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Bluffton South Carolina Estate Planning Law Blog

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.

Informing a child about their trust

When parents or grandparents in South Carolina create a trust for a child, they often wonder if they should tell them about it. Many of these children won't see the benefits of the trust for many years, but even the knowledge of the benefits may affect their behavior. The creator of the trust may have concerns that the beneficiary will lose ambition or feel entitled. Conversely, they don't want the child to be worried about their financial future.

In some jurisdictions, the grantor doesn't have any legal way to prevent beneficiaries from learning about a trust, even if they're children. Some states require that beneficiaries be reasonably informed about their trusts so that they have the chance to protect their interests. They usually have the right to access an annual accounting statement. Some information may be restricted before the age of 25.

How to create an estate plan in the new year

The first month of the year is a great time for South Carolina residents and others to get their lives in order. For example, it can be a great time to create a savings account or finally get serious about meeting fitness goals. It can also be a great time to get serious about creating an estate plan. Ideally, a plan will include a will that dictates where assets go after a person dies.

It can also determine who has guardianship of any minor children a person has. Without a will, state law may decide where assets go, and these beneficiaries may not be the ones an individual had in mind. Individuals can also benefit from buying an insurance policy that will provide surviving family members with income. The amount of coverage a person should buy will depend on his or her income and other financial needs.

Using multiple trusts in estate planning

When people in South Carolina think about planning for the future, they may wonder about the opportunities provided by instruments like trusts, which can be flexible and offer additional control. In addition to a will, many people opt to create trusts, especially if they want to pass property to minor relatives or otherwise direct a more complex distribution that may be possible in a will. After a trust has been established, people may wonder if they can make a second or additional trust.

A trust only manages the distribution of property that has already been assigned to it. Therefore, if people want to distribute that property differently than how it was designed in the original trust, they can make an amendment to change the trust document. In addition, if they want to completely replace the text of the original trust, they can create an restatement. Of course, as long as the trust is revocable, the creator can also revoke it and later create an additional document. In many cases, people can address their concerns through some form of an amendment.

Trusts serve many purposes but require competent management

Current federal tax laws have eliminated most of the need to use trusts to transfer assets because inheritance tax exemptions currently stand at $11,180,000. Although wealthy families in South Carolina might have few concerns about federal taxes at this point, trusts still offer significant benefits to people who want to exert control over the distribution of funds and keep wealth within a family.

By placing assets within in a trust instead of directly distributing inheritance to heirs, people could protect beneficiaries from outside claims on the money. A trust might prevent creditors from seizing funds or shield the money from a divorcing spouse. The terms of a trust could also impose rules that limit an heir's vulnerability to financial exploitation or poor personal decisions. A beneficiary with special needs might still qualify for government benefits while still accessing an inheritance held in trust.

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.

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