ESTATE PLANNING: WHAT YOU NEED TO KNOW. Ella S. Barbery, J.D., LL.M. Roe Cassidy Coates & Price, P.A. (864)

What is Estate Planning? Planning Now for Future Events Health and End of Life Decisions If you become incapacitated during your lifetime and are no longer able to make financial and/or medical decisions on your own, who do you want to make those decisions for you? Distribution of Assets After Death Upon your death, how do you want your assets distributed and whom do you want to handle your affairs?

Why is Estate Planning Important? 1. Allows you to determine who will receive your assets upon your death. 2. Allows you to decide who will manage your property if you are unable. 3. Allows you to decide who will make medical decisions on your behalf and/or what health care you will receive. 4. Minimizes the stress of family and friends in an already stressful and emotional time. 5. Reduces the cost of administration.

What Happens if I do not have an Estate Plan? Incapacitated SC Adult Health Care Consent Act decides who will make health care decisions (S.C. Code Ann. § , et seq.). Must Petition the Probate Court for the Appointment of a Guardian and Conservator. Death Subject to the South Carolina laws governing Intestate Succession (S.C. Code Ann. § through § ).

Rules of Intestate Succession 1. Surviving Spouse, No Children: 100% to Spouse 2. No Surviving Spouse, Surviving Children: 100% to Children 3. Surviving Spouse & Surviving Children: 50% to Spouse and 50% to Children to be divided equally.

Beginning the Estate Planning Process: Gathering the Facts Collect any previous Wills, Trust Agreements, and Amendments. Gather your financial information. Make a list of all property you own and how it is owned (joint or separate). Make a list of all debts/liabilities. Determine who should receive your property.

Two Types of Assets Probate Tangible Personal Property. Real Estate in 1 name or held as Tenants in Common. Bank accounts in 1 name with no designated beneficiary. Non-Probate Bank accounts in 2 or more names (JTWROS) or POD. Real Estate held as JTWROS. Life Insurance or other benefits payable to a beneficiary. Trust Assets.

Probate Fees The Probate Court charges a “filing fee” based on the value of the Probate assets being administered. Probate ValueFiling Fee $ 0.00 to $4,999$25.00 $ 5,000 to $19,999$45.00 $ 20,000 to $59,999$67.50 $ 60,000 to $99,999$95.00 $100,000 to $599,000$ % over $100,000 $600,000 and above$ % over $600,000

Probate Administration STEP 1: Pre-Probate Matters. Locate Will, insurance policies, and other documents. Determine what assets there are, whether they are probate or non- probate, and the heirs/devisees. STEP 2: Open Estate. Deliver original Will and any codicils to Probate Court within 30 days from date of death. Death Certificate or Proof of Death Application/Petition for Probate Bond for Personal Representative (if required) Filing Fee Notice to Creditors Information to Heirs and Devisees and Proof of Delivery

Probate Administration STEP 3: Gather and Appraise Assets. Obtain Certificates of Appointment Obtain Tax Identification number and open an estate account. File an Inventory and Appraisement Determine if any real property is located in another county or state. Determine what to do with assets. File decedent’s final income tax return.

Probate Administration STEP 4: Determine and Pay Debts and Expenses. Notify creditors (if court does not do it for you). Review creditors’ claims presented for validity, timeliness, etc. Disallow improper claims. Pay allowed claims in order of priority. 1. Administrative and funeral expenses. 2. Last illness and Medicaid. 3. Debts and taxes with priority under Federal law. 4. Debts and taxes with priority under State law. 5. General debts. File Estate Tax Returns and Pay taxes due if required.

Probate Administration STEP 5: Distribute Property and Close the Estate. Distribute real estate and file deed of distribution. Distribute personal property. Obtain receipts from distribution. File any necessary tax returns. File any Closing Documents required by Probate Court. Obtain Order Closing Estate and Terminating Appointment. *** Generally, the probate process will last about one year.

