One of the most common questions people have during the estate planning process is whether their estate will be subject to taxation. Fortunately, the answer is no for the vast majority of people in Wake Forest. North Carolina does not enforce an estate tax, regardless of the size of the estate.
However, it is still possible that another state or the federal government will take a portion of the estate. This usually only applies if the estate carries a significant cash value. Even so, it is essential to understand whether an estate plan will leave heirs vulnerable to taxation.
Understanding the estate tax in Wake Forest probate cases is essential to effectively plan for your family’s future. A knowledgeable attorney can help evaluate your estate’s vulnerability to taxation and suggest alternatives that protect its value for your heirs.
The concept of an estate tax comes with much political controversy. On one hand, many people believe that taking a portion of an estate with a high value is a legitimate way to fund government operations. On the other hand, some believe that this is an unfair theft of property that a person has worked their whole life to obtain.
As a result, the estate laws vary from state to state. On July 23, 2013, the state of North Carolina abolished the estate tax. This means that when a person dies in Wake Forest, the state will not take any portion of the estate.
However, this does not mean that local residents should ignore the question of estate taxes. According to the Internal Revenue Service, the federal government still collects taxes on estates with a value of at least $11,700,000. While only a small number of estates carry this value, it is still a point worth remembering when considering taxation in Wake Forest probate cases.
While it is true that most estates will be exempt from any form of taxation, there are certain exceptions. An heir who unexpectedly has to pay taxes on an inheritance may face trouble in collection efforts from the IRS. An executor of an estate who does not provide payment may also be at risk of legal consequences. To avoid this, it is beneficial to work with an attorney on an estate plan than addresses all potential forms of taxation in the Wake Forest probate process.
One option is to exempt property from taxation by removing it from the estate. The most common way to accomplish this is to place that property within a Trust. As soon as property moves into a Trust, it will not be included in the estate during probate. This can help to lower the value of an estate to avoid the federal tax guidelines.
Alternatively, a skilled lawyer could help testators select heirs who are immune from taxation. For instance, if an heir lives in a state that does have an estate tax, that state may claim a portion of the inheritance. The same concept applies to people with citizenship in foreign nations. Choosing the correct beneficiaries of an estate is essential for tax purposes, which a seasoned attorney can explain in further detail.
Wake Forest is located in a state that has abolished the estate tax. Even so, federal or other state laws may require an estate to pay taxes under certain circumstances. Because of this, it is recommended that you discuss the potential impact of taxation on your estate with an experienced attorney.
Our legal team can answer your questions on estate tax in Wake Forest probate cases and help you create an effective plan to preserve the value of your property for your heirs. Contact us today to learn how we can help you secure the financial future of your loved ones.