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Bluffton South Carolina Estate Planning Law Blog

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.

Pet care provisions in estate plans

About two out of three households in South Carolina and around the country own a pet. Many people see their companion animals as cherished members of the family. Pets may be placed in shelters when their owners die, and they are often euthanized if they are not adopted. Adding pet provisions to a will is not a solution to this dilemma because a will provides no ongoing control over how animals are treated. It could also be several months before a will is probated.

Pet owners who wish to ensure that their companion animals enjoy a happy life after they are no longer able to provide care may wish to consider a pet trust. Placing animals into a trust avoids probate and allows the creator to set strict guidelines for how their pets will be cared for. Pet trusts can be separate documents or incorporated into existing trusts.

Confusion continues to muddle estate planning efforts

There are no shortages of reasons why many South Carolina residents fail to complete the estate plan the vast majority of them fully understand they should and intend to establish. Of course, there is the uncomfortable thought of dealing with one's own mortality, but sooner or later everyone needs to confront that reality. And for many, there are difficult decisions or perhaps no good choices when it comes to dividing up assets among beneficiaries. But it's also true there is simply a common lack of understanding regarding what purpose individual estate planning documents serve and how they work together to protect the individual's interests.

Legal commentators point out a great deal of confusion exists because the terminology that has developed over the years has been anything but clear. For instance, a common form of trust that an average person or couple can employ may properly be called a 'living trust," but a 'will" and a 'living will" are two entirely different documents. Additionally, although a will and a trust are two distinct documents, both can accomplish many of the same estate planning objectives.

Trusts for young beneficiaries

People in South Carolina who have young children should not limit their estate plan to just a will. In order to ensure that the assets they set aside for their children will be properly managed, the inclusion of a trust is necessary. A trust can be used to manage the assets so that they can be long-term resources for the intended beneficiaries.

A trust can be used to create financial guidelines and boundaries for young beneficiaries. A trustee can help the beneficiaries create an income flow that will not only address their needs but also ensure that the principal in the trust remains intact. One of the trustee's duties can also be to instruct the beneficiaries on financial literacy so that when the beneficiaries are allotted more responsibility of the assets, they will have the skills necessary to properly manage them.

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.

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