Jun 2017 AFR: 2.4%
Gift Annuity State Regulations

North Dakota


Intestacy


General Definition

Any part of a decedent's estate not effectively disposed of by will passes by intestate succession. Sec. 30.1-04-01(1).

Order of Distribution

The share of a decedent's surviving spouse is:

  1. The entire intestate estate if no descendant or parent of the decedent survives or all of the decedent's surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives the decedent.
  2. The first $300,000, plus 3/4 of any balance of the intestate estate, if no descendant of the decedent survives the decedent, but a parent of the decedent survives.
  3. The first $225,000, plus 1/2 of any balance of the intestate, if all of the decedent's surviving descendants are also descendants of the surviving spouse and the surviving spouse has one or more surviving descendants who are not of the decedent.
  4. The first $150,000, plus 1/2 of any balance of the intestate estate, if one or more of the decedent's surviving descendants are not of the surviving spouse. Sec. 30.1-04-02.

The share of the estate other than that portion for the surviving spouse passes in the following order:

  1. To the decedent's descendants by representation.
  2. If there is no surviving descendant, to the decedent's parents equally if both survive, or to the surviving parent.
  3. If there is no surviving descendant or parent, to the decedent's siblings if living at to their issue by representation.
  4. If there is no surviving descendant, parent, siblings or their descendants but the decedent is survived on both the paternal and maternal sides by one or more grandparents or descendants of grandparents:
    a. half to the paternal grandparents or to the descendants of the decedent's paternal grandparents by representation; and
    b. Half to the maternal grandparents or to the descendants of the decedent's maternal grandparents by representation.
  5. If there is no surviving spouse, descendant, parent, sibling, descendant of a sibling, grandparent, or descendant of a grandparent, but the intestate decedent has one deceased spouse who has one or more descendants who survive the decedent, to those descendants by representation or has more than one deceased spouse who has one or more descendants who survive the decedent, the estate is divided into as many equal shares as there are deceased spouses, each share passing to those descendants by representation. Sec. 30.1-04-03.

Will Qualifications


Common Law or Community Property

North Dakota is a common law, elective share state.

Capacity

Any adult of sound mind may make a will. Sec. 30.1-08-01.

Drafting

A will must be in writing and signed by the testator or in the testator's name by some other individual in the testator's conscious presence and by the testator's direction. The will must be either signed by at least two witnesses, each of whom signed within a reasonable time after witnessing either the testator sign the will, the testator's acknowledgment of that signature or acknowledgment of the will. Alternatively, the will may be acknowledged by the testator before a notary public. Sec. 30.1-08-02(1).

A will is valid as a holographic will, whether or not witnessed, if the signature and material portions of the document are in the testator's handwriting. Sec. 30.1-08-02(2).


Heirs

An "heir" is any person, including the surviving spouse and the state, who are entitled under the statutes of intestate succession to the property of a decedent. Sec. 30.1-01-06


Modifications

A will or any part of it can be revoked by executing a subsequent will that revokes the previous will or part expressly or by inconsistency. A will may also be revoked by performing a revocatory act on the will. A "revocatory act on the will" includes burning, tearing, canceling, obliterating or destroying the will or any part of it. Sec. 30.1-08-07(1).

A divorce or annulment revokes any disposition or appointment of property made by a divorced individual to the individual's former spouse and any disposition or appointment to a relative of the former spouse. Sec. 30.1-10-04(2).

The court may reform the terms of a will, even if unambiguous, to conform to the transferor's intention if it is proved by clear and convincing evidence that the intent and the terms of the governing instrument were affected by a mistake of fact or law. Sec. 30.1-10-05.

To achieve the transferor's tax objectives, the court may modify the terms of a governing instrument in a manner that is not contrary to the transferor's probable intention. The court may provide that the modification has retroactive effect. Sec. 30.1-10-06.

Probate Process


Naming of Personal Representative

Whether the proceedings are formal or informal, persons who are not disqualified have priority for appointment in the following order:

  1. The person with priority as determined by a probated will, including a person nominated by a power conferred in a will.
  2. The surviving spouse of the decedent who is a devisee of the decedent.
  3. Other devisees of the decedent.
  4. The surviving spouse of the decedent.
  5. Other heirs of the decedent.
  6. A trust company.
  7. Forty-five days after the death of the decedent, any creditor. Sec. 30.1-13-06(1).

To be qualified to serve as a personal representative, the person must be at least 18 years of age and not determined to be unsuitable by the court. Sec. 30.1-13-03(6).

Submission of Will

To transfer any property or to nominate an executor, a will must be declared to be valid by an order of informal probate or an adjudication of probate by the court. Sec. 30.1-12-02.

