How To Set Up a Trust in South Carolina

Knowing your options when creating a trust can ease or eliminate the financial strain on your family members left behind. While the future unknown may be uncomfortable to think about, it is always a good idea to set up a trust to secure your assets and wishes. Securing your wishes via a trust can provide you relief, and protect your family members when you pass away.

In this blog, the Myrtle Beach estate planning attorneys at Bespoke Estate Law will walk you through the process of creating a trust in SC. If you have any questions, please give us a call.

Steps For Creating a Trust in South Carolina

Consult with an Estate Lawyer in South Carolina

Contact an experienced estate lawyer to help you determine the type of trust that best suits your situation. They will explain how different types of trusts operate, their benefits, and how they align with your goals and needs.

Define Your Estate Planning Goals

Before setting up a trust, clearly define your goals with your estate plan. Consider your long-term goals, such as asset protection, tax planning, or providing for loved ones.

Choose the Right Type of Trust

Select the appropriate type of trust based on your goals and your lawyer's advice. Each type serves different purposes and offers varying levels of flexibility.

Choose a Dependable Trustee

Make sure this is someone you fully trust. This person will know your financial business and will be in charge of distributing your assets to the beneficiaries. It is also a good idea to pick someone who gets along with and communicates well with the beneficiaries.

Identify the Trust's Beneficiaries

For extra protection, ensure that your method for providing for these beneficiaries is clearly outlined in the trust document. This may also reduce the likelihood of future disputes.

Fund the Trust

Transfer ownership of your assets into the trust. This may include real estate, bank accounts, investments, and other valuable property. Your estate lawyer can assist you with transferring these assets to ensure they are appropriately included in the trust.

Review and Update the Trust Periodically

Life circumstances change, so reviewing your trust regularly is important. It should be up-to-date and reflect your current wishes. Only certain trusts can be amended.

Knowing your options and how to proceed will help you have an educated discussion when you are ready to contact a trust fund attorney in Myrtle Beach or elsewhere in SC. Have questions prepared to ask your attorney during a consultation.

What is a Trust?

A trust is a legal arrangement where a person can transfer asset ownership to a separate entity managed by a Trustee. The Trustee is responsible for managing and distributing the assets according to the trust document’s instructions. Trusts offer flexibility in how and when assets are distributed to beneficiaries, making them a powerful tool for estate planning. All terms relating to trusts are defined in the South Carolina Uniform Trust Code.

Trusts can be set up differently to specify how and when you would like your belongings distributed to the beneficiaries. For example, the Trustee may be asked to give money to a beneficiary once they reach a certain age. There are also certain tax benefits enjoyed when transferring assets to irrevocable trusts.

Types of Trust

There are many types of trust to choose from, and understanding what trust is right for you is crucial. Therefore, calling an experienced estate lawyer in South Carolina will help you understand the types of trusts you can choose from and how they could benefit you. Below are some of the types of trusts:

Revocable Trusts

A revocable trust is a legal entity that allows you to place your assets under the management of a trustee while retaining the ability to modify or revoke the trust during your lifetime. Generally, under a revocable trust, you will serve as the initial trustee. A revocable trust provides flexibility in managing and distributing your assets, especially in cases of incapacity or changes in life circumstances.

A revocable trust can be beneficial if you become ill during your lifetime. The person you name as your trustee can pay your bills, pay for your care on your behalf, and even manage your banking. One key advantage of a revocable trust is that it can be amended or revoked at any time while you are still competent. For instance, you might amend the trust to include a new beneficiary, such as a newborn grandchild. This type of trust may provide tax advantages in the form of a “step up in basis” for real property.

Irrevocable Trusts

An irrevocable trust is a legal arrangement where assets are permanently transferred out of the grantor's control, and the trust can only be modified or revoked under very specific circumstances. Due to the difficulty behind amending an irrevocable trust, it is very important to get your wishes accurately stated before it is signed.

One significant benefit of an irrevocable trust is that no further taxes may be required, providing a sense of financial security and relief. You can make yearly gifts to beneficiaries from the trust without incurring gift taxes. This allows you to reduce the value of your taxable estate over time while providing financial support to your beneficiaries.

Irrevocable Life Insurance Trusts

An Irrevocable Life Insurance Trust (ILIT) holds and manages life insurance policies. The policy proceeds may be set aside to cover estate taxes. The grantor cannot alter it after this trust is made. When the policyholder dies, proceeds are distributed to beneficiaries tax-free.

