NORTH CAROLINA ESTATE ADMINISTRATION MANUAL, ninth edition xix

NORTH CAROLINA

ESTATE ADMINISTRATION MANUALninth edition

Foreword.....................................................................................................................................................viiPublisher Remarks................................................................................................................................xiBiographies...............................................................................................................................................xiii

CHAPTER IINTRODUCTION

A. OVERVIEW............................................................................................................................I-5B. ADVISORY OF ADDRESSES FOR TAX RETURNS...........................................................I-6

CHAPTER IIPRE-QUALIFICATION

A COMPILING INFORMATION...........................................................................................II-5 1. Preliminary Information.........................................................................................II-5 a. First Communication..................................................................................II-5 b. Documentation to Request..........................................................................II-5 2. Checklists..................................................................................................................II-5 a. Preliminary Checklist of Decedent’s Property...........................................II-5

b. Inventory of Decedent’s Assets and Liabilities...........................................II-5 c. Personal Information Worksheet................................................................II-6B. INFORMATION FOR FAMILY AND PR..........................................................................II-6 1. First Conference.......................................................................................................II-6 a. Amount of Information to Cover...............................................................II-6 b. Procedural Overview...................................................................................II-6 c. Time Frame..................................................................................................II-6 2. Assets Not Subject to Administration.....................................................................II-7 a. Education for Family and PR about Asset Administration........................II-7 b. Handle Non-Probate Assets........................................................................II-7 3. Social Security Claims..............................................................................................II-7 4. Review of Surviving Spouse’s Will.........................................................................II-7 5. Duties, Fees and Responsibilities of the Attorney..................................................II-7 6. Introduction to Staff................................................................................................II-7 7. Initial Filing Preparation.........................................................................................II-8 a. Application Information.............................................................................II-8 b. Estimated Asset Value..................................................................................II-8 8. Checklist.................................................................................................................II-8C. ORGANIZING THE ESTATE FILE...................................................................................II-8 1. Main File...................................................................................................................II-8

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2. Subfiles.....................................................................................................................II-9D. LOCATING THE WILL.......................................................................................................II-9 1. Initial Concerns........................................................................................................II-9 2. Possible Locations....................................................................................................II-9 3. Potential for Revocation or Codicil.......................................................................II-10 4. Photocopy...............................................................................................................II-10E. SAFE DEPOSIT BOX INVENTORY.................................................................................II-10 1. Necessity of Inventory............................................................................................II-10 2. Inadvertent Openings............................................................................................II-10 3. Procedure for Safe Deposit Box Inventory............................................................II-10 a. Clerk’s Presence Generally Required.........................................................II-10 b. Opening the Box........................................................................................II-11 c. Fees.............................................................................................................II-11 d. Clerk’s Presence Not Required in Certain Circumstances........................II-11 (1) Deputy Clerk.................................................................................II-11 (2) Qualified Person............................................................................II-11 (3) Deputy...........................................................................................II-11 e. Explain Reason for Inventory....................................................................II-12 f. Attorney Prepared Inventory.....................................................................II-12 4. Removal of Contents..............................................................................................II-12 5. Assets of Others......................................................................................................II-12 6. Checklist and Forms...............................................................................................II-13F. ENVIRONMENTAL CONSIDERATIONS......................................................................II-13 1. Strict, Joint and Several Liability Under Environmental Statutes.......................II-13 a. Owners......................................................................................................II-13 b. Operators.................................................................................................II-14 c. Other........................................................................................................II-14 2. Liability Under Superfund.....................................................................................II-14 3. The Fiduciary’s Dilemma......................................................................................II-14 4. Methods to Reduce the Likelihood of Liability....................................................II-15 a. Refuse to Serve as the Personal Representative........................................ II-15 b. Environmental Investigation.....................................................................II-15 c. Safe Harbor Provisions of CERCLA.........................................................II-15 d. Insurance....................................................................................................II-15 e. Corporate Form.........................................................................................II-15 f. Limited Duty..............................................................................................II-16Form II-1 Preliminary Checklist of Decedent’s Property......................................................II-17Form II-2 Inventory of Decedent’s Assets and Liabilities.....................................................II-21Form II-3 Personal Information Worksheet..........................................................................II-29Form II-4 Checklist of Matters to Cover at First Conference...............................................II-31Form II-5 Checklist for Safe Deposit Box Inventory.............................................................II-33Form II-6 Lock Box Inventory................................................................................................II-35

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CHAPTER IIIEXCEPTIONS TO REQUIREMENT OF FORMAL ESTATE ADMINISTRATION

A. ASSETS NOT SUBJECT TO ADMINISTRATION...........................................................III-5B. SMALL ESTATES................................................................................................................III-5 1. In General................................................................................................................III-5 2. Administration by Affidavit....................................................................................III-6 a. If Spouse is Only Heir................................................................................III-6 b. Contents of Affidavit..................................................................................III-6 c. Fees............................................................................................................III-7 d. Distribution of Property............................................................................III-7 e. Final Affidavit.............................................................................................III-7 f. Real Estate...................................................................................................III-8 3. Payment to Clerk of Money Owed to Decedent...................................................III-8 4. Removal of Tangible Personal Property by Landlord after Death of Residential Tenant..................................................................................................III-8C. FAMILY ALLOWANCES.....................................................................................................III-9 1. Spouse and Dependent Children...........................................................................III-9 2. Procedure and Forms............................................................................................III-10 3. Fees......................................................................................................................III-11 4. Additional Allowance...........................................................................................III-11D. SUMMARY ADMINISTRATION....................................................................................III-12 1. Availability............................................................................................................III-12 2. Process.................................................................................................................III-12 a. Filing Petition...........................................................................................III-12 b. Forms.......................................................................................................III-13 (1) Application and Petition for Summary Administration of Estate Without a Will...................................................................III-13 (2) Application for Probate and Petition for Summary Administration............................................................................III-13 (3) Order of Summary Administration, AOC Form E-904M..........III-14 3. Costs.....................................................................................................................III-14 4. Order of Clerk.......................................................................................................III-15 5. Liabilities..............................................................................................................III-15 6. Assets....................................................................................................................III-15 7. Personal Representative........................................................................................III-15E. NOTICE TO CREDITORS...............................................................................................III-16 1. Notice to Creditors in Small Estates, Administration by Affidavit and Summary Administration....................................................................................III-16 2. Notice to Creditors Without Estate Administration..........................................III-16 a. In General.................................................................................................III-16 b. Petition for Appointment of Limited Personal Representative..............III-17 c. Notice and Presentation of Claims..........................................................III-17 d. Final Account of Limited Personal Representative................................III-17

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F. TRANSFERS OF MOTOR VEHICLES.............................................................................III-18G. REAL ESTATE SALES.......................................................................................................III-18 1. Whether or Not Administration Required..........................................................III-18 2. Sales by Heirs and Devisees..................................................................................III-19 3. Sale Needed for Liquidity.....................................................................................III-19H. TAX RESPONSIBILITIES................................................................................................III-19 1. Tax Waivers, Estate Tax Return or Certification of No Tax Due........................III-19 2. Deduction of Administration Expenses..............................................................III-20I. CHECKLIST.....................................................................................................................III-20Form III-1 Affidavit of Authority to Assign Title (MVR-317)...............................................III-21Form III-2 Checklist of Exceptions to Requirement of Estate Administration...................III-23

CHAPTER IVQUALIFICATION IN GENERAL

A. ROLE OF CLERK................................................................................................................IV-5B. VENUE...............................................................................................................................IV-5C. PROCEDURE AND FORMS..............................................................................................IV-5 1. In General................................................................................................................IV-5 2. Forms.......................................................................................................................IV-6 3. Family History Intake Procedures and Forms......................................................IV-6D. FEES..................................................................................................................................IV-6Form IV-1 Questions About Deceased, Will and Family.........................................................IV-7Form IV-2 Interrogatories About Deceased and Family – Intestate.......................................IV-9Form IV-3 Court Costs and Fees Chart..................................................................................IV-11

CHAPTER VQUALIFICATION OF PERSONAL REPRESENTATIVE IN THE TESTATE ESTATE

A. PROBATING THE WILL....................................................................................................V-5 1. Locating the Will......................................................................................................V-5 2. Time Limitations......................................................................................................V-5 3. Filing or Probating of Will Without Qualification.................................................V-5 4. Probate in Common Form.......................................................................................V-6 5. Probate in Solemn Form..........................................................................................V-6 6. Probate of Attested, Written Will..............................................................................V-6 a. Self-Proved Wills..........................................................................................V-6 b. Other Attested, Written Wills.......................................................................V-7 7. Probate of Holographic Will....................................................................................V-7 8. Probate of Nuncupative Will....................................................................................V-7 9. Probate of Wills of Persons in Armed Forces..........................................................V-8B. LOCATING THE WITNESSES...........................................................................................V-8 1. Two Witnesses..........................................................................................................V-8 2. One Witness..............................................................................................................V-8

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3. No Witnesses.............................................................................................................V-8 4. Unavailable Witnesses..............................................................................................V-9C. RENUNCIATION BY PERSONAL REPRESENTATIVE...................................................V-9 1. Express Renunciation...............................................................................................V-9 2. Implied Renunciation..............................................................................................V-9 3. Determining Successor.............................................................................................V-9D. PERSONS DISQUALIFIED TO SERVE AS PERSONAL REPRESENTATIVE.................V-10E. EVIDENCE OF DEATH.....................................................................................................V-10F. PREPARATION OF FORMS..............................................................................................V-11 1. Application for Probate and Letters.......................................................................V-11 a. File Number................................................................................................V-11 b. Beneficiaries and Trusts.............................................................................V-11 c. Approximation of Values...........................................................................V-12 d. Property Which Can Be Added to Estate to Pay Claims..........................V-12 e. Other Property...........................................................................................V-12 f. Signatures and Attorney Information.......................................................V-12 g. Social Security Number.............................................................................V-13 h. Additional Copies......................................................................................V-13 i. Signature Cards for Joint Bank Accounts..................................................V-13 j. Qualification Fees.......................................................................................V-13 2. Appointment of Resident Process Agent...............................................................V-13 3. Bond........................................................................................................................V-13 4. Certificate of Probate..............................................................................................V-14 5. Oath........................................................................................................................V-14 6. Order Authorizing Issuance of Letters..................................................................V-14 7. Letters Testamentary..............................................................................................V-14 8. Notice to Beneficiary..............................................................................................V-15G. NOTICE TO ATTORNEY..................................................................................................V-15H. CHECKLIST.....................................................................................................................V-15I. PROBATE OF A LOST WILL............................................................................................V-15J. REVOCATION OF LETTERS...........................................................................................V-15 1. Revocation After Hearing.......................................................................................V-15 2. Summary Revocation.............................................................................................V-16 3. Effect of Revocation................................................................................................V-16K. RESIGNATION OF PERSONAL REPRESENTATIVE....................................................V-16Form V-1 Checklist of Qualification Procedures in the Testate Estate..................................V-17Form V-2 Affidavit of Lost Will..............................................................................................V-19Form V-3 Petition for Probate of Copy of Lost Will..............................................................V-21

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CHAPTER VIQUALIFICATION OF PERSONAL REPRESENTATIVE IN THE INTESTATE ESTATE

A. DETERMINING WHO WILL BE ADMINISTRATOR....................................................VI-5B. EVIDENCE OF DEATH....................................................................................................VI-6C. PREPARATION OF FORMS.............................................................................................VI-6 1. Renunciations........................................................................................................VI-6 2. Application for Letters of Administration.............................................................VI-7 3. Appointment of Resident Process Agent...............................................................VI-7 4. Bond......................................................................................................................VI-7 5. Oath.......................................................................................................................VI-8 6. Order Authorizing Issuance of Letters...................................................................VI-8 7. Letters of Administration.......................................................................................VI-9 8. Notice to Heirs........................................................................................................VI-9 9. Notice to Attorney...................................................................................................VI-9D. CHECKLIST......................................................................................................................VI-9E. REVOCATION OF LETTERS............................................................................................VI-9 1. Revocation After Hearing.......................................................................................VI-9 2. Summary Revocation...........................................................................................VI-10 3. Effect of Revocation..............................................................................................VI-10F. RESIGNATION OF PERSONAL REPRESENTATIVE..................................................VI-10Form VI-1 Checklist of Qualification Procedures in the Intestate Estate.............................VI-11

CHAPTER VIIASCERTAINING BENEFICIARIES

A. CIRCUMSTANCES EXISTING AT TIME OF DEATH...................................................VII-5 1. Intestacy.............................................................................................................VII-5 2. Adopted Children..................................................................................................VII-6 3. Lapsed Bequests.....................................................................................................VII-7 4. Simultaneous Death..............................................................................................VII-7 5. Ademption by Extinction and Satisfaction...........................................................VII-8 6. Marriage and Divorce............................................................................................VII-8 7. After-Born Children..............................................................................................VII-9 8. Illegitimate Children.............................................................................................VII-9 9. Acts Barring Property Rights..............................................................................VII-10 a. Surviving Spouse.....................................................................................VII-10 b. Parent......................................................................................................VII-11 c. Slayer........................................................................................................VII-11 10. Difficulty in Identifying Takers...........................................................................VII-12B. POST-DEATH CIRCUMSTANCES – RENUNCIATION............................................VII-12 1. Procedure for Renunciation by an Individual....................................................VII-13 2. Procedure for Renunciation by a Fiduciary........................................................VII-13 3. Additional Requirements for Effective Renunciation........................................VII-14

