Spoiler Alert: Your Spouse Doesn’t Automatically Inherit Everything
You’ve handled a lot in life. Maybe you’ve raised kids (or are still figuring out how to get them off your cell phone plan), you’ve managed a career, bought a house, and somehow survived the emotional rollercoaster of middle school math homework. You’ve done the hard stuff. And maybe you’ve even thought “should I have a will?”
But then you get distracted by the never-ending pile of dishes in the sink, forget your Netflix password (again), and eventually you go back to pretending estate planning is something “Future You” will deal with.
Until one day after watching an episode of Dateline (don’t watch alone), you pause and think: “wait… what actually happens to my stuff if I die without a will?” Great question. If your gut reaction is, “my spouse will just get everything,” you’re not alone, and you’re also not correct.
When someone passes away without a will (what we in the biz call dying “intestate”), North Carolina state law decides who inherits your assets. And trust us, it doesn’t always play out the way you’d expect. The process can be confusing, the outcomes can be surprising, and your loved ones might end up dealing with way more than just grief.
This article breaks down what actually happens under North Carolina intestacy laws and how to avoid the mess altogether.
What Assets Does Intestacy Law Govern?
Not everything you own will be subject to these default rules. Intestacy laws apply only to probate assets that don’t pass automatically to someone else. These include:
• Tangible personal property (furniture, jewelry, electronics, those Beanie Babies you swore would be worth something one day);
• Individually titled vehicles;
• Real estate not held jointly with rights of survivorship or as “tenants by the entirety;”
• Business interests;
• Financial accounts with no beneficiary designations or held without rights of survivorship (bank accounts, brokerage accounts, IRAs, 401(k)s, etc.); and
• Life insurance polices with no named beneficiary.
Assets like jointly titled bank accounts with rights of survivorship, payable-on-death or transfer-on-death accounts, and life insurance policies and retirement accounts with named beneficiaries pass automatically at your death outside of probate.
Now, let’s look at a few common situations and how intestacy laws play out:
You pass away with a surviving spouse and surviving parents, but no children.
You’re married, you moved out of your parents’ house decades ago, and you are hoping that they have forgotten about the money you owe them from totaling their car while attempting to parallel park for the first time. Sadly, you pass away without a will. Guess what? It’s your parents’ lucky day (well, except for you dying of course). The universe, or North Carolina state law rather, just paid your parents back.
Real Property: Your spouse gets half, and your parents get the other half. Good thing you’re already dead because your spouse might actually kill you when your parents start Airbnbing their half to bachelorette parties blasting Taylor Swift and clogging the guest bathroom with glitter.
Here, the only circumstance in which your surviving spouse would inherit all of your interests in real property is if you owned the real property with your surviving spouse as “tenants by the entirety” or jointly with a right of survivorship.
In the case of tenants by the entirety, the surviving spouse automatically inherits the entire property, no questions asked. Tenants by the entirety is a special form of joint ownership available only to married couples, where both spouses have equal, undivided interest in the property. The key feature of tenants by the entirety is the right of survivorship, meaning that if one spouse passes away, the surviving spouse automatically gets the deceased spouse’s share of the property. This means the surviving spouse avoids the hassle of probate and any potential claims from other family members, like parents, who might otherwise be entitled to a share.
Personal Property: If it’s worth less than $100,000, your spouse gets it all. If it’s worth more, your spouse gets $100,000 plus half of what’s left, and your parents get the other half. That could include cars, bank accounts, jewelry, pets, furniture, etc.
You pass away with a surviving spouse and children.
Real Property: With one child, your spouse gets half, your child gets half. With two or more children, your spouse gets one-third, and the children divide two-thirds equally.
Personal Property: If your personal property is worth less than $60,000, your spouse gets everything. If it’s worth more and you have one child, your spouse gets $60,000 plus half, and your child gets the rest. With two or more children, it’s $60,000 plus one-third to the spouse, and the children split the remaining two-thirds.
Minor Children: Assets inherited by minor children require establishing guardianship accounts to manage the assets until they turn 18. Moreover, a court has to appoint a guardian to manage those assets. That could mean delays, expenses, and oversight your family didn’t expect. And yes, your teenager will get their full inheritance the day they turn 18. Let that sink in.
You pass away with only a surviving spouse (no children, no living parents)
Good news: your spouse inherits everything.
Bad news: they’ll probably still be mad at you for (1) dying and (2) making them go through the probate process.
You pass away with only surviving parents (no spouse, no children)
All of your assets go to your living parent(s), split equally if both are alive.
