My mother-in-law died. My husband, her executor, did not file a will or open probate. What happens if we sell the house?

By Quentin Fottrell

'The home was willed to her son with the provision that he paid his sisters a percentage of the home's value'

Dear Quentin,

My mother-in-law passed away in 2009 in North Carolina and her only asset was her home that was worth $125,000 at the time. The home was willed to her son with the provision that he paid his sisters a percentage of the home's value - which he did, and the house was retitled to him.

Her bank account included her son as joint survivor and was used to pay credit-card debts, as were a couple of small insurance payouts, but it did not cover all of her debt. The creditors were notified that there was nothing left to pay the balances.

My concern is that the executor, my husband, never filed the will nor did it go through probate. Can the state take any legal actions against the executor if there were no other assets and the terms of the will were satisfied? Will this affect the future sale of the house?

Concerned Wife

Related: His daughter whispers, 'Where are your paychecks?' in his ear. My stepfather is in a nursing home with dementia. How can my mother and I protect him?

Dear Concerned Wife,

This sounds like a highly unusual situation, but the law varies by state.

According to the North Carolina Judicial Branch: "Land and houses generally are not administered through the probate estate unless the will provides otherwise or the sale of these assets is needed to pay estate debts." Not filing a will is highly irregular for nonspouses, even if you carried out the wishes therein. In many states, there's a difference between a "legal" and "insurable" title. That is, you might legally be on the deed as a passage of rights in North Carolina, but a title company may not wish to insure the property without the will being properly filed with the county.

When the owner of a property dies in North Carolina, unless otherwise noted in the will, you typically don't need to do anything to change the deed as an heir to that property. "The deed to the property automatically transfers to you after your loved one passes away," according to Farmer & Morris Law, which has offices in North Carolina. "From that point, all you would need to prove that you are the rightful owner of the property is a copy of your loved one's death certificate [and] copy of your loved one's will awarding you the property."

From your telling, there was no disagreement among the heirs with the house sale, which is a silver or, at least, an aluminum lining. In this case, your husband, as executor, bought out his siblings' shares of the house with their agreement. All interested parties have a right to challenge a will - except in this case there was no will filed, and yet all legal heirs agreed to cash out of their share of the house. Given that a will was not filed, they could have sued the executor for failing to carry out his duties, because an executor has a fiduciary duty to act in the interest of all parties.

Executor's responsibilities

One caveat: If there was equity in your mother-in-law's home in 2009, technically there were funds to pay off the creditors. As North Carolina Probate Solutions states: "In North Carolina, real estate does not have to go through probate unless the estate does not have enough funds to pay creditors and other fees. Even though real estate does not have to go through probate, it is highly advised not to sell the real estate until after the notice to creditor's period has completed. Creditors have three months to present a claim against the estate."

There are situations where you would not have to open probate on an estate in North Carolina. They include beneficiaries on joint accounts and/or payable-on-death accounts (these could include retirement accounts or life-insurance accounts), co-owners of properties held as joint tenants, and assets held in a revocable trust. Heirs can also fill out a small-estate application if the assets in the deceased person's name do not exceed $20,000 (excluding real estate) and/or if the deceased person's property is not sold within two years of their death.

"There is no law saying when a designated executor must start the probate process within a specific timeframe," according to Mullen Holland & Cooper, which is based in Gastonia, N.C. "However, the general expectation is that the executor will begin the process within 60 days after the deceased's death. If they wait any longer, other parties can apply to become the estate administrator, which could lead to an extended legal battle." If the executor waits too long to start probate, it adds, they or the estate might face legal action from tax authorities or creditors.

The executor's responsibilities are extensive - including maintenance of the real estate, paying the mortgage, making sure squatters don't occupy the property, clearing out and distributing furniture and other items to heirs, and staying current on insurance and real-estate taxes. Don't wait until you decide to sell your home. Contact a trusts-and-estates attorney about how and when your husband's siblings bought your husband out of their share of the house, and have a copy of those transactions, your mother-in-law's death certificate and her last will and testament.

It's better to do it now than run into a problem when you do get an offer.

The Moneyist regrets he cannot reply to questions individually.

Previous columns by Quentin Fottrell:

My late aunt gave her husband a life tenancy in her home - but her attorney won't even let us see the will. Is this a bad sign?

'We were all set to enjoy our retirement': My son invested in startups and we bailed him out with $100,000. What now?

I don't want to end up with stalkers': Should I tell my heirs that I'm writing a will and how much they can expect to inherit?

Check out The Moneyist's private Facebook group, where members help answer life's thorniest money issues. Post your questions, or weigh in on the latest Moneyist columns.

By emailing your questions to The Moneyist or posting your dilemmas on The Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.

By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

-Quentin Fottrell

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-05-24 2002ET

Copyright (c) 2024 Dow Jones & Company, Inc.