Jun 2017 AFR: 2.4%
Gift Annuity State Regulations

North Carolina


Intestacy


General Definition

Any part of the decedent's estate not validly disposed of by will. Sec. 29-8.

Order of Distribution

The share of the surviving spouse in the real property is:

  1. If the intestate is survived by only one child or by any lineal descendant of only one deceased child, a one-half undivided interest in the real property;
  2. If the intestate is survived by two or more children, or by one child and any lineal descendant of one or more deceased children or by lineal descendants of two or more deceased children, a one-third undivided interest in the real property;
  3. If the intestate is not survived by a child, children or any lineal descendant of a deceased child or children, but is survived by one or more parents, a one-half undivided interest in the real property;
  4. If the intestate is not survived by a child, children or any lineal descendant of a deceased child or children, or by a parent, all the real property.

The share of the surviving spouse in the personal property is:
  1. If the intestate is survived by only one child or by any lineal descendant of only one deceased child, and the net personal property does not exceed $60,000 in value, all of the personal property; if the net personal property exceeds $60,000 in value, the sum of $60,000 plus one half of the balance of the personal property;
  2. If the intestate is survived by two or more children, or by one child and any lineal descendant of one or more deceased children, or by lineal descendants of two or more deceased children, and the net personal property does not exceed $60,000 in value, all of the personal property; if the net personal property exceeds $60,000 in value, the sum of $60,000 plus one-third of the balance of the personal property;
  3. If the intestate is not survived by a child, children, or any lineal descendant of a deceased child or children, but is survived by one or more parents, and the net personal property does not exceed $100,000 in value, all of the personal property; if the net personal property exceeds $100,000 in value, the sum $100,000 plus one half of the balance of the personal property;
  4. If the intestate is not survived by a child, children, or any lineal descendant of a deceased child or children, or by a parent, all of the personal property. Sec. 29-14.

Those persons surviving the intestate, other than the surviving spouse, will take that share of the net estate not distributable to the surviving spouse, or the entire net estate if there is no surviving spouse, as follows:

  1. If the intestate is survived by only one child or by only one lineal descendant of only one deceased child, that person will take the entire net estate or share, but if the intestate is survived by two or more lineal descendants of only one deceased child, they will take as provided in Sec. 29-16; or
  2. If the intestate is survived by two or more children or by one child and any lineal descendant of one or more deceased children, or by lineal descendants of two or more deceased children, they will take as provided in Sec. 29-16; or
  3. If the intestate is not survived by a child, children or any lineal descendant of a deceased child or children, but is survived by both parents, they will take in equal shares, or if either parent is dead, the surviving parent will take the entire share; or
  4. If the intestate is not survived by such children or lineal descendants or by a parent, the brothers and sisters of the intestate, and the lineal descendants of any deceased brothers or sisters, will take as provided in Sec. 29-16; or
  5. If there is no one entitled to take under the preceding subdivisions,

The paternal grandparents will take one half of the net estate in equal shares, or, if either is dead, the survivor will take the entire one half of the net estate, and if neither paternal grandparent survives, then the paternal uncles and aunts of the intestate and the lineal descendants of deceased paternal uncles and aunts will take said one half as provided in Sec. 29-16; and
The maternal grandparents will take the other one half in equal shares, or if either is dead, the survivor will take the entire one half of the net estate, and if neither maternal grandparent survives, then the maternal uncles and aunts of the intestate and the lineal descendants of deceased maternal uncles and aunts will take one half as provided in Sec. 29-16; but
If there is no grandparent and no uncle or aunt, or lineal descendant of a deceased uncle or aunt, on the paternal side, then those of the maternal side who otherwise would be entitled to take one half as hereinbefore provided in this subdivision will take the whole; or
If there is no grandparent and no uncle or aunt, or lineal descendant of a deceased uncle or aunt, on the maternal side, then those on the paternal side who otherwise would be entitled to take one half as hereinbefore provided in this subdivision will take the whole. Sec. 29-15.
If no person is entitled to inherit under North Carolina law the property will escheat to the State. Sec. 29-12.

