A BILL TO BE ENTITLED
AN ACT to amend the law regarding the authority of a personal representative to sell or take other action with respect to real property of a decedent.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 28A‑13‑3 reads as rewritten:
"§ 28A‑13‑3.  Powers of a personal representative or fiduciary.
(a)	Except as qualified by express limitations imposed in a will of the decedent or a court order, and subject to the provisions of G.S. 28A‑13‑6 respecting the powers of joint personal representatives, a personal representative has the power to perform in a reasonable and prudent manner every act  that a reasonable and prudent person would perform incident to the collection, preservation, liquidation or distribution of a decedent's estate so as to accomplish the desired result of settling and distributing the decedent's estate in a safe, orderly, accurate and expeditious manner as provided by law, including but not limited to the powers specified in the following subdivisions:
(1)	To take possession, custody or control of the personal property of the decedent.  The personal representative may leave with or surrender any personal property to the heir or devisee presumptively entitled to it if, in the opinion of the personal representative, the property is not necessary for purposes of administration of the estate.(1a)	To take possession, custody, or control of the real property of the decedent, either under subsection (c) of this section or under G.S. 28A‑13‑3.1.
(2)	To retain assets owned by the decedent pending distribution or liquidation even though such assets may include items which are otherwise improper for investment of trust funds.
(3)	To receive assets from other fiduciaries or other sources.
(4)	To complete performance of contracts entered into by the decedent that continue as obligations of his estate, or to refuse to complete such contracts, as the personal representative may determine to be in the best interests of the estate, but such refusal shall not limit any cause of action which might have been maintained against decedent if he had refused to complete such contract. In respect to enforceable contracts by the decedent to convey an interest in land, the provisions of G.S. 28A‑17‑9 are controlling.
(5)	To deposit, as a fiduciary, funds of the estate in a bank, including a bank operated by the personal representative upon compliance with the provisions of G.S. 36A‑63.
(6)	To make, as a fiduciary, any form of investment allowed by law to the State Treasurer under G.S. 147‑69.1, with funds of the estate, when such are not needed to meet debts and expenses immediately payable and are not immediately distributable, including money received from the sale of other assets; or to enter into other short‑term loan arrangements that may be appropriate for use by trustees or beneficiaries generally. Provided, that in addition to the types of investments hereby authorized, deposits in interest‑bearing accounts of any credit union authorized to do business in this State, when such deposits are insured in the same manner as required by G.S. 147‑69.1 for deposits in a savings and loan association, are hereby authorized.
(7)	To abandon or relinquish all rights in any property when, in the opinion of the personal representative acting reasonably and in good faith, it is valueless, or is so encumbered or is otherwise in such condition that it is of no benefit to the estate.
(8)	To vote shares of stock or other securities in person or by general or limited proxy, and to execute waivers, consents or objections with respect to such stock or securities.
(9)	To pay calls, assessments, and any other sums chargeable or accruing against or on account of securities.
(10)	To hold shares of stock or other securities in the name of a nominee, without mention of the estate in the instrument representing stock or other securities or in registration records of the issuer thereof; provided, that
a.	The estate records and all reports or accounts rendered by the personal representative clearly show the ownership of the stock or other securities by the personal representative and the facts regarding its holdings, and
b.	The nominee shall not have possession of the stock or other securities or access thereto except under the immediate supervision of the personal representative or when such securities are deposited by the personal representative in a clearing corporation as defined in G.S. 25‑8‑102.
Such personal representative shall be personally liable for any acts or omissions of such nominee in connection with such stock or other securities so held, as if such personal representative had done such acts or been guilty of such omissions.
(11)	To insure, at the expense of the estate, the assets of the estate in his possession, custody or control against damage or loss.
(12)	To borrow money for such periods of time and upon such terms and conditions as to rates, maturities, renewals, and security as the personal representative  deems advisable, including the power of a corporate personal representative to borrow from its own banking department, for the purpose of paying debts, taxes, and other claims against the estate, and to mortgage, pledge or otherwise encumber  that portion of the estate  that may be required to secure  the loan or  loans, except that the personal representative shall obtain an order under G.S. 28A‑17‑11 before borrowing money on the security of the real property of the decedent unless the authority to mortgage, pledge, or otherwise encumber real property of the decedent to secure loans is granted to the personal representative under G.S. 28A‑13‑3.1.
(13)	To renew obligations of the decedent for the payment of money.
(14)	To advance his own money for the protection of the estate, and for all expenses, losses and liabilities sustained in the administration of the estate or because of the holding or ownership of any estate assets. For such advances, with any interest, the personal representative shall have a lien on the assets of the estate as against a devisee or heir.
(15)	To compromise, adjust, arbitrate, sue on or defend, abandon, or otherwise deal with and settle claims in favor of or against the estate.
