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Bluffton South Carolina Estate Planning Law Blog

"Knives Out" film sparks estate planning questions

Audiences in South Carolina and elsewhere have been flocking to the movies to see the film "Knives Out," a creative take on a classic murder mystery featuring a cast packed with stars. The film has earned over $70 million at the box office with its take on the investigation of the death of an elderly, wealthy man. However, after people are done enjoying the film, they may wonder how closely the estate planning issues depicted in the movie compare to real-life concerns. The plot of the film involves determining who was responsible for a man's death as well as how his assets should be distributed.

A lawyer in "Knives Out" gathers family members and heirs together to hear an official reading of the will. While it makes a powerful dramatic device, there is no such procedure in real life. Instead, people will submit the will to probate court in their area for further proceedings. While the will reading is a fictional device, the next step in the film is all too common. If beneficiaries believe that the will was written under some kind of duress or was a fake altogether, they can contest the document in probate court.

Estate planning conversations are worth having

Ideally, a South Carolina resident will form an estate plan before they become ill or pass away. However, it can be difficult to bring up the subject of money or a person's mortality. Regardless of who starts the conversation, it should be brought up in a gentle and respectful manner. Instead of focusing on uncomfortable subjects like death or taxes, it may be best for parents to talk to their kids about their financial values.

Doing so may help to prepare them for a time when mom and dad aren't able to manage a child's finances. Adult children who bring up the topic of estate planning will ideally frame it as a conversation about wills, trusts or other tools that might be beneficial for the family as a whole. It is important for family members to keep working toward creating a trust or other plan documents even if it is an uncomfortable or slow process.

What to do when a trust must be revoked

People in South Carolina who have a revocable trust that they want to revoke should take certain steps to ensure that their wishes are carried out. For example, two parents wanted to cancel their revocable trust, in which they had placed their estate that was worth $2 million, and they wondered whether a handwritten letter of revocation would be sufficient.

It is unlikely that this would be the case. Although the parents were going through and removing all their assets from the trust, the trust was still mentioned in their wills. Furthermore, there is always the possibility that a person might forget to remove some assets or that a person might die before removing all the assets. In addition, an older will cannot be reactivated by revoking a later will. In most cases, it is necessary to create and sign a new will.

Estate plans need to give specific guidance about digital assets

The online lives of people in South Carolina often create digital assets. An estate plan that does not describe how to access digital assets might leave the executor of an estate and heirs permanently disconnected from the digital estate.

Digital assets take many forms, including photos and other files stored in cloud accounts, social media accounts, email accounts and online financial accounts. The first step in organizing a digital estate requires taking a complete inventory. People need to write down all online accounts along with user IDs, passwords and other authentication steps. The inventory should also address automated payments. Without knowledge of automated transactions, the executor of an estate or surviving family members might have trouble tracking down the sources of account debits. After identifying all digital assets and liabilities, people can then decide who should have access to them.

Getting past estate planning hangups

There are several reasons why a South Carolina resident may procrastinate on creating an estate plan. For instance, it can be uncomfortable to talk about death with family members and potential heirs. The cost of an estate plan may also be a roadblock. However, those who have not yet created their estate plan are advised to do so as soon as possible.

Neglecting a will or trust may result in family members not getting assets that they were intended to receive. It can also result in higher tax bills or other problems. To make the process easier, one could create an estate plan with the help of a lawyer. While there may be a cost associated with doing so, legal counsel could help craft a proper plan.

A trust can provide flexibility in estate planning

Many South Carolina residents work long and hard to give themselves financial security during their working years and beyond, which includes, hopefully, a long, healthy and happy retirement. People are living longer, and retirement living is becoming more costly. Moreover, unexpected medical expenses can eat up sizeable chunks of money. However, if it is anticipated that an individual's estate assets will be considerable, estate planning becomes even more of a concern than it is for people with less property. Although a will can suffice as a means to designate which beneficiaries are to receive which estate assets, a trust can also do so but with more precision and control.

Even in the most basic of family scenarios, where a married couple has children, what happens to the couple's estate when one of the spouse passes can become problematic. One option is to leave everything to the other spouse with the assumption that he or she will then split whatever is left among the children. However, the surviving spouse can thereafter remarry and, perhaps, have other children. The picture then becomes murkier. Financial advisors often suggest a trust can provide more flexibility than a will for many of the 'what if" circumstances that may become a reality.

Modern family structures call for flexible estate planning

With the majority of families in South Carolina deviating from "traditional" (opposite-sex married partners with biological children), estate planning can become more complicated. People might have to consider whether or not their biological children and stepchildren will inherit similar amounts. Cohabiting couples might lack the same legal rights as legally married couples in the event of incapacity or death. Their estate plans would need to address issues that the law might not automatically cover. Modern developments in estate planning legal tools and language have emerged to help people in nontraditional families introduce flexibility into their plans and avoid unintentionally excluding loved ones.

For example, a carefully worded power of appointment could give someone the ability to redirect trust assets if family circumstances change. Estate owners might also choose to include a special type of trust agent known as a trust protector who can oversee a trust and replace a trustee if necessary. The distribution terms within a trust need not be set in stone either. A plan might grant an institutional trustee discretionary powers when making distributions.

What to know about special needs trusts

It may be easier for special needs individuals to retain access to government services if their assets are held in a trust. However, it is important that their South Carolina parents carefully structure the trust so that it is exempt from income and resource rules. Special needs trusts must irrevocable, for the benefit of only one person and can only pay for medical or dental needs not provided by other sources.

However, money inside of the trust can pay for a vacation, a video game console or anything else a special needs individual could want or need. The reason why special needs trusts are exempt is because the beneficiary cannot access the resources it holds or demand that they be distributed. Those who create special needs trusts should inform family members and others to make gifts to the trust as opposed to the beneficiary directly.

The benefits of having a living will

Many estate owners in South Carolina have heard that they should have a living will. However, they may not be fully clear about what this document represents. A living will is also called an advance health care directive. This document provides specific details about how a person's health care needs should be addressed if he or she is incapacitated and unable to make decisions about treatment. It can be a complex and emotionally challenging process to draft a living will because people will need to consider difficult topics about death or serious illness throughout the process.

At the same time, creating an advance health care directive is often very important. Many people have strong convictions about what they want to happen in case of a severe injury and reliance on life support. Because of the document's name, many people think a living will is part of a will, the document that specifies how property should be divided after death. However, a living will deals with health care decisions. There are other kinds of documents, such as a living trust or a financial power of attorney, that people may want to create so that their assets and funds will be properly managed.

Trusts provide flexibility in future planning

Trusts have helped many people in South Carolina plan for the future. By creating a trust, people can develop a plan that not only cares for their assets at the present time but can distribute them after death. Trusts give people much greater levels of control and flexibility in determining how their assets will be handled after they pass away. They allow people to make plans for legacies of generational wealth or create a mechanism for charitable giving and philanthropy. In addition, people who create trusts have much higher levels of privacy, as they are not considered public documents and do not go through the probate process.

Trusts also provide a more secure, trustworthy method of passing assets on to minor children. By naming a trustee, parents can ensure that their children have access to funds but will not receive their full inheritance until they are able to handle it. They may also be able to create conditions to give people access to these funds. They can also be very important for family members of people with special needs. Certain types of trusts allow people to pass on assets without hurting their loved ones' eligibility for key government programs.

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