Will Qualifications


Common Law or Community Property

North Carolina is a common law, elective share state.

Capacity

Any person of sound mind, and 18 years of age or over, may make a will. Sec. 31-1.

Drafting

Personal property may be bequeathed and real property may be devised by an attested written will or holographic will. Sec. 31-3.2.

An attested written will is a written will: signed by the testator and attested by at least two competent witnesses. The testator must, with intent to sign the will, do so by signing the will himself or by having someone else in the testator's presence and at his direction sign the testator's name. The testator must signify to the attesting witnesses that the instrument is his instrument by signing it in their presence or by acknowledging to them his signature previously affixed thereto, either of which may be done before the attesting witnesses separately. The attesting witnesses must sign the will in the presence of the testator but need not sign in the presence of each other. Sec. 31-3.3.

A holographic will is a will:

  1. Written entirely in the handwriting of the testator but when all the words appearing on a paper in the handwriting of the testator are sufficient to constitute a valid holographic will, the fact that other words or printed matter appear not in the handwriting of the testator, and not affecting the meaning of the words in such handwriting, does not affect the validity of the will, and
  2. Subscribed by the testator, or with his name written in or on the will in his own handwriting; and
  3. Found after the testator's death among his valuable papers or effects, or in a safe deposit box or other safe place where it was deposited by him or under his authority, or in the possession or custody of some person with whom, or some firm or corporation with which, it was deposited by him or under his authority for safekeeping.

No attesting witness to a holographic will is required. Sec. 31.3.4.

A nuncupative will is a will:

  1. Made orally by a person who is in his last sickness or in imminent peril of death and who does not survive such sickness or imminent peril, and
  2. Declared to be his will before two competent witnesses simultaneously present at the making and specially requested by him to bear witness. Sec. 31-3.5.

Any person competent to be a witness generally in this State may act as a witness to a will. Sec. 31-8.1. No person, on account of being an executor of a will, shall be incompetent to be admitted a witness to prove the execution of such will, or to prove the validity or invalidity of the will.

A witness to an attested written or a nuncupative will, to whom or to whose spouse a beneficial interest in property, or a power of appointment, is given by the will, is nevertheless a competent witness to the will and is competent to prove the execution or validity of the will. However, if there are not at least two other witnesses to the will who are disinterested, the interested witness and his spouse and anyone claiming under him will take nothing under the will, and so far only as their interests are concerned the will is void. A beneficiary under a holographic will may testify to such competent, relevant and material facts as tend to establish such holographic will as a valid will without rendering void the benefits to be received by him under the will. Sec. 31-10.

Personal property may also be bequeathed by a nuncupative will. Sec. 31-3.2.

Any will may be simultaneously executed, attested, and made self proved, by acknowledgment thereof by the testator and affidavits of the witnesses, each made before an officer authorized to administer oaths under the laws of the state where execution occurs and evidenced by the officer's certificate, under official seal. Sec. 31-11.6.

Beneficiaries

A beneficiary includes, in the case of a decedent's estate, an heir, legatee and devisee and, in the case of a trust, an income beneficiary and a remainder beneficiary.

Modifications

A written will, or any part of the will, may be revoked only:

  1. By a subsequent written will or codicil or other revocatory writing executed in the manner provided herein for the execution of written wills, or
  2. By being burnt, torn, canceled, obliterated, or destroyed, with the intent and for the purpose of revoking it, by the testator himself or by another person in his presence and by his direction. Sec. 31-5.1.

A nuncupative will or any part may be revoked:

  1. By a subsequent nuncupative will, or
  2. By a subsequent written will or codicil or other revocatory writing executed in the manner provided for the execution of written wills. Sec. 31-5.2.