After the death of a testator and on request of an interested person, a person having custody of a will of the testator must deliver it to a person able to secure its probate and if none is known, to the appropriate court. A person who willfully fails to deliver a will is liable to any person for any damages that may be sustained by the failure. A person who willfully refuses or fails to deliver a will after being ordered by the court in a proceeding brought for the purpose of compelling delivery is subject to penalty for contempt of court. Sec. 30.1-11-02

Notifications

No later than thirty days after appointment, the personal representative must give notice of his/her appointment to the heirs and devisees, including the devisees in any will mentioned in the application for appointment of a personal representative. The information must be delivered or sent by ordinary mail to each. Sec. 30.1-18-05.

If a hearing on any petition is required, the petitioner must provide notice of the time and place of the hearing to any interested person. Notice must be given by mailing a copy at least fourteen days before the hearing by certified or ordinary first-class mail. Alternatively, the petitioner may deliver a copy to the person being notified personally at least fourteen days before the time set for the hearing or if the address, or identity of any person is not known and cannot be ascertained by publishing at least once a week for three consecutive weeks, a copy in a newspaper having general circulation in the county where the hearing is to be held, the last publication of which is to be at least ten days before the time set for the hearing. Sec. 30.1-03-01.

The personal representative may publish a notice to creditors whose identities are not reasonably ascertainable. The notice must be published once a week for three successive weeks in a newspaper of general circulation in the county. If the personal representative decides to publish a notice to creditors then he/she must also mail a copy of the notice to those creditors whose identities are known to the personal representative or are reasonably ascertainable and who have not already filed a claim. The notice must announce the personal representative's appointment and address and notify creditors of the estate to present their claims within three months after the date of the first publication or mailing of the notice or be forever barred. Sec. 30.1-19-01.

Any person desiring notice of any order or filing pertaining to a decedent's estate in which the person has a financial or property interest may file a demand for notice with the court. The demand must state the name of the decedent, the nature of the person's interest in the estate and his or her address. The clerk will mail a copy of the demand to the personal representative. After filing of a demand, no order or filing to which the demand relates can be made or accepted without notice. Sec. 30.1-13-04.

Inventory

Within six months after appointment, or nine months after the death of the decedent, whichever is later, the personal representative must prepare and file or mail an inventory of property owned by the decedent at the time death, indicating each item's fair market value and the type and amount of any encumbrance that exists. Sec. 30.1-18-06(1).

The personal representative may file the inventory with the court and send a copy of the inventory only to interested persons who request it. If the personal representative elects not to file the inventory with the court, the personal representative must mail a copy of the inventory to each of the heirs in an intestate estate, or to each of the devisees if a will has been probated, and to any other interested persons who request it. Sec. 30.1-18-06(2).

Homestead, Elective Share, Exempt Property and the Family Allowance

The surviving spouse is entitled to exercise a claim of homestead over the home. The claim protects the property from forced sale. The value of the property may not exceed $100,000 over encumbrances. Sec. 47-18-01.

The surviving spouse has a right to take an elective share amount equal to 50% of the augmented estate. Sec. 30.1-05-01(1). The election must be made by filing in the court and mailing or delivering to the personal representative a petition for the elective share within nine months after the date of the decedent's death, or within six months after the probate of the decedent's will, whichever limitation later expires. Sec. 30.1-05-05(1).

In addition to the homestead allowance and the elective share, the decedent's surviving spouse is entitled from the estate to a value, not exceeding $15,000 of the exempt property of the estate. "Exempt property" includes household furniture, automobiles, furnishings, appliances, and personal effects. If there is no surviving spouse, the decedent's minor children are entitled jointly to the same value. Sec. 30.1-07-01.

The decedent's surviving spouse and minor children are entitled to a reasonable family allowance in money out of the estate for their maintenance during the period of estate administration. The allowance may not continue for longer than one year if the estate is inadequate to discharge allowed claims. Sec. 30.1-07-02. The amount of the allowance may not exceed $27,000 or installments not exceeding t$2,250 dollars per month for one year. Sec. 30.1-07-03.

Debts and Distributions

If the assets of the estate are insufficient to pay all claims in full, the personal representative will make payments in the following order:

  1. Costs and expenses of administration.
  2. Reasonable funeral expenses.
  3. Debts and taxes with preference under federal law.
  4. Reasonable and necessary medical and hospital expenses of the last illness of the decedent, including compensation of persons attending the decedent.
  5. The decedent's child support obligations that were due and unpaid before death.
  6. Debts and taxes with preference under other laws of this state.
  7. All other claims. Sec. 30.1-19-05.

After three months from the date of the first publication and mailing of the notice to creditors, the personal representative will pay the claims allowed against the estate in the order of priority, after making provision for homestead, family, and support allowances. Unless a contrary intention is indicated by the will, the assets of an estate must be distributed in kind to the extent possible. A specific devisee is entitled to distribution of the thing devised and a spouse or child who has selected particular assets of an estate as exempt property must receive the items selected. Any homestead or family allowance or devise of a stated sum of money may be satisfied in kind if the person entitled to the payment has not demanded payment in cash, the property distributed in kind is valued at fair market value as of the date of its distribution and no residuary devisee has requested that the asset in question. Sec. 30.1-19-07.

