North Carolina Estate Planning Blog : North Carolina Estate Planning Lawyer & Attorney : Trust Counsel, PA : Trust Administration : Serving Chapel Hill, Durham, Raleigh, Pittsboro, Orange County, Chatham County

Senate Bill 202, among other things, contains many tax increases for us in the Tar Heel state, to wit:

• Increase top income tax brackets to 8.25% and 8.5% (currently 7.75%)
• Raise the State sales tax from 6.75% to 7%
• Apply sales tax to repairs, warranties, installation, movies, athletic events, amusement events/activities, courier and delivery services, and internet sales.
• Require Limited Liability Companies to pay a franchise tax.
• Increase the liquor tax by 1.5%.

You may wish to contact the following Legislators to let them know how you feel about this proposed law:

Representative Paul Luebke (Chair of the House Finance Committee)
(919) 733-7663

Senator David Hoyle (Chair of the Senate Finance Committee)
(919) 733-5734

If you don't support the bill, there's a petition to sign.  Make some noise, people!

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North Carolina's elderly are particularly vulnerable to financial fraud and scams.  Check out the the North Carolina Department of Justice's website, which has helpful information for people of all ages to help protect themselves from identity theft, scams, and other crimes.  If you have an elderly family member without access to a computer,  please print the information and discuss it with them.

Even attorneys are being scammed these days, so it pays to be vigilant!

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Cremation is an increasing common way of handling human remains.  While cremated remains are sometimes buried, there is often a desire on the part of family members (or a request from the deceased) to scatter the ashes somewhere.

North Carolina General Statutes Section 90-210.130(f) provides for legal methods of scattering of cremated remains:

• over uninhabited public land
• over a public waterway or sea, subject to health and environmental standards
• on private property of a consenting landowner
• must be removed from the closed container

Boats or airplanes can be used to perform the scattering.  Scattering in a scattering garden in a dedicated cemetery is also permitted under NCGS Section 90-210-130(c).

Keep in mind that unless the deceased has requested cremation in a Will, Health Care Power of Attorney or other writing witnessed by two people, the next of kin must consent to the cremation in writing before it can take place.

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The U.S. Tax Court decision in Estate of Erma V. Jorgensen, T.C. Memo 2009-66, provides another example of the wrong way to create and administer a family limited partnership from an estate tax planning perspective.  See this article by attorney Kay Ford Bailey of Austin, Texas for a brief analysis.

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On June 1, 2009, Governor Perdue signed into law Session Law 2009-48, which, effective October 1, 2009, institutes substantial changes to to statutes dealing with renunciation of interests in property.  In general, the effect of a valid renunciation of property is that the person renouncing is treated as having predeceased the transferor.  For example, a child that renounces an inheritance from a parent would be treated under the parent's will as having died before the parent.

The revisions include:

• Allowing a parent of a minor child to renounce a interest in property that would have passed to the child as a result of the parent's renunciation.
• Expanding the rights of fiduciaries (trustees, personal representatives, attorneys-in-fact) to renounce fiduciary powers and provides a method to have the Clerk of Superior Court approve the renunciation.
• Adding a section regarding spelling out the requirements of delivery of renunciation of different property interests or powers to third persons.
• Adding detail on the effect of renunciation for different types of property.
• Providing that a valid tax qualified disclaimer under federal tax law is effective as a renunciation under North Carolina law.
• Adding renunciation powers to the NC Short Form Power of Attorney.

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See what the finance wizards at Kiplinger have to say with this fun quiz about saving money.

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Despite criticism from members of both parties, the North Carolina House of Representatives' Finance Committee approved a proposed tax package yesterday.  The proposal includes the following:

• Increase top income tax brackets to 8.25% and 8.5% (currently 7.75%)
• Raise the State sales tax from 6.75% to 7%
• Apply sales tax to repairs, warranties, installation, movies, athletic events, amusement events/activities, courier and delivery services, and internet sales.
• Require Limited Liability Companies to pay a franchise tax.
• Increase the liquor tax by 1.5%.

These and other increases would bring in an estimated additional $784 million in revenue for the next fiscal year.

Depressing to contemplate, indeed, but at least a 9 cent per six pack increase in the beer tax was defeated!  At 53 cents per gallon, North Carolina still has one of the highest beer taxes in the nation.  And that doesn't count the sales tax!

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That's a question we hear frequently from callers to the office.  While we like to be able to answer that question quickly and easily, that's not possible.  My favorite lawyer's answer applies: "well, it depends."  Depends on what, you ask?  Here are some of the factors that impact the fee for a Will:

• Are you married? 
  
  • Will your spouse be doing planning as well?
  • Are you in a second marriage with children from a prior marriage?
• Are you separated but not divorced? 
  
  • Do you have a settlement agreement?
• Do you have a prenuptial agreement?
  
  • What are your obligations, if any, upon your death?
• Do you have minor children?
• Do you have any elderly or disabled family member you wish to provide for?
• What's the total value of your estate? 
  
  • What are the values of the individual assets?
• Do you own real estate?
  
  • Where's it located?
• Do you own joint property?
  
  • With whom?
• Do you have any life insurance?
  
  • Who's the beneficiary?
• Do you have retirement accounts? 
  
  • Who's the beneficiary?
• Do you own a business?
• Have you made large gifts in the past?
• Do you have any debts or other financial obligations that will survive your death?

Then there are other questions to consider:

• Have you considered a living trust to provide privacy and avoid probate?
• What about Durable Powers of Attorney, Health Care Powers of Attorney, Living Wills and HIPAA Authorizations?  For some, these documents are more important than a Will.
• Do you want to protect your heirs from creditors, predators and mismanagement of the inheritance?
• What's the best way to handle estate tax planning (looking toward 2011 and a possible reduced exemption of $1 million).
• What's the best way to handle charitable gifts from an income and estate tax standpoint?
• What about advice and counseling about the process and pieces of estate planning

As you can see, it's virtually impossible to quote a one-size fits all fee for a Will (or complete estate plan, for that matter).  Any law firm who does that will most likely be providing a cookie cutter Will that doesn't fully address your particular situation.  And online and software do-it-yourself Wills are even worse! 

My advice is to make sure you have a lawyer who specializes in estate planning assist you with your estate plan. Isn't it worth the time and cost to ensure that you and your family are fully protected?

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Here's the text of IRS Tax Tip 2009-72, but don't forget, you can always contact a tax lawyer, CPA or enrolled agent for assistance and representation before the IRS:

It’s a moment many taxpayers dread. A letter arrives from the IRS — and it’s not a refund check. Don’t panic; many of these letters can be dealt with simply and painlessly.

Each year, the IRS sends millions of letters and notices to taxpayers to request payment of taxes, notify them of a change to their account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return. Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry.

If you receive a correction notice, you should review the correspondence and compare it with the information on your return.

• Agree? If you agree with the correction to your account, usually no reply is necessary unless a payment is due.

• Disagree?  If you do not agree with the correction the IRS made, it is important that you respond as requested. Write to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to help us respond to your inquiry.

Be sure to keep copies of any correspondence with your records.

For more information about IRS notices and bills, see Publication 594, What You Should Know about the IRS Collection Process. Information about penalties and interest charges is available in Publication 17, Your Federal Income Tax. Both publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

• Publication 594, Understanding the Collection Process (PDF 129K)
• Publication 17, Your Federal Income Tax (PDF 2,072K)
• Tax Topic 651, Notices — What to Do

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