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ESTATE TAX
PROTECTION & PLANNING

You work your entire life to save and have enough money to comfortably retire—and ideally leave something for your loved ones when you pass away. During your life, you pay all kinds of taxes: income taxes, property taxes, sales taxes, and so on. And at the end, the government even wants to tax you on the assets you have left at your death. This is known as the estate tax, sometimes called the inheritance tax or death tax.

 

Good news! North Carolina eliminated the state estate tax back in 2013. 

Exemptions to the Federal Estate Tax

 

The Tax Cuts and Jobs Act of 2017 nearly doubled the allowable exemptions in effect under President Obama , ensuring that very few families will be affected by federal estate taxes. The current schedule sunsets in 2025, and is expected to be about $6,200,000 ($12,400,000 for a married couple) unless it gets an early reduction by the federal government.

Here are the current exemption amounts for anyone dying in 2023

  • Estate tax exemption for individuals - $12,920,000.

  • Estate tax exemption for married couples - $25,840,000.


So unless your estate is valued at more than $12.92 million, you won’t have to worry about the estate tax at this time. But for those who are affected, there are numerous estate planning strategies available that can greatly reduce the amount owed.  

How Does the Estate Tax Work?

 

The estate tax is totally separate from federal income taxes and is paid on the net value of all your assets owned at your death. However, since there are fairly sizable exemptions to the estate tax, it’s primarily only high net-worth individuals and their families who are affected.

That said, we don't necessarily know what the rate will be when you pass away, and the estate tax rate is a whopping 40%, so we’re talking about potentially massive sums of money being owed by one’s heirs. And that bill must be paid to the IRS within 9 months of the decedent’s death. 

Advanced Estate Planning Strategies

 

Families with high-value estates face several complex legal and tax issues — and federal estate tax is only one of them. We can discuss a number of advanced estate planning strategies that are primarily aimed at reducing your family’s tax burden. In addition to the estate tax, we would navigate the gift tax and generation-skipping tax to help you pass on assets to successive generations without risk of taxes decimating the estate at each generation.

Some of the most popular advanced estate planning tools and strategies include:

 

  • Life insurance trusts

  • Qualified personal residence trusts

  • Grantor retained annuity trusts

  • Asset protection trusts

  • Land trusts

  • Dynasty Trusts 

  • Family limited partnerships or limited liability companies

  • Asset gifting (utilizing the annual gift exclusion amount, currently $16,000 per recipient per year)

You worked hard to build your family’s wealth and legacy, so it makes sense to put similar effort into protecting those assets—and that includes protecting them against excessive taxes.

Contact me to discuss minimizing the potential tax burden faced by your family, so you can maximize the inheritance you pass to them.

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