*Update, March 1, 2024: The N.C. Administrative Office of the Courts published revised year’s allowance forms in connection with the changes enacted by Session Law 2023-120.  They are AOC-E-100, Petition and Assignment Year’s Allowance and AOC-E-101, Deficiency Judgment.  Both the revised and previous version of the forms are available on the AOC’s website. The revised forms should be used for the estates of decedents dying on or after March 1, 2024.  The previous version of the forms should be used for the estates of decedents dying on or before February 29, 2024.

This is the third and final post in a series that focuses on changes to the year’s allowance in decedents’ estates resulting from Session Law 2023-120. This post discusses the process to apply for the spousal and child’s allowance. The statutory changes are effective for decedents dying on or after March 1, 2024. You can access my two previous posts in this series here and here.

Elimination of the Personal Representative and the Magistrate from the Process to Apply

For decedents dying before March 1, 2024, the statute contemplates that the spouse or eligible child first requests the personal representative (PR) or collector of the estate apply to the court to assign the allowance. See G.S. 30-16; -17. If there is no PR or the PR fails or refuses to apply, the person entitled to apply for the allowance may file the application directly with any magistrate or the clerk of superior court in any county where the property is located and the magistrate or clerk assigns the allowance. G.S. 30-16; -17.

For decedents dying on or after March 1, 2024, (i) the duty to first apply to the PR is removed; and (ii) the magistrate no longer has the authority to assign an allowance. A person eligible to apply for an allowance claims the allowance by filing a petition directly with the clerk of superior court. S.L. 2023-120, sec. 1.2, amending G.S. 30-15(a), -17(b). These changes largely conform with existing practices that occur in the approximately 20,000 allowance filings per year in North Carolina.

The Claim for an Allowance is Initiated by a Verified Petition

Another change resulting from S.L. 2023-120, and applicable to decedents dying on or after March 1, 2024, is that an eligible person claims the allowance not by filing an application, but instead by filing a verified petition. S.L. 2023-120, sec. 1.2, amending G.S. 30-15(b); -17(b).

The verified petition must be filed with the clerk in the county where venue would be proper under G.S. 28A-3-1. Proper venue for the probate of wills and for all proceedings related to the administration of a decedent’s estate in North Carolina is in:

1. the North Carolina county where the decedent was domiciled at death. G.S. 28A-3-1(1).
2. any North Carolina county where the decedent left any property or assets or into which any property or assets belonging to the estate may have come, if the decedent had no domicile in North Carolina at the time of death. G.S. 28A-3-1(2).
3. any county in North Carolina, if the decedent is a nonresident motorist who died in North Carolina. G.S. 28A-3-1(3).

Requirement of Residency to File for An Allowance

The legislation removes the requirement, for decedents dying on or after March 1, 2024, that to claim the allowance the decedent or the surviving spouse must be a resident of North Carolina at the decedent’s death. S.L. 2023-120, sec. 1.5, amending G.S. 30-15.

Delivery of the Verified Petition to the Personal Representative

Another new requirement under Session Law 2023-120 is that for decedents dying on or after March 1, 2024, a copy of the verified petition must be delivered to the PR, if one has been appointed. The amended G.S. 30-15(b) requires the petitioner to personally deliver or send by first-class mail a copy of the verified petition to the PR if one has been appointed in the decedent’s estate. S.L. 2023-120, sec. 1.2, amending 30-15(b).  Delivery of the petition is only required to the PR, it does not apply to a collector, an affiant under an affidavit of collection, or other person interested in the estate. The statute does not impose a timeframe on the delivery or mailing of the verified petition to the PR. As a result, it is not clear whether the delivery of the verified petition to the PR must be completed before the clerk may assign the allowance.

Commencement of a Contested Estate Proceeding

Most allowances are assigned by the clerk on an informal, ex parte basis, meaning the matter is not noticed for hearing and no interested persons are given notice of the spouse’s or child’s application. For example, a surviving spouse comes to the clerk’s office after the death of their spouse and completes the form AOC-E-100, Application And Assignment Year’s Allowance. The clerk then uses the same form to assign the allowance, at or around the same time the allowance is filed. This happens daily in clerks’ offices across the state.