(16)	To pay taxes, assessments, his own compensation, and other expenses incident to the collection, care, administration and protection of the assets of the estate in his possession, custody or control.
(17)	To sell or exercise stock subscription or conversion rights; consent, directly or through a committee or other agent, to the reorganization, consolidation, merger, dissolution, or liquidation of a corporation or other business enterprise.
(18)	To allocate items of income or expense to either estate income or principal, as permitted or provided by law.
(19)	To employ persons, including attorneys, auditors, investment advisors, appraisers or agents to advise or assist him in the performance of his administrative duties.
(20)	To continue any business or venture in which the decedent was engaged at the date of his death, where such continuation is reasonably necessary or desirable to preserve the value, including goodwill, of the decedent's interest in such business. With respect to the use of the decedent's interest in a continuing partnership, the provisions of G.S. 59‑71 and 59‑72 qualify this power; and with respect to farming operations engaged in by the decedent at the time of his death, the provisions of G.S. 28A‑13‑4 qualify this power.
(21)	To incorporate or participate in the incorporation of any business or venture in which the decedent was engaged at the time of his death.
(22)	To provide for the exoneration of the personal representative from personal liability in any contract entered into on behalf of the estate.
(23)	To maintain actions for the wrongful death of the decedent according to the provisions of Article 18 of this Chapter and to compromise or settle any such claims, whether in litigation or not. Unless all persons who would be entitled to receive any damages recovered under G.S. 28A‑18‑2(b)(4) are competent adults and have consented in writing, any such settlement shall be subject to the approval of a judge of the court or tribunal exercising jurisdiction over the action or a judge of the district or superior court in cases where no action has previously been filed. If the claim is brought under Article 31 of Chapter 143 of the General Statutes, the settlement is subject to the approval of the Industrial Commission in accordance with that Article. It shall be the duty of the personal representative in distributing the proceeds of such settlement in any instance to take into consideration and to make a fair allocation to those claimants for funeral, burial, hospital and medical expenses which would have been payable from damages which might have been recovered had a wrongful death action gone to judgment in favor of the plaintiff.
(24)	To maintain any appropriate action or proceeding to recover possession of any property of the decedent, or to determine the title thereto; to recover damages for any injury done prior to the death of the decedent to any of his property; and to recover damages for any injury done subsequent to the death of the decedent to such property.
(25)	To purchase at any public or private sale of any real or personal property belonging to the decedent's estate or securing an obligation of the estate as a fiduciary for the benefit of the estate when, in his opinion, it is necessary to prevent a loss to the estate.
(26)	To sell or lease personal property of the estate in the manner prescribed by the provisions of Article 16 of this Chapter.
(27)	To sell or lease real property of the  decedent, either under G.S. 28A‑13‑3.1 or under Article 17 of this Chapter.
(28)	To enter into agreements with taxing authorities to secure the benefit of the federal marital deduction pursuant to G.S. 28A‑22‑6.
(29)	To pay or satisfy the debts and claims against the decedent's estate in the order and manner prescribed by Article 19 of this Chapter.
(30)	To distribute any sum recovered for the wrongful death of the decedent according to the provisions of G.S. 28A‑18‑2; and to distribute all other assets available for distribution according to the provisions of this Chapter or as otherwise lawfully authorized.
(31)	To exercise such additional lawful powers as are conferred upon him by the will.
(32)	To execute and deliver all instruments which will accomplish or facilitate the exercise of the powers vested in the personal representative.
(33)	To renounce in accordance with the provisions of Chapter 31B of the General Statutes.
(a1)	Except as qualified by express limitations imposed in a will of the decedent, and subject to the provisions of G.S. 28A‑13‑6 respecting the powers of joint personal representatives, a personal representative shall have absolute discretion to make the election as to which items of the decedent's personal and household effects shall be excluded from the carry over basis provision of the federal income tax law and such election shall be conclusive and binding on all concerned.
(b)	Any question arising out of the powers conferred by subsections (a) and (a1) above shall be determined in accordance with the provisions of Article 18 of this Chapter.
(c)	 Unless the authority to take possession, custody, or control of real property is granted to the personal representative under G.S. 28A‑13‑3.1, prior to the personal representative exercising possession, custody or control over real property of the  decedent, the personal representative shall petition the clerk of court to obtain an order authorizing  that possession, custody or control. The petition shall include:
(1)	A description of the real property  that is the subject of the petition;
(2)	The names, ages, and addresses, if known, of the devisees and heirs of the decedent;
(3)	A statement by the personal representative that  the personal representative has determined that  the possession, custody or control is in the best interest of the administration of the estate.