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4. Waiver of Right to Renounce..............................................................................VII-15C. POST-DEATH CIRCUMSTANCES – ELECTIVE SHARE STATUTE........................VII-15 1. General Guidelines..............................................................................................VII-16 2. Basic Statutory Procedure for Determining Elective Share...............................VII-16 a. Step 1.......................................................................................................VII-16 b. Step 2.......................................................................................................VII-16 c. Step 3.......................................................................................................VII-17 d. Step 4.......................................................................................................VII-17 e. Step 5.......................................................................................................VII-17 f. Step 6.......................................................................................................VII-17 g. Step 7.......................................................................................................VII-17 3. Total Net Assets...................................................................................................VII-17 a. Intestate Property....................................................................................VII-18 b. General Power of Appointment..............................................................VII-18 c. Property Held as Tenants by the Entirety or as Joint Tenants with Right of Survivorship..............................................................................VII-18 d. Benefits Payable by Reason of Decedent’s Death.................................VII-18 e. Property Irrevocably Transferred but to Which Decedent Retained a Life Interest...........................................................................................VII-18 f. Property Transferred with Power Over Income....................................VII-19 g. Property Transferred Within One Year of Death....................................VII-19 h. Year’s Allowances.....................................................................................VII-19 4. Property Passing to the Surviving Spouse..........................................................VII-19 5. Spousal Trusts......................................................................................................VII-20 6. Procedure for Determining the Elective Share...................................................VII-21 7. Valuation of Assets...............................................................................................VII-21

8. Satisfaction of Elective Share...............................................................................VII-21 9. Waiver.................................................................................................................VII-22D. POST-DEATH CIRCUMSTANCES – CAVEATS..........................................................VII-22E. POST-DEATH CIRCUMSTANCES – DECLARATORY JUDGMENT PROCEEDINGS...............................................................................................................VII-24F. POST-DEATH CIRCUMSTANCES – FAMILY SETTLEMENT AGREEMENTS................................................................................................................VII-25Form VII-1 Summary of North Carolina Intestate Succession Act.......................................VII-27Form VII-2 Renunciation and Qualified Disclaimer..............................................................VII-29Form VII-3 Claim for an Elective Share..................................................................................VII-31

CHAPTER VIIIPOST-QUALIFICATION PROCEDURES

A. NEED TICKLER SYSTEM...............................................................................................VIII-5B. SPECIFIC PROCEDURES...............................................................................................VIII-5 1. Notice to Creditors and Claims Against the Estate............................................VIII-5 a. Verify Accuracy........................................................................................VIII-6

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b. Affidavit of Publication...........................................................................VIII-6 c. Claims Barred..........................................................................................VIII-6 d. Payment of Claim....................................................................................VIII-7 e. Satisfaction Other Than by Payment......................................................VIII-8 f. Debt on Entirety Property.......................................................................VIII-8 2. Inheritance Tax Waivers.......................................................................................VIII-9 3. Death Certificates.................................................................................................VIII-9 4. Real Property in Other Locations and Ancillary Administration....................VIII-10 a. Real Property Located in Other Counties and States..........................VIII-10 b. Ancillary Administration in North Carolina.......................................VIII-11 5. Opening Estate Accounts...................................................................................VIII-11 6. Federal Forms 56 and SS-4...............................................................................VIII-12 7. Decedent’s Estimated Income Tax Payments...................................................VIII-13 8. Transfers Prior to Death....................................................................................VIII-13 9. Sale of Assets and Abatement............................................................................VIII-14 10. Letter to PR.........................................................................................................VIII-15Form VIII-1 Estate Deadlines Sheet........................................................................................VIII-17Form VIII-2 Transmittal Letter..............................................................................................VIII-21Form VIII-3 Published Notice to Creditors...........................................................................VIII-23Form VIII-4 Notice to Creditors.............................................................................................VIII-25Form VIII-5 Affidavit of Publication.....................................................................................VIII-27Form VIII-6 Letter to Personal Representative Regarding Duties........................................VIII-29

CHAPTER IXHANDLING ASSETS

PART I. HANDLING ASSETS GENERALLY

A. DISCOVERY OF ASSETS..................................................................................................IX-13 1. Title to Property....................................................................................................IX-13 a. Personal Property.....................................................................................IX-13 b. Real Property............................................................................................IX-13 2. Searching for Assets..............................................................................................IX-13 3. Proceeding to Discover Assets...............................................................................IX-13 a. Institute Proceeding.................................................................................IX-13 b. Examination.............................................................................................IX-14 c. Appeal.....................................................................................................IX-14B. PRESERVATION OF ASSETS..........................................................................................IX-14C. INVESTMENT OF ASSETS..............................................................................................IX-14D. SALE OR LEASE OF PERSONALTY................................................................................IX-15E. NOTARY FOR PERSONAL REPRESENTATIVES.........................................................IX-15Form IX-1 Administration Checklist: Searching for Assets...................................................IX-17Form IX-2 Administration Checklist: Preserving Estate Assets............................................IX-19

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PART II. SPECIFIC ASSETS

Tab 1. Bank Accounts, Certificates of Deposit and Other Depository Accounts

A. SEARCHING FOR ACCOUNTS......................................................................................IX-25B. TAX WAIVERS..................................................................................................................IX-25C. INDIVIDUAL ACCOUNTS.............................................................................................IX-25D. JOINT ACCOUNTS..........................................................................................................IX-26 1. N.C.G.S. § 41-2.1 Accounts...................................................................................IX-26 2. Other Statutory Joint Deposit Accounts..............................................................IX-27 3. Common Law Survivorship Accounts.................................................................IX-28 4. State-Chartered Credit Unions............................................................................IX-28E. “PAYABLE ON DEATH” OR TENTATIVE OR “TOTTEN” TRUSTS............................IX-28F. PERSONAL AGENCY ACCOUNTS.................................................................................IX-29Form IX-3 Searching for Bank Accounts................................................................................IX-31Form IX-4 Requesting Information on Known Bank Accounts..........................................IX-35Form IX-5 Request for Account Information of Deceased Depositor..................................IX-39Form IX-6 Requesting Redemption of Account Held in Sole Name...................................IX-41Form IX-7 Requesting Redemption of Joint Bank Account Governed by N.C.G.S. § 41-2.1 ...................................................................................................IX-43Form IX-8 Requesting Redemption of Account Held in Sole Name...................................IX-45Form IX-9 Requesting Redemption of Joint Bank Account Not Subject to N.C.G.S. § 41-2.1..............................................................................................IX-47Form IX-10 Administration Checklist: Bank Accounts, Certificates of Deposit, Other Depository Accounts..................................................................................IX-49Form IX-11 Information Sheet: Bank Accounts, Certificates of Deposit, Other Depository Accounts..................................................................................IX-51Form IX-12 Authorization and Release of Information.........................................................IX-53

Tab 2. Cash, Uncashed Checks, Etc.

A. INTRODUCTION............................................................................................................IX-57Form IX-13 Administration Checklist: Cash, Uncashed Checks, Etc.....................................IX-59Form IX-14 Information Sheet: Cash, Uncashed Checks, Etc.................................................IX-61

Tab 3. Real Estate

A. DETERMINING REAL ESTATE OWNED BY DECEDENT...........................................IX-65B. POSSESSION, CUSTODY AND CONTROL BY PERSONAL REPRESENTATIVE.....IX-65 1. Petition..................................................................................................................IX-65 2. Recovery Against Fraudulent Grantee..................................................................IX-66C. SALE OF REAL PROPERTY.............................................................................................IX-66 1. Judicial Sale by Personal Representative.............................................................IX-67 2. Non-Judicial Sale by Personal Representative.....................................................IX-67 3. Sale by Heirs and Devisees...................................................................................IX-68

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D. SALE FOR PAYMENT OF DEBTS AND OTHER CLAIMS...........................................IX-69E. LEASE OR MORTGAGE..................................................................................................IX-70F. CONTRACT TO SELL......................................................................................................IX-72G. RENTAL PROPERTY........................................................................................................IX-72H. LIENS ON REAL PROPERTY...........................................................................................IX-72I. UPDATING TITLE...........................................................................................................IX-73J. CHECKLISTS....................................................................................................................IX-73K. CALCULATION OF THE VALUE OF A LIFE ESTATE...................................................IX-73Form IX-15 Petition for Possession, Custody and Control of Real Property by Personal Representative...................................................................................IX-75Form IX-16 Order Granting Possession, Custody and Control of Real Property to Personal Representative........................................................................................IX-79Form IX-17 Petition for Sale of Real Property at Private Sale.................................................IX-81Form IX-18 Order for Sale of Real Property at Private Sale..................................................IX-83Form IX-19 Report of Private Sale............................................................................................IX-85Form IX-20 Order of Confirmation of Private Sale.................................................................IX-87Form IX-21 Executor’s Special Warranty Deed.......................................................................IX-89Form IX-22 Beneficiary and Executor’s Deed.........................................................................IX-91Form IX-23 Limited Warranty in Deed Signed by Personal Representative...........................IX-95Form IX-24 Notifying Lessee of Address for Rent Payment...................................................IX-97Form IX-25 Administration Checklist: Real Estate.................................................................IX-99Form IX-26 Information Sheet: Real Estate...........................................................................IX-103

Tab 4. Life Insurance

A. INTRODUCTION..........................................................................................................IX-109Form IX-27 Transmitting Claim Forms to Life Insurance Company...................................IX-111Form IX-28 Requesting Form 712..........................................................................................IX-113Form IX-29 Requesting Ownership Information on Insurance...........................................IX-115Form IX-30 Administration Checklist: Life Insurance..........................................................IX-117Form IX-31 Information Sheet: Life Insurance.....................................................................IX-121

Tab 5. Other Insurance Claims

A. GOVERNMENT BENEFITS...........................................................................................IX-125 1. Social Security Benefits.......................................................................................IX-125 2. Veterans’ Death Benefits.....................................................................................IX-125 3. Medicare Benefits................................................................................................IX-126B. MEDICAL AND HOSPITALIZATION INSURANCE.................................................IX-126C. PREMIUM REFUNDS OR REIMBURSEMENT...........................................................IX-126D. OTHER............................................................................................................................IX-126E. CHECKLISTS..................................................................................................................IX-127Form IX-32 Application for Burial Benefits (VA Form 21P-530)..........................................IX-129Form IX-33 Application for Reimbursement of Headstone or Marker Expense (VA Form 21-8834).............................................................................................IX-133

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Form IX-34 Claim for Standard Government Headstone or Marker (VA Form 40-1330).............................................................................................IX-135 Form IX-35 Application for United States Flag for Burial Purposes (VA Form 27-2008).....IX-139Form IX-36 Patient’s Request for Medical Payment...............................................................IX-143Form IX-37 Administration Checklist: Other Insurance Claims..........................................IX-145 Form IX-38 Information Sheet: Other Insurance Claims.....................................................IX-149

Tab 6. Corporate Stocks and Bonds A. GENERAL.................................................................................................................IX-153B. JOINT OWNERSHIP......................................................................................................IX-154C. TRANSFER ON DEATH SECURITY REGISTRATION ACT......................................IX-155D. TRANSFERS............................................................................................................IX-155E. CLOSELY-HELD BUSINESS INTERESTS.....................................................................IX-157F. PLEDGED STOCK AND MARGIN ACCOUNTS........................................................IX-158G. NOTICE TO CREDITORS WITHOUT ESTATE ADMINISTRATION......................IX-159H. CHECKLISTS..................................................................................................................IX-159Form IX-39 Requesting Broker to Transfer “Street Name” Account into Estate Account....IX-161Form IX-40 Affidavit of Domicile by (Executor/Administrator)..........................................IX-163Form IX-41 Affidavit of Domicile..........................................................................................IX-165Form IX-42 Requesting Broker to Issue Certificates in Beneficiary’s Name........................IX-167Form IX-43 Stock Assignment Separate from Certificate......................................................IX-169Form IX-44 Assignment Separate from Certificate Stock Power..........................................IX-171Form IX-45 Bond Power..........................................................................................................IX-173Form IX-46 Transmitting Stock to Company for Reissuance..............................................IX-175Form IX-47 Requesting Company to Redeem Stock.............................................................IX-177Form IX-48 Requesting Company to Redeem Dividend Reinvestment Plan......................IX-179Form IX-49 Administration Checklist: Corporate Stocks and Bonds (Dividend Reinvestment Plans and Mutual Funds)/Municipal Bonds.............................IX-181Form IX-50 Information Sheet: Corporate Stocks (Dividend Reinvestment Plans and Mutual Funds)....................................................................................IX-185 Form IX-51 Information Sheet: Corporate/Municipal Bonds..............................................IX-189

