When you’ve built significant wealth, the question becomes not just how to preserve it but how to pass it on wisely. For North Carolina’s top earners, estate and trust tax planning is no longer optional. It’s an essential element of a forward-thinking financial strategy.
At Tax Advisors of Cary, we work exclusively with high-income individuals and families who expect more from their tax advisors. More insight, more strategy, more coordination. We understand that your goals stretch beyond your yearly tax return. You’re planning for the next generation, and for a legacy that reflects your values.
Whether you’re just starting to structure your estate or refining an existing trust, here’s what you need to know to protect your wealth from unnecessary taxation and ensure your wishes are fulfilled.
Why Estate and Trust Tax Planning Matters
Estate tax laws are always evolving, and with potential federal changes on the horizon and shifting exemptions, now is the time to act. While North Carolina doesn’t have its own estate tax, federal estate and gift tax laws still apply, and they can erode even carefully built fortunes without proper planning.
The federal estate tax exemption currently sits at $13.61 million per individual (2024), or $27.22 million per married couple. But this generous threshold is set to diminish after 2025, potentially cutting the exemption in half unless Congress acts.
If your estate is projected to exceed the post-sunset exemption, that could mean a federal tax of up to 40% on your assets. The good news? With proactive planning, you can sidestep much of this exposure.
Modern Wealth Planning
Trusts aren’t just for the ultra-wealthy, they’re a core tool for anyone interested in asset protection, tax minimization, and control over distribution. Depending on your goals, different types of trusts can be used to:
- Reduce estate tax exposure
- Avoid probate
- Protect heirs from creditors, divorce, or poor financial decisions
- Preserve family privacy
- Direct charitable giving
Let’s look at a few trust strategies our clients at Tax Advisors of Cary frequently leverage.
Irrevocable Trusts: Lock In Benefits Now, Reduce Tax Later
An Irrevocable Trust allows you to move assets out of your estate, meaning those assets and their appreciation are no longer subject to estate taxes when you pass. These trusts are often used to hold life insurance policies, business interests, or investment accounts.
While you relinquish control of the assets, the tax benefits can be significant. An Irrevocable Life Insurance Trust (ILIT), for example, can ensure that a death benefit isn’t counted as part of your estate, providing tax-free liquidity to heirs.
Grantor Trusts and Intentional Defective Grantor Trusts (IDGTs)
These specialized irrevocable trusts allow you to transfer appreciating assets to beneficiaries while freezing your estate’s value for tax purposes. You’ll pay the income tax on the trust’s earnings, further reducing your taxable estate while the assets grow outside of it.
For high-net-worth families in North Carolina with business assets, real estate portfolios, or highly appreciated securities, this can be a powerful tool to shift wealth without triggering immediate gift tax.
Charitable Trusts
If philanthropy is part of your legacy, Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs) can serve dual purposes: supporting causes you care about while reducing your income and estate tax burden.
With a CRT, you or your beneficiaries receive income from the trust for a period of time, after which the remainder goes to charity. With a CLT, the charity receives the income first, and your heirs receive the remainder. Each can be customized to suit your giving philosophy and tax needs.
Annual Gifting
You don’t have to wait for a trust to begin reducing your estate. Each year, you can give up to $18,000 per recipient (2024), or $36,000 per couple without tapping into your lifetime exemption.
This “use it or lose it” strategy is particularly useful for families looking to pass down wealth gradually, pay for education, or fund 529 plans. It’s simple, but over time, it’s incredibly effective.
Planning for Income Tax in Trusts
One commonly overlooked element in trust planning is income taxation. Trusts reach the highest federal income tax bracket (37%) after just $15,200 of income (2024). That’s a steep curve compared to individual tax brackets.
To avoid these compressed brackets, we often recommend distributing income to beneficiaries in lower tax brackets or using investment strategies within the trust to generate tax-efficient returns. Our team reviews every trust’s tax profile to ensure alignment with the broader estate plan.
The Importance of Coordination
The most effective estate and trust plans don’t happen in silos. They require coordination between your tax advisor, estate attorney, financial advisor, and, just as importantly, your family.
At Tax Advisors of Cary, we lead with tax strategy, but we understand the bigger picture. We’ll collaborate closely with your legal and financial teams to ensure your estate plan isn’t just technically sound but also fully optimized for tax efficiency.
We take a hands-on, concierge-level approach to managing and reviewing trust tax returns, ensuring compliance, and identifying planning opportunities year after year.
Leave More Than a Legacy, Leave a Plan
Your legacy is more than the assets you’ve built. It’s the foresight, strategy, and care you’ve applied to protecting them.
With rising asset values and a shifting tax landscape, there’s never been a better time for North Carolina’s high-net-worth families to take control of their estate and trust planning. Whether you’re looking to gift assets, protect beneficiaries, or prepare for the federal exemption sunset, we’re here to help.
At Tax Advisors of Cary, we go beyond the numbers. We serve as trusted partners to families who expect excellence, discretion, and clarity in everything they do.
Partner With Us Today!
Let us take the stress out of your taxes and help you keep more of what you earn. After all, your focus should be on your work, not on worrying about tax laws.
At Tax Advisors of Cary, we’re dedicated to helping you navigate complex filings, maximize deductions, and achieve your financial goals with confidence. Connect with us today to schedule an appointment and discover how our expert team can make tax season easier and more rewarding. Let’s work together for your success!
