NORTH CAROLINA WILLS AND TRUSTS REQUIREMENTS
Statutory Authority.
Wills:ย North Carolina Gen. Stat., Chapter 31 (N.C.G.S. ยง31-1, et. seq.).
Trusts: N.C.G.S., Chapter 36A (Trusts and Trustees), Chapter 36(c) (NC Uniform Trust Code)
North Carolina Will Requirements.
To create a valid will in North Carolina, a testator must be at least 18 years of age and of sound mind.ย Other than nuncupative (oral) willsโwhich have their own requirementsโa will in North Carolina must be in writing and must be signed by the testator (or someone else signing for the testator in the testatorโs presence at the testatorโs request).
North Carolina wills must also be attested by two competent witnesses, each of whom must sign the will in the testatorโs presence.ย The witnesses must observe the testator signing the document or hear the testator acknowledge that the signature is genuine.
To be eligible to witness a will, an individual need only be competent to act as a witness in North Carolina generally.ย Neither an executor of a will nor a beneficiary is prohibited from acting as a witness to the will.ย However, devises to an interested witness (or to an interested witnessโs spouse) are deemed void if the will does not have at least two other disinterested witnesses.
North Carolina law permits wills to incorporate by reference other documents if the document is in existence when the will is executed and sufficiently described to allow identification.
Although North Carolina wills need not be notarized, a will can be made โself-provedโ if the testator and the willโs witnesses execute a notarized affidavit to accompany the will.ย When a will is self-proved, it can be admitted to probate based upon the affidavit and without testimony from the witnesses.ย ย
A self-proved affidavit may be executed at the same time as the will itself or at a future time, as long as the testator and witnesses remain living. Within the self-proved affidavit, the testator attests that the document was signed willingly as a will under the testatorโs own volition.ย Witnesses attest that the testator signed the will of his or her own volition and was at least 18 years old, of sound mind, and not under duress when signing. The North Carolina legislature publishes a recommended form for the affidavit at N.C.G.S. ยง31-11.6.
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Amendment, Revision, and Revocation of North Carolina Wills.
A North Carolina will may be revoked or amended through a later will or codicil (an addendum to an existing will) or similar writing that complies with all formalities required for valid wills. ย Revocation can also be accomplished through physical destruction of the document, such as by burning or tearing, with the intention of revoking the will.
A North Carolina will is not deemed to have been revoked if the testator is married after executing the document.ย A surviving spouse omitted from a will does, though, have the right to petition for an elective share of a decedent spouseโs estate.ย
If a testator is divorced after executing a will, any provisions in favor of the former spouse are deemed to have been revoked unless the will expressly provides otherwise.ย Provisions deemed revoked due to divorce are revived if the testator later remarries the same spouse.
If a testator has a child after execution of a willโand if the testatorโs will does not contemplate the birth or otherwise provide for the childโthe child inherits the same share of the estate the child would have inherited had the testator died intestate.ย However, the assumed share of an after-born child is not effective if a surviving spouse receives the entire estate under the will or if the testator had other children alive when the will was executed who do not take under the will.
Holographic and Oral Wills.
An unwitnessed will can be nonetheless valid as a holographic will if all pertinent provisions in the will are written in the testatorโs handwriting.ย A holographic will does not require witnesses, but must be signed by the testator and found after the testatorโs death among the testatorโs effects, or in a safe place where it was deposited by the testator, or in the possession of a person with whom the testator left it for safe-keeping.
North Carolina law recognizes oral (or โnuncupativeโ) wills under limited circumstances.ย The testator must make the statements while in his or her last sickness or while in imminent danger of death from which the testator does not survive.ย The statements constituting an oral will must be heard simultaneously by two witnesses, and the testator must declare that the oral statements are intended as the testatorโs last will.ย ย
North Carolina Trust Requirements.
Trusts in North Carolina are governed by North Carolinaโs version of the Uniform Trust Code, enacted by the legislature at N.C.G.S. ยง36C-1-101, et. seq.ย North Carolina trusts can be created for any lawful purpose that does not violate North Carolinaโs public policy and is possible to achieve.ย The purpose and terms of a North Carolina trust must ultimately be designed to benefit the trustโs beneficiaries.ย
A North Carolina trust can be created through transfer of property by a grantor to a trustee, a grantorโs declaration that property is owned as trustee, by exercising a power of appointment in favor of a trustee, or through a court order establishing the trust.