Tab 7. Employment-Related Compensation and Benefits

A. INTRODUCTION..........................................................................................................IX-193Form IX-52 Requesting Employee Benefit Information from Present Employer................IX-197Form IX-53 Requesting Employee Benefit Information from Past Employer.....................IX-199Form IX-54 Administration Checklist: Employment-Related Compensation and Benefits..............................................................................................................IX-201Form IX-55 Information Sheet: Employment-Related Compensation and Benefits..............................................................................................................IX-203

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Tab 8. Individual Retirement Accounts

A. MINIMUM REQUIRED DISTRIBUTIONS (MRD): DIRECTION AND EXAMPLES............................................................................................................IX-209 1. MRDs During Lifetime of IRA Owner...............................................................IX-209 2. MRDs After Death of IRA Owner......................................................................IX-209 3. Examples.............................................................................................................IX-209B. ANNUITIZATION.........................................................................................................IX-212C. POST-MORTEM ADMINISTRATION OF IRAS.........................................................IX-213D. RENOUNCE THE IRA...................................................................................................IX-213E. IRA IS PAYABLE TO AN ESTATE..................................................................................IX-214F. “FIXING” THE BENEFICIARY......................................................................................IX-215G. FIXING NON-DESIGNATED BENEFICIARIES.........................................................IX-215H. FIXING WIDE AGE VARIATIONS AMONG DESIGNATED BENEFICIARIES: SEPARATE SHARE RULES...........................................................................................IX-216I. TRUST AS BENEFICIARY OF IRA................................................................................IX-216 1. Validity of Trust..................................................................................................IX-217 2. Trust Must Be Irrevocable..................................................................................IX-217 3. Beneficiaries are Identifiable..............................................................................IX-217 a. Powers of Appointment.........................................................................IX-218 b. Who is In the Class of Beneficiaries? Conduit v. Accumulation Trusts..............................................................................IX-218 c. Documentation Requirement................................................................IX-219 d. All Beneficiaries Must Be Individuals...................................................IX-219Form IX-56 Distributions After 70 1/2...................................................................................IX-221Form IX-57 Distributions After Death...................................................................................IX-223

Tab 9. Income Tax Refunds

A. INTRODUCTION..........................................................................................................IX-227Form IX-58 Administration Checklist: Income Tax Refunds..............................................IX-229Form IX-59 Information Sheet: Income Tax Refunds..........................................................IX-231

Tab 10. Notes and Secured Obligations

A. INTRODUCTION..........................................................................................................IX-235Form IX-60 Assignment of Promissory Note........................................................................IX-237Form IX-61 Assignment of Real Estate (Mortgage/Deed of Trust)......................................IX-239Form IX-62 Administration Checklist: Notes and Secured Obligations..............................IX-241Form IX-63 Information Sheet: Notes and Secured Obligations..........................................IX-243

Tab 11. U.S. Government Bonds/Notes/Bills

A. SAVINGS BONDS..........................................................................................................IX-249B. SERIES E, EE, I AND H BOND INTEREST.....................................................................IX-251C. TREASURY BILLS/NOTES............................................................................................IX-252

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D. CHECKLISTS.................................................................................................................IX-253Form IX-64 Agreement and Request for Disposition of a Decedent’s Treasury Securities (FS Form 5394)...................................................................................IX-255Form IX-65 Special Form of Request for Payment of United States Savings and Retirement Securities Where Use of a Detached Request Is Authorized (FS Form 1522)................................................................................IX-265Form IX-66 Request by Fiduciary for Distribution of United States Treasury Securities (FS Form 1455)..................................................................................IX-269Form IX-67 Request to Reissue United States Savings Bonds(FS Form 4000)....................IX-275Form IX-68 Direct Deposit Sign-Up Form (FS Form 5396)..................................................IX-285Form IX-69 Requesting Information on Ownership and Valuation of United States Savings Bonds......................................................................................................IX-287Form IX-70 Requesting Reissuance of United States Savings Bonds (Decedent Sole Owner).......................................................................................IX-289Form IX-71 Requesting Reissuance of United States Savings Bonds (Co-owner, Beneficiary Form)...........................................................................IX-291Form IX-72 Security Transfer Request (FS Form 5179)........................................................IX-293Form IX-73 Disposition of Treasury Securities Belonging to a Decedent’s Estate Being Settled Without Administration (FS Form 5336).....................................IX-297Form IX-74 Administration Checklist: United States Government Bonds/Notes/Bills...............................................................................................IX-307Form IX-75 Information Sheet: United States Government Bonds/Notes/Bills...............................................................................................IX-309

Tab 12. Household Furnishings and Personal Effects

A. INTRODUCTION..........................................................................................................IX-313Form IX-76 Bill of Sale............................................................................................................IX-315Form IX-77 Administration Checklist: Household Furnishings and Personal Effects...................................................................................................IX-317Form IX-78 Information Sheet: Household Furnishings and Personal Effects....................IX-319

Tab 13. Farm Products, Livestock and Equipment

A. INTRODUCTION..........................................................................................................IX-323Form IX-79 Administration Checklist: Farm Products/Livestock/Equipment....................IX-325Form IX-80 Information Sheet: Farm Products/Livestock/Equipment...............................IX-327

Tab 14. Motor Vehicles

A. INTRODUCTION..........................................................................................................IX-331Form IX-81 Title Application (DMV Form MVR-1).............................................................IX-335Form IX-82 Odometer Disclosure Statement (DMV Form MVR-180)................................IX-337Form IX-83 Eligible Risk Statement for Registration and Certificate of Title (DMV Form MVR-615)......................................................................................IX-339

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Form IX-84 Highway Use Tax Exemption Certificate (DMV Form MVR-613)..................IX-341Form IX-85 Transfer of Motor Vehicle to Beneficiary...........................................................IX-343Form IX-86 Application for Duplicate Certificate of Title (DMV Form MVR-4)...............IX-345Form IX-87 Administration Checklist: Motor Vehicles........................................................IX-347Form IX-88 Information Sheet: Motor Vehicles....................................................................IX-349

Tab 15. Boats and Vessels

A. INTRODUCTION..........................................................................................................IX-353Form IX-89 Bill of Sale (U.S. Department of Transportation Form CG-1340).................IX-355Form IX-90 NC Vessel Registration & Title Application (Form VL-1)...............................IX-357Form IX-91 Seller’s Statement of Lost Vessel Title................................................................IX-359Form IX-92 Bill of Sale for a Vessel........................................................................................IX-361Form IX-93 Transfer of Boat/Vessel to Beneficiary...............................................................IX-363Form IX-94 Administration Checklist: Boats and Vessels....................................................IX-365Form IX-95 Information Sheet: Boats and Vessels................................................................IX-367

Tab 16. Aircraft

A. INTRODUCTION..........................................................................................................IX-373Form IX-96 Aircraft Bill of Sale (AC Form 8050-2)..............................................................IX-375Form IX-97 Aircraft Registration Application (AC Form 8050-1).....................................IX-379Form IX-98 Administration Checklist: Aircraft....................................................................IX-383Form IX-99 Information Sheet: Aircraft................................................................................IX-385

Tab 17. Business Interests

A. PARTNERSHIP INTERESTS.........................................................................................IX-389 1. General...............................................................................................................IX-389 2. Valuation............................................................................................................IX-389 3. Basis....................................................................................................................IX-389 4. Partnership Income............................................................................................IX-390 5. Sale or Liquidation..............................................................................................IX-390 6. Statutory Settlement...........................................................................................IX-390 7. Limited Partnership Interests.............................................................................IX-391 8. Checklist............................................................................................................IX-391B. SOLE PROPRIETORSHIP..............................................................................................IX-392C. S CORPORATIONS.......................................................................................................IX-392D. LIMITED LIABILITY COMPANY.................................................................................IX-394E. PROFESSIONAL CORPORATION...............................................................................IX-395Form IX-100 Administration Checklist: Partnership Interests...............................................IX-397Form IX-101 Information Sheet: Partnership Interests..........................................................IX-401Form IX-102 Administration Checklist: Sole Proprietorship.................................................IX-403Form IX-103 Information Sheet: Sole Proprietorship.............................................................IX-405Form IX-104 QSST Election Form...........................................................................................IX-407

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Form IX-105 ESBT Election Form...........................................................................................IX-411Form IX-106 Administration Checklist: Limited Liability Company Interests.....................IX-413Form IX-107 Information Sheet: Limited Liability Company Interests................................IX-417

Tab 18. Other Interests

A. BENEFICIAL INTEREST IN ESTATE OR TRUST........................................................IX-421B. LEASE.......................................................................................................................IX-421C. GIFTS CAUSA MORTIS.................................................................................................IX-421D. RECOVERY AGAINST FRAUDULENT GRANTEE....................................................IX-422E. TORT AND CONTRACT CLAIMS................................................................................IX-422Form IX-108 Assignment of Lease...........................................................................................IX-423

Tab 19. Firearms

A. STORAGE.......................................................................................................................IX-427 1. Securing Firearms...............................................................................................IX-427 2. Manner of Storage...............................................................................................IX-427 3. Safeguarding Firearms from Minors.................................................................IX-427 4. Negligent Storage or Entrustment of Firearms.................................................IX-428B. TRANSPORTATION......................................................................................................IX-428 1. Methods for Transporting Firearms..................................................................IX-428 2. Concealed Transportation..................................................................................IX-428 3. Places Where Firearms are Forbidden...............................................................IX-429C. TRANSFER.....................................................................................................................IX-429 1. Requirements for Transfer of Handguns............................................................IX-429 2. Requirements for Transfer of Long Guns..........................................................IX-430 3. Best Practices – Transfer Through Licensed Dealer.........................................IX-431 4. Transfer of Firearms into Revocable Living Trust............................................IX-431D. FEDERAL LAW...............................................................................................................IX-432 1. Title I – Gun Control Act.................................................................................IX-432 2. Title II – National Firearms Act........................................................................IX-432

CHAPTER XINVENTORIES AND ACCOUNTINGS

A. 90-DAY INVENTORY..........................................................................................................X-5 1. Statutory Requirements...........................................................................................X-5 2. Preparation of the Inventory....................................................................................X-6 a. Jointly-Held Assets.......................................................................................X-6 (1) Bank Accounts and Securities.........................................................X-6 (2) Other Personal Property..................................................................X-7 (3) Real Estate........................................................................................X-7 b. Assets Held Solely by Decedent or Payable to Estate..................................X-7 c. Payable on Death Accounts..........................................................................X-7

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d. Wrongful Death Proceeds............................................................................X-8 e. Voluntary Payments.....................................................................................X-8 f. Description..................................................................................................X-8 (1) Bank Accounts.................................................................................X-8 (2) Stocks, Bonds and Mutual Funds....................................................X-8 (3) Other Personal Property..................................................................X-8 (4) Real Property....................................................................................X-9B. ANNUAL/FINAL ACCOUNTS...........................................................................................X-9 1. Statutory Requirements...........................................................................................X-9 2. Preparation of the Account....................................................................................X-11 3. Expenses Related to Real Property.........................................................................X-11 4. Wrongful Death Proceeds......................................................................................X-11 5. Permissive Notice of Final Accounts.....................................................................X-11

CHAPTER XITHE UNIFORM PRINCIPAL AND INCOME ACT

A. THE UNIFORM PRINCIPAL AND INCOME ACT.........................................................XI-5B. INTRODUCTION: PURPOSE OF PRINCIPAL AND INCOME ACCOUTING...........XI-6C. ARTICLE 1: DEFINITIONS, GENERAL PRINCIPLES AND FIDUCIARY DUTIES, POWER TO ADJUST, UNITRUST CONVERSION, EXPRESS TOTAL RETURN TRUSTS AND JUDICIAL INTERVENTION...................................................................XI-7 1. Definitions..............................................................................................................XI-7 2. Four General Principles..........................................................................................XI-7 3. Fiduciary Duty of Trustee......................................................................................XI-8 4. Trustee’s Power to Adjust.......................................................................................XI-8 a. Factors for Trustee to Consider.................................................................XI-8 b. Limitations on Power to Adjust.................................................................XI-9 c. Renunciation of Power to Adjust............................................................XI-10 d. Limitation of Judicial Intervention.........................................................XI-10 5. Unitrust Conversions............................................................................................XI-10 a. By Disinterested Trustees Without Court Approval................................XI-11 b. Without Disinterested Trustee or Court Approval.................................XI-12 c. Petition for Court Order..........................................................................XI-12 d. Setting Amount of Unitrust.....................................................................XI-13 e. Treatment of Unitrust Amount...............................................................XI-13 f. Determining Date of Conversion and Timing of Distributions............XI-13 g. Exculpation of Trustees and Disinterested Persons................................XI-14 6. Express Total Return Unitrusts.............................................................................XI-14 7. Limitations on Judicial Review of Trustee’s Exercise of Discretion.................XI-14D. ARTICLE 2: INCOME DISTRIBUTION IN A DECEDENT’S ESTATE OR UPON TERMINATING AN INCOME INTEREST....................................................................XI-16 1. Application of Article 2........................................................................................XI-16 2. Determination and Distribution of Net Income.................................................XI-16

