Is there a law in NC that prohibits the distribution of assets to the heirs before the 90 day time line, if all debts are paid.
1 Answer from Attorneys
Re: 90 Days
There is no law that prohibits the distribution but the executor/administrator makes the distribution at his or her own risk. By that I mean that if any unknown creditors come forward and file valid claims during the notice period (90 days) then the executor must have the distributed funds returned by the recipients or if unsuccessful in having the funds returned, pay the claim personally for the breach of his or her obligation to the creditors or the estate who hold a superior right over the beneficiary.
It is therefore common accepted practice in North Carolin not to distribute any assets until the expiration of the creditor's period.
Keep in mind that the income tax liability is a priority claim and in most cases the amount of the income tax liability cannot be determined until after all of the income and 1099 information is received in January. Neither the state nor the federal government will be barred by the expiration of the creditor period.
Additionally, if there is a a federal estate or state inheritance tax return due, the distributions should not be made until after the closing letter is received from the IRS.