A valid trust is only created under North Carolina law if the settlor has adequate capacity to create the trust and expresses an intent to create a trust.ย For revocable trusts, the standard for capacity is the same as for wills.ย A trust found to have been induced by fraud, duress, or undue influence is voidable under North Carolina law.ย
Additionally, a trustโs trustee must have actual duties to perform, and a sole trustee cannot also be a trustโs sole beneficiary.ย Trustees who manage assets are governed by the โprudent investor rule,โ though the rule may be modified under the terms of the trust.ย A North Carolina trust must also have a reasonably ascertainable beneficiary (subject to exceptions such as for charitable trusts and trusts for the care of animals).
Though most trusts are evidenced by a written instrument setting forth the trustโs terms, North Carolina law recognizes oral trusts.ย However, the creation and terms of an oral trust must be established by clear and convincing evidence.
North Carolina trusts terminate upon revocation or expiration under the trustโs own terms, when there is no purpose of the trust remaining to be achieved, or when the trustโs purpose becomes unlawful or impossible.ย Upon termination, a trustโs assets are distributed as agreed by beneficiaries, ordered by a court, or otherwise consistently with the trustโs purposes.ย ย
If a North Carolina grantor divorces after creating a revocable trust, any provisions in favor of the former spouse are deemed to have been revoked, and the trust is treated as if the former spouse had died prior to the grantor.
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Estate Tax:ย Effective in 2015, the North Carolina legislature repealed North Carolinaโs estate tax.ย Large North Carolina estates may still be liable for federal estate taxes. North Carolina does not impose an inheritance tax.
Simplified Probate:ย North Carolina provides a streamlined probate process for certain small estates.ย Qualifying estates must have less than $20,000 in personal property.ย If the surviving spouse stands to inherit the entire estate, the limit is increased to $30,000.ย When simplified probate applies, an heir who will inherit personal property from the estate can receive it by completing a compliant affidavit, rather than proceeding through full probate.ย A similar summary administration process is available when a surviving spouse is an estateโs only beneficiary and agrees to assume all claims against the estate that are not discharged by the decedent spouseโs death.ย ย
Non-Probate Transfers:ย Along with living trusts, North Carolina law offers multiple options for non-probate transfer of assets.ย Assets co-owned as joint tenants with a right of survivorship automatically transfer to a surviving owner upon the other ownerโs death.ย North Carolina also recognizes tenancy by the entireties, another joint ownership form that includes a right of survivorship.ย Tenancy by the entireties can only be used for co-ownership by two spouses and only to own real estate.ย POD (payable-on-death) and TOD (transfer-on-death) designations, which provide for automatic transfer to a beneficiary upon an ownerโs death, can be added to certain assets such as financial accounts, CDs, and securities.ย Similarly, beneficiary designations to retirement accounts and life insurance policies allow for non-probate transfer.ย TOD designations are not available in North Carolina for real estate deeds or motor vehicle titles, though a bill recognizing TOD deeds was recently introduced in the North Carolina legislature.
Spousal Elective Share:ย To protect against disinheritance, North Carolina law guarantees surviving spouses an elective share in a decedent spouseโs estate.ย The share ranges from 15 to 50 percent of the decedentโs net assets, depending on how long the couple was married.ย The value of property that otherwise passes to the surviving spouse is subtracted from the elective share.ย Surviving spouses are also entitled to a spousal support allowance of $60,000 that is exempt from claims against the estate.
Spendthrift Trusts:ย North Carolina law expressly recognizes spendthrift trusts protecting trust assets from claims of most creditors of trust beneficiaries.ย If a trust includes a spendthrift provision, a beneficiaryโs creditor cannot attach trust property until it is actually distributed to the beneficiary. However, interests in spendthrift trusts can be attached to satisfy some domestic support obligations.ย If a spendthrift trust is revocable, the grantorโs creditors can attach trust assets during the grantorโs lifetime, and trust assets can be reached to satisfy estate claims.ย If irrevocable, creditors of the settlor can only reach the amount of assets that can be distributed for the settlorโs benefit.ย ย
Creating a will or trust does not have to be difficult or intimidating.ย However, certain circumstancesโlike second marriages, stepchildren, aging parents, special needs beneficiaries, guardianships, and business interests (to name a few)โcan add a layer of complexity and result in unforeseen long-term consequences.ย Whenever any out-of-the-ordinary issues are present, itโs a good idea to consult with an experienced attorney familiar with and licensed under the laws of the relevant jurisdiction.
