North Carolina General Statutes 31-46.1. Construction of certain formula clauses applicable to estates of decedents dying in calendar year 2010
(a) Purpose. – The federal estate tax and generation-skipping transfer tax expired January 1, 2010, for one year. To carry out the intent of decedents in the construction of wills and trusts and to promote judicial economy in the administration of trusts and estates, this section construes certain formula clauses that reference federal estate and generation-skipping transfer tax laws and that are used in wills or codicils of decedents who die in or before calendar year 2010.
(b) Applicability. – This section applies to the following:
(1) To a will or codicil executed by a decedent before December 31, 2009, that contains a formula provision described in subsection (c) of this section if the decedent dies after December 31, 2009, and before the earlier of January 1, 2011, and the effective date of the reinstatement of the federal estate tax and generation-skipping transfer tax, unless the will or codicil clearly manifests an intent that a rule contrary to the rule of construction described in subsection (c) of this section applies.
Terms Used In North Carolina General Statutes 31-46.1
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Codicil: An addition, change, or supplement to a will executed with the same formalities required for the will itself.
- Decedent: A deceased person.
- following: when used by way of reference to any section of a statute, shall be construed to mean the section next preceding or next following that in which such reference is made; unless when some other section is expressly designated in such reference. See North Carolina General Statutes 12-3
- Marital deduction: The deduction(s) that can be taken in the determination of gift and estate tax liabilities because of the existence of a marriage or marital relationship.
- property: shall include all property, both real and personal. See North Carolina General Statutes 12-3
- Trustee: A person or institution holding and administering property in trust.
(2) To the terms of a will or codicil executed by a decedent who dies before December 31, 2009, providing for a disposition of property that contains a formula provision described in subsection (c) of this section and occurs as a result of the death of another individual who dies after December 31, 2009, and before the earlier of January 1, 2011, and the effective date of the reinstatement of the federal estate tax and generation-skipping transfer tax, unless the terms of the will or codicil clearly manifests an intent that a rule contrary to the rule of construction described in subsection (c) of this section applies.
(c) Construction. – A will or codicil subject to this section is considered to refer to the federal estate and generation-skipping transfer tax laws as they applied with respect to estates of decedents dying on December 31, 2009, if the will or codicil contains a formula that meets one or more of the following conditions:
(1) The formula refers to any of the following: “applicable credit amount,” “applicable exclusion amount,” “applicable exemption amount,” “applicable fraction,” “estate tax exemption,” “generation-skipping transfer tax exemption,” “GST exemption,” “inclusion ratio,” “marital deduction,” “maximum marital deduction,” “unified credit,” or “unlimited marital deduction.”
(2) The formula measures a share of an estate or trust based on the amount that can pass free of federal estate taxes or the amount that can pass free of federal generation-skipping transfer taxes.
(3) The formula is otherwise based on a provision of federal estate tax or federal generation-skipping transfer tax law similar to the provisions in subdivision (1) or (2) of this subsection.
(d) Judicial Determination. – The personal representative or an affected beneficiary under a will or testamentary trust may bring an action in the superior court division of the General Court of Justice under Article 26 of Chapter 1 of the N.C. Gen. Stat., and the trustee of a trust created under the will or an affected beneficiary under the trust may bring a proceeding as permitted under Article 2 of Chapter 36C of the N.C. Gen. Stat. to determine whether the decedent intended that the references under subsection (c) of this section be construed with respect to the federal law as it existed after December 31, 2009. The action must be commenced within 12 months following the death of the decedent. (2010-126, s. 1.)