Another year, another increase in the lifetime estate tax exemption for estates in North Carolina (and nationwide). Since the exemption amount is tied to inflation and set to increase each year (or maybe be repealed altogether), around this time each year estate planners and high net worth families await the expected exemption limits for the following year, as set by the Internal Revenue Service. 2017 saw a jump from $5.45 million per individual and $10.9 million per married couple to $5.49 and $10.98 respectively.
The Estate Tax Exemption for North Carolina Estate in 2018
For 2018, the exemption is expected to rise (although not fully confirmed by the IRS) to $5.6 million and $11.2 million respectively – quite a significant jump. This means that every dollar, up to $5.6 million, that passes from a single individual to his/her family during life or at death will pass tax free ($11.2 combined for a married couple), and every dollar over that amount will pass subject to a forty percent (40%) estate tax. Generally speaking, few families have wealth that would come close to the exemption amounts, but estate tax is a common concern for most people who are new to estate planning.
Annual Gift Tax Exclusion in North Carolina
That’s not the only welcome news to come from the IRS – we may also be set to see the Annual Gift Tax exclusion raise from $14,000 to $15,000 per year. While that may not seem like much to you, many high net worth families rely on annual gifting strategies to pass as much wealth as they can to their children in hopes of passing just under the lifetime exemption by the time they pass, or minimizing the amount of estate tax liability their family will ultimately face.
Planning for an expected estate tax liability can be difficult, but working with an experienced estate planning attorney can get a plan in place to avoid or reduce that liability as much as possible. Tax planning should be taken lightly, but it’s also unwise to just throw up your hands and say, “What do I care? I’ll be dead!” Talking about your options is as easy as contacting us for a free consultation.