A Comprehensive Guide to Make a Living Trust in South Carolina

What is a Living Trust?

A living trust is created during an individual's lifetime. Individuals who name beneficiaries in this trust ensure their assets are transferred to them upon death.

While a Will is an option, it requires probate. Probate is a court-supervised process for transferring property to beneficiaries.

Many people include a revocable living trust in their comprehensive estate plan. These trusts allow you to change or revoke them at any time.

Typically, the trust's creator acts as a "trustee" during their lifetime, retaining control over the trust and its assets. The trust document also names a "successor trustee." This individual handles and distributes the trust's assets following the creator's death.

In the case of a shared living trust, which is commonly established by spouses. The successor trustee takes control only after both spouses have died.

In contrast, once an irrevocable trust is signed, it cannot be changed or revoked. Despite the fact that they need to relinquish ownership and control of the trust property, irrevocable trusts are useful tools for achieving specific goals, such as tax reduction.

Is a Living Trust Required in South Carolina?

Creating a living trust to transfer your assets to loved ones after your death can potentially save them time, complexity, and financial strain.

Unlike a Will, which can entangle property in probate court for months or years, subjecting it to significant court expenses and even attorney's fees, a trust allows for the expeditious distribution of assets to beneficiaries, often without legal intervention.

While some states have adopted the Uniform Probate Code—a standardized law that streamlines the probate process—South Carolina is not one of them. South Carolina, on the other hand, has a simplified probate procedure for specific estates.

This accelerated probate route, known as "dispensing with administration," becomes available if the following criteria are met. There is no Will, no debts or creditors require notification, and the heirs unanimously agree on the division of assets.

Assume your estate meets the criteria for this efficient procedure. In that case, the probate process will be quick, simple, and relatively inexpensive, potentially eliminating the need to create a living trust solely to avoid probate.

Do I Still Need a Will if I Create a Living Trust in South Carolina?

Although establishing a living trust is intended to eliminate the need for a Will, one is still required for the following reasons:

• Making a guardian appointment for minor children. A trust cannot be used to name a guardian for your minor children. As a result, if you have minor dependents, drafting a Will explicitly naming a guardian is essential.
• Concerning property that has not been transferred to the trust. Individuals frequently establish trusts but fail to formalize the transfer of certain assets into the trust. For example, they may fail to update the deed to their house.
• Individuals may also acquire or inherit property after establishing the trust and fail to recognize the importance of assuming ownership as the trustee. As a result, having a Will as a backup becomes critical to dictate the distribution of assets outside the trust.
• Without a Will, any property not transferred through your living trust or other means, such as joint tenancy, will be distributed to your closest relatives under South Carolina state law.

Can a South Carolina Living Trust Reduce Estate Tax?

Most likely not. However, most people do not have to worry about federal estate taxes because they are only levied on estates worth nearly $12 million. The state of South Carolina does not have its own estate tax.

If you have a property worth close to $12 million (or a combined estate worth less than $24 million), you may be able to use a more complicated trust (such as an AB trust) to lower or avoid federal estate taxes.

How Do I Create a South Carolina Living Trust?

Step 1: Assess Your Assets

Begin by meticulously compiling a detailed inventory of your assets, including everything from your primary residence and vehicles to valuables such as jewelry, stocks, bonds, and life insurance policies.

Gaining a comprehensive understanding of your holdings enables you to identify assets that may be subject to the probate process. Incorporating these assets into your living trust maximizes the benefits of this legal arrangement.

Step 2: Collect Required Documentation

To effectively "fund the trust," gather all necessary documentation, such as property titles, stock certificates, and bank account statements. These documents are critical for a smooth transfer of ownership to the trust.

Step 3: Identify the Grantor(s)

Consider whether you will be the sole grantor of the trust or whether a shared trust would be more appropriate. Shared trusts may benefit married couples or domestic partners with significant assets. However, in certain circumstances, two trusts can meet distinct needs.

Step 4: Choose the Recipients

Choose the beneficiaries of your living trust after careful consideration. These people can be relatives, close friends, loved ones, or charitable organizations. Your choices will ultimately determine who receives the trust property upon your death.

Step 5: Name a Successor Trustee

The successor trustee plays a critical role in managing your assets and ensuring that your wishes are faithfully carried out in the event of mental incapacity or death.

If necessary, this person will handle debt settlements and asset distribution and take control of your affairs if you cannot manage them.

It is critical to choose someone with whom you have complete trust. You should discuss your living trust plans with the designated trustee to confirm their willingness and ability to take on this responsibility. They may also be named as a trust beneficiary.

Step 6: Identify a Property Manager for Minor Children

Consider naming a property manager if a minor child may inherit assets through your living trust. This person will oversee and protect the inherited property until the child reaches the age specified in the trust.

Step 7: Create the Trust Agreement

After you've made all of your preliminary decisions, it's time to write the living trust document. South Carolina has specific legal statutes that govern the creation of trust documents. To ensure compliance with state laws is intact, seeking advice from an experienced estate planning attorney or an online legal service is best.

Step 8: Sign the Document and Have it Notarized

Once the trust document is complete, sign it and, if the trust was established jointly, have your spouse sign it in front of a notary public.

Step 9: Transfer Property to the Trust

The next step is to transfer your assets to the trust. The procedure differs depending on the type of property in question. Real estate requires changing the title, whereas intellectual property requires assigning ownership rights. To ensure that your assets are properly held within the trust, follow the specific procedures.

Step 10: Keep the Document Safely

Secure a location to keep your trust document and ensure that only a trustworthy individual, such as the estate plan successor trustee, can access it.

Step 11: Evaluate and Revise a Revocable Living Trust On an Ongoing Basis

Life's milestones, from the joys of births and marriages to the heartbreaking reality of deaths and divorces, necessitate a thorough reassessment of your revocable living trust. This crucial step ensures the trust aligns with your desires and intentions.

Even without such significant events, reviewing the document every few years is prudent to ensure its continued relevance in the face of life's ever-changing circumstances.