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E. ARTICLE 3: APPORTIONMENT AT BEGINNING AND END OF INCOME INTERESTS.......................................................................................................................XI-17 1. When Right to Income Begins and Ends.............................................................XI-17 2. Apportionment of Receipts When Decedent Dies or Income Interest Begins...................................................................................................................XI-18 3. Apportionment When Income Interest Ends......................................................XI-18F. ARTICLE 4: ALLOCATION OF RECEIPTS...................................................................XI-19 1. Receipts from Entities...........................................................................................XI-19 a. Character of Receipts...............................................................................XI-19 b. Departure from Chapter 37.....................................................................XI-20 c. Distributions from a Trust or Estate.......................................................XI-20 d. Business and Other Activities Conducted by Trustee...........................XI-20 2. Receipts Normally Not Apportioned...................................................................XI-21 a. Principal Receipts.....................................................................................XI-21 b. Rental Property.........................................................................................XI-22 c. Obligation to Pay Money..........................................................................XI-22 d. Insurance Policies and Similar Contracts..............................................XI-22 3. Receipts Normally Apportioned...........................................................................XI-23 a. Insubstantial Allocations Not Required..................................................XI-23 b. Deferred Compensation, Annuities and Similar Payments....................XI-23 c. Liquidating Asset......................................................................................XI-24 d. Minerals, Water and Other Natural Resources........................................XI-24 e. Timber...................................................................................................XI-25 f. Property Not Productive of Income........................................................XI-25 g. Derivatives and Options...........................................................................XI-25 h. Asset-Backed Securities............................................................................XI-25G. ARTICLE 5: ALLOCATION OF DISBURSEMENTS......................................................XI-26 1. Disbursements from Income...............................................................................XI-26 2. Disbursements from Principal.............................................................................XI-26 3. Transfers from Income to Principal for Depreciation........................................XI-27 4. Transfers from Income to Reimburse Principal..................................................XI-28 5. Income Taxes........................................................................................................XI-28 6. Adjustments Between Principal and Income Because of Taxes..........................XI-29H. MISCELLANEOUS PROVISIONS..................................................................................XI-30Form XI-1 John Doe Irrevocable Trust Conversion to Unitrust Written Policy...................XI-31

CHAPTER XIIANCILLARY ADMINISTRATION

A. OVERVIEW........................................................................................................................XII-5B. STATUTORY SCHEME....................................................................................................XII-5C. PASSING TITLE TO REAL PROPERTY...........................................................................XII-6D. PAYMENT OF NORTH CAROLINA ASSETS TO FOREIGN DOMICILIARY PERSONAL REPRESENTATIVE WITHOUT ANCILLARY ADMINISTRATION.......XII-6

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E. PROCEDURE FOR ANCILLARY ADMINISTRATION..................................................XII-7 1. Preference Given to Domiciliary Personal Representative....................................XII-7 2. Alternate Procedure...............................................................................................XII-8 3. Forms.....................................................................................................................XII-8F. BONDS..............................................................................................................................XII-8 1. General Rule...........................................................................................................XII-8 2. Exception...............................................................................................................XII-8G. JURISDICTION.................................................................................................................XII-9 1. Original Jurisdiction Over Estate Proceedings in North Carolina........................XII-9 2. Authority of Domiciliary Representative..............................................................XII-9 3. Submission to the Jurisdiction of the Courts of North Carolina.........................XII-9 4. Service of Process.................................................................................................XII-10H. PAYMENT OF CLAIMS AND EXPENSES.....................................................................XII-10 1. Applicable Law.....................................................................................................XII-10 2. Priority in the Payment of Claims.......................................................................XII-10I. ESTATE TAXES...............................................................................................................XII-11 1. North Carolina Estate Tax...................................................................................XII-11 2. Federal Estate Tax................................................................................................XII-11J. PROBLEMS IN DELAYED ADMINISTRATION..........................................................XII-11 1. Transfers More Than Two Years After Death......................................................XII-11 2. Transfers Within Two Years of Death.................................................................XII-12 3. Survivorship Property..........................................................................................XII-12 4. Lapsed Bequests...................................................................................................XII-13K. REMISSION OF SURPLUS ASSETS...............................................................................XII-13

CHAPTER XIIIDISTRIBUTIONS

A. TIMING DISTRIBUTIONS.............................................................................................XIII-5 1. Minimum Waiting Periods...................................................................................XIII-5 a. The Three-Month Claim Period..............................................................XIII-5 b. Estate Tax Deficiencies.............................................................................XIII-5 c. Alternate Valuation Date Considerations...............................................XIII-5 d. Assuming the Risk....................................................................................XIII-6 2. Problems in Delayed Distributions......................................................................XIII-6 a. Interest on Legacies..................................................................................XIII-6 b. Action by Internal Revenue Service........................................................XIII-6 c. Funding Pecuniary Bequests In-Kind.....................................................XIII-7B. TAX CONSIDERATIONS...............................................................................................XIII-7 1. The Income “Bunching” Problem........................................................................XIII-7 2. Inadvertent Income Distributions.......................................................................XIII-7 3. Distributing Estate Income Tax Deductions to Beneficiaries.............................XIII-8 4. Funding Pecuniary Legacies.................................................................................XIII-8C. DISTRIBUTION TO MINOR.........................................................................................XIII-8

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D. ABATEMENT..................................................................................................................XIII-9E. ADVANCEMENTS.........................................................................................................XIII-10F. EQUITABLE ADJUSTMENTS......................................................................................XIII-10 1. General Rules......................................................................................................XIII-10 2. Examples Where Adjustments May Be Appropriate..........................................XIII-10 a. Administration Expenses......................................................................XIII-10 b. Trapping Distributions.........................................................................XIII-11 c. Sale or Distribution of Assets and Timing............................................XIII-11 d. Selection of Taxable Year.......................................................................XIII-11 e. Non Pro-Rata Principal Distributions..................................................XIII-11 f. Non Pro-Rata Distributions of Tangible Personal Property.................XIII-12 g. Other Possible Adjustments..................................................................XIII-12 3. Solutions.............................................................................................................XIII-13G. WITHHOLDING FOR NORTH CAROLINA ESTATE TAX.......................................XIII-13H. WITHHOLDING FOR FEDERAL ESTATE TAX........................................................XIII-13I. RECEIPT, RELEASE AND REFUNDING AGREEMENT.............................................XIII-13Form XIII-1 Receipt, Release and Refunding Agreement......................................................XIII-15

CHAPTER XIVCLOSING AND TERMINATION OF THE ESTATE

A. CLOSING LETTER AND ESTATE AND INHERITANCE TAX CERTIFICATE...........XIV-5B. PAYMENT OF ATTORNEY’S FEES................................................................................XIV-5 1. Statutory Authority...............................................................................................XIV-5 2. Procedure for Payment.........................................................................................XIV-6C. PAYMENT OF PERSONAL REPRESENTATIVE’S COMMISSIONS...........................XIV-6 1. Statutory Authority...............................................................................................XIV-6 2. Procedure for Payment.........................................................................................XIV-8D. FINAL ACCOUNT............................................................................................................XIV-8E. ORDER DISCHARGING PERSONAL REPRESENTATIVE........................................XIV-10F. NOTICE OF TERMINATION OF FIDUCIARY RELATIONSHIP..............................XIV-10G. NOTIFY SURETY...........................................................................................................XIV-10Form XIV-1 N.C. Inheritance and Estate Tax Certificate......................................................XIV-11Form XIV-2 Estate Tax Closing Letter....................................................................................XIV-13Form XIV-3 Petition for Payment of Counsel Fees.................................................................XIV-15Form XIV-4 Order for Payment of Counsel Fees...................................................................XIV-17Form XIV-5 Waiver of Right to Personal Representative’s Commissions..............................XIV-19Form XIV-6 Petition for Payment of Personal Representative’s Commissions.....................XIV-21Form XIV-7 Order for Payment of Personal Representative’s Commissions........................XIV-23Form XIV-8 Petition for Commissions...................................................................................XIV-25Form XIV-9 Petition for Extension of Time to Administer Estate.........................................XIV-27Form XIV-10 Order Granting Extension of Time to Administer Estate..................................XIV-29Form XIV-11 Petition for Discharge of Personal Representative...........................................XIV-31Form XIV-12 Order Granting Discharge of Personal Representative.....................................XIV-33

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CHAPTER XVTAX RETURNS

Tab 1. Gift Tax Returns

A. FEDERAL GIFT TAX RETURN.........................................................................................XV-7 1. Filing Requirements...............................................................................................XV-7 2. Supplemental Documents.....................................................................................XV-9 3. Split Gifts..............................................................................................................XV-10 4. Gifts Subject to Generation-Skipping Transfer (GST) Tax.................................XV-11 5. Obtaining Gift Tax Account Information for Prior Years...................................XV-12 a. Requesting Gift Tax Account Information – Use Form 4506-T.............XV-12 b. Requesting Copy of a Filed Form 709 – Use Form 4506.........................XV-12B. STATE GIFT TAX RETURN...........................................................................................XV-13 1. North Carolina Gifts Made On or After January 1, 2009....................................XV-13 2. North Carolina Gifts Made Prior to January 1, 2009........................................XV-13

Tab 2. Fiduciary Tax Returns

A. UNITED STATES ESTATE (AND GENERATION-SKIPPING TRANSFER) TAX RETURN..................................................................................................................XV-17 1. Filing Requirements.............................................................................................XV-17 a. Federal Estate Tax Return Filing Thresholds.........................................XV-17 i. Decedents Dying After 2010.......................................................XV-17 ii. Decedents Dying in 2010............................................................XV-18 iii. Decedents Dying After 2000 and Prior to 2010..........................XV-18 2. Form and Instructions.........................................................................................XV-19 3. Tax Elections........................................................................................................XV-19 a. Alternate Valuation.................................................................................XV-19 b. Special Use Valuation..............................................................................XV-20 c. Administration Expenses........................................................................XV-20 d. Medical Expenses.....................................................................................XV-21 e. Section 303 Redemption..........................................................................XV-21 f. Extension of Time to Pay Estate Tax and File Return..............................XV-21 g. Qualified Terminable Interest Property (QTIP) Election and Qualified Domestic Trust (QDOT) Election..........................................XV-22 h. Reversions and Remainders....................................................................XV-22 i. Request for Prompt Determination of Estate Tax..................................XV-22 4. Generation-Skipping Transfer (GST) Tax..........................................................XV-23 a. Direct Skip.........................................................................................,.....XV-23 b. Schedules R and R-1...............................................................................XV-23 c. Exemption...............................................................................................XV-23 d. Deceased Child Exception.......................................................................XV-24 e. Mental Disability Exception....................................................................XV-24

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f. Reverse QTIP Election.............................................................................XV-25 g. Grandfathered Trusts..............................................................................XV-25 5. Common Problems.............................................................................................XV-25B. BASIS CONSISTENCY REPORTING............................................................................XV-25C. NORTH CAROLINA ESTATE TAX RETURN (FOR DECEDENTS DYING ON OR AFTER 1/1/99 AND ON OR BEFORE 12/31/12)....................................................XV-26 1. Filing Requirements.............................................................................................XV-26 2. Extensions...........................................................................................................XV-26D. FIDUCIARY INCOME TAX RETURNS.........................................................................XV-27 1. Filing Requirements............................................................................................XV-27 2. Federal Estimated Tax Payments........................................................................XV-27 3. Preparation of the Return....................................................................................XV-28 a. Election of Fiscal Year.............................................................................XV-28 b. Election to Treat Revocable Trust as Part of Estate...............................XV-28 c. Distributions...........................................................................................XV-29 d. Exemptions.............................................................................................XV-29 e. Income in Respect of a Decedent............................................................XV-29 f. Waivers....................................................................................................XV-29 g. Excess Deductions...................................................................................XV-30E. TAX RETURNS IN OTHER STATES.............................................................................XV-30 1. Estate Tax Returns................................................................................................XV-30 2. Income Tax Returns.............................................................................................XV-30 3. Residency Problems.............................................................................................XV-30Appendix Common Pitfalls in Preparing the U.S. Estate Tax Return.................................XV-31Form XV-1 Transmittal Letter to IRS.....................................................................................XV-33Form XV-2 Checklist for Preparing U.S. Estate Tax Return (IRS Form 706).......................XV-35Form XV-3 Checklist of Supplemental Documents for Filing U.S. Estate Tax Return (IRS Form 706)................................................................................XV-41Form XV-4 Letter to IRS of Request for Prompt Determination.......................................XV-43Form XV-5 Transmittal Letter to N.C. Department of Revenue...........................................XV-45

