South Carolina does not levy an inheritance or estate tax, but like all states, it has its own unique set of laws regarding inheritance of estates. In this detailed guide of South Carolina inheritance laws, we break down intestate succession, probate, taxes, what makes a will valid and more. If you’re planning an estate or just inherited money, it can be a good idea to work with a financial advisor to manage your inheritance. SmartAsset’s free advisor matching tool can pair you with up to three financial advisor who serve your area.
Does South Carolina Have an Inheritance Tax or Estate Tax?
There are no inheritance or estate taxes in South Carolina. It is one of the 38 states that does not have either inheritance or estate tax. However, the Palmetto State’s income tax is between 0% and 7%, the 13th-highest in the country.
Though they are similar, there are some key differences between estate taxes and inheritance taxes. Estate taxes are taken out of the deceased’s estate immediately after their passing, while inheritance taxes are imposed upon the deceased’s heirs after they have received their inheritance.
South Carolina also does not have a gift tax. Though keep in mind that the federal gift tax is applied once you gift more than $16,000 in one calendar year.
Other Necessary Tax Filings
- Inheritance tax from another state – Even though South Carolina does not levy an inheritance or estate tax, if you inherit an estate from someone living in a state that does impart these taxes, you will be responsible for paying them.
- Federal estate tax – The federal estate tax is applied if an inherited estate is more than $12.06 million in 2022. However, you are only taxed on the overage, not the entire estate. That tax rate can be as high as 40%.
To file any of these estate-based returns, you’ll need to apply for an employer identification number (EIN) with the IRS. You can do this online, by fax or via mail.
Dying with a Will in South Carolina
It’s always better to die with a will or die testate. That’s because leaving a valid will and last testament gives you the most control of how your estate is distributed and to whom. However, if you die without a valid will, also known as dying intestate, your estate will be subject to the state inheritance laws.
In South Carolina, the requirements for a testate will include being at least 18 years of age and of sound mind, the will must be signed by both the testator and two witnesses, it must be in writing, and it must name a beneficiary.
But even if you do have a valid will in South Carolina and want to disinherit your spouse, there are state laws that limit this – even if you have a valid will from before you were married or while you were married that did so.
An estate skips probate if it’s less than $25,000 in South Carolina. Any more than that, though, and it must go through probate to be settled. There are a few different ways probate can go. First, there’s informal probate. The most-commonly used probate procedure, this is most often utilized when all parties are getting along regarding the distribution of the estate and no disputes are anticipated.
Then there’s unsupervised formal probate, which must go through the court, in which the judge must approve some actions regarding the distribution of the estate. Then you have supervised formal probate, in which the court oversees every aspect of the probate process.
South Carolina adheres to the Uniform Probate Code, a standardized set of probate procedures used across 15 states.
Dying Without a Will in South Carolina
Dying without a valid will and testament in South Carolina means your estate is subject to the state’s inheritance laws or intestate succession laws. This means your assets will likely have to go through probate, which can be a time-consuming and expensive process.
Generally speaking, your assets will go to your closest living relatives under South Carolina’s intestate succession laws. Though there are some assets that don’t go through probate under state inheritance laws, such as property in a living trust, retirement accounts, life insurance policies, transfer-on-death accounts or payable-on-death accounts, or jointly owned property.
Spouses in South Carolina Inheritance Law
Spousal inheritance laws in South Carolina are relatively straightforward. If you live in South Carolina and die without a valid will and have only a surviving spouse (but no children), your spouse gets everything. If you have children and you die intestate in South Carolina, your spouse inherits half of your estate while your children get the other half evenly.
Children in South Carolina Inheritance Law
In South Carolina, if you die without a valid will and last testament and have both a surviving spouse and children, then your spouse claims half your estate while the children split the other half. How much each child is entitled to depends on how many children there are.
Remember, children are entitled to part of your intestate estate in South Carolina only if they are legally recognized children. That means they must be legally adopted, born within marriage, and those born outside of marriage if a marriage later occurred or paternity was established. South Carolina does not recognize common law marriage. Grandchildren are also eligible to receive a share if your child has passed before you.
|Intestate Succession: Spouses and Children|
|Inheritance Situation||Who Inherits Your Property|
|Spouse, but no children||– Entire estate to spouse|
|Children and spouse||– Spouse inherits half, remaining half split between children|
Unmarried Individuals Without Children in South Carolina Inheritance Law
If you are unmarried and die intestate in South Carolina and have children, your children will inherit your estate in equal shares. If the deceased has no children but has living parents, their estate will pass on to their parents.
If parents are no longer living, the estate then goes to siblings. If the deceased’s parents are no longer living and the deceased does not have siblings or they are no longer living, their estate will go to their closest living relative, which includes grandparents, grandparents’ children, great-grandparents, or great-grandparents’ children.
And as is the case in many other states, if the deceased dies without a spouse or any living relatives, their estate will escheat. In other words, it would go back to the state of South Carolina.
It’s important to keep in mind that the abovementioned succession scenarios are only enacted in the case of an intestate estate. If the deceased has a valid will, it will take precedence over a state’s succession law
|Intestate Succession: Extended Family|
|Inheritance Situation||Who Inherits Your Property|
|Parents, but no spouse, children, or siblings||– Entire estate to parents|
|Parents are deceased, but no spouse or children||– Estate split among siblings in equal shares|
|No living parents or siblings||– Estate goes to closest living relative, such as grandparents or great-grandparents|
Non-Probate South Carolina Inheritances
There are various assets that are not subject to intestate succession laws and aren’t governed by your will. These include property in a living trust, life insurance policies, retirement account funds such as a Roth IRA, IRA, or 401(k), jointly owned property, payable-on-death bank accounts, and securities that are transfer-upon-death.
Other Situations in South Carolina Inheritance Law
Like many other states, there are some interesting laws governing inheritance. For example, in order to inherit their share of your estate, an heir must outlive you by 120 hours, or half-relatives inherit the same way they would if they were whole relatives. Additionally, relatives conceived before you died but were born after you die are not eligible to inherit a portion of your estate, and finally, heirs entitled to a part of your estate will inherit said estate regardless of their immigration status.
Resources for Estate Planning
- Managing your own estate, or handling the intricacies of inheriting money from the estate of a loved one, can get complicated. That’s why many people choose to work with a professional. Finding a qualified 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.
- If you’d rather build your estate plan on your own, that’s definitely an option. However, there are a number of DIY estate planning mistakes you’ll want to avoid.
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