Orsbon & Fenninger, LLP

Estate Planning and Estate Administration

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April 2017 Archives

Estate tax planning when one spouse is not a citizen

Estate planning in order to avoid or reduce estate tax can be complicated, and it may become even more complicated if one spouse is not a citizen. The U.S. has a tax treaty with more than 70 countries, but not all of these treaties deal with estate tax. One of the first steps for determining estate tax when one spouse is a foreign national is to establish whether or not a person is considered a resident. This determination can be somewhat subjective although if people appear to have a residence in North Carolina with no intention of leaving they may be considered resident for estate tax purposes.

Elements of a qualified personal residence trust

North Carolina homeowners who are creating an estate plan might wonder they should set up a qualified personal residence trust. The purpose of a QPRT is to transfer a home to a beneficiary for less than the home's full value. This is done by creating two separate interests. The income interest is the right of the grantor to live in the home for a certain number of years or until death. The reversion interest is the right of the beneficiary to get the house if the person dies before the set amount of time. The remainder interest is the beneficiary's right to the house at the end of the fixed term.

Tax court finds conflict of interest in estate tax appraisal

North Carolina executors of estates with significant assets may wish to be careful who they choose to perform estate tax appraisals. The Internal Revenue Service pays close attention to asset valuations, and the agency may issue a notice of deficiency when the appraised value of an asset differs significantly from its own valuation. The estate of a deceased New York art collector recently discovered this when a tax court ruled that two 17th Century paintings had been undervalued by $1.77 million.

How a revocable trust can be useful

Some North Carolina residents might wonder whether they need a trust as part of their estate plan. Although there are many different kinds of trusts, one that is helpful for many people is a revocable living trust. This means that it is created while a person is alive and can be changed during their lifetime.

Remarried? Protect assets, children with an updated estate plan

For you and many other individuals, your first marriage may have ended in divorce. However, that does not mean that love will never come again. In fact, numerous people enter into second marriages at some point in their lives and enjoy a new kind of family and happiness. Of course, when entering into another marriage, aspects of your first marriage might still require some consideration.