CHAPTER XVIN.C. GUARDIANSHIP PRACTICE AND PROCEDURE

PART I: THE BASICS

A. INTRODUCTION............................................................................................................XVI-9 1. Use of Guardianships and Overview...................................................................XVI-9 2. Nature and Purpose of an Incompetency Proceeding.....................................XV1-11 3. Coverage Under N.C.G.S. Chapter 35A............................................................XVI-12 4. Guardianship of Veterans Under N.C.G.S. Chapter 34....................................XVI-12 5. Involuntary Commitment Procedures Under N.C.G.S. Chapter 122C..........XVI-12 6. Protection for Disabled Adults Under Article 6, N.C.G.S. Chapter 108A......XVI-12B. PROCEEDINGS TO DETERMINE INCOMPETENCE..............................................XVI-13

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1. General..............................................................................................................XVI-13 a. Will Cannot Create a Guardianship for Adult Beneficiary...................XVI-13 b. Prosecuting or Defending a Civil Action..............................................XVI-13 2. Definitions.........................................................................................................XVI-14 a. Incompetent Adult................................................................................XVI-14 b. Incompetent Child................................................................................XVI-16 c. Multidisciplinary Evaluation................................................................XVI-16 d. Respondent...........................................................................................XVI-16 e. Ward......................................................................................................XVI-16 3. Procedure..........................................................................................................XVI-16 a. Begin With Petition................................................................................XVI-17 b. Clerk Issues Notice.................................................................................XVI-18 c. Service of Notice and Petition................................................................XVI-18 d. Guardian ad Litem Required.................................................................XVI-19 e. What if the Respondent Wants a Private Attorney?..............................XVI-19 f. North Carolina Revised Rules of Professional Conduct Rule 1.14, “Client with Diminished Capacity”.......................................................XVI-20 g. What Happens When an “Interested Person” is Represented?............XVI-21 h. Role of Guardian ad Litem in Incompetency and Guardianship Proceedings...........................................................................................XVI-22 i. What Should the Guardian ad Litem Do to Prepare for the Hearing?.................................................................................................XVI-23 j. Option of Multidisciplinary Evaluation...............................................XVI-24 k. Pre-Trial Prep; Discovery; Hearing Before Clerk.................................XVI-24 l. Motion for Appointment of Interim Guardian....................................XVI-26 m. Appeals................................................................................................XVI-28 n. Costs....................................................................................................XVI-29 4. Motions in the Cause Following Guardianship Order.....................................XVI-30 5. Ex Parte Motion in the Cause Following Guardianship Order........................XVI-31 6. Restoration to Competency...............................................................................XVI-31C. APPOINTMENT OF GUARDIAN AND REPORTS TO COURT.................................XVI-32 1. General...............................................................................................................XVI-32 2. Definitions..........................................................................................................XVI-32 a. Disinterested Public Agent....................................................................XVI-32 b. Estate......................................................................................................XVI-32 c. General Guardian..................................................................................XVI-32 d. Guardian ad Litem.................................................................................XVI-32 e. Guardian of the Estate ...........................................................................XVI-33 f. Guardian of the Person..........................................................................XVI-33 g. Incompetent Person..............................................................................XVI-33 h. Minor.....................................................................................................XVI-33 3. Jurisdiction of Clerk and Procedural Matters...................................................XVI-33 4. Appointing Guardian for Person Adjudicated Incompetent...........................XVI-33

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a. Filing Petition.........................................................................................XVI-33 b. Service of Application............................................................................XVI-34 c. Hearing Before Clerk.............................................................................XVI-34 d. What Happens When an Interested Person is Represented...................XVI-34 e. Selecting the Guardian...........................................................................XVI-35 f. Nomination of Guardian by Durable Power of Attorney and Health Care Power of Attorney..........................................................................XVI-36 g. Relation of Guardian to Attorney-in-Fact or Health Care Agent..........XVI-37 i. Durable Power of Attorney.......................................................XVI-37 ii. Health Care Power of Attorney.................................................XVI-38 h. Contents of the Clerk’s Order................................................................XVI-39 5. Appointing Guardian for Minor........................................................................XVI-39 a. Petition...................................................................................................XVI-40 b. Service of Application and Notices........................................................XVI-40 c. Hearing..................................................................................................XVI-40 d. Selection of Guardian............................................................................XVI-41 e. Order Appointing Guardian for Minor.................................................XVI-41 f. Adjudicating Minor Incompetent.........................................................XVI-42 g. Exceptions to Need for Guardianship for Certain Funds Owed to Minor.......................................................................................XVI-42 (1) Insurance Proceeds or Other Funds Under $25,000.................XVI-42 (2) Distribution of Devise of Personal Property to Parent or Guardian....................................................................................XVI-43 (3) Property Due Minor from Personal Representative or Collector....................................................................................XVI-43 (4) Transfers Under North Carolina Uniform Transfers to Minors Act..............................................................................................XVI-43 h. Persons Serving in Armed Forces: Allotments and Allowances for Children............................................................................................XVI-43 6. Oath: Letters of Appointment............................................................................XVI-43 7. Guardian’s Bond.................................................................................................XVI-43 a. Requirement of Bond.............................................................................XVI-43 b. Determining Amount of Bond..............................................................XVI-44 c. Adjusting Bond Prior to Sale of Property..............................................XVI-44 d. Excluding Funds With Restricted Access: Receipt and Agreement.......XVI-44 e. Reducing Bond......................................................................................XVI-45 f. Renewal of Personal Surety Bond..........................................................XVI-45 g. Endangered Surety.................................................................................XVI-45 h. Clerk’s Liability.......................................................................................XVI-46 8. Powers and Duties of Guardian of the Person..................................................XVI-46 a. General Provisions.................................................................................XVI-46 b. Decisions Over Person and Place of Abode...........................................XVI-46 c. Care of the Ward and Liability...............................................................XVI-46

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d. Reimbursement.....................................................................................XVI-47 e. Status Reports........................................................................................XVI-47 9. Powers and Duties – Guardian of the Estate.....................................................XVI-47 a. General.................................................................................................XVI-47 b. Broad Powers Contained in N.C.G.S. § 35A-1251...............................XVI-47 c. Administering Estate of Minor Ward...................................................XVI-48 d. Required Duties of Guardian................................................................XVI-49 e. Substituted Judgment vs. Best Interest Standard.................................XVI-49 f. Financial Exploitation Investigations...................................................XVI-50 10. Returns and Accounting....................................................................................XVI-51 a. General.................................................................................................XVI-51 b. Initial Inventory and Additional Property Discovered.........................XVI-52 c. Annual Accounts....................................................................................XVI-52 d. Court Costs............................................................................................XVI-52 e. Compelling Annual Accounts...............................................................XVI-53 f. Expenses and Commissions..................................................................XVI-53 g. Final Account and Discharge of Guardian...........................................XVI-54 11. Public Guardian.................................................................................................XVI-54 12. Nonresident Ward..............................................................................................XVI-55 13. Removal or Resignation of Guardian................................................................XVI-55 a. Removal by Clerk...................................................................................XVI-55 b. Resignation............................................................................................XVI-55 c. Appointment of Successor Guardian...................................................XVI-55 d. Termination of Guardianship...............................................................XVI-55D. UNIFORM ADULT GUARDIANSHIP AND PROTECTIVE PROCEEDINGS JURISDICTION ACT.....................................................................................................XVI-56 1. Definitions..........................................................................................................XVI-56 a. Proceedings............................................................................................XVI-56 b. Order......................................................................................................XVI-56 c. Incompetent Party.................................................................................XVI-57 2. Organization......................................................................................................XVI-57 a. Article 2: Jurisdiction.............................................................................XVI-57 i. Definitions................................................................................XVI-57 (1) Emergency....................................................................XVI-57 (2) Home State....................................................................XVI-57 (3) Significant-Connection State.......................................XVI-57 b. Article 3: Transfers.................................................................................XVI-58 c. Article 4: Registration............................................................................XVI-60E. MANAGING THE WARD’S ESTATE............................................................................XVI-60 1. General..............................................................................................................XVI-60 2. Special Proceedings to Sell, Exchange, Mortgage or Lease..............................XVI-61 a. Petition (Forms XVI-4 through XVI-6)................................................XVI-61 b. Order and Required Finding.................................................................XVI-61

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c. Superior Court Approval for Minor Ward............................................XVI-62 d. Judicial Sale Procedures Apply..............................................................XVI-62 e. Real Estate in Another County..............................................................XVI-62 f. Sales Proceeds Retain Character of Property Sold................................XVI-62 g. Timber Sales...........................................................................................XVI-62 h. Sale of Incompetent Spouse’s Interest..................................................XVI-62 3. Special Proceeding to Sell or Mortgage Entireties Property.............................XVI-63 4. Gifts from Incompetent’s Estate........................................................................XVI-63F. STANDBY GUARDIANS...............................................................................................XVI-64 1. General...............................................................................................................XVI-64 2. Definitions.........................................................................................................XVI-64 a. Designation............................................................................................XVI-64 b. Designator.............................................................................................XVI-64 c. Incapacity...............................................................................................XVI-65 d. Petitioner................................................................................................XVI-65 e. Standby Guardian..................................................................................XVI-65 f. Triggering Event....................................................................................XVI-65 3. Procedure...........................................................................................................XVI-65 a. Jurisdiction.............................................................................................XVI-65 4. Appointment by Petition...................................................................................XVI-66 a. Filing Petition; Notice............................................................................XVI-66 b. Order......................................................................................................XVI-66 c. Commencement of Standby Guardian’s Authority..............................XVI-66 d. Rescission, Revocation and Renunciation............................................XVI-66 5. Appointment by Written Designation...............................................................XVI-67 a. Signing Designation..............................................................................XVI-67 b. Filing with Clerk....................................................................................XVI-67 c. Notice and Hearing...............................................................................XVI-67 d. Order Appointing Standby Guardian as Guardian..............................XVI-68 e. Revocation of Designation of Standby Guardianship..........................XVI-68 6. Determination of Incapacity or Debilitation....................................................XVI-68 7. Restoration of Capacity or Ability and Suspension of Guardianship..............XVI-68 8. Concurrent Authority when Authority Commences.......................................XVI-69 9. Same Guardianship Powers and Duties............................................................XVI-69 10. Guardian ad Litem..............................................................................................XVI-69 11. Bond..................................................................................................................XVI-69 12. Accounting.....................................................................................................XVI-69 13. Termination......................................................................................................XVI-69

PART II: SUMMARY REFERENCES TO GUARDIANSHIP ALTERNATIVES

A. NORTH CAROLINA UNIFORM TRANSFERS TO MINORS ACT...........................XVI-70B. NORTH CAROLINA UNIFORM CUSTODIAL TRUST ACT.....................................XVI-70

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Form XVI-1 Affidavit of Physician.........................................................................................XVI-73Form XVI-2 Answer by Guardian ad Litem...........................................................................XVI-75Form XVI-3 Order Appointing Guardian ad Litem..............................................................XVI-77Form XVI-4 Petition for Sale of Real Property......................................................................XVI-79Form XVI-5 Order for Sale of Real Property..........................................................................XVI-85Form XVI-6 Order Confirming Sale of Real Property...........................................................XVI-87Form XVI-7 Motion and Order to Intervene.........................................................................XVI-89Form XVI-8 Petition for Discharge of Guardian of the Estate.............................................XVI-93Form XVI-9 Order Granting Discharge of Guardian of the Estate.......................................XVI-95

CHAPTER XVIITRUST ADMINISTRATION

Tab 1. Trust Administration Under the North Carolina Uniform Trust Code

A. APPLICATION OF UNIFORM TRUST CODE...........................................................XVII-9 1. Governing Law...................................................................................................XVII-9 2. Scope of UTC......................................................................................................XVII-9 3. Default and Mandatory Rules............................................................................XVII-9B. OFFICE OF TRUSTEE..................................................................................................XVII-10 1. Acceptance of Trusteeship...............................................................................XVII-10 2. Trustee’s Bond..................................................................................................XVII-10 3. Cotrustees.........................................................................................................XVII-11 4. Resignation of Trustee......................................................................................XVII-11 5. Removal of Trustee...........................................................................................XVII-12 6. Vacancy in Trusteeship....................................................................................XVII-12 7. Appointment of Successor Trustee..................................................................XVII-12 8. Trustee Compensation.....................................................................................XVII-13C. DUTIES AND POWERS OF TRUSTEE.......................................................................XVII-13 1. Fundamental Duties of Trustee.......................................................................XVII-13 2. Duty to Administer Trust in Good Faith.........................................................XVII-14 3. Duty of Loyalty – Conflicts of Interest and Voidable Transactions.................XVII-14 4. Duty of Impartiality.........................................................................................XVII-14 5. Trustee’s Skills..................................................................................................XVII-15 6. Control Over Trust Property............................................................................XVII-15 7. Discretionary Powers.......................................................................................XVII-15 8. Duty to Inform and Report to Trust Beneficiaries (Recordkeeping and Identification of Trust Property).....................................................................XVII-15 9. Powers of the Trustee.......................................................................................XVII-16 10. Delegation of Trustee’s Powers and Duties to an Agent..................................XVII-17 11. Limitations on Trustee’s Discretionary Powers Granted Under Trust Terms................................................................................................................XVII-17 12. Duties and Powers of Trust Protector.............................................................XVII-17

