South Carolina Trust and Estate Lawyer Blog

By MillerLaw



South Carolina Trust
and Estate Law Blog

My South Carolina Trusts and Estates Blog Has Moved

October 24, 2011

My blog is moving on over to a new web address at SC Trust and Estate Law.  So check out the other blog asap. Thank you.

Tags: — Christopher L. Miller

South Carolina Estate Lawyer A to Z: Fiduciary

October 1, 2011

Installment F of A to Z is FIDUCIARY. A fiduciary is a person (or organization) that undertakes to act as an agent for another person. In the trust and estate context, a fiduciary is a person or entity who undertakes to manage the assets of another person. A fiduciary who manages the assets of a deceased person is called the Personal Representative (in other states this is called the Executor or Administrator), or it is a trustee who is overseeing the trust assets of a deceased person. A fiduciary who manages the assets of a living person is the conservator of an individual (appointed by the Probate Court), or could be a trustee of a trust for a living person.

The concept of a fiduciary has been around for ages. The fiduciary relationship gives rise to several duties that the fiduciary owes to the individual on whose behalf he or she acts. There is a duty of care owed by the fiduciary. An example of this is the duty of the fiduciary to perform due diligence when investing assets under his or her care. There is a duty of loyalty owed as well, which is illustrated in the duty of the fiduciary to be concerned only with what is in the best interest of the individual for whom he or she acts, and not the fiduciary’s own self interest. The great jurist Benjamin Cardozo wrote what is possibly the most famous description of the duty of loyalty when he wrote: “A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior… the level of conduct for fiduciaries [has] been kept at a level higher than that trodden by the crowd.” Meinhard v. Salmon, 249 N.Y. 458 (1928).

Like any decent lawyer, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs doesn’t make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation.

Tags: estate-administration fiduciary — Christopher L. Miller

South Carolina Estate Lawyer – I Would Like A “Simple” Will Please.

August 14, 2011

I am sometimes asked by potential clients that they would like me to prepare a “simple” Will for them. And I often wonder how the person knows that they require a simple Will.  Furthermore, what is considered a simple Will anyway? Isn’t asking for a simple Will similar to walking into a car repair shop and telling the mechanic “Hey, my car will not run. I would like a simple repair please.”

Your Will may be a simple matter. True. But it may not be. And you as the potential client may not be in the best position to judge this. A number of factors go into potentially complicating an estate plan. As just a few examples, second or troubled marriages tend to complicate things; step children in the family can complicate things; disinheriting potential heirs can complicate things; minor or disabled persons as potential beneficiaries complicates things, missing heirs can complicate things; potential estate tax liability can complicate things; potential income tax liability on retirement accounts can complicate things; and so on.

When you go to an attorney for estate planning services, these are the types of issues that will be dealt with. In each of the above scenarios, a simple Will likely may not be sufficient to protect you, your assets, and your family. While the final estate planning product may appear to be simple, when you are considering protecting your family and your assets, the process to arrive there should not be simple, it should be thoughtful and well-considered.

That is what I would like to be asked for. “A thoughtful and well-considered estate plan.”

Like any decent lawyer, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs doesn’t make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation.

Tags: estate-planning Wills — Christopher L. Miller

South Carolina Estate Lawyer A – Z: “Estate Tax Exemption”

July 15, 2011

Installment E of A to Z is ESTATE TAX EXEMPTION.  This is an estate tax term that is equal to the amount of assets that an estate can transfer without incurring estate taxes. The related term is the estate tax exemption credit, which is equal to the amount of estate tax credit against the estate tax.

The federal estate exemption credit has been tinkered with mightily over the past decade or so.  For the years 2011 and 2012, the federal exemption is equal to $5,000,000.00, which corresponds to an estate tax credit of $1,730,800. Alas, beginning January 1, 2013, the estate tax exemption credit is scheduled to be reduced to $1,000,000.00, unless a new law is enacted by Congress between now and then.

If you are curious as to what the South Carolina estate tax exemption amount is, SC does not currently impose a separate estate tax. See my prior post where I discuss the unceremonious end of the South Carolina estate tax here.

Like any decent lawyer, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs doesn’t make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation. 

Tags: estate-tax estate-tax-exemption — Christopher L. Miller

South Carolina Estate Lawyer A – Z: “Disclaimer”

June 11, 2011

Installment D of A – Z is DISCLAIMER.

Internal Revenue Code section 2518 allows a South Carolina beneficiary to execute a qualified disclaimer, resulting in transmission of the disclaimed property as if the disclaimant had predeceased the decedent. Utilizing disclaimers as part of the estate plan builds in flexibility.  This technique can be used in the context of disclaimer trust planning for estate tax purposes, or in the context of IRAs and qualified plan transmission to accomplish favorable income tax treatment, to describe but a few uses.

Treasury Regulation section 25.2518-2 lists the following “Requirements for a Qualified Disclaimer”.

