Charlotte Estate Planning Blog

Families that hold substantial assets in North Carolina typically seek financial and legal advice when planning their wealth transfers. Every person who writes a will, sets up a trust or plans a business succession must grapple with unique issues, but some matters apply broadly to most estate planning situations. These include family dynamics and the selection of executors or trustees.

Relationships among heirs might become frayed or hostile because of estate planning decisions. Disputes could arise for many reasons, such as jealousy over other siblings receiving a larger share or a trustee's inability to manage funds properly. Financial advisers recommend that benefactors discuss their plans with heirs whenever feasible. This will reduce the chances of them becoming angered by estate surprises.

Every family is different, which means every family will have different estate planning goals. If you have a disabled or special needs individual in your family, it is beneficial to consider his or her future needs when drafting estate plans. There are certain tools available to you that can benefit your family for years to come. 

Through a special needs trust, you can set aside assets for the specific purpose of caring for a person who cannot care for himself or herself in the future. If you do not have plans in place for the care of your special needs loved one, you would be wise to consider taking this step as soon as possible. There is significant benefit in having the right protections in place for the well-being and security of your North Carolina family.

An estate planning tool called domestic asset protection trusts (DAPTs) may make it possible to minimize income and estate taxes. The DAPT is a self-settled irrevocable trust, which means that a person can both create it and be a beneficiary. However, the trustee must reside in a state such as North Carolina that allows one to be created. While the trustee is generally a financial institution, it generally doesn't manage the trust's investments.

Instead, whoever is responsible for doing so before the trust was created will continue in that role. One of the key benefits of a DAPT is that an individual can both protect assets and have access to them at the same time. For instance, a professional who is worried about losing personal assets to pay off a malpractice or liability judgment can put the assets in a DAPT.

There are some unique tax considerations to keep in mind when an estate owner in North Carolina passes away. In most cases, an executor or personal representative is named in the will. When one does not exist, they can be appointed by the probate court. This person is responsible not only for distributing the property to beneficiaries but also for dealing with the final tax obligations of the estate.

The term "gross estate" embraces all of the property that the person owned at the time of death. This includes property interests as well as assets owned outright. For example, the gross estate will generally include lifetime transfers or gifts, overseas property, some community property, annuities and joint assets with a right of survivorship. It can even include some proceeds taken from life insurance. In general, the executor will add up the value of all of these assets in addition to some adjustments for taxable gifts. This amount will then be compared to the federal estate tax exemption. If the gross estate is greater than the exemption amount, the executor will need to file IRS form 706, even if no estate taxes are due.