The concept of an estate tax is always at the forefront of political discussion. Many people feel that it is unfair that the government takes a portion of a deceased person’s estate when that property and asset should go to their assigned heirs.
Fortunately, few estates are subject to taxation as the state does not levy an estate tax. In addition, the federal government only takes a percentage of an estate when it has a value in excess of the minimum. If you are concerned how this could impact your future plans, an experienced attorney can provide you with more information about the concept of estate taxes in Cary probate cases.
While many states have begun taxing estates as a way to raise additional revenue, North Carolina is not one of them. In other words, people in Cary going through probate do not have to worry about a local estate tax.
As of July 23, 2013, the state passed a law that repealed the estate tax. This applied retroactively to all estates where a person died after January 1, 2013. Similarly, the state also does not demand tax payment on property that heirs receive.
However, this does not necessarily mean that no state will levy a tax on the estate. If beneficiaries live in states that do tax inheritance, those parties will need to declare an inheritance on their income taxes. Furthermore, if the estate enters probate in two or more states, the beneficiaries in those locations should also be aware of whether those states demand an estate tax payment.
While people in Cary may not have to worry about a local estate tax while going through probate, there are some situations where an estate will owe taxes to the federal government. The Internal Revenue Service rule states that the full value of the estate is the only determining factor when considering whether an estate must pay taxes.
This value is significant. In 2020, only estates with a net value of $11,580,000 or more must pay federal estate tax. This value will rise to $11,700,000 in 2021. If an estate crosses this threshold, the IRS will use a set formula to determine the amount of owed tax. Generally, this amount will range from 18 to 40 percent of the value of the estate. An attorney in the area can help to determine the amount of federal taxes that an estate will have to pay if it carries a value of more than $11,580,000.
The requirement of estate tax payments is becoming rarer and rarer across the country. As of 2020, only a handful of states demand payment from an estate upon a person’s death. Fortunately, South Carolina residents are free from this burden under most circumstances.
However, it is still possible that an estate will owe payments to the federal government. If an estate carries a value of at least a million and a half dollars, the IRS will take a share before distribution to heirs and beneficiaries. If you wish to learn more about estate tax in Cary probate cases, reach out to our office today.