Another year, another increase in the lifetime estate tax exemption for estates in North Carolina (and nationwide). Since the exemption amount is tied to inflation and set to increase each year (or maybe be repealed altogether), around this time each year estate planners and high net worth families await the expected exemption limits for the following year, as set by the Internal Revenue Service. 2017 saw a jump from $5.45 million per individual and $10.9 million per married couple to $5.49 and $10.98 respectively.
For 2018, the exemption is expected to rise (although not fully confirmed by the IRS) to $5.6 million and $11.2 million respectively – quite a significant jump. This means that every dollar, up to $5.6 million, that passes from a single individual to his/her family during life or at death will pass tax free ($11.2 combined for a married couple), and every dollar over that amount will pass subject to a forty percent (40%) estate tax. Generally speaking, few families have wealth that would come close to the exemption amounts, but estate tax is a common concern for most people who are new to estate planning.
That’s not the only welcome news to come from the IRS – we may also be set to see the Annual Gift Tax exclusion raise from $14,000 to $15,000 per year. While that may not seem like much to you, many high net worth families rely on annual gifting strategies to pass as much wealth as they can to their children in hopes of passing just under the lifetime exemption by the time they pass, or minimizing the amount of estate tax liability their family will ultimately face.
Planning for an expected estate tax liability can be difficult, but working with an experienced estate planning attorney can get a plan in place to avoid or reduce that liability as much as possible. Tax planning should be taken lightly, but it’s also unwise to just throw up your hands and say, “What do I care? I’ll be dead!” Talking about your options is as easy as contacting us for a free consultation.
Paul Yokabitus is the CEO and Managing Partner of Cary Estate Planning, a Cary, NC, estate planning law firm. With years of experience in estate and elder law, he has zealously represented clients in various legal matters, including estate planning, guardianship, Medicaid planning, estate administration, and other cases.
Paul received his Juris Doctor from the Campbell University School of Law and is a North Carolina Bar Association member. He has received numerous accolades for his work, including being named among the “Best Attorney in Cary” in 2016 and 2017 by Cary News and Rising Star in 2020-2023 by Super Lawyers.