There are many ways that probate proceedings could reduce how much property you leave for your loved ones. The process of settling an estate takes months and often involves professional support, ranging from a lawyer to someone who organizes estate sales. Creditors could make sizable claims against your estate. A challenge in probate court could consume thousands of dollars of estate assets.
Any of those expenses will impact how much you pass on to those you love after you die. Your executor may also need to pay estate taxes if the overall value of your property is too high. Will estate taxes force the sale of your assets and diminish your legacy?
North Carolina does not assess an estate tax
The good news is that North Carolina does not have an estate tax regardless of how much property you leave behind when you die. However, you are still subject to federal estate tax rules. Your federal estate tax obligations depend on the total value of the property in your estate.
As of 2022, estates worth more than $12,060,000 may have to pay estate taxes to the federal government. The tax rate you pay depends on the overall value of the estate, but the highest possible tax rate is a shocking 40%. Advance planning, such as changing how you own major assets or creating a trust, could help you avoid or at least minimize how much of your legacy goes to the federal government in the form of taxes.
Addressing major concerns like taxes and debts when planning your estate will help you leave more property for the people that you love.