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D. UNIFORM PRUDENT INVESTOR ACT.....................................................................XVII-18 1. General Rule......................................................................................................XVII-18

2. Diversification...................................................................................................XVII-193. Applicability..................................................................................................XVII-19

E. PROTECTION OF THIRD PARTIES DEALING WITH TRUSTEE...........................XVII-20F. CERTIFICATION OF TRUST......................................................................................XVII-20G. CREDITORS’ CLAIMS AGAINST TRUST PROPERTY..............................................XVII-20 1. Spendthrift Trusts.............................................................................................XVII-20 2. Discretionary Trusts.........................................................................................XVII-21 3. Mandatory Distributions.................................................................................XVII-21 4. Claims Against the Settlor................................................................................XVII-21 5. Powers of Withdrawal.......................................................................................XVII-21Form XVII-1 Notice of Delegation of Certain Trustee Powers..............................................XVII-23Form XVII-2 Notice of Resignation of Trustee.....................................................................XVII-25Form XVII-3 Notice of Removal of Trustee...........................................................................XVII-27Form XVII-4 Notice of Appointment of and Acceptence by Successor Trustee..................XVII-29Form XVII-5 Certification of Trust........................................................................................XVII-31

Tab 2. Court Proceedings Involving Trusts

A. EFFECTIVE DATE.......................................................................................................XVII-35B. APPLICATION OF THE UNIFORM TRUST CODE TO TRUSTS............................XVII-35C. ROLE OF COURT IN ADMINISTRATION OF TRUST.............................................XVII-36D. PERSONAL JURISDICTION OVER THE TRUSTEE AND BENEFICIARY OF A TRUST............................................................................................................................XVII-36 1. Jurisdiction Over the Trustee of a Trust............................................................XVII-37 2. Jurisdiction Over a Beneficiary of a Trust........................................................XVII-37E. SUBJECT MATTER JURISDICTION..........................................................................XVII-38 1. Original and Exclusive Jurisdiction in the Clerks of Superior Court............XVII-38 2. Concurrent Jurisdiction Between the Clerk and the Superior Court Division of the General Court of Justice.........................................................................XVII-39 3. Matters Excluded From the Jurisdiction of the Clerk of Superior Court......XVII-39 4. Jurisdiction if Principal Place of Administrations is in Another State...........XVII-40F. DECLARATORY JUDGMENTS..................................................................................XVII-40G. VENUE..........................................................................................................................XVII-40H. INITIATING A PROCEEDING....................................................................................XVII-41 1. Contested Proceedings.....................................................................................XVII-41 2. Uncontested Proceedings.................................................................................XVII-42 3. Pleadings...........................................................................................................XVII-42 4. Extensions of Time...........................................................................................XVII-42 5. Rules of Civil Procedure...................................................................................XVII-43 6. Consolidation...................................................................................................XVII-43 7. Joinder..............................................................................................................XVII-43 8. Notice of Transfer.............................................................................................XVII-43

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9. Orders Upon Consolidation, Joinder or Transfer............................................XVII-44 10. Notice to Attorney General for Proceedings Involving Charitable Trusts.....XVII-44I. REPRESENTATION OF PARTIES..............................................................................XVII-44J. WAIVER OF NOTICE...................................................................................................XVII-44K. ACCOUNTING TO CLERK.........................................................................................XVII-44L. QUALIFICATION AND ACCOUNTING OF TRUSTEE OF A TESTAMENTARY TRUST..........................................................................................................................XVII-45M. REPRESENTATION...................................................................................................XVII-46 1. Generally...........................................................................................................XVII-46 2. Representation by Holder of General Testamentary Power of Appointment.....................................................................................................XVII-47 3. Representation by Fiduciaries, Parents and Other Persons.............................XVII-47 4. Representation by Person Having Substantially Identical Interests...............XVII-48 5. Appointment of Representative; Scope of Representation.............................XVII-49N. LIMITATION ON ACTION........................................................................................XVII-50O. APPEAL.......................................................................................................................XVII-50Form XVII-6 Notice of Hearing..............................................................................................XVII-53

Tab 3. Modification, Termination, Merger and Division of Trusts

A. MODIFICATION OR TERMINATION OF AN IRREVOCABLE TRUST.................XVII-57 1. Modification or Termination of a Noncharitable Trust by Consent..............XVII-57 a. Modification or Termination by Consent of Settlor and Beneficiaries..........................................................................................XVII-57 b. Mandatory Modification or Termination by Consent of Beneficiaries..........................................................................................XVII-58 c. Requested Modification or Termination by Beneficiary Consent.....XVII-58 d. Modification Even Without the Consent of All Beneficiaries............XVII-59 2. Unanticipated Circumstances, the Inability to Administer a Trust Effectively, or Changes in Tax Laws May Allow for Modification or Termination..........XVII-59 3. An Uneconomical Trust Can Be Terminated With Notice to the Beneficiaries.....................................................................................................XVII-59 4. Reformation of a Trust to Correct Mistakes....................................................XVII-60 5. Modification or Termination of a Trust to Achieve Settlor’s Tax Objectives..........................................................................................................XVII-60 6. Trustee’s Decanting Power...............................................................................XVII-60 a. Who is a Necessary Party?.....................................................................XVII-61 b. What is Required for Decanting?.........................................................XVII-61 c. Terms of Second Trust.........................................................................XVII-62 d. Procedure..............................................................................................XVII-65B. COMBINATION AND DIVISION OF TRUSTS..........................................................XVII-66 1. Combining Trusts.............................................................................................XVII-66 2. Dividing Trusts.................................................................................................XVII-66C. REVOCATION OR AMENDMENT OF REVOCABLE TRUST.................................XVII-66

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1. The Settlor or His Agent/Guardian Can Revoke or Amend a Revocable Trust.................................................................................................XVII-66 2. Revoking or Amending a Jointly Created or Funded Trust.............................XVII-67 3. A Court Can Also Modify or Terminate a Revocable Trust.............................XVII-67 4. The Effects of Divorce or Annulment on Specific Terms of a Revocable Trust.................................................................................................XVII-67Form XVII-7 Modification of Trust by Agreement of Grantor, Spouse Beneficiary and Adult Child Beneficiary..............................................................................XVII-69Form XVII-8 Modification of Trust by Agreement of Two Grantors and Multiple Noncharitable Beneficiaries.............................................................................XVII-71Form XVII-9 Petition to Modify Trusts..................................................................................XVII-75Form XVII-10 Trust Merger Agreement..................................................................................XVII-79Form XVII-11 Declaration of Division of Trust Assets...........................................................XVII-83Form XVII-12 Revocation of Revocable Trust.........................................................................XVII-85Form XVII-13 Decanting Instruments.....................................................................................XVII-87

CHAPTER XVIIIESTATE PROCEEDINGS

A. ESTATE PROCEEDINGS IN GENERAL......................................................................XVIII-5B. CLERK OF COURT’S JURISDICTION AND SOURCES OF JURISDICTION..........XVIII-5 1. Clerk’s Powers are of Constitutional and Statutory Origin.............................XVIII-6 2. The Clerk’s Jurisdiction in Estate Proceedings.................................................XVIII-6 3. Matters Outside of the Clerk’s Jurisdiction......................................................XVIII-7C. COMMENCEMENT OF ESTATE PROCEEDINGS....................................................XVIII-8D. APPLICATION OF THE RULES OF CIVIL PROCEDURE TO ESTATE PROCEEDINGS............................................................................................................XVIII-8 1. Rules of Civil Procedure Generally...................................................................XVIII-8 2. Rules 4 & 5 – Service and Waiver of Service.....................................................XVIII-9 3. Rule 45 and Other Pre-Hearing Discovery........................................................XVIII-9E. CONSOLIDATION AND JOINDER OF PARTIES AND CLAIMS..........................XVIII-10F. TRANSFER OF ESTATE PROCEEDING TO SUPERIOR COURT..........................XVIII-11G. REPRESENTATION OF PARTIES.............................................................................XVIII-11H. APPEALS OF ESTATE PROCEEDINGS....................................................................XVIII-12 1. Ten-Day Time Period Within Which to File Notice of Appeal.......................XVIII-12 2. Appeal Bond....................................................................................................XVIII-13 3. Standard of Review on Appeal........................................................................XVIII-14I. CONTESTED APPOINTMENTS OF PERSONAL REPRESENTATIVES................XVIII-15J. PROCEEDINGS TO TAKE POSSESSION, CUSTODY AND CONTROL OF DECEDENT’S REAL PROPERTY...............................................................................XVIII-15K. ACTIONS TO RECOVER PERSONAL PROPERTY OF DECEDENT......................XVIII-16

1. Action to Sue for Recovery of Decedent’s Property.......................................XVIII-16 2. Examination of Persons Believed to Be in Possession of Decedent’s Property...........................................................................................................XVIII-16

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L. CLAIMS AGAINST THE ESTATE..............................................................................XVIII-17M. PERMISSIVE NOTICE OF FINAL ACCOUNTS......................................................XVIII-17N. PROCEEDINGS BEFORE DEATH TO DETERMINE VALIDITY OF WILL OR CODICIL (“LIVING PROBATE”)........................................................................XVIII-17O. ELECTIVE SHARE PROCEEDINGS.........................................................................XVIII-19P. GUARDIANSHIP PROCEEDINGS............................................................................XVIII-19Form XVIII-1 Estates Proceedings Summons........................................................................XVIII-21Form XVIII-2 Affidavit of Service...........................................................................................XVIII-23Form XVIII-3 Motion to Consolidate Civil Action & Estate Proceeding.............................XVIII-25Form XVIII-4 Notice of Transfer............................................................................................XVIII-27Form XVIII-5 Notice of Appeal..............................................................................................XVIII-29Form XVIII-6 Verified Petition for Removal of Personal Representative.............................XVIII-31Form XVIII-7 Petition for Recovery of Estate Property.........................................................XVIII-35

APPENDIX AFIDUCIARY INCOME TAXATION OF NONGRANTOR TRUSTS AND ESTATES

A. OVERVIEW...........................................................................................................................A-7 1. Simple and Complex Trusts Defined.......................................................................A-7 a. Definition – A “Simple Trust”......................................................................A-7 b. Definition – A “Complex Trust”...................................................................A-7 2. Income Taxation of Simple Trusts and Their Beneficiaries.....................................A-8 a. Taxation of a Simple Trust...........................................................................A-8 b. Taxation of Beneficiaries of Simple Trusts.................................................A-8 3. Income Taxation of Estates and Complex Trusts, and Their Beneficiaries............A-8 a. Taxation of the Estate or Complex Trust....................................................A-8 b. Taxation of Beneficiaries of Estates or Complex Trusts.............................A-9B. STEPS IN SOLVING A FIDUCIARY INCOME TAX PROBLEM....................................A-10C. FIDUCIARY ACCOUNTING INCOME...........................................................................A-10 1. Definition...............................................................................................................A-11 2. The Uniform Principal and Income Act................................................................A-11D. TAXABLE INCOME..........................................................................................................A-11 1. Computation of Taxable Income...........................................................................A-11 2. Exceptions..............................................................................................................A-11 a. Exemptions................................................................................................A-11 b. Charitable Deductions...............................................................................A-12 c. Administrative Expenses...........................................................................A-13 d. Excess Deductions.....................................................................................A-13 e. Depreciation...............................................................................................A-14 f. Generation-Skipping Tax..........................................................................A-14 3. The 2-Percent Floor on Itemized Deductions.......................................................A-14 a. Charitable Contribution Exception..........................................................A-15 b. Personal Exemption Exception..................................................................A-15 c. Distribution Deduction Exception............................................................A-15

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d. Ownership Costs........................................................................................A-15 e. Tax Preparation Fees..................................................................................A-16 f. Investment Advisory Fees..........................................................................A-16 g. Appraisal Fees............................................................................................A-16 h. Fiduciary Expenses....................................................................................A-17 i. Bundled Fees..............................................................................................A-17E. DISTRIBUTABLE NET INCOME (DNI).........................................................................A-17 1. Significance............................................................................................................A-17 a. Distribution Deduction.............................................................................A-18 b. Inclusion....................................................................................................A-18 c. The Character Rule....................................................................................A-18 2. Computation of DNI..............................................................................................A-18 a. Distribution Deduction.............................................................................A-18 b. Personal Exemption...................................................................................A-19 c. Capital Gains and Losses...........................................................................A-19 d. Extraordinary or Taxable Stock Dividends................................................A-19 e. Tax-Exempt Interest..................................................................................A-20 i. General Rule..................................................................................A-20 ii. Special Rules for Tax-Exempt Interest...........................................A-20 (a) Simple Trusts.....................................................................A-20 (b) Estates and Complex Trusts.............................................A-20 f. Foreign Trusts............................................................................................A-20F. THE DISTRIBUTION DEDUCTION; TAXABLE INCOME OF THE TRUST OR ESTATE...........................................................................................................A-20 1. Simple Trusts..........................................................................................................A-21 a. Distribution Deduction.............................................................................A-21 i. General Rule..................................................................................A-21 ii. Limitation......................................................................................A-21 b. Taxable Income..........................................................................................A-21 2. Estates and Complex Trusts...................................................................................A-21 a. Distribution Deduction.............................................................................A-21 i. General Rule..................................................................................A-21 ii. Limitation......................................................................................A-21 b. Taxable Income..........................................................................................A-21G. COMPLIANCE MATTERS................................................................................................A-22 1. Preliminary............................................................................................................A-22 a. Identification Number...............................................................................A-22 b. Notice of Fiduciary Relationship...............................................................A-22 c. Taxable Years..............................................................................................A-22 i. Trusts.............................................................................................A-22 ii. Estates............................................................................................A-22 2. Returns...................................................................................................................A-23 a. Threshold Requirements...........................................................................A-23