The devisees and heirs  shall be made parties to the proceeding by service of summons in the manner prescribed by law. If the clerk of court determines that it is in the best interest of the administration of the estate to authorize the personal representative to take possession, custody or  control, the clerk shall grant an order authorizing that power. If a special proceeding has been instituted by the personal representative pursuant to G.S. 28A‑15‑1(c), the personal representative may petition for possession, custody, or control of any real property as a part of that proceeding and is not required to institute a separate special proceeding."
SECTION 2.  Article 13 of Chapter 28A of the General Statutes is amended by adding a new section to read:
"§ 28A‑13‑3.1.  Power of personal representative to deal with real property without a court order.
(a)	A personal representative may, without court order, take possession, custody, and control of the decedent's real property or sell, exchange, give options upon, partition, lease, mortgage, or otherwise dispose of the property to the extent the will expressly grants any of these powers to the personal representative by any of the following grants of power:
(1)	Incorporation by reference of the powers in G.S. 32‑27 when title to the real property is devised to the personal representative;
(2)	An express power granted to the personal representative in the will when title to the real property is devised to the personal representative; or
(3)	An express power granted to the personal representative in the will when title to the real property is not devised to the personal representative, if the decedent specifically indicates an intent that the power applies to that real property. For purposes of this section, provisions in the will stating that the power applies to the real property "whether or not title is devised to the personal representative" or "even though title is not devised to the personal representative" or other similar language is sufficient to indicate such an intent.
(b)	Any party dealing with the personal representative is not under any duty to follow the proceeds or other consideration received by the personal representative from the disposition of the real property pursuant to the exercise of a power authorized by this section."
SECTION 3.  Article 13 of Chapter 28A of the General Statutes is amended by adding a new section to read:
"§ 28A‑13‑3.2.  Notice of taking or disposition of real property not devised to the personal representative.
(a)	If pursuant to G.S. 28A‑13‑3.1(a)(3) a personal representative exercises a power to take possession, custody, or control of, or to sell, exchange, give options upon, partition, lease, mortgage, or otherwise dispose of real property of the decedent not devised to the personal representative, the personal representative shall file with the clerk of superior court in the county where the estate administration is pending a notice of the exercise of the power. The notice shall be filed not more than 30 days from the date of:
(1)	Recordation of the deed executed to accomplish the sale, exchange, or partition of the real property;
(2)	Recordation of a lease or other instrument as applicable or the execution of the lease or other applicable instrument that is not required to be recorded by G.S. 47‑18 and is not recorded; or
(3)	The initial collection of rent or other affirmative act indicating that the personal representative has taken possession, custody, and control.
The notice shall include a description of the real property that is the subject of the notice and a summary of the action taken.
(b)	The failure of the personal representative to file the notice within the 30‑day period shall not affect the validity of the personal representative's authority to exercise the power."
SECTION 4.  G.S. 28A‑13‑10 reads as rewritten:
"§ 28A‑13‑10.  Liability of personal representative.
(a)	Property of Estate. – A personal representative  is be liable for and chargeable in  the personal representative's accounts with all of the estate of the decedent  that comes into  the personal representative's possession at any time, including all the income therefrom; but  the personal representative is not liable for any debts due to the decedent or other assets of the estate  that remain uncollected without  the personal representative's fault. Except for commissions allowable by law,  the personal representative is not entitled to any profits caused by an increase in  values and is not chargeable with loss by a decrease in value or destruction, without  the personal representative's fault, of any part of the estate.
(b)	Property Not a Part of Estate. – A personal representative  is chargeable in  the personal representative's accounts with property not a part of the estate  that comes into  the personal representative's possession at any time and  is liable to the persons entitled thereto if:
(1)	The property was received under a duty imposed on  the personal representative by law in the capacity of personal representative; or
(2)	 The personal representative has commingled  the property with the assets of the estate.
(c)	Breach of Duty. – A personal representative  is liable  and chargeable in  the personal representative's accounts for any loss to the estate arising from  the personal representative's embezzlement or commingling of the estate with other property; for loss to the estate through self‑dealing; for any loss to the estate from wrongful acts or omissions of  the personal representative's joint personal representatives   that the personal representative could have prevented by the exercise of ordinary care; and for any loss to the estate arising from  the personal representative's failure to act in good faith and with  the care, foresight and diligence  that an ordinarily reasonable and prudent  person would act with  the person's own property under like  circumstances. If the exercise of power concerning the estate is improper, the personal representative is liable for breach of fiduciary duty to interested persons for resulting damage or loss to the same extent as a trustee of an express trust."
SECTION 5.  G.S. 28A‑15‑1 reads as rewritten:
"§ 28A‑15‑1.  Assets of the estate generally.
(a)	All of the real and personal property, both legal and equitable, of a decedent shall be assets available for the discharge of debts and other claims against  the decedent's estate in the absence of a statute expressly excluding any such property.  Before real property is  selected, however, the personal representative must determine that  the selection is in the best interest of the administration of the estate.
