On March 1, 2024, several significant changes will take effect that apply to the spousal and child’s allowance in decedents’ estates. This post is the first in a series of posts that will focus on the changes to the allowance enacted by Session Law 2023-120.
What Is a Year’s Allowance?
There are two types of decedent estate allowances:
- one for certain children of the decedent and
- one for the surviving spouse of the decedent. (I previously published a blog post on the history and basics of the spousal year’s allowance.)
The year’s allowance is intended to provide a means of support for the surviving spouse and for certain children upon the decedent’s death and during the administration of the decedent’s estate. See Bryant v. Bowers, 182 N.C. App. 338, 340 (2007) (“A year’s allowance is allotted to a surviving spouse to meet immediate needs, maintain a standard of living, ease the mourning process, and keep the family intact”). One of the major benefits of the allowance is that it has priority over claims against the estate, meaning it may be allocated to the surviving spouse and to eligible children before any claims against the estate are paid. It also provides a way to open and close an estate with limited assets in an expeditious and inexpensive manner.
The amount of the year’s allowance varies depending on the date of the decedent’s death and the date the application for the allowance is made with the clerk. The North Carolina General Assembly has increased the amount of the allowance multiple times over the years. The current spousal allowance is $60,000 if the application for a year’s allowance is made on or after January 1, 2019. As for eligible children, S.L. 2023-120 raises the allowance from $5,000 to $10,000 if the decedent died on or after March 1, 2024. This change to the amount of the child’s allowance will be the subject of further discussion in a future post.
Time Period to Apply for the Allowance
One of the major legislative changes resulting from S.L. 2023-120 is the removal of the one-year time limit to apply for the allowance. Under the law applicable to the estates of decedents dying before March 1, 2024, the surviving spouse and eligible children have one year after the date of death of the decedent to apply for the allowance. G.S. 30-15; -17. They typically do so by using the N.C. Administrative Office of the Courts form AOC-E-100, “Application and Assignment of Year’s Allowance.”
For the estates of decedents dying on or after March 1, 2024, the one-year time limit to claim the allowance is removed. S.L. 2023-120, sec. 1.2.* The law, G.S. 30-15(a), continues to provide that the purpose of the allowance is for “support for one year after the death” of the decedent, and the allowance is still referred to throughout the statute as a “year’s allowance.” However, for decedents dying or after March 1, 2024, there is no time limitation on bringing a claim for an allowance with two exceptions. S.L. 2023-120, sec. 1.2, amending G.S. 30-15(b) (spouse) and G.S. 30-17(b) (children). The first exception is simply that the surviving spouse and eligible children must file a claim for the allowance during their lifetime. Id. The second exception is more complicated.
Under the second exception, if a personal representative is appointed for the decedent’s estate, the claim must be made within six months after the issuance of letters testamentary (testate estates) or letters of administration (intestate estates). Id. The issuance of letters testamentary or letters of administration by the clerk opens what is often referred to as a “full” or “formal” estate administration. The letters represent the personal representative’s authority to receive and administer the assets of the decedent’s estate. The issuance of these letters starts the running of the limitation period for the allowance.
However, the six-month limitation period does not start to run if other types of letters are issued or other types of administration are opened. For example, the limitation period would not start to run if:
- An Article 11 Collector is appointed and letters of collection are issued pursuant to G.S. 28A-11-1.
- A limited personal representative is appointed and letters of appointment as a limited personal representative are issued pursuant to G.S. Chapter 28A, Article 29.
- An affiant (also referred to as a collector by affidavit) is appointed to collect property by affidavit in a small estate pursuant to G.S. Chapter 28A, Article 25.
- A payment is made to the clerk of money owed to the decedent pursuant to G.S. 28A-25-6.
- An order for summary administration is entered by the clerk pursuant to G.S. 28A-28-3.
The six-month limitation period runs from the date of the “issuance of letters” testamentary or administration. The issuance of letters is different from an order authorizing the issuance of letters. When the clerk appoints a personal representative, the clerk first enters an order authorizing the issuance of letters. G.S. 28A-6-1. The clerk typically uses form AOC-E-402, “Order Authorizing Issuance of Letters.” The clerk then issues the letters using AOC-E-403, “Letters.” Most often, the clerk enters the order and issues the letters on the same date. However, there could be a delay between the two. For example, the clerk may enter an order authorizing the issuance of letters on March 1st, but for some reason the letters are not issued by the clerk until March 3rd. The six-month limitation period imposed by the new legislation seems to run from March 3rd, not March 1st, since that is the date the letters were issued.
If no letters testamentary or administration are issued in the estate and the surviving spouse and the eligible children are living, then there is no time limitation on their right to claim the allowance. This may prove to be helpful in cases where a decedent dies on or after March 1, 2024, and at the time of the decedent’s death there is no personal property that requires estate administration. Years later some additional item of personal property is discovered, perhaps a bank account held in the decedent’s name, a car, or a tractor. The allowances may be used to administer that property up to the allowable amounts.
The child’s allowance also may be exercised at any time during the lifetime of the child, provided the child qualifies for the allowance at the time of the decedent’s death. For example, a decedent dies without a spouse but with one child who is 16 as of the date of the death of the decedent on March 1, 2024. At the time of the decedent’s death, it is believed that the decedent owns no personal property, and a full estate administration is not opened. Eight years later it is discovered that the decedent owned a trailer worth $2,000. A petition for a child’s allowance may still be filed, and the clerk may assign the allowance, at that later date because the child is still alive and the child was eligible for the allowance at the time of the decedent’s death.
