07.29.2011 North Carolina Substantially Revises Procedural Rules for Estate Matters and Caveat Proceedings and Expands Reach of Non-Claim Statute


On June 27, 2011, Governor Beverly Purdue signed into law North Carolina Senate Bill 432[1] (the “Act”) which makes substantial changes to the administration of decedent estates in North Carolina.  Effective for decedents dying on or after January 1, 2012, the Act clarifies and revises the subject matter jurisdiction of the clerk of superior court, the procedures governing estate matters, and the procedures for instituting caveat proceedings.  The Act also expands the scope of North Carolina’s non-claim statute to include most claims of the State of North Carolina.

I.          Subject Matter Jurisdiction for “Estate Proceedings”

Under prior law, confusion existed as to whether the clerk of superior court (the “clerk”) could exercise jurisdiction over certain estate matters. The Act clarifies that the clerk has exclusive, original jurisdiction over “estate proceedings.”[2]  Estate proceedings are generally defined as any “matter ... related to the administration, distribution or settlement of an estate, other than a special proceeding.”[3]  The probate of wills, appointment or removal of a personal representative, and proceedings to determine the spousal elective share, ascertain heirs, approve family settlement agreements, construct wills, determine priority among creditors, and determine possession and recovery of estate property are expressly defined as “estate proceedings.”[4]  The Act also provides particular matters that the clerk does not have jurisdiction to decide, including actions by or against creditors of the estate, claims for monetary damages, caveat proceedings, proceedings to determine venue, and certain actions to recover property fraudulently conveyed by a decedent.[5]

II.        New Procedures for “Estate Proceedings”

The Act unifies the previously divergent procedures governing trust proceedings and estate proceedings.[6]  Under prior law, the procedures governing estate matters largely depended on the specific type of estate matter at issue.  For example, a petition for examination of a person in possession of estate property required only that the personal representative file an affidavit with the clerk, that the clerk issue notice of the hearing, and that the hearing occur within three days from issuance of the notice.[7]  In contrast, a petition to remove a personal representative required the filing of a verified complaint, issuance of a citation, and at least ten days before a hearing could commence.[8]

To begin an estate proceeding under the Act, a petition with a short and plain statement of the facts and relief requested must be filed in the estate file.[9] Thereafter, the clerk issues and serves an “estate proceeding summons” on the respondent pursuant to the standard service methods under Rule 4 of the Rules of Civil Procedure.  The respondent is given twenty days to respond to the petition and can request that the clerk grant additional time to respond.  At the expiration of the time period to respond to the petition, any party or the clerk may provide notice of the hearing.  Selected Rules of Civil Procedure automatically apply to the estate proceeding, including the ability of either party to issue subpoenas.  Upon motion of either party, the clerk may also direct that discovery may be commenced.  The Act adopts a standard ten day time period for appealing decisions of the clerk as well as the methods for filing the appeal set forth in G.S. §1-301.3.[10]

III.       New Procedures for Caveat Proceedings

The Act substantially revises the procedures for instituting a caveat proceeding in North Carolina.  Under prior law, a caveat proceeding was commenced only after the caveator filed the caveat and posted bond with the clerk.[11]  The case was then transferred to the superior court for trial, and the caveator was required to serve notice on all interested parties to appear at an alignment hearing where each party would side with either the propounder of the will or the caveator.  A copy of the caveat was not required to accompany the notice.  Questions existed over whether interested parties that did not participate in the alignment hearing should be joined as a party to the proceeding and, therefore, be required to join in the execution of a family settlement agreement.

The new procedures provide that a caveat is filed in the decedent’s estate file after payment of a filing fee.[12]  The case is transferred to the superior court docket, and the caveator is required to serve the caveat upon all interested parties in accordance with Rule 4 of the Rules of Civil Procedure.[13]  After service is obtained, the caveator is required to serve notice of the alignment hearing on all interested parties.  Interested parties that do not appear at the alignment hearing are dismissed from the proceeding, but are bound by the judgment or settlement.[14]  The Act also clarifies that the consent of interested parties that fail to align at the hearing is not required to enter a binding settlement agreement.  The requirement that the caveator post a bond to commence the caveat proceeding is also repealed.  Instead, a party may move the court to require the caveator to post appropriate security if the filing of the caveat will cause the estate to incur undue costs and damages.[15]

IV.       Scope of Non-Claim Statute Expanded

The Act also expands North Carolina’s non-claim statute to provide that “claims by the State of North Carolina, its subdivisions, and its agencies” are barred to the same extent as other claims, unless otherwise provided in the statute.[16] Accordingly, the legislation serves to overturn prior judicial decisions holding that the non-claim statute did not preclude the State of North Carolina from pursuing claims for Medicaid reimbursement from a decedent’s estate after the running of the non-claims period.[17]  The Act makes clear that all claims are barred within the limitations period with the limited exception for claims by the United States, tax claims of the State of North Carolina, and claims based on a warranty in the conveyance of real estate.   

[1] N.C. Session Law 2011-344.

[2] N.C. Gen. Stat. §28A-2-4 (effective Jan. 1 2012).

[3] Id. § 28A-1-1(1b)(effective Jan. 1 2012).

[4] Id. § 28A-2-4(a)(effective Jan. 1 2012).

[5] Id. § 28A-2-4(c)(effective Jan. 1 2012).

[6] Id. § 28A-2-6 (effective Jan. 1 2012).

[7] Id. § 28A-15-12.

[8] Id. § 28A-9-1.

[9] Id. § 28A-2-6 (effective Jan. 1 2012).

[10] Id. § 28A-2-9 (effective Jan. 1 2012).

[11] Id. §§ 31-32 through 31-36.

[12] Id. §§ 31-32 and 7A-307(effective Jan. 1 2012)(assessing $200.00 fee for filing a caveat proceeding).

[13] Id. § 31-33(a) (effective Jan. 1 2012).

[14] Id. § 31-33(b) (effective Jan. 1 2012).

[15] Id. § 31-33(d) (effective Jan. 1 2012).

[16] Id. § 28A-19-3(j) (effective Jan. 1 2012).

[17] State HHS v. Thompkins, 695 S.E.2d 133 (N.C. App. 2010).

For more information about this topic, please contact the author or any member of the Williams Mullen Private Client & Fiduciary Services Team.