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Tax and Legal Considerations for Surviving Spouses

Posted by Erin Patterson | Jul 01, 2024

The surviving spouse of a decedent faces many challenges, including navigating various tax and legal considerations.  Three of the most important concepts for a surviving spouse to understand are included below:

Spousal Allowance

In North Carolina, the surviving spouse of a decedent is entitled to apply for a Spousal Year's Allowance (the “Allowance”).  The Allowance is intended to provide immediate support to the surviving spouse of the decedent from the personal property of the estate (not real estate or proceeds from the sale of real estate).  Typically, surviving spouses will request an assignment of vehicles or bank accounts.  An advantage of the Allowance is that it has priority above all other claims of the estate and cannot be subject to any creditor claims.  If there is not enough property in the estate to satisfy the Allowance, a Deficiency Judgment is prepared and filed with the Court to track the remaining Allowance.  The Deficiency Judgment does not expire.  Therefore, if additional property is received by the Estate, the property is paid over to the surviving spouse until the remaining Allowance is satisfied.  The Allowance is cancelled/closed by the Court once the full amount of the Allowance is assigned to the surviving spouse. 

The Allowance for spouses of decedents who died on or before February 29, 2024 is $60,000.  The surviving spouse has one (1) year from the decedent's date of death to apply for the Allowance.  If the surviving spouse does not file to claim the Allowance within the one (1) year following the decedent's death, the spouse is no longer entitled to apply for the Allowance. For a surviving spouses to be entitled to the Allowance, he or she must have been a resident of North Carolina at the time of the decedent's death, or the decedent must have been a residence of North Carolina at that time. 

The Allowance for spouses of decedents who died on or after March 1, 2024 is $60,000.  There is no time limit within which to petition the Court for a the Allowance, except that the surviving spouse must file to claim the Allowance during their lifetime.  In addition, if a Personal Representative (i.e., Executor, Administrator) is appointed for the decedent's estate, the claim must be filed within six (6) months after the issuance of Letters Testamentary (testate estate) or Letters of Administration (intestate estate) by the court, and such verified claim for the Allowance must be delivered to the Personal Representative for the estate. 

Elective Share

Under North Carolina law, the spouse of decedent who is domiciled in North Carolina has certain spousal protection afforded to them under the Elective Share statutes.  A surviving spouse of a decedent has the option to claim an elective share whether a decedent dies with or without a will.  There are many considerations a surviving spouse should take into account prior to claiming an Elective Share.  The North Carolina statutes outline the formula used to calculate the statutory share a surviving spouse could claim of estate assets, which is based solely on the length of the marriage. 

The claim for an elective share can only be exercised during the surviving spouse's lifetime by the surviving spouse (or the surviving spouse's agent under power of attorney) and must be filed within six (6) months following the issuance of Letters Testamentary or Letters of Administration by the court. 

Portability

If the gross taxable estate of the decedent who dies in 2024 exceeds $13.61 Million, then the executor must file a federal estate tax return and applicable state death tax returns within 9 months of the decedent's date of death. While no return is necessary if the estate assets of a decedent who dies in 2024 do not exceed $13.61 Million, it may be advisable for the surviving spouse to file a federal estate tax return in order to claim “portability.”  Portability is the surviving spouse's right to carry-over to their own estate the amount of any unused estate tax exemption for decedent (i.e., $13.61 Million less the value of the gross taxable estate is “unused” in the estate and can be used later by the surviving spouse.  We recommend that the surviving spouse consult with their CPA and financial advisors about this decision, because the tax implications in future can be significant.

Our attorneys regularly counsel surviving spouses on the tax and legal considerations that arise during an estate administration.  Please contact our office for assistance with these matters.

About the Author

Erin Patterson

Founding Partner

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