Prior to the repeal of North Carolina's inheritance tax in 1999, the survivor of a gay or lesbian couple was taxed on every bit of property left to him or her, and at a much higher rate than for the survivor of a marriage. Now, the tax disadvantage of being unmarried kicks in only for estates larger than the federal exemption ($675,000 through the end 2001, rising to $1,000,000 by 2006).
If the estate exceeds these limits, the person can make gifts before dying. A power of attorney can allow the dying person's agent (attorney-in-fact) to give away the person's property, including the right to make gifts to himself. With such a provision in the power of attorney, the significant other of the dying person can make gifts to himself or herself. Of course, the decision to give another person the right to make such gifts requires careful consideration. As of October 1, 1995, the right to make such gifts is one of the standard powers set out in N.C.G.S. § 32A-2 (discussed in a previous chapter). Note that the right to make gifts to the attorney-in-fact was not one of the standard powers prior to October 1, 1995, and many persons who signed powers of attorney in the past may wish to execute a new power of attorney to include the power to make gifts. Any such gift prior to the person's death, up to $10,000 as of this writing in any year, will be exempt from gift, estate or inheritance taxation.