However, in some instances, the allowance is contested. This may include questions such as whether the person seeking the allowance is entitled to an allowance. For example, is the spouse a spouse? Or, is certain property is eligible to be assigned under the allowance, such as a bank account or a vehicle? Under S.L. 2023-120 there is now a procedure for raising issues related to a year’s allowance. The procedure differs depending on who raises the issue: (i) the clerk or (ii) a person who seeks to challenge the award of the allowance.

Contested Estate Proceeding Directed by the Clerk. A year’s allowance may be initiated by a spouse or eligible child as an uncontested proceeding. However, the clerk may have questions about the petition or determine that there is insufficient evidence in the petition to support the assignment of the allowance. Under a new G.S. 30-20(c), the clerk may, on the clerk’s own motion, determine that a hearing is necessary to determine whether a year’s allowance should be awarded and, if so, what personal property should be awarded. If the clerk makes this determination, the clerk directs the petitioner to commence a contested estate proceeding to determine the year’s allowance.  S.L. 2023-120, sec. 1.2, amending G.S 30-20.

After the petitioner commences a contested estate proceeding at the direction of the clerk and a hearing is held, the clerk will then grant or deny the assignment of the allowance. If the clerk assigns the allowance and a person wants to challenge the assignment, the path they follow to challenge the assignment depends on whether they were a party to the contested estate proceeding.  If they were a party to the proceeding, they can appeal the order entered by the clerk (the process to appeal is discussed further below).

If they were not a party to the contested estate proceeding, then any person with standing, including the PR of the decedent’s estate, may bring a proceeding to challenge the award of a spousal or a child’s allowance. S.L. 2023-120, sec. 1.2, enacting G.S. 30-23.1(a). The proceeding could be to challenge the validity of an award of a year’s allowance, the amount of a year’s allowance awarded, or the assets awarded as part of a year’s allowance. S.L. 2023-120, sec. 1.2, enacting G.S. 30-23.1(a). The proceeding to challenge the assignment of the year’s allowance by a non-party is conducted as an estate proceeding pursuant to G.S. Chapter 28A, Article 2 and it must be brought within one year of the date of entry the clerk’s order awarding the year’s allowance. S.L. 2023-120, sec. 1.2, enacting G.S. 30-23.1(b).  For more on the procedure applicable to estate proceedings, refer to this bulletin written by my former colleague, Ann Anderson.

Contested Estate Proceeding Filed by Person Challenging the Assignment.  If the allowance is assigned by the clerk and a contested estate proceeding is not initiated prior to the assignment of the allowance, any person with standing, including the PR, may bring a proceeding to challenge the award of a spousal or a child’s allowance. S.L. 2023-120, sec. 1.2, enacting G.S. 30-23.1(a). The proceeding to challenge the assignment of the year’s allowance is conducted as an estate proceeding pursuant to G.S. Chapter 28A, Article 2 and it must be brought within one year of the date of entry the clerk’s order awarding the year’s allowance. S.L. 2023-120, sec. 1.2, enacting G.S. 30-23.1(b).

Figure 1. Who may challenge an order awarding a year’s allowance (YEAL).

Clerk’s Duty to Deliver Three Reports Replaced with Duty to Deliver to the PR Only

For decedents dying before March 1, 2024, upon assignment of an allowance, the clerk must report the assignment of the allowance. G.S. 30-21. The statute provides that the clerk does this by making and signing “three lists” of the property assigned:

1. One list must be delivered to the surviving spouse if the assignment is to the surviving spouse. If the assignment is to an eligible child, then the list shall be delivered to (i) the surviving parent with whom the child is living; (ii) to the child’s guardian or next friend if the child is not living with the surviving parent; or (iii) to the child if the child is not living with the surviving parent and has no guardian or next friend.
2. A second list must be delivered to the PR.
3. A third list must be returned by the clerk of the county in which administration was granted or the will probated and the clerk must file it.

