circumstances, to the highest authority that can act on behalf of the organization as determined by applicable law.

(c) If, despite the lawyer's efforts in accordance with paragraph (b), the highest authority that can act on behalf of the organization insists upon action, or a refusal to act, that is clearly a violation of law and is likely to result in substantial injury to the organization, the lawyer may reveal such information outside the organization to the extent permitted by Rule 1.6 and may resign in accordance with Rule 1.16.

(d) Paragraph (c) shall not apply with respect to information relating to a lawyer's representation of an organization to investigate an alleged violation of law, or to defend the organization or an officer, employee, or other constituent associated with the organization against a claim arising out of an alleged violation of law.

(e) A lawyer who reasonably believes that he or she has been discharged because of the lawyer's actions taken pursuant to paragraphs (b) or (c), or who withdraws under circumstances that require or permit the lawyer to take action under these Rules, shall proceed as the lawyer reasonably believes necessary to assure that the organization's highest authority is informed of the lawyer's discharge or withdrawal.

(f) In dealing with an organization’s directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should know that the organization’s interests are adverse to those of the constituents with whom the lawyer is dealing.

(g) A lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7. If the organization’s consent to the dual representation is required by Rule 1.7, the consent shall be given by an appropriate official of the organization other than the individual who is to be represented, or by the shareholders.

2002 Formal Ethics Opinion 3: rules that a lawyer for an estate may seek removal of the personal representative if the personal representative’s breach of fiduciary duties constitutes grounds for removal under the law.

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JAN 23, 2015

North Carolina General Statute Section 28A-23-3 and 23-4 § 28A-23-3 Commissions allowed personal representatives; representatives guilty of misconduct or default.

(a) Personal representatives, collectors or public administrators shall be entitled to commissions to be fixed in the discretion of the clerk of superior court not to exceed five percent (5%) upon the amounts of receipts, including the value of all personal property when received, and upon the expenditures made in accordance with law. In determining the maximum commissions allowable under this subsection, the clerk of superior court may take into consideration fees paid by the estate for professional services performed in the ordinary course of administering the estate, including services performed by attorneys and accountants. However, the clerk is not required to reduce the maximum commissions allowed by the aggregate fees paid to professionals on a dollar-for-dollar basis.

The commissions shall be charged as a part of the costs of administration and, upon allowance, may be retained out of the assets of the estate against creditors and all other persons claiming an interest in the estate. If the gross value of an estate is two thousand dollars ($2,000) or less, the clerk of superior court may fix the commission to be received by the personal representative, collector or public administrator in an amount the clerk of superior court, in the clerk's discretion, deems just and adequate.

(b) In determining the amount of the commissions, both upon personal property received and upon expenditures made, the clerk of superior court shall consider the time, responsibility, trouble and skill involved in the management of the estate. Where real property is sold to pay debts or devises, the commission shall be computed only on the proceeds actually applied in the payment of debts or devises.

(c) The clerk of superior court may allow commissions from time to time during the course of the administration, but the total commissions allowed shall be determined on final settlement of the estate and shall not exceed the limit fixed in this section.

(d) Nothing in this section shall be construed to:

(1) Prevent the clerk of superior court from allowing reasonable sums for necessary charges and disbursements incurred in the management of the estate.

(2) Allow commissions on distribution of the shares of heirs or on distribution of shares of devisees.

(3) Abridge the right of any party interested in the administration of a decedent's estate to appeal an order of the clerk of superior court to a judge of superior court.

(e) No personal representative, collector or public administrator, who has been guilty of default or misconduct in the due execution of the personal representative's, collector's, or public administrator's office resulting in the revocation of the appointment of the personal representative, collector, or public administrator under the provisions of G.S. 28A-9-1, shall be entitled to any commission under the provisions of this section.

(f) For the purpose of computing commissions whenever any portion of the dividends, interest, rents or other amounts payable to a personal representative, collector or public administrator is required by any law of the United States or other governmental unit to be withheld for income tax purposes by the person, corporation, organization or governmental unit paying the same, the amount withheld shall be deemed to have been received and expended.

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(G.S. § 28A-23-3 continued from prior page)

(g) Subsection (a) of this section does not apply if the testator's will specifies a stipulated amount or method or standard for determining the compensation for the services rendered by the personal representative, including a provision in the will that the compensation of the personal representative is to be determined by applying the personal representative's regularly adopted schedule of compensation in effect at the time of performance of those services. Subsection (a) of this section also shall not apply if the testator's will provides that the personal representative is to receive "reasonable compensation" for those services or similar language to that effect if the personal representative and the beneficiaries whose shares would be charged with the payment of the personal representative's compensation consent in writing to the specific amount that constitutes reasonable compensation.

(h) Subsection (a) of this section shall apply if the testator's will provides that compensation of the personal representative shall be the amount "as provided by law," the "maximum amount provided by law," or other similar language. (1868-9, c. 113, s. 95; 1869-70, c. 189; Code, s. 1524; Rev., s. 149; C.S., s. 157; 1941, c. 124; 1953, c. 855; 1959, c. 662; c. 879, s. 8; 1961, cc. 362, 575; 1973, c. 1329, s. 3; 1977, c. 814, s. 2; 2005-388, s. 1; 2011-284, s. 20; 2011-344, s. 4.)