Probate Process


Naming of Executor

Letters testamentary will be granted to the executor or executors named or designated in the will, or if no such person qualifies, to any substitute or successor executor named or designated in the will. If no person so named or designated qualifies, letters testamentary will be granted to some other person nominated by a person upon whom the will expressly confers the authority to make such nomination. If none of the foregoing persons qualifies or if the clerk of superior court upon hearing finds that none of the foregoing persons is qualified, the clerk will grant letters of administration to persons who are qualified to serve, in the following order, unless the clerk of superior court in his discretion determines that the best interests of the estate otherwise require:

  1. The surviving spouse of the decedent;
  2. Any devisee of the testator;
  3. Any heir of the decedent or any next of kin, with a person who is of a closer kinship having priority;
  4. Any creditor to whom the decedent became obligated prior to his death;
  5. Any person of good character residing in the county who applies therefor; and
  6. Any other person of good character who is not disqualified.

When applicants are equally entitled, letters will be granted to the applicant who, in the judgment of the clerk of superior court, is most likely to administer the estate advantageously, or they may be granted to any two or more of such applicants. Sec. 28A-4-1.

No person is qualified to serve as a personal representative who:

  1. Is under 18 years of age;
  2. Has been adjudged incompetent in a formal proceeding and remains under such disability;
  3. Is a convicted felon, under the laws either of the United States or of any state or territory of the United States, or of the District of Columbia and whose citizenship has not been restored;
  4. Is a nonresident of this State who has not appointed a resident agent to accept service of process in all actions or proceedings with respect to the estate, and caused such appointment to be filed with the court; or who is a resident of this State who has, subsequent to appointment as a personal representative, moved from this State without appointing such process agent;
  5. Is a corporation not authorized to act as a personal representative in this State;
  6. Has lost his rights as provided by Chapter 31A;
  7. Is illiterate;
  8. Is a person whom the clerk of superior court finds otherwise unsuitable; or
  9. Is a person who has renounced either expressly or by implication. Sec. 28A-4-2.

Submission of Will

Any executor named in a will may, at any time after the death of the testator, apply to the clerk of the superior court, having jurisdiction, to have the same admitted to probate. Sec. 28A-2A-1.

If no executor applies to have the will proved within 60 days after the death of the testator, any devisee or legatee named in the will, or any other person interested in the estate, may make such application, upon 10 day's notice thereof to the executor. Sec. 28A-2A-2.


Notifications

The clerks of the superior court of North Carolina are required and directed to notify by mail, all devisees whose addresses are known, designated in wills filed for probate in their respective counties. All expense incident to such notification will be deemed a proper charge in the administration of the respective estates. Sec. 28A-2A-3.


Inventory

On application for probate to the clerk of the superior court an executor must list on the affidavit the value and nature of the testator?s property, as near as can be ascertained. Sec. 28A-2A-5.

Homestead, Elective Share and the Family Allowance

The surviving spouse is entitled to enforce a valid homestead exemption and protect the property from creditors. Sec. 1C-1602.

The surviving spouse of a decedent who dies domiciled in North Carolina has a right to claim an "elective share", which means an amount equal to the applicable share of the Total Net Assets, as defined in Sec. 30-3.2(4), less the value of Net Property Passing to Surviving Spouse, as defined in Sec. 30 3.2(2c). The applicable share of the Total Net Assets is based upon the length of the marriage between the surviving spouse and the decedent according to the following schedule:

  1. Less than five years: 15%
  2. Between 5 and 10 years: 25%
  3. Between 10 and 15 years: 33%
  4. 15 years or more: 50% Sec. 30-3.1.

The surviving spouse is entitled to an allowance of $30,000 for support for one year after the death of the deceased. The allowance is exempt from any lien against the property of the deceased spouse, and is, in cases of testacy, be charged against the share of the surviving spouse. Sec. 30-15. Whenever a parent dies survived by any child under the age of 18 years or a child who is less than 22 years of age and is a full time student in any educational institution, or a child under 21 years of age who has been declared mentally incompetent, or a child under 21 years of age who is totally disabled, the child is entitled to receive an allowance of $5,000 for the child's support for one year after the death of such parent. Sec. 30-17.

