No one wants to think about estate planning but taking the time to plan will ensure your financial wishes are carried out while easing the burden on your loved ones.

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.

Estate Tax Planning

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 does not 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.

Establishing a Trust

A trust is an agreement that allows a third party (called a trustee) to hold assets on behalf of your beneficiaries. Many people establish a trust because they can detail exactly how and when their heirs receive their assets. When a trust is established, it also allows assets to be passed on quicker and can help to reduce the tax burden on your heirs. While an attorney typically helps people establish a trust, it is also a good idea to have a Durham accountant on hand as well.

Why Choose Us?

Steward Ingram & Cooper PLLC has more than 20 years of experience in handling estate tax and estate planning. Our CPAs will take the time to understand your financial situation and help advise you with your estate planning. We can also help trustees navigate through tax laws. Getting professional advice is important to ensure you are not subject to any tax penalties. With CPA Firms in Durham and Raleigh, we serve all of the Triangle area including Cary, Chapel Hill, Apex, Garner, Wake Forest, and Wilson.

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.