How do I protect my family from estate taxes in North Carolina?
North Carolina was in the middle of a tax reform in 2013. A repeal of the estate tax, also known as the “death tax” was approved and passed into law. Estate executors will be responsible for satisfying North Carolina estate taxes as well as federal estate taxes only for decedents who passed away before January 1, 2013. (The repeal was retroactive.) Only federal estate taxes will need to be paid for individuals who die on or after January 1, 2013.
The estate tax is paid on the net value of the decedent’s total assets. This encompasses real property, retirement, life insurance benefits, and bank accounts as valued on the date of death. According to the North Carolina Department of Revenue, the state estate tax applies when the decedent was a resident of North Carolina, or they were not a resident of North Carolina but owned real property in North Carolina. Again–the state estate tax does not apply for those who pass away on or after January 1, 2013.
The federal estate tax exemptions is $5.34M as of 2014. However, Obama has proposed a budget that includes the reversion of the federal estate tax rate to 2009 levels beginning in 2018: $3.5M and amounts in excess will be taxed at 45%.
Curious about North Carolina gift taxes? The NC gift tax was repealed on January 1, 2009.
Both North Carolina estate tax and federal estate tax are in a state of potential change in 2013. You can reduce the amount of taxes your surviving family members will be required to pay on their inheritances by employing estate planning strategies. Trusts are popular and effective tax reduction and asset protection tools. Learn more here: Trust Administration
Learn more about our Chapel Hill tax planning lawyers.