By Cowles Liipfert Estate Tax, Gift Tax and Generation-Skipping Transfer (GST) Tax have nothing to do with income tax. The recipient of a gift or inherited property does not owe income tax on the gift or inheritance. Gift taxes, if any, are the primary responsibility of the donor. Those taxes are totally separate and apart from income tax. One income tax-related point, however, is that the recipient of property which has appreciated in value since acquired by the donor, takes… Read More
By Cowles Liipfert The North Carolina General Statutes contain very detailed procedures for establishing or contesting the validity of wills. Wills must be “probated,” that is, found by the Probate Court (the Clerk of Superior Court) to be properly executed and valid, before an Executor or other personal representative will be appointed to settle a decedent’s estate. There are two different procedures for determining the validity of a will, called 1) probate in common form, and 2) probate in solemn… Read More
By Cowles Liipfert Much of the time it is not necessary to go through a full estate administration for a decedent’s estate, due to one or more of the reasons discussed below, particularly if the estate is modest in size. Non-Probate Assets Estate administration is not needed for the transfer of non-probate assets, such as real property owned jointly with right of survivorship, life insurance or retirement accounts payable to a named beneficiary, bank accounts or securities accounts which are… Read More
By Cowles Liipfert Health Care Power of Attorney North Carolina authorizes Health Care Powers of Attorney to be executed, authorizing someone to make medical decisions for you, if you become unable to make or communicate your own medical decisions. We recommend that everyone have a Health Care Power of Attorney, which frequently designates a primary agent and also back-up agents, in case the primary agent cannot be reached or cannot make a decision for you. The official form of Health… Read More
By Cowles Liipfert If you die without a Will and you are a resident of North Carolina, the assets owned by you personally on the date of death (i.e., not owned jointly with someone else who has survivorship rights), and not including assets payable to a named beneficiary at your death, will pass under the North Carolina Intestate Succession Act. (If a person dies with a Will, he or she is said to have died “testate;” without a Will, he… Read More
By Cowles Liipfert “Irrevocable” trusts in North Carolina often may be modified or even terminated under Article 4 of Chapter 36C of the North Carolina General Statutes. Some terminology used in the article includes: (a) The trust “Grantor” is the person who creates the Trust; (b) The “Trustee” is the person or corporate fiduciary who manages the Trust; and (c) The “Beneficiary” is the person or group of individuals or entities for whom the trust has been created. Irrevocable Trusts… Read More
By Cowles Liipfert A Power of Attorney is a legal document in which a person (the “Principal”) gives someone else (the “Agent”) the power to act on behalf of the Principal as set forth in the Power of Attorney, perhaps doing things such as writing and signing checks, or even signing deeds or tax returns. A Power of Attorney may also include the authority to do many other things, and not merely basic functions. We highly recommend that all adults… Read More
By Cowles Liipfert There are several different types of irrevocable trusts––mostly known by four-letter words––which we will describe very briefly (and superficially) below, and if you need to know more information about any of them, you will need to consult further with an estate planning professional. 1. Irrevocable Life Insurance Trust (ILIT) If a life insurance policy is owned by the insured and is payable to named beneficiaries at death, the full death benefit is included in the taxable estate… Read More
By Cowles Liipfert Want to make gifts for certain medical or educational expenses? Gifts may be made for these purposes, separate and apart from annual exclusion gifts for gift and GST tax purposes, but there is a separate set of rules which apply to these gifts. Under Section 2503€ of the Internal Revenue Code, tuition payments made directly to an educational organization on behalf of an individual are not treated as taxable gifts for gift tax purposes. Also, certain qualifying… Read More
By Cowles Liipfert If a US citizen or resident is married to a non-citizen, even if the non-citizen spouse has been a US resident for many years, the transfer of assets at the death of the US citizen or resident spouse to the non-citizen will not qualify for the estate tax marital deduction. Due to the high estate and gift tax exemptions which are now in effect for the estates of US citizens and residents ($11.4 million in 2019, indexed for… Read More
