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North Carolina Estate Planning Considerations

Posted on: August 2nd, 2013
north carolina estate planningWhen estate planning in North Carolina, one needs to consider to whom to leave one's property, which is usually not much of a problem. Next, one must decide who will be in charge of the administration of the Will: The executor. This choice is sometimes more difficult, but even without suitable family or friends, a professional or corporate fiduciary can be named. Once these decisions are made, the very simplest of Wills can be created.
However, a simple North Carolina Will does not address three very important estate planning considerations dealing with protecting assets and family members:
Estate Taxes – The North Carolina estate tax was repealed as part of the North Carolina tax reform, effective January 1, 2013. What many people don't realize is that virtually everything they own is taxable. The most common misconception is that life insurance is tax-free. This is generally true for income tax purposes, but not for estate tax purposes. The combination of life insurance face value, retirement plans and equity in real estate put some unsuspecting couples over the exemption amount. Without proper planning, roughly 40% of the property over $5.25 million ($10.5 million for couples) will go to the government (federal estate tax). (NOTE: As of 2014, the federal estate tax exemption is $5.34 million.)

Probate Avoidance – Even the most sophisticated Will does not avoid North Carolina probate for property passing under the terms of the Will. The probate process, governed by the court, can be lengthy and expensive. Living Trusts can keep matters out of the court and save time, money and hassle.  As a rule of thumb, I recommend Living Trusts for those who have probate assets of $200,000 or more. An example of a probate asset would be a brokerage account in one's sole name.

Asset Protection – Leaving an inheritance to someone outright makes things simple, but once that person receives the assets, there is no protection for the inheritance. The assets could be lost to bad judgment, creditors, or divorcing spouses. Our asset protection attorneys in Chapel Hill urge clients to consider leaving assets in trust, even to their spouses. The protection offered can be invaluable in case the unexpected happens. The trusts can be designed to be very flexible, and the beneficiary can even be a trustee.
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