What is an estate plan?

An estate plan is a group of legal documents that outlines how your assets will be distributed after your death as well as during your lifetime. Your plan will also address issues which may come up during medical situations. Common estate planning documents are wills, trusts, powers of attorney, health care powers of attorney, and living wills.

What is a will?

 A will, or sometimes called a “last will and testament” or “last will,” is the legal document that controls how your assets will be distributed when you die. It addresses certain issues such as who will be your personal representative (in some states called and “executor”), names guardians for minor children, and can even contain trusts called “testamentary trusts” which come into being only after death and typically provide for the distribution of assets to minor children.

What are the two kind of estate plans?

 The initial decision you need to make is whether to establish a will-based estate plan or a trust-based estate plan. With a will-based plan, your will will be filed with the probate court and your devisees (those receiving your property) will have to file various documents and pay fees to the probate court. Probate proceedings are public and generally last about a year. In addition, creditors must receive legal notice and are allowed to file claims against your assets.

With a trust-based plan, you “fund” the trust by transferring assets into the trust. Because those assets are in the trust, you avoid probate. When you die, your trustee (typically spouse or child) will transfer those assets according to the provisions of your trust.

What exactly is a trust?

A trust is a division of equitable and legal ownership. Equitable ownership means beneficial ownership, the real owner who receives the benefits of the trust. Legal ownership is just title to assets held for the benefit of the equitable owner. Because the legal owner (the trustee) retains title and the power to transfer assets then no probate is necessary.

How old are trusts? Do they exist in all states?

Trust law originated in England, and all 50 states recognize trusts. Having a trust isn’t a new thing! But having a trust can be very effective to carry out your wishes as seamlessly as possible. You don’t need to have a large net worth or be a high roller to take advantage of a trust-based estate plan.

What is a revocable living trust?

 This is a trust that you have the right to revoke, in contrast to an irrevocable trust. It’s “living” because you establish the trust while you’re living, in contract to a testamentary trust, which is established in a will after you die.

Can I sell my property after it’s been placed in a revocable living trust?

 Yes. During your lifetime, unless you’re incapacitated, you’ll be in complete control of your assets.

Does a living trust protect me against creditors in South Carolina?

 No. SC Code section 62-7-505 addresses creditor claims against a trust, whether revocable or irrevocable. It states that after the settlor’s death, assets in a revocable trust are subject to creditor claims unless otherwise exempted by law.

Does a living trust make sense for a blended family?

 Yes, but in this situation, it’s better to have dual trusts—his and hers. Each trust can contain each spouse’s separate property and preserve it for their descendants (children, grandchildren, etc.). Estate planning for blended families requires careful planning and cooperation to ensure each spouse’s wishes are honored.

If one spouse dies, does the other spouse have the right to revoke or modify the trust?

Generally speaking, yes, but not with certain trusts like credit shelter trusts or QTIP trusts—Qualified Terminable Interest Property trust. These decisions need to be discussed with your estate planning attorney. While QTIP trusts can be a useful tool to protect children after the first spouse dies, credit shelter trusts—used for tax planning—are used less frequently now because the joint estate tax exemption is now (in 2025) almost 28 million dollars.

Most couples opt for a joint trust, especially those who have been married for a long time. This is the simplest option and gives the surviving spouse the ability to modify the trust.

Must the successor trustee follow the desires of the creator (called the “settlor,” “trustor,” or “trustmaker”) of the trust?

 Yes. There are two types of successor trustees: “incapacity trustees” and “death trustees.” All trustees are under a fiduciary duty to follow the provisions of the trust for the beneficiaries. A fiduciary duty is a duty of utmost loyalty, care, and good faith.

Does a living trust become irrevocable?

 After the creators of the trust die, the trust becomes irrevocable and cannot be changed.

Do I need to name a bank of trust company as trustee of my trust?

No. In most instances the settlor (creator) of the trust names individuals to be trustee. For example, spouses creating a joint trust would serve as trustees, then name children to serve after their death. In estate plans with young children, other relatives can be named as trustees. However, you may want to name a corporate fiduciary as trustee depending on your circumstances. Some examples in the Charleston area are FineMark National Bank & Trust and Colonial Trust Company. Nationally, Vanguard National Trust Company and the Charles Schwab Trust Company are good choices.

Do I need a will if I have a trust?

Yes. You’ll have what’s commonly referred to as a “pour over will,” which—you guessed it—pours over assets into your trust. This pour over will is a backup so that if any assets don’t get transferred into your trust (either by inadvertence or intentionally) that those assets are transferred to the trust, which, in turn, distributes the assets according to the terms of the trust as part of the probate process.

What is a trust protector?

Trust protectors are a relatively new thing to estate planning. Trust protectors were first used in overseas assets protection trusts. Now, they are more commonly used and specifically authorized in the South Carolina Trust Code.

The trust protector can be an individual named in the trust, or the trust may provide that, if necessary, the probate court may appoint a trust protector.

A trust protector can be granted a variety of powers, such as modifying the trust for tax reasons, removing trustees, appointing successor trust protectors, or changing the governing law of the trust. Think of the trust protector as a back up plan.

Should I transfer my retirement assets like my IRA or 401(k) to my trust?

No. However, depending on your circumstances, you may wish to name the trust shares of various trust beneficiaries as beneficiaries of your retirement account. With what I call “very” adult children—say those in their late 20s or 30s—you would typically just name those children as direct beneficiaries of your retirement assets. There is no need to make your trust the beneficiary.

However, with younger beneficiaries, disabled beneficiaries, or that spendthrift child who likes to keep her money in circulation and can’t seem to manage her money, you may want to name the trust share for those beneficiaries as the taker so that those funds will be distributed in a more controlled manner, rather than in one large lump sum.

What is a supplemental needs trust?

You can imbed a supplemental needs trust within your trust for a disabled child so that funds are distributed for the health, education, maintenances, and support for the child and also provide that the trustee must take into consideration government benefits when making distributions so as not to disqualify the beneficiary for those government benefits.

What is a durable power of attorney?

 This document allows you to name an agent to act for you—either effective immediately or when you are incapacitated. The durable power of attorney will list out all the powers the agent is granted, such as the power to do banking, file taxes, institute legal proceedings, deal with brokerage accounts, or to sell or buy property, just to name a few of the powers. The durable power of attorney is called “durable” because it remains effective even if you’re disabled. If the power isn’t granted in the document, the agent will not have it, so we draft a very comprehensive power of attorney at the DeMott Law Firm.

What is a health care power of attorney?

 Your health care power of attorney addresses who will act on your behalf if you can’t act for yourself due to some health problem. Spouses typically name each other, then adult children or other relatives. Also, selections are made regarding organ donation and whether you want continued medical intervention if (a) you are expected to die or (b) are in state of permanent unconsciousness.

If I transfer my home into my trust, will this trigger the due-on-sale clause of my mortgage?

No. Federal law prohibits this. The Garn-St. Germain Depository Institutions Act of 1982 provides that if the mortgage borrower remains living in the home and retains beneficial interest, due-on-sale clauses are not operative.

Will I need to apply for my 4% and (if applicable) homestead exemption if I transfer my home into my revocable living trust?

Yes. But as long as you are the income beneficiary of your trust (and you will be!) your 4% and homestead exemptions will be approved. We add provisions to your Certification of Trust which is recorded with the Register of Deeds to show that the trustees are also the income beneficiaries—that is they retain control and have the present equitable interest in the home even though they are also trustees.