Multigenerational Estate Planning in North Carolina: What You Need to Know

Multigenerational estate planning in North Carolina involves writing a will with the intent of providing future generations of your family with financial stability. Having a well-drafted will can help your family protect property and transfer your wealth to them easily and with reduced tax burdens. State law sets clear laws on how estates are handled during probate, the legal process used to settle a person’s estate after they die.

Probate involves proving that a will is valid, identifying and gathering the person’s property, paying debts and taxes, and then distributing what’s left to the rightful heirs or beneficiaries.

3 Types of Legally Valid Wills in North Carolina

The most common type of estate planning is a will. There are several types of wills allowed under North Carolina law:

• Traditional will. This kind of will must be signed by the person making it, called the testator, and witnessed by two competent people. The testator does not have to sign the will in front of the witnesses, but if not, they must later confirm to the witnesses that it is their signature.
• Holographic will. This is a handwritten version of the will that must be written entirely in the testator’s handwriting, signed by them, and kept among their important personal items.
• Nuncupative will. This is an oral version of a will and is only valid if the person making it is dying. This type of will can only be used to leave personal items, not real estate.

What Happens if a Person Dies Without a Legally Valid Will

For those without a valid will, Chapter 29 of the General Statutes outlines intestate succession laws. Property division varies depending on the person’s family. For example, if someone dies without children or parents, their spouse gets everything.

If they had one child or grandchildren, the spouse gets half the land and a share of the personal property. If they had more than one child or grandchildren, the spouse’s share is smaller. Whatever is left after the spouse’s share is divided among children and grandchildren. If there are no children or grandchildren, the property may go to the parents, siblings, grandparents, or their descendants.

If there are no living relatives at all, the property goes to the state of North Carolina. With the average North Carolina home valuing $337,457, proper estate planning is key to protecting high-value assets.

Options to Reduce Taxes After You Pass

One of the most effective tools to reduce estate taxes during probate is creating a trust. There are two types of trusts: revocable and irrevocable. In a revocable trust, the creator may change the terms and conditions of the trust at any time, including if they wish to dissolve it. These are flexible but offer limited tax benefits because the assets are still a part of the estate.

Irrevocable trusts cannot be easily altered or revoked. Because the creator gives up control over the assets placed in the trust, these assets are no longer considered part of the taxable estate.

For example, if you place $500,000 into an irrevocable trust for your grandchildren, you give up control of your assets. This removes that money from your taxable estate and potentially reduces estate taxes after you pass, maximizing the amount your heirs will receive.

Hire an Estate Planning Lawyer

Understanding how to do this can be incredibly complex and difficult for a person to do alone. Because North Carolina will only recognize legal wills, it’s vital to hire an experienced estate planning lawyer to help you navigate this process. 18% of North Carolina’s population was age 65 or older as of 2023, making estate planning a pressing issue for many residents of the state.

Hiring an estate planning lawyer can help ensure that your assets are appropriately accounted for and that your estate planning wishes are smoothly written, filed, and processed to ensure your designated beneficiaries will benefit as outlined. Caring for our loved ones is commonplace for many people, and proper estate planning can give you the peace of mind that this will continue even after you are gone.

FAQs

What Taxes Might My Estate Owe After I Pass?

North Carolina does not have a state estate or inheritance tax, but the federal estate tax may apply if your estate exceeds the federal exemption limit. This amount is $13,990,000 for those who pass in 2025. Careful estate planning can help reduce or eliminate tax exposure through lifetime gifting, charitable donations, or trust creation.

What Is the 5-by-5 Rule in North Carolina Estate Planning?

The 5-by-5 rule is a common clause in trusts that gives beneficiaries limited access to trust funds. Each year, a beneficiary may withdraw up to $5,000 or 5% of the trust’s fair market value, whichever is greater. This rule helps provide flexibility without compromising the trust’s long-term purpose. If this is an option you’d like to explore, an experienced attorney will be able to help you understand if it’s beneficial in your unique situation.

How Much Does an Estate Have to Be Worth to Go to Probate in North Carolina?

In North Carolina, if someone dies leaving $20,000 or less in personal property, not including real estate, their estate may qualify for a simplified process called collection by affidavit. This avoids formal probate. This option can save time and money for smaller estates, but it’s not suitable if real estate will be sold within two years.

Talk To Our North Carolina Estate Planning Lawyer Today

The Jonas Law Firm, P.L.L.C. has built longstanding relationships with generations of clients in North Carolina. Our team has a niche focus on all facets of family law, making us knowledgeable about the intricacies of estate planning.

Multigenerational estate planning requires vast knowledge of changing state and federal laws, as well as the empathy needed to understand personal family dynamics. Because of our firm’s history of helping multiple generations of families, you can rely on our team to be there for your family after you pass. If you need legal guidance with estate planning in North Carolina, contact The Jonas Law Firm, P.L.L.C. today.