Turner Padget Insights
What Is an Estate Plan and Why Do You Need it?
Posted On February 7, 2019
As the calendar pages turn, we recognize that time is fleeting. This can lead to thoughts about whether your family’s financial future is secure and how you can make sure your affairs are in order when your time comes.South Carolina has unique rules about how your property transfers after death. Having a complete estate plan, which includes a will and powers of attorney, ensures that your wishes will be followed. Estate planning covers the transfer and control of your wealth after you die or are no longer capable to make decisions for yourself.
Estate plans may vary based on your goals or assets. If you run a family business or farm, own multiple pieces of real estate or are on your second marriage, it’s important to create a consistent, comprehensive plan for someone to step in to manage your assets if you can't do it, as well as the mechanism and rules by which they can do that.
Typically, we recommend that an estate plan include four documents:
1. Will: This goes into effect when you die and tells the court who gets your property after your death. Without a will, South Carolina law says that half of your property will pass to your surviving spouse and half will be distributed equally among your children. This can get complicated if your children are under 18 at the time of your death and your spouse needs to make major financial decisions such as selling your house. Additionally, in South Carolina a surviving spouse is entitled to one-third of the estate under what’s called an “elective share.” This is true even if a couple are separated but not legally divorced,
2. Durable power of attorney: This takes effect during your lifetime and names someone as your agent to deal with your property as you would in the instance that you are unable or incapable of doing so. This includes personal finances, real estate, investments, vehicles – any type of asset or property. Commonly, an aging parent may give a child power of attorney to go to the bank, sign checks and pay bills.
In a recent change to South Carolina law, notwithstanding any general grant of authority, an agent under a power attorney may only take certain actions when the power of attorney specifically grants the agent the authority to do so. Such specific grants of authority include among other things, the authority to create / amend / revoke / terminate a trust, make a gift, create or change a beneficiary designation, and access a safe deposit box leased by the principal.
This is important to note if your power of attorney document was drafted before 2017 as it may not reflect these changes in the law. These specifically granted powers may be beneficial for an individual when gifting assets to a family member can avoid costly probate.
3. Health care power of attorney: This also takes effect while you’re alive and names an agent with the power to make medical decisions for you when you cannot. A doctor must decide that you are incompetent of making medical decisions for yourself or have no way of communicating with you to determine your wishes. It could be used during an individual’s decline from a degenerative disease such as Alzheimer’s or during a surgical procedure requiring general anesthesia.
4. Living will: Also called an advanced health care directive or commonly the “pull the plug” document, this instruction says you do not want to be kept on life support in the event you are deemed to be terminal and meet other statutory qualifications. You can specify nutrition and hydration to be provided or not in certain instances.
We recommend reviewing your estate plan every five years or when you experience major life changes, like the birth or death of a child, divorce or even the sale of real estate. This will allow you to identify anything that may need to be changed. Consult an estate planning attorney to make sure your plan will accomplish your goals and provide peace of mind for your spouse and family after you are gone.