The Priority Among the Spousal and Child’s Allowance
Another important change to both the spousal and child’s allowance resulting from S.L. 2023-120 is the priority among the allowances. For decedent’s dying before March 1, 2024, the allowance of the spouse and any eligible children are given equal priority. The clerks’ manual** notes that under the law applicable to decedents’ dying before March 1, 2024: “[i]f a surviving spouse files an application for an allowance and the clerk (1) has been made aware of a potential application for an allowance by an eligible child and (2) does not have evidence in the court file (e.g., the inventory filed in a full administration) sufficient to prove that personal property is available to pay both allowances in full, the spousal allowance should be prorated accordingly.”
For example, there is $40,000 of personal property available to assign under an allowance in the estate of a decedent who died on February 28, 2024. The surviving spouse applies for the allowance on March 3, 2024, and the clerk is aware that there is a child who would be entitled to an allowance. The clerk should prorate the assignment of the $40,000 to the spouse and not assign the full $40,000 to the spouse to ensure that there is a proportionate share of personal property available to assign to the eligible child if they apply within the requisite one-year period. This practice ensures that the assets are prorated and paid out proportionately to the spouse and eligible children based on their equal priority to the allowance. Just because the spouse applies first within the one-year limitation period, does not mean that the spouse gets priority and takes the full $40,000.
For decedents dying on or after March 1, 2024, the spousal allowance has priority over the child’s allowance. G.S. 30-20(a), as amended by S.L. 2023-120, provides that the clerk shall first ascertain if the surviving spouse is entitled to an allowance and, if so, enter an order setting out the personal property of the estate awarded to the spouse. Once the spouse’s allowance is awarded, then the clerk next ascertains whether there are any children of the decedent entitled to an allowance, and if so, enters an order setting forth the personal property awarded for the child’s allowance. S.L. 2023-120, sec. 1.2, amending G.S. 30-20(a). However, after the award of the spousal allowance, which is $60,000, there may be nothing left for the eligible child. For example, a decedent dies on March 1, 2024, with $40,000 in personal property available to satisfy an allowance. The decedent has both a surviving spouse and an eligible child. The spouse is entitled to receive the full $40,000 in personal property under the surviving spouse’s assignment of the allowance and the child would receive nothing.
There is an open question resulting from these legislative changes when there is an eligible child and a surviving spouse. What happens when the eligible child petitions for the allowance but the surviving spouse does not? Does the eligible child have to wait for the spouse to petition? There does not appear to be a mechanism to force the surviving spouse to petition for the allowance or for the clerk to determine that the surviving spouse renounced the right to petition for the allowance, even when the child files an estate proceeding for a determination of the allowances and names the spouse as a party. Under the revised statute, the surviving spouse, for decedents dying on or after March 1, 2024, has an unlimited lifetime right to petition for the allowance. It seems the child may have to wait to receive their allowance (and the court may have to wait to assign it) until the surviving spouse (i) dies without petitioning for the allowance, (ii) petitions for and is assigned the allowance by the clerk, or (iii) letters testamentary or letters of administration are issued in the decedent’s estate and the six month limitation period runs on the spouse’s right to petition for the allowance.
Moving Forward
Be aware that for at least one year after the effective date of this new legislation, the old and the amended law will apply. Because S.L. 2023-120 is effective as to decedents’ dying on or after March 1, 2024, the parties and the clerk should first note the date of the decedent’s death to determine which law applies when dealing with any application for a spousal or child’s allowance. For example, if Tyrell Jacobs dies intestate on February 29, 2024, the prior law will still apply. His spouse and eligible children will have one year from the date of his death to apply for the allowance. The surviving spouse and eligible children will have equal priority to the assignment of the allowance. All other provisions of the prior law will apply to the assignment. They should use the AOC-E-100 form to apply.
However, if Tyrell Jacobs dies intestate on March 1, 2024, the law as amended by S.L. 2023-120 will apply. His spouse and eligible children are not subject to the one-year limitation period to petition for the allowance. Instead, they may file a petition for an allowance any time during their lifetime unless letters of administration (because he died intestate) are issued in Mr. Jacobs’ estate. If letters of administration are issued, then they have six months to file a petition from the date of the issuance of the letters. The surviving spouse will have priority to the assignment of the allowance over any eligible children. All other changes to the allowances under S.L. 2023-120 will also apply.
The other changes resulting from S.L. 2023-120 will be the subject of future blog posts. This includes a post on the new process to apply for the allowance (spoiler: magistrates are no longer authorized to make an assignment of an allowance) as well as a post on the changes to the amount, entitlement, and pay out of the child’s allowance. In the meantime, feel free to reach out with questions and feedback. I’m available at Meredith.smith@sog.unc.edu.
Author’s Note: Two additional posts accompany this post and constitute a series discussing the changes to the year’s allowance resulting from S.L. 2023-120. Those additional posts are available here and here.
* As a side note, the one-year limitation period in G.S. 1-54(5) applicable to the year’s allowance of a surviving spouse and children was not amended by S.L. 2023-120. It may require a subsequent technical correction to remove that limitation to align with the legislative changes to the allowance in G.S. Chapter 30.
** Meredith Smith, Decedents’ Estates, Trusts, and Powers of Attorney, ch. 14, “Year’s Allowance of a Surviving Spouse and Children,” at p. 14.10, North Carolina Clerk of Superior Court Manual Series, edited by Meredith Smith and Jan S. Simmons, UNC School of Government, 2022.