§ 28A-23-4. Counsel fees allowable to attorneys serving as representatives.

The clerk of superior court, in the discretion of the clerk of superior court, is authorized and empowered to allow counsel fees to an attorney serving as a personal representative, collector or public administrator (in addition to the commissions allowed the attorney as such representative, collector or public administrator) where such attorney in behalf of the estate the attorney represents renders professional services, as an attorney, which are beyond the ordinary routine of administration and of a type which would reasonably justify the retention of legal counsel by any such representative, collector or public administrator not licensed to practice law.

Twists on Scenario II:

1. Assume instead that prior to obtaining approval of the Clerk, both your firm and the Executor made all the payments for Attorney fees, reimbursements to the Executor, and Commissions without any disclosure to or consent from the beneficiaries. You file with the Clerk the Petitions along with the final account.

What statutory and ethical considerations are relevant?

2. Assume instead that the Executor was a long time significant other of the Decedent who unbeknownst to you believed the Decedent intended to make a later Will revoking the probated Will and making the Executor the sole beneficiary. As a result of such belief, the Executor converted half of the Estate funds to the Executor’s own personal use. You do not become aware of this until you are preparing the final account.

What are your obligations as the Attorney for the Estate upon discovering this information?

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JAN 23, 2015

Scenario III:

You drafted the Last Will and Testament for the Decedent naming all four children as

Co-Executors and equal beneficiaries. Despite your efforts to convince the Decedent this might

not be the best choice, the Decedent insisted on naming all four children as Executors along

with the added language that the majority of them shall decide issues. You receive a call from

the Clerk’s office informing you that a hearing was held and none of the children were

determined suitable to administer the Estate. The children who were present at the hearing were

offered an opportunity to object to the Court seeking out the Attorney who drafted the Will to

be the Court Appointed Administrator, CTA. No objections were presented. The Clerk wishes

to appoint you to administer the Estate since you prepared the Will and are most familiar with

the assets of the Decedent.

What ethical considerations are relevant in your accepting the appointment to administer the Estate?

Additional Ethical Considerations Rule 1.14 Client with Diminished Capacity

(a) When a client's capacity to make adequately considered decisions in connection with a representation is diminished, whether because of minority, mental impairment or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with the client.

(b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of substantial physical, financial or other harm unless action is taken and cannot adequately act in the client's own interest, the lawyer may take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of a guardian ad litem or guardian.

(c) Information relating to the representation of a client with diminished capacity is protected by Rule 1.6. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized under Rule 1.6(a) to reveal information about the client, but only to the extent reasonably necessary to protect the client's interests.

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Rule 1.16 Declining or Terminating Representation

(a) Except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if:

(1) the representation will result in violation of law or the Rules of Professional Conduct; (2) the lawyer's physical or mental condition materially impairs the lawyer's ability to represent the client; or (3) the lawyer is discharged.

(b) Except as stated in paragraph (c), a lawyer may withdraw from representing a client if:

(1) withdrawal can be accomplished without material adverse effect on the interests of the client; or

(2) the client knowingly and freely assents to the termination of the representation; or

(3) the client persists in a course of action involving the lawyer's services that the lawyer reasonably believes is criminal or fraudulent; or

(4) the client insists upon taking action that the lawyer considers repugnant, imprudent, or contrary to the advice and judgment of the lawyer, or with which the lawyer has a fundamental disagreement; or

(5) the client has used the lawyer's services to perpetrate a crime or fraud; or

(6) the client fails substantially to fulfill an obligation to the lawyer regarding the lawyer's services and has been given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled; or

(7) the representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client; or

(8) the client insists upon presenting a claim or defense that is not warranted under existing law and cannot be supported by good faith argument for an extension, modification, or reversal of existing law; or

(9) other good cause for withdrawal exists.

(c) A lawyer must comply with applicable law requiring notice to or permission of a tribunal when terminating a representation. When ordered to do so by a tribunal, a lawyer shall continue representation notwithstanding good cause for terminating the representation. (d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee or expense that has not been earned or incurred. The lawyer may retain papers relating to the client to the extent permitted by other law.

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Comment 27 and 28 to Rule 1.7 A lawyer should be cautious prior to preparing wills for related family members, even for a husband and wife, to ensure no conflicts of interests are present. Whether a conflict is consentable depends on the circumstances. This comment references Comment 15 for more information in that regard.

CPR 15 following Rule 1.7 A lawyer/guardian may not give a title opinion to the purchaser of his ward’s property.

RPC 229 following Rule 1.7 A lawyer who jointly represented a husband and wife in the preparation and execution of estate planning documents may not prepare a codicil to the will of one spouse without the knowledge of the other spouse if the codicil will affect adversely the interest of the other spouse or each spouse agreed not to change the estate plan without informing the other spouse.

Comment 8 to Rule 1.8 A lawyer may be named as the executor of the client’s will if certain disclosures are made.

Comment 11 to Rule 1.8 A person other than the client may pay for legal services if certain consent and protections are put in place, and a conflict of interest does not arise due to the lawyer’s loyalty to the paying person or entity.

RPC 137 following Rule 1.9 An attorney who formerly represented an estate may not subsequently defend the former personal representative against a claim brought by the estate.

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