(a) In general. For the purposes of section 2518(a), a disclaimer shall be a qualified disclaimer only if it satisfies the requirements of this section. In general, to be a qualified disclaimer—

(1) The disclaimer must be irrevocable and unqualified:

(2) The disclaimer must be in writing;

(3) The writing must be delivered to the person specified in paragraph (b) (2) of this section within the time limitations specified in paragraph (c)(1) of this section;

(4) The disclaimant must not have accepted the interest disclaimed or any of its benefits; and

(5) The interest disclaimed must pass either to the spouse of the decedent or to a person other than the disclaimant without any direction on the part of the person making the disclaimer.

The use of qualified disclaimers should be carefully thought out, and quite frankly, should only be utilized under the supervision of an attorney or tax professional. Disclaimers can be tricky. I have heard the following horror story arise from the uninformed use of disclaimers: A man died without a Last Will. Under SC intestacy law, the beneficiaries of the estate were to be the man’s surviving spouse and his two children. The two children wanted to do the “right thing” by their mother and signed a disclaimer of their inheritance.

The problem? Well, the two children had children of their own. When you disclaim an inheritance, the disclaimed property is treated as though the disclaimant predeceased the Decedent. In this case, under South Carolina’s anti-lapse statute, the inheritance that was disclaimed did not go to the Disclaimants’ mother but instead went to the disclaimants’ children. Making things worse was that the disclaimants’ children were minors, who would have a guardian ad litem appointed for them by the Probate Court to protect their newly created property interests.

The moral of the story is that qualified disclaimers of property should only be undertaken under the supervision of an experienced estate attorney who will carefully analyze the law to determine where the disclaimed property would go after the disclaimer is made.

Like any decent lawyer, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs doesn’t make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation. 

Tags: disclaimers estate-administration estate-tax — Christopher L. Miller

Greenville Estate Lawyer A – Z: “Capacity”

May 8, 2011

This installment of Greenville Estate Attorney A – Z is CAPACITY, as in, CAPACITY to make a Last Will and Testament. The capacity to make a Last Will is actually a lower standard than that to enter into a regular contract.

Capacity to make a Last Will requires the following:

1. The Testator (person making the Will) understands what his/her estate assets are;

2. The Testator knows the natural objects of his affections; and

3. The Testator knows to whom he/she wishes to leave his/her estate to.

This is a rather low standard, even a clinically insane person can execute a Last Will and Testament if it is done during a lucid interval. The capacity to make a Revocable Trust is actually the same as that to make a Last Will, this is stated by statute, SC Code 62-7-601.

Like any decent lawyer, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs doesn’t make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation.

Tags: estate-planning — Christopher L. Miller

Greenville Estate Attorney A to Z: “Bypass Trust”

April 10, 2011

A BYPASS TRUST (also called a credit shelter trust, the “B” trust of the “AB” trust arrangement, or the family trust) is a type of trust typically set up by a married couple that is concerned about estate tax liability.

The bypass trust is set up to receive that amount of assets that equals the amount of the federal estate tax exemption in effect when the first spouse dies.  It is called a bypass trust because the assets contained in the trust escape estate taxation when the surviving spouse passes away, in effect, ’bypassing’ estate taxation in the surviving spouse’s estate.

The beneficiary of the bypass trust is usually the surviving spouse, but this is actually not required. Children of the first spouse to die are often included as beneficiaries as well.

The requirements of the bypass trust are rather simple. It is usually funded by a provision in a Last Will or Revocable Living Trust which in effect states that it is to be funded up to the amount of the federal estate tax exemption amount (there are numerous ways that this funding provision can be drafted, but it is usually easily recognized once you see it).

Other requirements are that the surviving spouse is typically entitled to all the income from the bypass trust, plus a portion of the principal of the trust each year equal to the greater of $5,000.00 or 5% of the principal.  The surviving spouse may have some power to appoint the bypass trust assets upon death to certain beneficiaries that he or she names, this is called a limited power of appointment. (*A limited power of appointment cannot be included in the event that it is expected that the bypass trust will be funded as a result of a qualified disclaimer by the surviving spouse.)

The surviving spouse may be the sole trustee of the bypass trust, but this requires some restrictive language if the bypass trust allows for the making of discretionary principal distributions from the trust. The language allowing distributions must state that distributions from the trust may only be made for the health, education, maintenance, and support of the surviving spouse. If there is a co-trustee serving with the surviving spouse, the co-trustee can be given broad discretion to make distributions for the welfare of the surviving spouse. It is typically beneficial to have a co-trustee serve alongside the surviving spouse.

The bypass trust offers a method by which spouses whose estates will be valued near the federal estate tax exclusion amount can be sure to take full advantage of each of their estate tax exclusions. It should not be attempted without professional help, it takes more than just signing the trust document to make it work, the ownership of assets will most likely need to be rearranged as well.

I will revisit the bypass trust once I make my way to P, when I will discuss the new estate tax concept of Portability.

Like any decent lawyer, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs doesn’t make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation. 

Tags: estate-planning estate-tax — Christopher L. Miller

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