Estate Taxes Attorney in Cary, North Carolina
What Are Estate Taxes and How Much Will I Have to Pay?
Estate taxes are also known as death taxes. Estate taxes, or death taxes, is a tax on your estate at your death. Essentially, the government taxes you because you didn't spend enough of your hard-earned assets. Both Estate Taxes and Death Taxes are naughty phrases these days as they are very unpopular among many people. The thought of getting taxed when you earn money and then again on that money you saved during life to leave behind as an inheritance after you die is double taxation and not desirable. Many states have abolished this tax, including North Carolina which abolished the NC death tax in 2013, but our Federal government still has it. However, the newest tax laws only impose an estate tax on estates valued at approximately $11,500,000. This means the federal government exempts estates valued at less than approximately $11,500,000. Therefore, currently, my guess is 99% of North Carolinians will not pay an estate tax (or death tax). However, as all laws are subject to change, the estate tax can always be changed or reinstated. The states that still have estate taxes will impose these taxes on your estate if you own property in those states or are a resident of those states at your death. These taxes are taken out of your estate before the beneficiaries get anything. The government is always the first to get paid. And the tax on the amount over the exemption is typically very high and can be up to 40%! Therefore it will be expensive and a high price to pay if you fail to plan for it.
How to Avoid or Minimize Estate Taxes or Death Taxes?
One of the best ways to avoid Estate Taxes is to be a North Carolina resident and die with less than approximately $11,500,000.
If your estate has more than approximately $11,500,000, don't be tempted to gift away too much to a single person at one time or in one year. Here's why: Gift Taxes. Keep reading below for more information on Gift Taxes. However, for now, know that if you give more than either $15,000 or $30,000 to one person in one calendar year, that gift is added to your estate value upon your death. Therefore, too generous gifts will not avoid minimizing the Estate Tax.
If you are married, you and your spouse can plan together and double your exemption from approximately $11,500,000 to approximately $23,000,000. The double comes by making the proper elections on the deceased spouse's tax return and the second to die spouse's tax return. Using an experienced professional is crucial to ensure this easy step is not overlooked or missed.
You can also gift an unlimited amount to your spouse with paying taxes on it.
You can also use a Charitable Remainder Trust to reduce your Estate Value and save any potential estate taxes.