So yes, the same people who grounded you in high school could now be co-owners of your “little black book.”
You pass away with surviving children but no spouse.
Everything is divided equally among your children (or grandchildren standing in place of a deceased child). If they’re minors, a court will appoint a guardian of the estate. Assets will be held in court-supervised accounts until they turn 18, the same age they go to college. I’m sure Junior will spend the cash on school supplies and books and definitely not on funding his fraternity’s tailgate.
You pass away with no spouse, children, or parents.
Now we’re in distant relative territory. Your estate goes to siblings, then grandparents, then aunts and uncles, and eventually maybe even that third cousin who winked at you once at a funeral. If no living relatives can be found, the state may take it.
WILD CARD ROUND: You pass away while separated from your spouse (but not legally divorced).
If you die without proper planning, your soon-to-be ex-spouse may still be entitled to a share of your property. Separation alone does not sever the inheritance rights of a spouse under intestacy laws, meaning your future ex could inherit just as if you were still happily married. This can come as a major (and unpleasant) surprise, especially if you’ve been separated for years.
There are a couple of ways to prevent a separated spouse from inheriting any of your assets upon your death, such as premarital agreements, postmarital agreements, and updating your will. You’ll also want to review and update the beneficiary designations on your retirement accounts, life insurance policies, and bank or brokerage accounts. Without updated designations, even a divorced ex-spouse could still end up receiving those assets. Finally, make sure to finalize your divorce. If you are legally divorced at the time of your death, your ex-spouse generally will not be entitled to any of your probate assets, even if you never got around to making a will.
Quick Recap: Who Gets What?
| Spouse & Parents | Spouse: 1/2 real property + up to $100k + 1/2 of personal property; Parents: 1/2 real property + 1/2 of personal property over $100k |
| Spouse & One Child | Spouse: 1/2 real property + $60k + 1/2 personal property over $60k; Child: 1/2 real property + 1/2 personal property over $60k |
| Spouse & Two+ Children | Spouse: 1/3 real property + $60k + 1/3 personal property over $60k; Children: 2/3 real property + 2/3 personal property over $60k |
| Spouse only | Spouse gets all assets |
| Children only | Children get all assets, split equally |
| Parents only | Parents get all assets, split equally |
| No immediate heirs | More distant relatives inherit in order; if none, the state may claim it |
| Spouse Separated (Not Legally Divorced) | Spouse still inherits same shares as outlined above. |
So, what can you do to prevent the state of North Carolina from dictating how your assets pass upon your death?
Step One: Create a Will. A will tells the court who should inherit your property, who should serve as executor (the person in charge of handling your estate), and who should raise your kids if both you and your spouse pass away. If you don’t have a will, the court picks these people for you, and they might not be who you’d choose.
Step Two: Talk With Your Estate Planning Attorney (Hi, That’s Us). We can help you evaluate your assets and goals. If you have significant assets, closely held business interests, or want to avoid probate, you might be a good candidate for a revocable trust (a powerful tool that offers benefits such as avoiding probate, privacy, potential cost savings, and flexibility in how and when assets are distributed).
Step Three: Check Your Beneficiary Designations. Assets like IRAs, 401(k)s, life insurance policies, and some bank accounts pass outside of a will if they have valid beneficiary designations. If not, they fall into probate and, without a will, follow the intestacy laws we just spent 1,800 words warning you about.
Step Four: Look at Your Real Estate Titles. If you own property jointly with your spouse, consider holding it as tenants by the entirety (exclusively reserved for married couples), which not only simplifies things at death but also offers creditor protection.
Step Five: If You Own a Business, Plan Ahead. If you own a business, failing to plan for what happens when you die could create chaos for your loved ones or your business partners. We can help you set up a clear succession plan that matches your estate plan and entity documents.
Questions? Feeling a little nervous now?
Good. (Just kidding, kind of.) Dying without a will is a legal mess, and the best time to clean it up is before it happens. We’re here to help make sure your wishes, not North Carolina’s default rules, control what happens next.
Reach out to us with any questions. We promise to make estate planning as painless (and dare we say, fun?) as possible.
About the Author
Sydney ter Avest is an associate attorney in Carruthers & Roth’s Business, Tax, and Estates practice. She assists clients with corporate and business law matters, estate planning, and wealth transfer and preservation. Sydney received her B.A. from the University of North Carolina at Chapel Hill and her J.D. from Campbell University School of Law, where she served as both a teaching scholar and research assistant and received multiple academic honors in civil and criminal law.
Sydney can be reached at (336) 478-1187 or sta@crlaw.com.