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Bluffton South Carolina Estate Planning Law Blog

How to make a better estate plan

Estate owners in South Carolina have many options when it comes to wills and trusts. In some cases, they will choose to leave a portion of their assets to charity and a portion to their children. If a person chooses to structure their estate plan in such a fashion, it is important to consider the tax implications of how assets are actually transferred.

Often, an individual will include a charity in a will, trust or other estate plan document. While this is perfectly legal, it can also increase an heir's tax bill. Let's say that a parent leaves an IRA to their children and another asset for charity. In such a scenario, the child would be required to pay tax on the entire IRA. However, if a portion of the IRA was left to charity, the child would receive the balance and pay less in tax.

Why it is important to have an estate plan

South Carolina fans of the musician Prince might know that he did not have a will, and as a result, his estate has been tied up in probate. Aretha Franklin has also died without an estate plan. According to one of her attorneys, he urged her to make one but she simply did not get around to it.

Not getting around to it is a reason given by many of the more than 60 percent of Generation Xers and 42 percent of baby boomers who say they do not have a will. For people like Prince and Aretha Franklin, a lack of estate planning means a significant proportion of their assets will go to taxes. Furthermore, their estate must pass through the probate process, which is not private. Franklin had four children including a son with special needs. With a special needs trust, a person can set aside money to care for an individual without affecting that person's access to government benefits such as Medicaid.

A quick guide to micro estate planning

Financially concerned people in South Carolina are well aware of the long-term benefits that come with careful estate planning. Taxes can be lowered, assets can be protected and families can get some peace of mind. However, many estate owners forget about the short-term circumstances that could arise directly following a tragedy. For example, what happens to a child in the immediate aftermath of a parent's death before a court enforces the guardianship provisions can be written out in an estate plan.

This short-term, narrowly focused type of plan is sometimes referred to as a micro estate plan. It addresses issues such as who the kids will stay with temporarily and who should be immediately contacted. It can include any type of immediate action needed to help children in a time of need. For many parents, the goal of this document is to minimize the trauma their children might have to experience.

How to plan for old age when living alone

Roughly 19.5 million of the people who live alone in South Carolina and other states are age 65 and older. While some people prefer their independence, a spouse or child can act as a caregiver as an individual gets older. Absent the support that family members can provide, it is important for older people to create estate plans that meet their needs. Part of this plan is to save as much money as possible while still a part of the workforce.

Money should be split between a 401(k) and a bank account that can be accessed at any time. It is also important for an individual to choose a person who can make financial decisions when he or she cannot do so. Whoever is given a durable power of attorney can take actions such as filing a tax return or paying bills on another person's behalf.

The dangers of picking the wrong executor

You gave careful thought to what you want your will to accomplish. You made sure all the terms of your will are consistent with your wishes. Even if you've done all these things, the probate process could still end up going very differently than you would have wanted if you make a critical mistake in your will. This mistake is picking the wrong executor.

The executor is in charge of managing a person's estate and implementing the terms of a will after a person passes away. A person typically names an executor in his or her will.

Funding trusts

South Carolina residents can use an estate plan to ensure that their assets are managed according to their wishes and that their beneficiaries are not overly burdened with handling the estate. The inclusion of a trust is an important part of having a complete and efficient estate plan.

One type of asset that individuals can place into trusts is real estate. They can have an attorney draft a deed or deed in trust so that the real estate title is transferred into the trust. This transfers the title from under the individual's name to that of the trustee of the trust.

When a will is not enough

Many people living in South Carolina understand the importance of having a will. What they may not understand, however, is that a will is just the start of a comprehensive estate plan. While wills are helpful in ensuring that a deceased person's wishes regarding asset distribution are respected, other documents and plans are necessary to protect the interests of both the individual making the estate plan as well as their dependents.

When somebody makes an estate plan, one area of consideration should be the relationships between family members at the time of, and after, their death. Unfortunately, old resentments and unexpected misunderstandings can lead to significant heartache if family members are in disagreement over end-of-life decisions and distribution of personal property.

About revocable living trusts

People in South Carolina may consider using a revocable living trust as part of their estate plan to address issues that cannot be rectified with a will. A living trust is one that is created during an individual's lifetime and is useful in helping them with asset management and with ensuring that their wishes are carried out if they become incapacitated.

The majority of living trusts are created so that an individual has the option to revoke them or change the provisions at their discretion. Because they can be revoked or amended, and thereby included in the estate, they cannot be used to avoid being assessed taxes on the estate. However, they can be used to bypass the probate process.

Popularity of pet trusts growing

If you ever wanted a great trivia question to break out at cocktail parties, just ask what Gail Posner, Alexander McQueen, and Leona Helmsley all had in common. After getting past the quizzical looks you’ll probably receive, you can reveal that all of them (who were wealthy individuals) all created trusts for their pets. After they passed away, the trio left an average of $13 million for the care of their dogs.

Like many aspects of estate planning, creating pet trusts is not exclusively left to the wealthiest of Americans. In fact, more pet owners of meager means are leaving money to care for their pets. The American Pet Products Association reports that 12 percent of dog and cat owners made provisions in their wills for this purpose in 2016.

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