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Estate Planning
University of South Carolina School of Law
Thomas, Karen

 
Professor Thomas
Fall 2015
Estate Planning
 
Overview of Estate Planning Process:
·         What is Estate Planning?
o   Planning for incapacity and death of yourself or loved ones
o   Planning Process
§  Identify personal goals
§  Identify gross estate
§  Determine documents needed to implement plan
§  Prepare personal documents
§  Make changes to assets so that documents work as planned
§  Maintenance of documents/plan
§  Implementation of plan
·         Typical Estate Planning Goals
o   Transfer assets to family members
o   Minimize estate admin expenses
o   Minimize or eliminate probating assets and publicity
o   Minimize taxes (income taxes to heirs)
o   Promote family harmony (attempt to minimize family friction)
o   Provide asset protection from marital claims or creditors
o   Provide asset management
o   Protection for minor children
o   Protection during incapacity
·         Assets of the Estate
o   Gross Estate consists of anything you own and property you may not own but control
o   Probate Assets are those controlled by your will
o   Non-Probate Assets are those controlled by contract
·         Probate Assets
o   Assets in your name alone
o   Tenants in Common
o   Failed or no beneficiary on contract
·         Last Will and Testament:
o   Names
o   Personal Representative
o   Beneficiaries with Dispositive Scheme
o   Grants Powers to Personal Representative (Power to Sell)
o   Tax Planning
o   Execution by SC Law
·         Non-Probate Assets
o   Do not pass by your will or intestacy but rather by contract or beneficiary designation
§  Includes
ú  IRAs, 401Ks, other retirement assets
ú  Life Insurance
ú  JTWROS
ú  POD/TOD
ú  Funded Revocable Trusts
·         Basic Estate Planning Documents
o   Will
o   Trust
o   Health Care Power of Attorney or Living Will
o   Durable Power of Attorney
 
Hypo:
·         Car Title Issues
o   Or = JTWROS
o   And = you own half of a car
·         IRAs
o   At 70.5 years of age, must take your required minimum distribution
·         Check for Beneficiary Designations on all accounts
·         Check for cost-basis of assets (tax issues)
o   Basis = FMV at death for after death transfer
o   Basis = purchase price if transferred while alive
o   Use a life estate to avoid tax issues
 
9/1/15
Will Basics:
·         Who can make a will = 2-501
·         Will in writing 2-502
·         Number of witnesses 2-502
·         Who can witness signing 2-504
·         How to make will self-proving 2-503
·         Personal Effects Memo = 2-512
 
Filing v. Probating:
·         Filing just puts will in probate court
o   Filing does not probate the will
·         Probate will = making it the official will
 
Types of Wills:
·         Simple Will (single or married)
·         Long-form Will with Trusts (single or married)
·         Will with Disclaimer Planning (married)
·         Will with Trust for Tax Planning (single or married)
·         Pour Over Will (single or m

  Trust Company
·         Contingent/Flexible
o   Family can agree to use contingent personal representative instead of the primary personal representative
 
Statutes to Address Drafting Issues or Distributions:
·         Beneficiary is Deceased; Anti-Lapse = 2-603
·         Failure of Devise = 2-604
·         Property is Securing Debt = 2-607
 
Issues not to Forget in Discussions and Drafting:
·         Beneficiary is deceased – what is next?
·         Specific devise of property – but property is no longer in existence
·         How much of a bequest – percentage or specific amount or both
·         Who is an Issue – limitations, adoptions, frozen embryos
·         How to define per stirpes
o   Modern v. Per Capita
§  SC uses modern per stirpes
ú  Find out what client intended
 
*Will Not be Tested on Tax Laws*
 
9/8/15
Overview of Transfer Taxation System:
·         Unified system on transfer of property
o   Gift
o   Estate
·         Generation skipping (same rate as estate and gift tax but may be applied in addition to gift and estate tax)
·         Related tax – income tax (key – look at cost basis of assets)
o   High cost basis is good because it limits income taxes