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Bluffton South Carolina Estate Planning Law Blog

How to protect a business through estate planning

Estate plans can help anyone protect assets or ensure that his or her final wishes are carried out. However, those who own businesses in South Carolina or anywhere else should have an estate plan in place to protect their companies. Creating a plan may help ensure that the surviving spouse will have the financial resources that he or she needs after the business owner dies or becomes incapacitated.

In some cases, it may be best to sell the business and give the money to the surviving spouse. The other spouse could also be allowed to run the company and keep it in the family. If another person partially owns the company, it is a good idea to consult with that individual when making an estate plan. This is because a business partner might not want to be involved with the decedent's spouse.

The uses of a spendthrift trust

Some people in South Carolina might be considering using a trust as part of their estate plan. A spendthrift trust can help ensure that assets are protected against a beneficiary's irresponsible spending. It can also protect assets against creditors.

A trustee is placed in charge of a spendthrift trust. The trustee may be an individual or may be a corporate entity. The trust outlines how distributions are supposed to be made, and the trustee is responsible for making those distributions. A beneficiary would be unable to use the assets in the trust as collateral on a loan. If the beneficiary defaulted on a loan, creditors would be unable to access the principal of the trust.

Why people should keep only one signed will

When people in South Carolina make a will, they may know just how important it is to keep a signed copy of this key estate document safe and secure. People make wills to determine how their assets will be distributed after they pass away. By planning for the future, they can specify the use of their property without relying on the state law standards. Estate planning is especially important for wealthy people, but it can help people of any means. Family members will find that dividing assets is an easier process if a clear, legal will is available, and they will generally spend less time and money in probate court.

However, because people know that their will should be accessible and available in the event of their death, some may be tempted to keep or distribute several signed copies. People may want to pass copies to their children or to trusted advisors. However, many estate planning lawyers advise against this practice. After all, a will can be edited and changed by the creator as long as he or she is competent. This means that people may wind up with several different versions of their will floating around and even being entered into probate court.

Why a pour-over will can be important

People in South Carolina who are using a trust in their estate plan may also want to create a pour-over will. The purpose of a pour-over will is to place all assets not already in the trust or passed using other methods, such as beneficiary designations, into the trust.

A pour-over will can be useful because it is not uncommon for people to forget to add new assets to a trust. If a person dies and there are assets that are not covered by a will, a trust or other means, the assets will go the next of kin. This is generally the spouse and children. It can mean that a family member from whom a person is estranged might receive an inheritance while another family member who was supposed to receive it might get nothing.

Tips for choosing a trustee

A trust can be a powerful tool in an estate plan by protecting assets from creditors or in a divorce. When shares of a family business are placed in a trust, the voting rights are held by the trustee instead of the beneficiaries. This may help ensure that votes are made with the good of all beneficiaries in mind instead of the self-interest of just one person. Some people in South Carolina may want to build their estate plan around a trust, but it is important to have the right trustee.

People often default to appointing a spouse. However, a spouse who is close in age might become incapacitated or die soon after. A spouse could be unduly influenced by some family members. Or, the spouse could remarry, and the assets in the trust might pass to the new spouse's family. In a blended family, appointing a spouse as trustee could create a rift with the stepchildren and end up in litigation. Some of the same dangers could arise if an adult child is appointed as trustee. The child might simply have no interest in acting as trustee.

Why a trust may be a better option than a will

South Carolina parents who are creating an estate plan might want to consider using a trust instead of a will. A trust can offer a number of advantages and give a parent more control over how his or her assets are distributed.

A trust may be revocable or irrevocable depending on its purpose. Unlike a will, a trust is private, and assets from a trust may be distributed immediately instead of going through the probate process. However, one advantage of a trust is that assets do not necessarily have to be distributed right away, and, in some cases, it might be created to prevent this. Even adult children may be too immature to manage a large inheritance, so the trust might be set up so that they do not get a distribution until later. Alternately, they might receive small distributions at certain intervals. If the child has issues with creditors, the trust can keep assets protected from those creditors.

Estate plans that should be updated

People in South Carolina who fail to regularly review their estate plan may do so for various reasons. They may be reluctant to talk about death or may be intimated by the complex documents or tax laws. However, an estate plan that is not properly up to date may not be efficient enough to ensure the assets of an estate are distributed as preferred by the estate's owner.

One indication of an inadequate estate plan is that important documents are missing. The most basic estate plan should include a will, an advanced medical directive, a financial power of attorney and a will. All of these documents should be evaluated by an attorney within the last decade and immediately after all major life events.

Advantages of a revocable trust

For fairly straightforward estates, a last will and testament may be sufficient for passing assets on to beneficiaries. However, some estate owners in South Carolina might want to consider a living trust, also known as a revocable trust. This estate planning vehicle has a number of advantages for people with larger estates or more complicated financial or family situations.

The estate owner retains control over the trust and the property that is placed in it. Property can be moved in and out of the trust without penalty. With a trust in place, the probate process can be largely avoided. Probate can be expensive and time-consuming, but one of the biggest advantages of avoiding probate with a trust is that it makes the estate plan private. Family members may use the details of an estate plan they are able to see as it passes through probate to challenge it.

Reasons adults need an estate plan

The American Association of Retired Persons reports that around half of adults do not have an estate plan, and some people in South Carolina may be part of that percentage. Individuals might not have a plan because they think they are too young, have too few assets or do not have family, but there are a number of reasons to create an estate plan.

Most people want some kind of control over their medical care if they were to be incapacitated. A living will that addresses a person's wishes for end-of-life care and a power of attorney that appoints someone to make medical decisions on that person's behalf can ensure some of this control. A financial power of attorney can appoint someone to take financial and legal action for the person.

How to choose the right people for roles in an estate plan

When a South Carolina resident is creating an estate plan, there are many specifics to consider. For example, it's important to choose the right people for estate planning roles. One common problem is that multiple people may be appointed for responsibilities that overlap. This and other errors may cause conflict.

The many different roles that may exist in association with an estate plan include executor, trustee, agents for financial and medical decisions, agents for funeral decisions, financial account designees, long-term care insurance lapse designee and Social Security representative payee. These multiple and sometimes conflicting roles tend to arise when arrangements are made at different times throughout the estate owner's life. Therefore, one step in revising an estate plan may be to look at these roles and see which ones can be combined.

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