Charitable Lead Trust

Once made, a charitable trust is irrevocable, and it ensures that a charity you select receives money for a limited amount of time after you are gone. After that time, the remaining funds are transferred to the named beneficiaries.

Charitable Remainder Trust

This trust is the opposite of a charitable lead trust. The beneficiary receives money first, and the remainder goes to the charity or charities that the trustor designated. This type of trust may avoid or lower estate taxes.

Spendthrift Trust

This trust specifies how and when the assets in the trust are distributed. This is an excellent route if you believe the person you leave the inheritance to is not responsible. This could be a good option if the beneficiaries have issues managing money or have substance abuse issues, but you still want to ensure that they have a roof over their heads. If this is the case, you can indicate that you want the money to go directly to their school or even to pay rent directly to the landlord.

Educational Trust

An education trust is a legal entity that holds and manages assets to pay for a beneficiary’s education expenses. These trusts are flexible. Grantors can tailor the terms and conditions to determine when the trust will take effect and whether it will be a living trust or a testamentary trust.

Special Needs Trust

A special needs trust is created to hold assets for the future care of an individual with disabilities or special needs. This trust ensures that the beneficiary gets financial support without losing access to government benefits. This trust is made to supplement, not replace, governmental benefits.

Living Trust

A living trust is established while you are living (as opposed to a testamentary trust, which springs out of a will), and allows you to control how your assets are distributed upon death while maintaining control over them while you are alive. Although a living trust shares characteristics with a will, it is a valuable tool to help the assets included in the trust avoid probate.

As you can see, many different considerations are in play when determining what type of trust is right for your specific needs. At Bespoke Estate Law, we will listen to your unique needs and help you determine which trust type to utilize.

Other Estate Planning Tools

Power of Attorney

A POA is a document which allows you to choose a person you trust to make decisions for you when you are no longer capable. This person can handle important financial and medical decisions on your behalf. A POA is created when you are in a sound mind and goes into effect when you can no longer make decisions.

Health Care Proxy

A healthcare proxy is a person tasked with making medical decisions if you cannot make those decisions yourself. Healthcare proxies are vital in advance care planning and help prepare your loved ones for unforeseen situations.

Do you need to have both a Trust and a Will?

Yes, it is advisable to have both a trust and a will. While a trust may specify how your assets should be distributed when you pass away, a will determines how your assets not included in the trust will be distributed to your heirs. Most estate planning firms also have attorneys for wills on staff, and you can always get a holistic estate plan from an experienced professional.

A pour-over will is often recommended. Since people make mistakes and may forget to place newly acquired assets into their trust, a pour-over will ensure that those acquired assets are still distributed according to the terms of the trust upon your death. Although a trust remains private, a pour-over will becomes public record if those assets not funded into the trust need to go through probate. With a pour-over will, the estate may qualify for an Affidavit for Collection of Personal Property, which is faster and less expensive than a formal probate.

In South Carolina, the probate process involves validating the will, appointing a representative, ensuring all assets are identified and appraised, paying debts and taxes, and creating a final accounting showing every cent that went into and out of the estate. After all that is taken care of, the remaining assets are distributed to the heirs.

Why Should You Hire an Estate Attorney For Trust Creation?

Although there are ways to make a trust without the help of an advisor or an estate lawyer, it is never advised to do so. If a person forgets to dot one” i”, forgets a signature, or perhaps forgets to include a crucial provision altogether, it can prevent the trust from being legally valid. Contacting an estate planning lawyer from the start will eliminate this potential danger.

What Will it Cost to Hire an Attorney?

One reason people hesitate or do not make a trust is the fear that they will not be able to afford it. However, at Bespoke Estate Law, we offer transparent flat fees, and flexible payment options or services that suit your needs. You will always have the opportunity to discuss legal fees with your attorney at your initial consultation.

Ready to Protect Your Assets and Family?

If you’re ready to start your estate planning journey, contact one of our trust fund attorneys in Myrtle Beach, SC or along the coastal Carolinas. We will educate you on the estate planning process, and inform you of your options at every step of the process. We understand how sensitive estate planning can be, and we are dedicated to helping you consider every possibility and leave a lasting legacy for your loved ones.