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Bluffton South Carolina Estate Planning Law Blog

What older people should know about divorce and retirement

People in South Carolina and throughout the country who get divorced after the age of 50 may face unique estate planning challenges. TD Wealth conducted a survey of 112 financial professionals to determine what those challenges may be. Of those who responded, 39% said that getting divorced later in life can increase the cost of retirement. Those respondents also said that ending a marriage could make it harder to adequately fund a retirement.

Individuals are encouraged to review beneficiary designations on retirement and other financial documents. Of financial planners surveyed, 42% said that advised their clients to consider putting their assets into trusts. Trusts may be an easier and less expensive way for divorced individuals to transfer assets to their children.

Determining when a trust should hold college savings

A revocable living trust can help individuals hold their assets. Some South Carolina residents who have a trust may wonder if they should use it to hold a 529 college savings account for a child's future education.

The answer really depends on the situation. If the creator would like to name a successor who will be responsible for the 529 account and they want to prevent the account from being subjected to probate, using a trust to hold college savings is not necessary. What the trust holder could do is name a successor. It is possible to do this on the beneficiary form that is provided by the sponsor of the 529 plan. When the account owner dies, the account will be passed on to the successor who was named and will not go through probate.

How a trust differs from a will

While most estate owners in South Carolina probably have heard of wills and trusts, some may not understand the difference between the two. Trusts can help individuals manage their assets while they are alive. On the other hand, wills dictate how assets are disbursed after the creator dies. In some cases, a will can contain instructions to transfer assets into a trust when an individual passes. The level of control one retains over a trust depends on what type of document is created.

Terms of a revocable trust can be altered by the person created it. However, an irrevocable trust usually cannot be changed unless all of the beneficiaries agree with the decision to do so. One potential benefit of an irrevocable trust is that assets inside of it are usually beyond the grasp of creditor claims. Assets that are held in any type of a trust can also avoid probate.

"Knives Out" film sparks estate planning questions

Audiences in South Carolina and elsewhere have been flocking to the movies to see the film "Knives Out," a creative take on a classic murder mystery featuring a cast packed with stars. The film has earned over $70 million at the box office with its take on the investigation of the death of an elderly, wealthy man. However, after people are done enjoying the film, they may wonder how closely the estate planning issues depicted in the movie compare to real-life concerns. The plot of the film involves determining who was responsible for a man's death as well as how his assets should be distributed.

A lawyer in "Knives Out" gathers family members and heirs together to hear an official reading of the will. While it makes a powerful dramatic device, there is no such procedure in real life. Instead, people will submit the will to probate court in their area for further proceedings. While the will reading is a fictional device, the next step in the film is all too common. If beneficiaries believe that the will was written under some kind of duress or was a fake altogether, they can contest the document in probate court.

Estate planning conversations are worth having

Ideally, a South Carolina resident will form an estate plan before they become ill or pass away. However, it can be difficult to bring up the subject of money or a person's mortality. Regardless of who starts the conversation, it should be brought up in a gentle and respectful manner. Instead of focusing on uncomfortable subjects like death or taxes, it may be best for parents to talk to their kids about their financial values.

Doing so may help to prepare them for a time when mom and dad aren't able to manage a child's finances. Adult children who bring up the topic of estate planning will ideally frame it as a conversation about wills, trusts or other tools that might be beneficial for the family as a whole. It is important for family members to keep working toward creating a trust or other plan documents even if it is an uncomfortable or slow process.

What to do when a trust must be revoked

People in South Carolina who have a revocable trust that they want to revoke should take certain steps to ensure that their wishes are carried out. For example, two parents wanted to cancel their revocable trust, in which they had placed their estate that was worth $2 million, and they wondered whether a handwritten letter of revocation would be sufficient.

It is unlikely that this would be the case. Although the parents were going through and removing all their assets from the trust, the trust was still mentioned in their wills. Furthermore, there is always the possibility that a person might forget to remove some assets or that a person might die before removing all the assets. In addition, an older will cannot be reactivated by revoking a later will. In most cases, it is necessary to create and sign a new will.

Estate plans need to give specific guidance about digital assets

The online lives of people in South Carolina often create digital assets. An estate plan that does not describe how to access digital assets might leave the executor of an estate and heirs permanently disconnected from the digital estate.

Digital assets take many forms, including photos and other files stored in cloud accounts, social media accounts, email accounts and online financial accounts. The first step in organizing a digital estate requires taking a complete inventory. People need to write down all online accounts along with user IDs, passwords and other authentication steps. The inventory should also address automated payments. Without knowledge of automated transactions, the executor of an estate or surviving family members might have trouble tracking down the sources of account debits. After identifying all digital assets and liabilities, people can then decide who should have access to them.

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.

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