Estate Planning

NC Law on Intrepretation of Estate Tax Clauses for 2010 Decedents

By Greg Herman-Giddens

This year, of course, there is no federal estate tax.  However, many Wills and Trusts drafted in the past contain formula clauses based on the existence of the federal estate and/or generation-skipping transfer tax.  These convoluted clauses were generally designed to maximize tax savings.

In 2010 there is no federal estate tax.  So what happens if a persons with such a Will or Trust dies this year?  How is the formula to be interpreted?  Well, recent changes to North Carolina law (N.C.G.S. Sections 31-46.1 and 36C-1-113) help provide certainty in the interpretation of the formula clauses.  NC law now provides that the clauses are to be given effect as if the federal estate and generation-skipping transfer taxes law as of December 31, 2009 were in effect.

Executors or trustees, or an affected beneficiary, if they believe the testator would not have intended such a result, may bring a proceeding for a court determination.

Full post as published by North Carolina Estate Planning Blog on September 01, 2010 (boomark / email).