Transcript ESTATE PLANNING: What you need to know

ESTATE PLANNING:
WHAT YOU NEED TO
KNOW.
Ella S. Barbery, J.D., LL.M.
Roe Cassidy Coates & Price, P.A.
[email protected]
(864) 349-2600
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.
2.
3.
4.
5.
Allows you to determine who will receive your assets upon
your death.
Allows you to decide who will manage your property if you
are unable.
Allows you to decide who will make medical decisions on
your behalf and/or what health care you will receive.
Minimizes the stress of family and friends in an already
stressful and emotional time.
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. §
44-66-10, 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. § 62-2-101
through § 62-2-114).
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
Non-Probate
• Tangible Personal Property.
• Bank accounts in 2 or more
• Real Estate in 1 name or
names (JTWROS) or POD.
• Real Estate held as
JTWROS.
• Life Insurance or other
benefits payable to a
beneficiary.
• Trust Assets.
held as Tenants in Common.
• Bank accounts in 1 name
with no designated
beneficiary.
Probate Fees
The Probate Court charges a “filing fee” based on the
value of the Probate assets being administered.
Probate Value
$
0.00 to $4,999
$ 5,000 to $19,999
$ 20,000 to $59,999
$ 60,000 to $99,999
$100,000 to $599,000
$600,000 and above
Filing Fee
$25.00
$45.00
$67.50
$95.00
$95.00 + 0.15% over $100,000
$845.00 + 0.25% 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 nonprobate, 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 2012 - $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.
5.
You can name a Guardian whom you wish to have custody over minor
children.
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.
2.
3.
4.
5.
Assets subject to Estate Tax.
Public Record.
Requires the involvement of the Probate Court.
Probate is required in All States where real estate is located.
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
• 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.
[email protected]
(864) 349-2600