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i. Estates............................................................................................A-23 ii. Trusts.............................................................................................A-23 b. Forms.......................................................................................................A-23 c. Due Date....................................................................................................A-23 d. Ancillary Representative............................................................................A-23 3. Payment of Tax.......................................................................................................A-24 a. Federal Income Tax Rates..........................................................................A-24 b. Estimated Payments...................................................................................A-24 c. Election to Treat Payments of Estimated Tax as Paid by Beneficiary........A-25H. INCLUSION OF INCOME BY THE BENEFICIARY.......................................................A-25 1. Timing....................................................................................................................A-25 2. Simple Trusts..........................................................................................................A-25 3. Estates and Complex Trusts...................................................................................A-26 a. First Tier Distributions..............................................................................A-26 b. Second Tier Distributions.........................................................................A-29I. PROPERTY DISTRIBUTIONS..........................................................................................A-31 1. Trust or Estate Level...............................................................................................A-31 a. Taxable Income..........................................................................................A-31 b. Distribution Deduction.............................................................................A-32 2. Beneficiary Level.....................................................................................................A-32 a. Inclusion.....................................................................................................A-32 b. Basis...........................................................................................................A-33 3. Example..................................................................................................................A-33J. INCOME IN RESPECT OF DECEDENTS (IRD).............................................................A-34 1. Definition of IRD...................................................................................................A-34 2. General Rule of Inclusion.......................................................................................A-34 a. Inclusion of IRD When Received by the Estate, Heir or Direct Recipient.........................................................................................A-34 b. Inclusion Examples....................................................................................A-35 c. Transfer of IRD..........................................................................................A-36 d. Character....................................................................................................A-36 e. Installment Obligations.............................................................................A-36 3. Deductions in Respect of Decedents (DRD)........................................................A-37 4. Deduction for Estate Tax Attributable to IRD......................................................A-37 a. In General...................................................................................................A-37 b. Example.....................................................................................................A-38 c. The I.R.C. § 691(c) Deduction for Estates, Trusts and Beneficiaries........A-39 i. Basic Rule.......................................................................................A-39 ii. Example.........................................................................................A-39 5. Partnership Interests..............................................................................................A-40K. MISCELLANEOUS..........................................................................................................A-40 1. Charitable Remainder Trusts.................................................................................A-40 a. Types.........................................................................................................A-40

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i. Charitable Remainder Annuity Trust (CRAT).............................A-41 ii. Charitable Remainder Unitrust (CRUT)......................................A-41 b. Income Taxation........................................................................................A-41 2. Charitable Lead Trusts...........................................................................................A-41 3. North Carolina Income Taxation of Estates, Trusts and Their Beneficiaries.......A-42L. COMPREHENSIVE EXAMPLE........................................................................................A-43 1. Facts........................................................................................................................A-43 2. Income, Expenses and Distributions.....................................................................A-44 3. Determination of Taxable Income and Amounts Reportable.............................A-44

APPENDIX B THE HYPOTHETICAL ESTATE OF HUNTER M. JOHNSON

A. OVERVIEW.........................................................................................................................B-5 1. Statement of Facts.....................................................................................................B-5 2. Relevant Provisions of Decedent’s Will....................................................................B-5 3. Inventory of Decedent’s Assets and Liabilities.........................................................B-6 a. Real Estate Owned Individually....................................................................B-6 b. Stocks and Bonds.........................................................................................B-6 c. Notes and Cash.............................................................................................B-7 d. Life Insurance...............................................................................................B-7 e. Jointly Owned Property................................................................................B-8 f. Miscellaneous Property................................................................................B-8 g. Powers of Appointment................................................................................B-9 h. Annuities......................................................................................................B-9 i. Funeral, Administration Expenses and Debts..............................................B-9B. ESTATE’S 2015 TRANSACTIONS.....................................................................................B-10 1. Receipts..................................................................................................................B-10 a. Dividends...................................................................................................B-10 b. Interest........................................................................................................B-11 c. Other Receipts ..........................................................................................B-11 2. Expenditures...........................................................................................................B-11 a. Funeral Expenses........................................................................................B-11 b. Administration Expenses...........................................................................B-11 c. Other Expenditures....................................................................................B-12 3. Distributions...........................................................................................................B-12 a. Distributions in Kind.................................................................................B-12 b. Cash Distributions.....................................................................................B-12 4. Probate Documents and Tax Returns....................................................................B-13 a. Application for Probate and Letters Testamentary....................................B-13 b. 90-Day Inventory.......................................................................................B-13 c. Fiduciary Income Tax Returns...................................................................B-13 d. Other Tax Returns......................................................................................B-13C. ESTATE’S 2016 TRANSACTIONS....................................................................................B-14

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1. Receipts..................................................................................................................B-14 a. Dividends...................................................................................................B-14 b. Interest........................................................................................................B-14 c. Sales of Assets..............................................................................................B-14 d. Other Receipts............................................................................................B-15 2. Expenditures..........................................................................................................B-15 a. Administration Expenses..........................................................................B-15 b. Other Expenditures....................................................................................B-15 3. Distributions..........................................................................................................B-16 4. Probate Documents and Estate Returns................................................................B-16 a. Estate Tax Returns......................................................................................B-16 b. Annual Account.........................................................................................B-16 c. Fiduciary Income Tax Returns..................................................................B-16 d. Final Account.............................................................................................B-16Exhibit B-1 Application for Probate and Letters Testamentary (AOC-E-201).........................B-17Exhibit B-2 90-Day Inventory (AOC-E-505)............................................................................B-21Exhibit B-3 2015 U.S. Fiduciary Income Tax Return (IRS Form 1041)..................................B-27Exhibit B-4 2015 N.C. Fiduciary Income Tax Return (NCDOR Form D-407)........................B-47Exhibit B-5 U.S. Estate (and Generation-Skipping Transfer) Tax Return (IRS Form 706)......B-55Exhibit B-6 Annual Account (AOC-E-506)..............................................................................B-75Exhibit B-7 2016 U.S. Fiduciary Income Tax Return (IRS Form 1041)..................................B-87Exhibit B-8 2016 N.C. Fiduciary Income Tax Return (NCDOR Form D-407).....................B-111Exhibit B-9 Final Account (AOC-E-506)................................................................................B-123

INDEX

All official NCAOC publications are reproduced by permission of the North Carolina Administrative Office of the Courts. Each was current as of the date of this publication, but is subject to ongoing revision and may not still be current at the time you use this publication.

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TABLE OF FORMS

Find below the websites for the IRS, N.C. Department of Revenue and N.C. Administrative Office of the Courts. For the most current applicable form, we recommend you check these websites for updates. Also included is the website for the North Carolina General Assembly in order that you may track the most current statutory law.

Internal Revenue Service www.irs.gov/formspubs/North Carolina Department of Revenue www.dor.state.nc.usNorth Carolina Administrative Office of the Courts www.nccourts.org/forms/formsearch.asp?North Carolina General Assembly www.ncga.state.nc.us/homePage.pl

CHAPTER IIPRE-QUALIFICATION

Form II-1 Preliminary Checklist of Decedent’s Property......................................................II-17Form II-2 Inventory of Decedent’s Assets and Liabilities.....................................................II-21Form II-3 Personal Information Worksheet..........................................................................II-29Form II-4 Checklist of Matters to Cover at First Conference...............................................II-31Form II-5 Checklist for Safe Deposit Box Inventory.............................................................II-33Form II-6 Lock Box Inventory................................................................................................II-35

CHAPTER IIIEXCEPTIONS TO REQUIREMENT OF FORMAL ESTATE ADMINISTRATION

Form III-1 Affidavit of Authority to Assign Title (MVR-317)...............................................III-21Form III-2 Checklist of Exceptions to Requirement of Estate Administration...................III-23

CHAPTER IVQUALIFICATION IN GENERAL

Form IV-1 Questions About Deceased, Will and Family.........................................................IV-7Form IV-2 Interrogatories About Deceased and Family – Intestate.......................................IV-9Form IV-3 Court Costs and Fees Chart..................................................................................IV-11

CHAPTER VQUALIFICATION OF PERSONAL REPRESENTATIVE

IN THE TESTATE ESTATE

Form V-1 Checklist of Qualification Procedures in the Testate Estate..................................V-17Form V-2 Affidavit of Lost Will..............................................................................................V-19Form V-3 Petition for Probate of Copy of Lost Will..............................................................V-21

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CHAPTER VIQUALIFICATION OF PERSONAL REPRESENTATIVE

IN THE INTESTATE ESTATEForm VI-1 Checklist of Qualification Procedures in the Intestate Estate.............................VI-11

CHAPTER VIIASCERTAINING BENEFICIARIES

Form VII-1 Summary of North Carolina Intestate Succession Act.......................................VII-27Form VII-2 Renunciation and Qualified Disclaimer..............................................................VII-29Form VII-3 Claim for an Elective Share..................................................................................VII-31

CHAPTER VIIIPOST-QUALIFICATION PROCEDURES

Form VIII-1 Estate Deadlines Sheet........................................................................................VIII-17Form VIII-2 Transmittal Letter..............................................................................................VIII-21Form VIII-3 Published Notice to Creditors...........................................................................VIII-23Form VIII-4 Notice to Creditors.............................................................................................VIII-25Form VIII-5 Affidavit of Publication.....................................................................................VIII-27Form VIII-6 Letter to Personal Representative Regarding Duties........................................VIII-29

CHAPTER IXHANDLING ASSETS

Form IX-1 Administration Checklist: Searching for Assets...................................................IX-17Form IX-2 Administration Checklist: Preserving Estate Assets............................................IX-19Form IX-3 Searching for Bank Accounts................................................................................IX-31Form IX-4 Requesting Information on Known Bank Accounts..........................................IX-35Form IX-5 Request for Account Information of Deceased Depositor..................................IX-39Form IX-6 Requesting Redemption of Account Held in Sole Name...................................IX-41Form IX-7 Requesting Redemption of Joint Bank Account Governed by N.C.G.S. § 41-2.1 ...................................................................................................IX-43Form IX-8 Requesting Redemption of Account Held in Sole Name...................................IX-45Form IX-9 Requesting Redemption of Joint Bank Account Not Subject to N.C.G.S. § 41-2.1..............................................................................................IX-47Form IX-10 Administration Checklist: Bank Accounts, Certificates of Deposit, Other Depository Accounts..................................................................................IX-49Form IX-11 Information Sheet: Bank Accounts, Certificates of Deposit, Other Depository Accounts..................................................................................IX-51Form IX-12 Authorization and Release of Information.........................................................IX-53Form IX-13 Administration Checklist: Cash, Uncashed Checks, Etc.....................................IX-59Form IX-14 Information Sheet: Cash, Uncashed Checks, Etc.................................................IX-61Form IX-15 Petition for Possession, Custody and Control of Real Property by Personal Representative...................................................................................IX-75