The “lists” referred to in the statute are incorporated into the form assignment of a year’s allowance, AOC-E-100. The clerk typically satisfies the requirements of G.S. 30-21 by delivering a copy of the AOC-E-100 as indicated above.

The requirements in G.S. 30-21 were repealed by S.L. 2023-120 for the estates of decedents dying on or after March 1, 2024.  Instead, a separate provision was added to G.S. 30-20.  It streamlines the requirement, deletes the concept of “lists,” and only requires the clerk to provide a copy to the PR of any order awarding an allowance if a PR has been appointed. S.L. 2023-120, sec. 1.2, amending G.S. 30-20. The amended statute does not state how the clerk must provide a copy of the order to the PR.

Appeal

For decedents dying before March 1, 2024, the PR, the surviving spouse, the child by the child’s guardian or next friend, or any creditor, devisee, or heir of the deceased may appeal the clerk’s order assigning the allowance to the superior court. G.S. 30-23. The person appeals by filing a copy of the assignment and a notice of appeal within 10 days after the assignment. G.S. 30-23. The appeal is subject to G.S. 1-301.2, which governs the appeal of special proceedings, and is for a hearing de novo. G.S. 30-23; 1-301.2(e).

For decedents dying on or after March 1, 2024, G.S. 30-23 is repealed. The revised G.S. Chapter 30, Article 4 does not expressly state what procedure applies to the appeal of an order entered by the clerk in an uncontested year’s allowance proceeding. It appears that the standard set out in G.S. 1-301.3, which governs the appeal of estate matters determined by the clerk, may apply but S.L. 2023-120 does not make that clear.

It is clear that, for decedents dying on or after March 1, 2024, if a contested estate proceeding is initiated to determine the year’s allowance and the clerk enters an order assigning or denying the allowance, the clerk’s order is appealable pursuant to G.S. 1-301.3, which governs the appeal of estate proceedings. G.S. 28A-2-9(c).  The appeal is to superior court and the standard of review is the deferential “on the record” standard.  G.S. 1-301.3(d).

Reporting the Allowance on the Inventory and Subsequent Accountings

Prior to the enactment of S.L. 2023-120, a frequent question was whether the assets assigned under an allowance must be shown on an inventory or an accounting filed in the estate when the assets never came into the PR’s possession. Practice varied across the state.  For the estates of decedents dying on or after March 1, 2024, if the assets under the allowance are distributed to the person entitled to receive them and never come into the PR’s possession, then it is now clear that the assets shall not be reported on the inventory or any accounting. S.L. 2023-120, sec. 1.2, enacting G.S. 30-21.1.

Survival of the Deficiency Judgment

Another open question that is answered by the enactment of S.L. 2023-120 is whether a deficiency judgment entered in favor of a surviving spouse survives the death of the surviving spouse. For the estates of decedents dying on or after March 1, 2024, if the surviving spouse dies after the petition is filed, but before the claim for the allowance is fully satisfied, any deficiency judgment existing at the time of the surviving spouse does not expire. S.L. 2023-120, sec. 1.2, amending G.S. 30-15(c).

For example, Susan and Frank are married.  Frank dies and at the time of his death it is thought that Frank has no personal property. Susan files for a year’s allowance and the clerk enters a $60,000 deficiency judgment against the estate and in favor Susan on March 31, 2024. Susan dies on April 15, 2024. It is later discovered that Frank owned a truck worth $50,000. The deficiency judgment entered in Frank’s estate may be used to assign the truck to Susan’s estate. The truck would then become an asset of Susan’s estate.

Conclusion

This is the final installment of my three-part series on the changes to the year’s allowance enacted by Session Law 2023-120.  Don’t forget that for at least a period of time, the old and the new law will apply and which law applies depends on the date of the decedent’s death. Make sure to check the date of the decedent’s death to determine whether you are under the old or new framework. Feel free as always to reach out with any questions or feedback.  I’m at Meredith.smith@sog.unc.edu.