Repeal of North Carolina Gift Tax
By: Patrick D. Newton
Effective January 1, 2009, North Carolina no longer has a gift tax. The repeal of the North Carolina Gift Tax allows taxpayers to make gifts up to their full $1 million lifetime federal exemption without incurring any gift tax and therefore enhances the value of estate tax planning techniques involving outright and leveraged gifts (such as GRATs and QPRTs).
Giving away an asset that is likely to grow in value is an excellent way to help control future estate taxes; any and all future growth of the asset will no longer be part of your potential taxable estate. Straight gifts of cash, however do not leverage your available gifting to maximize the transfer of wealth at your death.
Estate tax techniques are available to "leverage" your exemptions to move additional value to your children or others while minimizing the tax effect of doing so. Planning techniques that will be enhanced by the repeal of the North Carolina gift tax include the Qualified Personal Residence Trust (QPRT); the Grantor Retained Annuity Trust (GRAT); the installment note sale to an Intentionally Defective Irrevocable Trust (IDIT), the Charitable Remainder Trust (CRT, but only if the payment stream does not go to the Grantor), Spousal Lifetime Access Trusts (SLAT) and straight gifting. If you are interested in learning more about how these techniques can enhance your estate plan, please call us to arrange an appointment.
In addition, the Federal Annual Exclusion for 2009 is $13,000 per donor per donee.