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Form IX-16 Order Granting Possession, Custody and Control of Real Property to Personal Representative........................................................................................IX-79Form IX-17 Petition for Sale of Real Property at Private Sale.................................................IX-81Form IX-18 Order for Sale of Real Property at Private Sale..................................................IX-83Form IX-19 Report of Private Sale............................................................................................IX-85Form IX-20 Order of Confirmation of Private Sale.................................................................IX-87Form IX-21 Executor’s Special Warranty Deed.......................................................................IX-89Form IX-22 Beneficiary and Executor’s Deed.........................................................................IX-91Form IX-23 Limited Warranty in Deed Signed by Personal Representative...........................IX-95Form IX-24 Notifying Lessee of Address for Rent Payment...................................................IX-97Form IX-25 Administration Checklist: Real Estate.................................................................IX-99Form IX-26 Information Sheet: Real Estate...........................................................................IX-103Form IX-27 Transmitting Claim Forms to Life Insurance Company...................................IX-111Form IX-28 Requesting Form 712..........................................................................................IX-113Form IX-29 Requesting Ownership Information on Insurance...........................................IX-115Form IX-30 Administration Checklist: Life Insurance..........................................................IX-117Form IX-31 Information Sheet: Life Insurance.....................................................................IX-121Form IX-32 Application for Burial Benefits (VA Form 21P-530)..........................................IX-129Form IX-33 Application for Reimbursement of Headstone or Marker Expense (VA Form 21-8834).............................................................................................IX-133Form IX-34 Claim for Standard Government Headstone or Marker (VA Form 40-1330).............................................................................................IX-135 Form IX-35 Application for United States Flag for Burial Purposes (VA Form 27-2008).....IX-139Form IX-36 Patient’s Request for Medical Payment...............................................................IX-143Form IX-37 Administration Checklist: Other Insurance Claims..........................................IX-145 Form IX-38 Information Sheet: Other Insurance Claims.....................................................IX-149Form IX-39 Requesting Broker to Transfer “Street Name” Account into Estate Account....IX-161Form IX-40 Affidavit of Domicile by (Executor/Administrator)..........................................IX-163Form IX-41 Affidavit of Domicile..........................................................................................IX-165Form IX-42 Requesting Broker to Issue Certificates in Beneficiary’s Name........................IX-167Form IX-43 Stock Assignment Separate from Certificate......................................................IX-169Form IX-44 Assignment Separate from Certificate Stock Power..........................................IX-171Form IX-45 Bond Power..........................................................................................................IX-173Form IX-46 Transmitting Stock to Company for Reissuance..............................................IX-175Form IX-47 Requesting Company to Redeem Stock.............................................................IX-177Form IX-48 Requesting Company to Redeem Dividend Reinvestment Plan......................IX-179Form IX-49 Administration Checklist: Corporate Stocks and Bonds (Dividend Reinvestment Plans and Mutual Funds)/Municipal Bonds.............................IX-181Form IX-50 Information Sheet: Corporate Stocks (Dividend Reinvestment Plans and Mutual Funds)....................................................................................IX-185 Form IX-51 Information Sheet: Corporate/Municipal Bonds..............................................IX-189Form IX-52 Requesting Employee Benefit Information from Present Employer................IX-197Form IX-53 Requesting Employee Benefit Information from Past Employer.....................IX-199

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Form IX-54 Administration Checklist: Employment-Related Compensation and Benefits..............................................................................................................IX-201Form IX-55 Information Sheet: Employment-Related Compensation and Benefits..............................................................................................................IX-203Form IX-56 Distributions After 70 1/2...................................................................................IX-221Form IX-57 Distributions After Death...................................................................................IX-223Form IX-58 Administration Checklist: Income Tax Refunds...............................................IX-229Form IX-59 Information Sheet: Income Tax Refunds..........................................................IX-231Form IX-60 Assignment of Promissory Note........................................................................IX-237Form IX-61 Assignment of Real Estate (Mortgage/Deed of Trust)......................................IX-239Form IX-62 Administration Checklist: Notes and Secured Obligations..............................IX-241Form IX-63 Information Sheet: Notes and Secured Obligations..........................................IX-243Form IX-64 Agreement and Request for Disposition of a Decedent’s Treasury Securities (FS Form 5394)...................................................................................IX-255Form IX-65 Special Form of Request for Payment of United States Savings and Retirement Securities Where Use of a Detached Request Is Authorized (FS Form 1522)................................................................................IX-265Form IX-66 Request by Fiduciary for Distribution of United States Treasury Securities (FS Form 1455)..................................................................................IX-269Form IX-67 Request to Reissue United States Savings Bonds(FS Form 4000)....................IX-275Form IX-68 Direct Deposit Sign-Up Form (FS Form 5396)..................................................IX-285Form IX-69 Requesting Information on Ownership and Valuation of United States Savings Bonds......................................................................................................IX-287Form IX-70 Requesting Reissuance of United States Savings Bonds (Decedent Sole Owner).......................................................................................IX-289Form IX-71 Requesting Reissuance of United States Savings Bonds (Co-owner, Beneficiary Form)...........................................................................IX-291Form IX-72 Security Transfer Request (FS Form 5179)........................................................IX-293Form IX-73 Disposition of Treasury Securities Belonging to a Decedent’s Estate Being Settled Without Administration (FS Form 5336).....................................IX-297Form IX-74 Administration Checklist: United States Government Bonds/Notes/Bills...............................................................................................IX-307Form IX-75 Information Sheet: United States Government Bonds/Notes/Bills...............................................................................................IX-309Form IX-76 Bill of Sale............................................................................................................IX-315Form IX-77 Administration Checklist: Household Furnishings and Personal Effects...................................................................................................IX-317Form IX-78 Information Sheet: Household Furnishings and Personal Effects....................IX-319Form IX-79 Administration Checklist: Farm Products/Livestock/Equipment....................IX-325Form IX-80 Information Sheet: Farm Products/Livestock/Equipment...............................IX-327Form IX-81 Title Application (DMV Form MVR-1).............................................................IX-335Form IX-82 Odometer Disclosure Statement (DMV Form MVR-180)................................IX-337Form IX-83 Eligible Risk Statement for Registration and Certificate of Title (DMV Form MVR-615)......................................................................................IX-339

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NORTH CAROLINA ESTATE ADMINISTRATION MANUAL, ninth edition lvii

Form IX-84 Highway Use Tax Exemption Certificate (DMV Form MVR-613)..................IX-341Form IX-85 Transfer of Motor Vehicle to Beneficiary...........................................................IX-343Form IX-86 Application for Duplicate Certificate of Title (DMV Form MVR-4)...............IX-345Form IX-87 Administration Checklist: Motor Vehicles........................................................IX-347Form IX-88 Information Sheet: Motor Vehicles....................................................................IX-349Form IX-89 Bill of Sale (U.S. Department of Transportation Form CG-1340).................IX-355Form IX-90 NC Vessel Registration & Title Application (Form VL-1)...............................IX-357Form IX-91 Seller’s Statement of Lost Vessel Title................................................................IX-359Form IX-92 Bill of Sale for a Vessel........................................................................................IX-361Form IX-93 Transfer of Boat/Vessel to Beneficiary...............................................................IX-363Form IX-94 Administration Checklist: Boats and Vessels....................................................IX-365Form IX-95 Information Sheet: Boats and Vessels................................................................IX-367Form IX-96 Aircraft Bill of Sale (AC Form 8050-2)..............................................................IX-375Form IX-97 Aircraft Registration Application (AC Form 8050-1).....................................IX-379Form IX-98 Administration Checklist: Aircraft....................................................................IX-383Form IX-99 Information Sheet: Aircraft................................................................................IX-385Form IX-100 Administration Checklist: Partnership Interests...............................................IX-397Form IX-101 Information Sheet: Partnership Interests..........................................................IX-401Form IX-102 Administration Checklist: Sole Proprietorship.................................................IX-403Form IX-103 Information Sheet: Sole Proprietorship.............................................................IX-405Form IX-104 QSST Election Form...........................................................................................IX-407Form IX-105 ESBT Election Form...........................................................................................IX-411Form IX-106 Administration Checklist: Limited Liability Company Interests.....................IX-413Form IX-107 Information Sheet: Limited Liability Company Interests................................IX-417Form IX-108 Assignment of Lease...........................................................................................IX-423

CHAPTER XITHE UNIFORM PRINCIPAL AND INCOME ACT

Form XI-1 John Doe Irrevocable Trust Conversion to Unitrust Written Policy...................XI-31

CHAPTER XIIIDISTRIBUTIONS

Form XIII-1 Receipt, Release and Refunding Agreement.....................................................XIII-15

CHAPTER XIVCLOSING AND TERMINATION OF THE ESTATE

Form XIV-1 N.C. Inheritance and Estate Tax Certificate......................................................XIV-11Form XIV-2 Estate Tax Closing Letter....................................................................................XIV-13Form XIV-3 Petition for Payment of Counsel Fees.................................................................XIV-15Form XIV-4 Order for Payment of Counsel Fees...................................................................XIV-17Form XIV-5 Waiver of Right to Personal Representative’s Commissions..............................XIV-19Form XIV-6 Petition for Payment of Personal Representative’s Commissions.....................XIV-21

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Form XIV-7 Order for Payment of Personal Representative’s Commissions........................XIV-23Form XIV-8 Petition for Commissions...................................................................................XIV-25Form XIV-9 Petition for Extension of Time to Administer Estate.........................................XIV-27Form XIV-10 Order Granting Extension of Time to Administer Estate..................................XIV-29Form XIV-11 Petition for Discharge of Personal Representative...........................................XIV-31Form XIV-12 Order Granting Discharge of Personal Representative.....................................XIV-33

CHAPTER XVTAX RETURNS

Appendix Common Pitfalls in Preparing the U.S. Estate Tax Return.................................XV-31Form XV-1 Transmittal Letter to IRS.....................................................................................XV-33Form XV-2 Checklist for Preparing U.S. Estate Tax Return (IRS Form 706).......................XV-35Form XV-3 Checklist of Supplemental Documents for Filing U.S. Estate Tax Return (IRS Form 706)................................................................................XV-41Form XV-4 Letter to IRS of Request for Prompt Determination.......................................XV-43Form XV-5 Transmittal Letter to N.C. Department of Revenue...........................................XV-45

CHAPTER XVIN.C. GUARDIANSHIP PRACTICE AND PROCEDURE

Form XVI-1 Affidavit of Physician.........................................................................................XVI-73Form XVI-2 Answer by Guardian ad Litem...........................................................................XVI-75Form XVI-3 Order Appointing Guardian ad Litem..............................................................XVI-77Form XVI-4 Petition for Sale of Real Property......................................................................XVI-79Form XVI-5 Order for Sale of Real Property..........................................................................XVI-85Form XVI-6 Order Confirming Sale of Real Property...........................................................XVI-87Form XVI-7 Motion and Order to Intervene.........................................................................XVI-89Form XVI-8 Petition for Discharge of Guardian of the Estate.............................................XVI-93Form XVI-9 Order Granting Discharge of Guardian of the Estate.......................................XVI-95

CHAPTER XVIITRUST ADMINISTRATION

Form XVII-1 Notice of Delegation of Certain Trustee Powers..............................................XVII-23Form XVII-2 Notice of Resignation of Trustee.....................................................................XVII-25Form XVII-3 Notice of Removal of Trustee...........................................................................XVII-27Form XVII-4 Notice of Appointment of and Acceptence by Successor Trustee..................XVII-29Form XVII-5 Certification of Trust........................................................................................XVII-31Form XVII-6 Notice of Hearing..............................................................................................XVII-53Form XVII-7 Modification of Trust by Agreement of Grantor, Spouse Beneficiary and Adult Child Beneficiary..............................................................................XVII-69Form XVII-8 Modification of Trust by Agreement of Two Grantors and Multiple Noncharitable Beneficiaries.............................................................................XVII-71Form XVII-9 Petition to Modify Trusts..................................................................................XVII-75

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NORTH CAROLINA ESTATE ADMINISTRATION MANUAL, ninth edition lix

Form XVII-10 Trust Merger Agreement..................................................................................XVII-79Form XVII-11 Declaration of Division of Trust Assets...........................................................XVII-83Form XVII-12 Revocation of Revocable Trust.........................................................................XVII-85Form XVII-13 Decanting Instruments.....................................................................................XVII-87

CHAPTER XVIIIESTATE PROCEEDINGS

Form XVIII-1 Estates Proceedings Summons........................................................................XVIII-21Form XVIII-2 Affidavit of Service...........................................................................................XVIII-23Form XVIII-3 Motion to Consolidate Civil Action & Estate Proceeding.............................XVIII-25Form XVIII-4 Notice of Transfer............................................................................................XVIII-27Form XVIII-5 Notice of Appeal..............................................................................................XVIII-29Form XVIII-6 Verified Petition for Removal of Personal Representative.............................XVIII-31Form XVIII-7 Petition for Recovery of Estate Property.........................................................XVIII-35

APPENDIX BTHE HYPOTHETICAL ESTATE OF HUNTER M. JOHNSON

Exhibit B-1 Application for Probate and Letters Testamentary (AOC-E-201).........................B-17Exhibit B-2 90-Day Inventory (AOC-E-505)............................................................................B-21Exhibit B-3 2015 U.S. Fiduciary Income Tax Return (IRS Form 1041)..................................B-27Exhibit B-4 2015 N.C. Fiduciary Income Tax Return (NCDOR Form D-407)........................B-47Exhibit B-5 U.S. Estate (and Generation-Skipping Transfer) Tax Return (IRS Form 706)......B-55Exhibit B-6 Annual Account (AOC-E-506)..............................................................................B-75Exhibit B-7 2016 U.S. Fiduciary Income Tax Return (IRS Form 1041)..................................B-87Exhibit B-8 2016 N.C. Fiduciary Income Tax Return (NCDOR Form D-407).....................B-111Exhibit B-9 Final Account (AOC-E-506)................................................................................B-123

All official court forms are reproduced by permission of the North Carolina Administrative Office of the Courts. Each form was current as of the date appearing in the lower left hand corner of the Side One of Page One of the form, but is subject to ongoing revision and may not still be current at the time you use this publication.

Table of Forms