Basic Estate Planning Tools Will Trusts  Revocable (Living) Trust  Irrevocable (Living) Trust Durable Power of Attorney Health Care Power of Attorney Living Will

Estate Taxes South Carolina Estate Taxes  None. Federal Estate Taxes  Current Law  2011 and $5,000,000 Exemption  Option of “Portability” of tax credit from deceased spouse to surviving spouse.

Last Will and Testament Requirements  18 years old  “Sound Mind” a) know your estate b) know the objects of your affection and c) know to whom you want to give your property  Signed by the Testator  Witnessed by 2 Independent Persons

Last Will and Testament Benefits: 1. You determine who will receive your property. 2. You appoint a Personal Representative, decide if a bond is required, and whether or not compensation should be paid. 3. You determine how distribution to minors should be handled.  Should it go to them directly?  Should it go to their parents or guardian? 4. You can name a Guardian whom you wish to have custody over minor children. 5. The Will can be revoked or modified at anytime prior to your death as long as you are of “Sound Mind”.

Last Will and Testament Limitations: 1. Assets subject to Estate Tax. 2. Public Record. 3. Requires the involvement of the Probate Court. 4. Probate is required in All States where real estate is located. 5. Tangible Personal Property  Unless otherwise provided for in Will, there is a presumption that tangible personal property held in joint possession of husband & wife is held as joint tenants with right of survivorship and will pass to surviving spouse. 6. Surviving Spouse may be able to claim an “Elective Share”.  Surviving Spouse is entitled to claim an “elective share” equal to 1/3 of the deceased’s probate estate. Applies even if you are separated but not yet divorced. 7. Omitted Spouse or Children may have a claim.  Unless it is clear that the spouse or child was not to take under the will, they each may be able to receive their intestate share of the estate.

Revocable Trust Vehicle used to avoid Probate. Benefits: 1. Can be revoked or modified. 2. Avoids probate and probate fees. 3. Provides privacy regarding assets and beneficiaries. 4. You remain in complete control of the trust property.

Revocable Trust Limitations: 1. Value of trust is included for purposes of calculating your taxable estate. 2. Only works if property is re-titled to the trust. 3. Assets in trust may be included in the calculation of the Elective Share.

Irrevocable Trust  Used to remove assets from the estate for tax purposes.  Most common with large estates.  Once property is transferred to the trust, you lose all authority or control over it.  Terms of the trust cannot be modified or revoked.

Special Planning Situations Second Marriage  Will want to include a Trust in your estate plan so that some or all of your assets can used for your spouse’s benefit during lifetime with the remainder being distributed to your children.  Can be tailored to fit your specific needs and wishes.  If you leave everything outright to your spouse with the “promise” that they will do as you ask upon his/her death, the spouse may use all the property, distribute it to others, and/or modify his/her Will upon your death. Minor Children  Typically will want to include a Trust for minor children.  Otherwise, a conservator will have to be appointed for the child and child will receive everything once reaches the age of 18.  Trust allows you to decide at what age and how much at one time a child will receive distributions.

Special Planning Situations Problematic Adult Child or Spouse  Spouse/Child who cannot manage money, has drug problems, debt and creditor problems, etc.  Want to consider a Trust with restrictions and/or limitations to help prevent them from blowing through all the money or from their creditors reaching it. Disabled Spouse, Child, and/or Parent  Disabled persons may be entitled to receive public benefits such as Medicaid, eligibility which is based on their financial resources.  An outright distribution of money or other assets made to them at your death may disqualify them from receiving current benefits or make them ineligible for future benefits.  Special consideration, including the creation of a Supplemental Needs Trust, must be given when planning for these persons.

What Now? If you do not have an Estate Plan, get started!! If you do, review your documents and overall plan to make sure everything still works for you. REVIEW, REVIEW, AND REVIEW!!!

Contact Information Ella S. Barbery, Esq. ROE CASSIDY COATES & PRICE, P.A. (864)