As part of the tax changes implemented by the Legislature, North Carolina joins the growing number of states to repeal the estate tax. The Tax Simplification and Reduction Act signed into law by Governor McCrory provides (among other things) that North Carolina will assess no estate tax on decedents dying on or after January 1 of 2013. North Carolina has no separate inheritance tax. Of course, North Carolina residents STILL face the Federal Estate Tax, but there is no tax due North Carolina and planning issues for North Carolina residents are improved by only having to plan around the federal tax scheme. Tennessee and Maryland are now the only states in the southern United States to impose an estate tax (along with the District of Columbia), while Kentucky and Maryland impose an inheritance tax. (Yes Maryland, along with New Jersey, actually has both…just makes you want to move, doesn’t it?)
The Federal Estate Tax Exemption is at 5.25 million for persons dying in 2013, with a tax rate of 40% imposed on estates above that amount. Married couples can easily pass double that 5.25 million with proper trust planning, and there are other options as well. Planning is key.