Shares of distributees abate, without any preference or priority between real and personal property, in the following order:

  1. Property not disposed of by the will.
  2. Residuary devises.
  3. General devises.
  4. Specific devises. Sec. 30.1-20-02.

Estate/Inheritance Tax


North Dakota imposes an estate tax on every taxable estate. The tax is equal to the maximum tax credit allowable for state death taxes against the federal estate tax. Sec. 57-37.1-04. Therefore, North Dakota does not currently have an estate tax.

Income Tax Charitable Deductions and/or Credits


Taxpayers who contribute to nonprofit private institutions of higher education, secondary education or primary education located within the state are permitted to take a tax credit. The credit is limited to 50% of the total amounts donated to one of these types of educational institutions. The total amount of the tax credit may not exceed 20% of the taxpayer's total income tax or $2,500, whichever is less. Sec. 57-38-01.7.

Taxpayers in North Dakota may also obtain a tax credit by creating a planned gift with a North Dakota qualified nonprofit organization or an endowment held by a North Dakota nonprofit organization. The credit available to such taxpayers is 40% of the charitable gift portion of a planned gift. The credit may not exceed the taxpayer's tax liability and is limited to $10,000 ($20,000 married). Tax credits for planned gifts may be carried forward an additional three years. "Planned gifts" are described as:

  1. Charitable remainder trusts.

  2. Pooled income fund trusts.

  3. Charitable lead trusts.

  4. Charitable gift annuities (must begin payments within the annuitant(s)'s life expectancy as calculated under IRS Publication 1457).

  5. Charitable life estate agreements.

  6. Paid-up life insurance policies.

Planned gifts may not be assigned back to the endowment sooner than the earlier of the death of the beneficiaries or five years from the date of the contribution. Sec. 57-38-01.21.

In addition, a taxpayer is allowed a tax credit for making a charitable gift to a qualified endowment. The credit is equal to 40% of the charitable gift. If the taxpayer makes a single charitable gift to a qualified endowment, the charitable gift must be $5,000 or more to qualify for the credit. If the taxpayer makes more than one charitable gift to the same qualified endowment, the aggregate amount of the charitable gifts made to that endowment must be $5,000 or more to qualify for the credit. The maximum credit that may be claimed under this subsection for charitable gifts made in a taxable year is $10,000 ($20,000 for a married couple filing jointly). This tax credit may not exceed the taxpayer's income tax liability. Sec. 57-38-01.21(2)(b).

Gift Annuity Requirements


North Dakota, a "registration" state, regulates the issuance of charitable gift annuities under Sec. 26.1-34.1-01. Charities must obtain a Certificate of Exemption from the Insurance Department (which exempts the charity from insurance regulation) before issuing charitable gift annuities in this state.

Application Process

To register for a permit with the Insurance Department, the charity must submit an application. The fee is $100. The Application for Certification of Exemption to Issue Gift Annuities must include: evidence of the charity's tax-exempt status; designation of the North Dakota commissioner as attorney for in-state service of process ("Attachment A"); the charity's most recent complete financial statement certified by an officer responsible for the statement; and certification the charity will comply with Secs. 26.1-34.1-03 and 26.1-34.1-04 ("Attachment B") regarding the segregated account and contents of the gift annuity agreements. The financial statement will include the financial condition (balance sheet and income and expense statement), management and affairs of the corporation. The annuity agreements must contain information such as the value of property, annuity amount, manner of payments, annuitants' age and the reasonable value as of the agreement date.

Disclosure Language

The sample gift annuity agreements must contain the following state-required disclosure language:

"The interest of the annuitant or annuitants in the gift annuity may not be assigned to the qualified nonprofit organization or qualified endowment sooner than the earlier of the date of death of the annuitant or annuitants or five years after the date of the contribution."

Reserve Requirements

To qualify, applying charities must maintain a segregated annuity account fund. The segregated fund must have a minimum amount equal to the reserves (present value of annuity payments on all outstanding annuity agreements) but the State does not impose investment limitations.

Annual Filing Requirements

Once a Certificate is granted, North Dakota requires annual filings be submitted to the Insurance Department within 15 days of preparing the charity's audited Financial Statement. These filings renew the Certificate annually by submitting the most recent audited Financial Statement "as of December 31" or "June 30," whichever applies. The State strongly requests the charity submit an email attachment of the audited Financial Statement to Yvonne Keniston (see information below) with the following subject line: Gift Annuity Financial Statement. In addition, charities are expected to provide written notice to the Insurance Department of any corporate changes and submit any updated documents "in a timely manner."

State Contact Information

North Dakota Insurance Department
600 East Boulevard, Dept. 401
Bismark, ND 58505-0320
(701) 328-3328
(800) 247-0560
Yvonne Keniston (Company Licensing Specialist)
ytkeniston@nd.gov

Insurance Department Website: Gift Annuities

State Forms

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

Would you like to learn more about our services?
Please contact us for a free demonstration