Cary Estate Tax Planning Lawyers

Estate Tax Planning In NC

You’ve worked your entire life to build your estate and legacy, and it’s important to make sure you’re able to pass on those resources to your family and organizations where you want to make a lasting impact. To accomplish that, it’s critical to understand tax implications and work to minimize any impact that taxes may have on your estate.

The estate planning attorneys at McCollum Law understand and can help you and your family make well-informed decisions on how to structure your estate and the conveyance of the assets to where you want them to go.

With the recent changes on how estate taxes are assessed and structured, it’s important to go into the process well-informed and with an experienced North Carolina tax planning attorney working alongside you.

How Does Estate Tax Work In North Carolina?

North Carolina does not currently have a state-specific estate tax, so we will review the federal estate tax as it applies to estates over a certain amount.

With the changes made in 2017 (effective January 1, 2018) through The Tax Cuts And Jobs Act, the lifetime gift and estate tax exemption nearly doubled from $5,490,000 for an individual, and is currently $11,200,000 for individuals, and $22,400,000 for married couples. This increased exemption amount is currently set to expire after 2025 unless Congress takes action to extend it or implement new guidelines.

Assets above these exemptions would be subject to federal estate tax, although there are ways to structure your estate with charitable giving and other methods to minimize tax liabilities.

What Is The Gift Tax Exclusion?

The gift tax exclusion in North Carolina is currently $15,000 per individual and $30,000 for a married couple, per donee. If you gift over this exclusion amount, you are required to file a gift tax return for that tax year. 

These gifts exceeding the limits would be reported on IRS Form 709, the US Gift (and Generation-Skipping Transfer) Tax Return. This form is used to keep track of your lifetime exemptions – gifts given in this manner reduce the lifetime gift and estate tax exemption that is applicable in the year you pass away.

What Gifts Are Not Taxable?

There are some gifts that are excluded from the guidelines above – they include:

    • Gifts To Your Spouse – As long as your spouse is a US citizen, there is no limit on gifts between married spouses, and you can transfer as much property or funds as you desire without a gift tax.
    • Tuition/Education – Qualified education expenses to someone such as your child, grandchild or other individual do not count towards the gift tax exclusion. The catch with this is that it has to be for tuition, and it has to be paid directly to the educational institution. If you pay the money to the student and they pay it to the institution, it’s a taxable gift. This also doesn’t cover books, mandatory fees, or other educational expenses, although these can often be funded with a 529 college savings plan.
  • Medical Expenses – Qualified medical expenses paid on behalf of someone else don’t count as a taxable gift, either. One of the qualifiers is the same as tuition – these expenses must be paid directly to the healthcare provider, not to the individual.

If you have any questions about if an expense is a taxable gift or falls under these carve-outs, you should consult a qualified tax professional or estate planning attorney to make sure you don’t incur a surprise tax bill.

How An Estate Planning Lawyer Can Help

Whether your estate is nearing or above the federal exemption amount, or much less, it’s important to have an experienced estate planning attorney on your side to ensure that your loved ones and the organizations you care about inherit your assets in the manner you wish.

McCollum Law can help – we have worked for years with individuals and families just like yours, and look forward to the opportunity to help you. Fill out our contact form or call us today to schedule a consultation!

Let’s Work Together