Change in the Law – North Carolina Year’s Allowance

As of January 2019 the Year’s Allowance in North Carolina has been adjusted. For a surviving spouse there is an increase in the statutory allowance from $30,000.00 to $60,000.00. The Spousal Allowance is intended as a type of stop-gap; a means of meeting the immediate needs of the surviving spouse when he or she is widowed and presumably assets may be tied up during the estate administration.

The $60,000.00 Spousal Allowance is authorized by statute to provide for necessities. It may only be paid from the personal property of the Decedent and not from real property. With the exception of secured creditors, the property assigned has priority over the creditors of the estate. If there are not enough personal property assets to satisfy the assignment, a “deficiency judgment” is given. If there are sufficient assets, the spouse may make an application to the Clerk of Court for an allowance greater than $60,000.00. Such an additional allowance would only be allowed in solvent estates and would provide the surviving spouse with the same level of support during the year after the Decedent’s death that the spouse had been accustomed to receiving from the Decedent. The maximum amount is “one-half of the average annual net income (after tax income) of the Decedent for the 3 years immediately preceding the Decedent’s death”. However, the Clerk may only assign this with “due consideration for other persons entitled to allowances for year’s support from the Decedent’s estate.”

It is the duty of the Executor or Administrator to pay the Year’s Allowance if the spouse applies for it within one year of the death of the deceased spouse. You should note, it is not the duty of the personal representative to ask the surviving spouse if he or she wants the allowance, only to fulfill it once applied for. The surviving spouse can apply directly to the Clerk or Court for the Year’s Allowance.

The surviving spouse, a child or a creditor can appeal the award of a Year’s Allowance within 10 days of the assignment.

There are certain circumstances when the surviving spouse is not entitled to the Year’s Allowance. By statute these include voluntarily separating from the spouse and living in adultery, willfully abandoning the spouse, if surviving spouse killed the Decedent (a “slayer”), or a valid premarital agreement waived the right. In addition, case law adds another restriction. If the surviving spouse lived in a state other than North Carolina, they cannot be awarded the Year’s Allowance. This could be problematic for spouse’s whose jobs require that they live in different states such as the military. It is the opinion of this author that the Legislature should legislate around this 100+ year old case.

The other “Year’s Allowance” that is allowed is the Child’s Allowance. Under N. C. Gen. Stat. § 31-17, whenever any parent dies “survived by any child under the age of 18 years, including an adopted child or a child with whom the widow may be pregnant at the death of her husband, or a child who is less than 22 years of age and is a full-time student in any educational institution, or a child under 21 years of age who has been declared mentally incompetent, or a child under 21 years of age who is totally disabled, or any other person under the age of 18 years residing with the deceased parent at the time of death to whom the deceased parent or the surviving parent stood in loco parentis, every such child shall be entitled to receive an allowance of five thousand dollars ($5,000) for the child’s support for the year next ensuing the death of the parent.” This amount did not increase with the change to the Spouse’s Allowance but similar to the surviving spouse, a child can petition the Court for an additional amount under certain circumstances.

If there are not enough personal property assets to satisfy both the surviving spouse and the children, the allowance is prorated. If the Decedent died with a Will, the amounts awarded are credited towards the amount taken under the Will. If the Decedent died without a Will, the amounts awarded are in addition to the amount taken under the intestate succession statute. If you have questions about a Spousal Allowance or a Child’s Allowance, the attorneys in the estate department of Law Firm Carolinas can assist you.

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