Debts and Distributions

After payment of costs and expenses of administration, the claims against the estate of a decedent must be paid in the following order:

  1. Claims which by law have a specific lien on property to an amount not exceeding the value of such property.
  2. Funeral expenses to the extent of $3,500. This limitation does not include burial place or gravestone.
  3. Costs associated with gravestones and reasonable costs for the purchase of a suitable burial place to the extent of $1,500.
  4. All dues, taxes, and other claims with preference under the laws of the United States.
  5. All dues, taxes, and other claims with preference under the laws of the State of North Carolina and its subdivisions.
  6. Judgments of any court of competent jurisdiction within the State, docketed and in force, to the extent to which they are a lien on the property of the decedent at his death.
  7. Wages due to any employee employed by the decedent, which claim for wages does not extend to a period of more than 12 months next preceding the death; or if such employee was employed for the year current at the decease, then from the time of such employment; for medical services within the 12 months preceding the decease; for drugs and all other medical supplies necessary for the treatment of such decedent during the last illness of such decedent, said period of last illness not to exceed 12 months.
  8. A claim for equitable distribution. Sec. 28A-19-6.

Estate Tax


The North Carolina estate tax was repealed effective January 1, 2013 Sec. 105-32.3.

Income Tax Charitable Deductions and/or Credits


Itemizers and non-itemizers benefit from gifts made to charities in North Carolina. However, a taxpayer receives either a credit or an itemized deduction, but not both. If a taxpayer chooses to itemize his or her tax deductions, no credit is available. For taxpayers who select the standard deduction instead of itemizing, North Carolina allows a credit equal to 7% of the taxpayer's excess charitable contributions. Excess contributions are defined as the amount a taxpayer would be able to claim as a deduction if the taxpayer had itemized his or her deductions. In order for a non-itemizing taxpayer to use the tax credit, he or she must show that the total contributions for the taxable year equaled or exceeded 2% of the taxpayer's adjusted gross income. The credit does have some limitations, especially for part-year residents. N.C. Gen. Stat. §105-151.26.

Gift Annuity Requirements


North Carolina, a "notification" state, regulates the issuance of charitable gift annuities pursuant to North Carolina General Statutes Annotated Sec. 58-3-6(a). Charitable gift annuities are deemed not to be engaging in the business of insurance in North Carolina if the issuing charity satisfies certain conditions and notifies the North Carolina Department of Insurance.

To qualify, the organization must be an educational institution or an organization described in Sec. 501(c)(3) or Sec. 170(c)(3). If the organization is described in Sec. 501(c)(3) or Sec. 170(c)(3), the charity must have been in continuous operation for at least three years (or be a successor/affiliate to a charitable organization that has) and hold a minimum of $100,000 unrestricted assets (cash, cash equivalents or publicly-traded securities exclusive of the assets contributed by the donor) at the time the agreement is executed. In addition, a charity must provide a copy of its Form 990 to the Commissioner upon request and make it available to the prospective annuitant at time of initial solicitation for the agreement (and also an updated version at the time it is executed).

Failure to comply permits the Department of Insurance to impose fines up to $1,000 per gift annuity agreement after notice and demand from the Commissioner.

Notification Process

Written notification to the Department of Insurance is required of the charity within 90 days of issuing its first annuity agreement. The notice provided to the Department of Insurance shall be signed by an officer or director of the organization or educational institution, identify the organization or institution, and certify that the organization or institution is a charitable organization or educational institution and that its annuities are issued in compliance with the applicable provisions of Sec. 58-3-6(a).

Disclosure Statement

All gift annuity agreements must include the following state-specific required disclosure language:

"This annuity is not issued by an insurance company, is not subject to regulation by the State of North Carolina, and is not protected or otherwise guaranteed by any government agency or insurance guaranty fund."

Reserve Requirements

North Carolina does not require an issuing charity to hold any amount in reserve.

Annual Filing Requirements


Once notification is given to the state, no further reporting is required.

State Contact Information

Cara Shackelford
Senior Policy and Rate Analyst
Life & Health Division
North Carolina Department of Insurance
1201 Mail Services Center
Raleigh, NC 27699-1201

Phone: (919) 807-6064

State Forms

For more information on state-specific form requirements, please contact Crescendo at 800-858-9154.
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