Are you getting ready to plan your estate? If so, you’ll have a lot of options to choose from to protect your assets for your family. One of them is a living trust. This article is for people in South Carolina who are thinking about forming a living trust. It will take you through all of the steps to creating a living trust in the state and also explain the pluses and minuses of using a living trust as part of your estate plan. You can work with a financial advisor who focuses on estate planning to help you through the process of choosing the purpose for any trusts your estate needs.
How to Create a Living Trust in South Carolina
It’s important to create any living trust the right way so that the trust can always live up to any scrutiny later on when it is needed. Here are the six steps to creating a living trust in the Palmetto State:
- Figure out which type of trust is best for you: Single people will likely opt for a single trust, while married people will probably want to create a joint trust. Couples can use joint trusts to store property individually owned by both spouses as well as jointly held property, like real estate and vehicles.
- Take inventory of your property: A lot of your assets and property, including stocks, real estate and family heirlooms, are eligible to be stored in a living trust. One notable exception is retirement plans like 401(k) accounts, but you can name the trust as a beneficiary. Also use this time to gather any corresponding documents for your property, like certificates of stock ownership and car titles.
- Choose your trustee: You can be the trustee, or you can name someone else. If you take the title, you’ll need to designate a successor trustee. This person will take over when you die and ensure your assets are doled out to your beneficiaries according to the trust’s instructions.
- Create the trust document: You can do this yourself with an online program or work with a lawyer.
- Sign the trust in front of a notary public: This one is pretty straightforward but it must ber a registered notary in the state.
- Fund the trust by transferring your assets into it: This can be done yourself, but the paperwork required means you might want a lawyer’s advice.
What Is a Living Trust?
A living trust is a legal framework. It is established by a document and can be used to store property and assets. All trusts have a trustee who is in charge of managing and distributing the trust’s assets. You can be the trustee or pick someone else. Many people choose one of their children or another trusted relative.
There are two types of living trusts. An irrevocable living trust is permanent. The person who creates the trust can’t alter the trust or remove property from it without the permission of everyone named in the trust. The trust owns the property placed inside it, and relevant taxes are paid via the trust.
A revocable living trust, though, has flexibility. You can change the trust or remove property from it as needed. You still own the assets and pay any relevant taxes as normal.
How Much Does It Cost to Create a Living Trust in South Carolina?
The cost of creating a living trust in South Carolina will depend on the method you use. If you want to make a living trust yourself with an online program, it will cost a few hundred dollars. You can also hire a lawyer to help you create your trust, which will likely run more than $1,000. The exact cost will depend on the attorney’s fees, the complexity of your estate and the services requested.
Even though making your own living trust might save you some money, there are risks to DIY estate planning. You’ll have to do a lot of research and pay very close attention to detail. If you don’t think you can do that, you’ll probably want to hire a lawyer. Before hiring a lawyer though, you’ll want to be sure you know the attorney’s fees upfront so there aren’t any surprises. Also, make sure the lawyer you use is a trusted expert rather than just an estate planner.
Why Get a Living Trust in South Carolina?
The most common reason people use living trusts in their estate plans is so their family can avoid going to the probate court, a process that can take a lot of time and be an invasion of privacy. South Carolina has adopted the Uniform Probate Code though. This simplifies the probate process significantly, so you may not actually need to use a living trust in South Carolina — though of course, you’ll still need an estate plan.
However, there are other reasons you might use a living trust. For instance, a living trust allows you to specify when you leave property to a minor. You can leave the property in the trust under the trustee’s supervision until the child reaches legal age. Additionally, a living trust can allow you to avoid conservatorship if you become incapacitated, as you’ll already have been named a trustee.
Who Should Get a Living Trust in South Carolina?
Though living trusts are generally not only for the wealthy, South Carolina’s adoption of the Uniform Probate Code means that unless your estate is especially large or complex, a living trust may not be worth getting in the Palmetto State. The state also has a simplified probate process for especially small estates (under $10,000), so if that’s your situation a living trust is especially unneeded.
Living trusts are also more expensive and time-consuming to set up than wills. Plus, they allow a longer time frame for legal challenges, potentially causing problems for your family after you die. Take these downsides into account when considering whether to get a living trust.
Living Trusts vs. Wills
Even if you make a living trust, you’ll still need a will. A will can direct the fate of any property that’s not placed in the trust. Wills can also do the following that trusts cannot:
To get a better sense of how the two estate planning documents stack up, this chart compares living trusts and wills:
|Living Trusts vs. Wills|
|Names a property beneficiary||Yes||Yes|
|Allows revisions to be made||Depends on type||Yes|
|Avoids probate court||Yes||No|
|Requires a notary||Yes||No|
|Names of guardians for children||No||Yes|
|Names an executor||No||Yes|
Living Trusts and Taxes in South Carolina
Creating a living trust probably won’t impact your taxes. If you’re estate planning, though, you should know about the South Carolina estate tax and the South Carolina inheritance tax and how they might affect your estate.
There is no estate tax or inheritance tax in South Carolina. The federal estate tax could apply to you, but only if your estate is worth more than $11.18 million ($22.36 million for couples).
The Bottom Line
While a living trust can be useful for planning your estate, the adoption of the Uniform Probate Code in South Carolina means that most people probably won’t need to use one. One of the most common reasons to create a living trust is to avoid the probate process, but the state’s probate process is already simplified.
If you do think you need a living trust, you can make it yourself or you can hire a lawyer to guide you through all of the steps involved. Just remember that regardless of which estate planning option you choose, you’ll still need an estate plan.
Estate Planning Tips
- Estate planning can be difficult, just like all financial planning activities. You might find it helpful to work with a financial advisor who can walk you through the process and help you make the right decisions. Finding the right financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Don’t forget to name a guardian for your children. Obviously, this is one part of an estate plan you hope never gets put into action, but it is always better to have a plan in case the worst happens. Don’t make the estate planning mistake of waiting until it’s too late.
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