What's New?

The North Carolina General Assembly has effectively eliminated the North Carolina inheritance tax effective for persons dying on or after January 1, 1999. The inheritance tax is now equal to the "state death tax credit" claimed by an estate on IRS Form 706, the federal inheritance tax return.

Effective January 1, 2002, the state and federal annual gift tax exclusion increased to $11,000.00 from $10,000.00.

The federal government is also increasing the "applicable exclusion amount" on an annual or semi-annual basis. This is the maximum amount added to lifetime gifts in excess of the "annual exclusion" which can pass tax free to heirs. This credit is equal to $1,000,000.00. For the estates of persons who die on or after January 1, 2004, the credit is equal to $1,500,000.00. For the estates of persons who die on or after January 1, 2006, the credit is equal to $2,000,000.00. For the estates of persons who die on or after January 1, 2009, the credit is equal to $3,500,000.00. For the estates of persons who die on or after January 1, 2010, the credit is unlimited. For the estates of persons who die on or after January 1, 2011, the credit is equal to $1,000,000.00.

Though the word was slow to filter to the banks, the North Carolina General Assembly eliminated the temporary freeze on bank accounts of persons dying on or after July 1, 1998. It is no longer necessary to file inheritance tax waivers in order to access such an account. However, in the event that the account is not owned with survivorship rights, it is still necessary to present Letters Testamentary or Letters of Administration to the bank, in order to demonstrate one's authority in transferring the assets.

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