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Bluffton South Carolina Estate Planning Law Blog

Common estate planning errors to avoid

South Carolina residents who are creating estate plans should watch out for several common errors. For example, some estate owners forget to leave information where it can be easily found by executors or beneficiaries. It is best to make a complete list of all assets and their locations. This includes mortgage paperwork, information on bank accounts and paperwork associated with insurance policies. There are also sentimental assets that a person might want to identify. Furthermore, estate owners should not neglect digital assets.

Another common error involves beneficiary designations. Certain types of assets, such as retirement accounts, are passed on by beneficiary designation instead of wills or trusts. Instructions in a will or trust do not override what is on the beneficiary designation. If the beneficiary designation is not completed correctly or is in conflict with other estate planning documents, the assets could end up in probate. This could be costly and time-consuming.

What to do when trustees do not cooperate

Some trust beneficiaries in South Carolina may find themselves dealing with trustees who seem to be uncooperative. For example, one person who was left money in a trust by grandparents to be received at certain ages could not get any information about the trust or distributions although the distributions were supposed to be made at certain ages.

In general, beneficiaries are entitled to see a copy of the trust, and this should be the first step if there is an issue. Often, problems around trusts, trustees and beneficiaries come down to misunderstandings. These can sometimes be cleared up once a person sees what is actually written in the trust. If a person reviews a trust and feels that a trustee is not abiding by its instructions, the next step should be to contact the trustee and try to have a calm conversation about the issue.

Estate planning and hard assets

South Carolina residents can create an estate plan to ensure that their assets are managed according to their wishes after they have died. This can apply to cash, real estate and other assets such as heirlooms and art. For the hard assets, it is important that certain steps are taken to make that they are addressed properly in the estate plan.

Whether an asset or the revenue from the sale of the asset is to be bequeathed directly to an heir, it is necessary to know the fair market value of the asset. Having this number lays the foundation for the plan.

How charitable trusts can be useful

When it comes to estate planning in South Carolina, charitable trusts can be very useful. However, it's important to understand that charitable trusts differ from other types of trusts. One of the main differences is that it is not necessary for a charitable trust to identify a beneficiary. Instead, these trusts are established for the public good.

Charitable trusts can also continue for perpetuity. This is not the case with most trusts, which are subject to the Rule Against Perpetuities. The idea behind the rule is to avoid situations in which property associated with an estate is restricted for a long time. An example would be not allowing a trust to say that a piece of land must be kept in the family forever. However, an exception is made for charitable trusts since the intention is for the overall public good.

The advantages of estate planning for young people

Although older people in South Carolina might realize at some point that they need to make final arrangements for their estates, young people could also prevent many difficulties by completing an estate plan. They might consider death far off or their estates insignificant, but estate plans could reduce problems when accidents leave young people incapacitated.

By executing a durable power of attorney, a young adult could establish who will manage financial affairs. This could come into effect if the person suffers a catastrophic accident or is out of the country for an extended period of time. Similarly, an advanced medical directive would allow a person to express wishes concerning the use of life support. In addition to making formal statements about medical care, a person could choose someone to make medical decisions during a period of crisis. Without documentation about medical issues, a person might be kept alive in a persistent vegetative state.

A business owner needs an estate plan more than most

When people die without executing a legal will or trust, control over what happens to their estate is relinquished. South Carolina has its own laws, as do all of the states, for what is known as intestate succession. Distribution of assets of the estate follows the statutory scheme without regard to the decedent's wishes.

Despite having significant assets and most likely access to financial advisers, many celebrity estates are handled intestate because of the individual's failure to plan. When a business owner fails to plan, it is not merely ownership of the business that hangs in the balance but also the question of whether the business can continue to exist at all.

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.

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