Steward Ingram & Cooper, PLLC provides trust and estate tax planning in Durham for families and business owners that protect assets and reduce the tax burden on heirs. Since 2000, our CPAs have worked alongside estate attorneys throughout Durham and the Triangle, often for business owners and Research Triangle Park (RTP) professionals planning both succession and personal legacy.
What is an Estate Plan?
An estate plan documents what will happen to your assets such as bank accounts, property, and vehicles when you die. It is more detailed than a will because it covers trusts, power of attorney, your living will, and more. An attorney, financial planner or an accountant can help you create this document.
Navigating Estate Tax Planning in Durham
When your estate plan is carried out, you don’t have to worry about leaving your loved ones with a large tax burden. As of 2019, estates valued at less than $11.14 million are not subject to taxation before they are bequeathed to your heirs. In addition, North Carolina does not impose state taxes on inheritance and inherited funds are not subject to federal taxes.
Despite these rules, it doesn’t mean that your loved ones will not have to pay any taxes on the assets you leave them. It does mean that the large tax bills many people fear are not likely to apply. Any income generated by an inheritance is taxable and any capital gains from property sales can also be taxed. That’s why navigating the logistics with a CPA who knows the full scope of estate tax planning in Durham is so critical.
Reasons to Establish a Trust with a CPA
Establishing a trust puts a third party, known as the trustee, in charge of managing assets for the people you name as beneficiaries. For Durham families and business owners, a trust opens up several practical advantages:
- Sets clear terms for how and when your beneficiaries receive assets, instead of leaving the timeline to the courts
- Lets your estate bypass the delays of probate, so assets reach your family sooner
- Can lower the overall tax burden your heirs face
- Stays out of the public record, unlike a will, which is filed with the court
- Allows staged distributions, useful for beneficiaries who are minors or who you would rather not hand a lump sum to all at once
- Protects assets for a beneficiary with special needs or limited money management experience
- Names someone to manage your affairs if you become incapacitated, without a court-appointed guardianship
An attorney typically drafts the trust document, but the tax strategy behind it, especially for Durham business owners weighing how to pass along a company alongside personal assets, is where a Durham CPA earns their keep. Loop us in before the document is finalized so we can ensure your document is all set before it’s legally binding.
Why Choose Steward Ingram & Cooper for Estate Tax Planning?
Our CPAs have more than 20 years of combined experience in estate tax and estate planning, working alongside your attorney to make sure the tax side of your plan holds up.
Your CPA will take the time to understand your financial situation and help advise you with your estate planning while navigating tax laws and avoiding tax penalties.
Estate Planning: Frequently Asked Questions
Do I need estate tax planning?
Without proper estate planning, your assets may end up going to the IRS rather than your loved ones. Our estate planning professionals can help you plan in advance to provide for your loved ones and avoid tax penalties that can leave your family struggling.
What is inheritance tax?
An inheritance tax is a state tax paid on any assets an individual inherits after someone dies. Fortunately, North Carolina does not have an inheritance tax, so if you inherit money, property, or other assets, you will not have to pay a direct tax on them.
What is estate tax?
The estate tax is a federal tax that is applied to a person’s assets after their death. However, any estate that is worth less than $12.06 million for 2022 is exempt from the tax, and is adjusted each year. For estates valued over that amount, the estate tax is paid before any inheritance is distributed or dispersed, so while beneficiaries may not receive a full amount, they will not have to pay a separate tax on it.
How can I reduce estate tax?
To reduce the amount of tax owed on your estate after your death, you can opt to spend it before your passing, provide monetary gifts below the gift tax threshold, leave it to a qualified charitable organization, or create a trust for your heirs and beneficiaries.
Will I owe estate tax on inherited real estate or other assets?
Upon receiving an inheritance of real estate, you would not pay a tax on the property itself; however, if you decide to sell, you do need to report any income made from the sale. If you inherit cash that you leave in an interest-bearing account, you are liable for reporting any interest income earned on that money, whereas if you inherit stocks or an investment account, you will need to report either capital gains or dividends you receive.
What is a trust?
A trust is a legal entity that safely holds assets on behalf of someone else. The person who creates the trust, the grantor, chooses what goes into it and the rules and guidelines associated with it. A trust can hold anything of value including real estate, checking and savings accounts, stocks and investments, businesses, or artwork.