(b)	In determining what property of the estate shall be sold, leased, pledged, mortgaged or exchanged for the payment of the debts of the decedent and other claims against  the decedent's estate, the personal representative shall select the assets which in  the personal representative's judgment are calculated to promote the best interests of the estate. In the selection of assets for this purpose, there shall be no necessary distinction between real and personal property, absent any contrary provision in the will.
(c)	If  the personal representative determines that it is in the best interest of the administration of the estate to sell, lease, or mortgage any real estate or interest therein to obtain money for the payment of debts and other claims against the decedent's estate, the personal representative shall institute a special proceeding before the clerk of superior court  under Article 17 of this Chapter, except that no such proceeding shall be required for a  sale, lease, or mortgage under G.S. 28A‑13‑3.1. If a special proceeding has been instituted by the personal representative  under G.S. 28A‑13‑3(c), the personal representative may petition for sale, lease, or mortgage of any real property as a part of that proceeding and is not required to institute a separate special proceeding.
(d)	 A decedent's crops  that remain ungathered at the decedent's death,  belong to the personal representative or  collector as part of the personal assets of the decedent's  estate and do not pass to the devisee by virtue of any devise of the land, unless  a contrary intent  is manifest and specified in the will."
SECTION 6.  G.S. 28A‑15‑2 reads as rewritten:
"§ 28A‑15‑2.  Title and possession of property.
(a)	Personal Property. – After the death of the decedent and  before the appointment and qualification of the personal representative or collector, the title and the right of possession of personal property of the decedent is vested in the decedent's heirs; but upon the appointment and qualification of the personal representative or collector, the heirs  are divested of  title and right of possession, which  becomes vested in the personal representative or collector relating back to the time of the decedent's death for purposes of administering the estate of the decedent. But, if in the opinion of the personal representative,  the personal representative's possession, custody and control of any item of personal property is not necessary for purposes of administration, such possession, custody and control may be left with or surrendered to the heir or devisee presumptively entitled thereto.
(b)	Real Property; Title. – The title to real property of a decedent  vests as follows:
(1)	Subject to subdivisions (2) and (3) of this subsection, title to real property of a decedent is vested in the decedent's heirs as of the time of the decedent's death.
(2)	Subject to subdivision (3) of this subsection and the provisions of G.S. 28A‑17‑12 and G.S. 31‑39, title to real property of a decedent devised under a valid probated will becomes vested in the devisees and relates back to the decedent's death.
(3)	If a decedent's will grants the personal representative a power under G.S. 28A‑13‑3.1 to sell, exchange, or partition decedent's real property, the exercise of that power divests the devisees or heirs of title to the real property and vests title in the personal representative. The devisees' or heirs' title is divested, and the title becomes vested in the personal representative, immediately prior to the recordation of a valid deed executed by the personal representative.
(c)	Real Property:  Leases or Mortgages. – A lease or mortgage of the decedent's real property by the personal representative under G.S. 28A‑13‑3.1 or under Article 17 of this Chapter encumbers the devisee's or heir's title upon the recordation of the lease or other instrument as applicable or upon the execution of the lease or other applicable instrument that is not required to be recorded by G.S. 47‑18 and is not recorded.
(d)	Real Property:  Docketed Judgments Against Heir or Devisee. – The interest of any heir or devisee and any person claiming through or against any heir or devisee, including a person holding a docketed judgment against an heir or devisee, is subject to the personal representative's right to sell, exchange, give options upon, partition, lease, mortgage, or otherwise dispose of the real property of the decedent, either under G.S. 28A‑13‑3.1 or under Article 17 of this Chapter."
SECTION 7.  G.S. 28A‑22‑1 reads as rewritten:
"§ 28A‑22‑1.  Scheme of distribution; testate and intestate estates.
After the payment of costs of administration, taxes and other valid claims against the decedent's estate, the personal representative shall distribute the remaining assets of the estate in accordance with the terms of decedent's valid probated will or the provisions of Chapter 29 of the General Statutes or as otherwise lawfully authorized. Assets remaining from the sale of real property by the personal representative retain the character of real property for purposes of distribution to the devisee only."
SECTION 8.  G.S. 28A‑23‑3(b) reads as rewritten:
"(b)	In determining the amount of  the commission, both upon personal property received and upon expenditures made, the clerk of superior court shall consider the time, responsibility, trouble and skill involved in the management of the estate.  When real property is sold to pay debts or legacies, and other claims against the decedent's estate, including costs of administration, the commission shall be computed only on the proceeds actually applied  to the payment  of debts and legacies or other claims. When real property is sold for other reasons under G.S. 28A‑13‑3.1, the proceeds of the sale shall not be considered in computing the commission."
SECTION 9.  This act becomes effective January 1, 2006, and applies to actions by personal representatives on or after that date.