Client Information.
The first step in preparing an estate plan is to gather extensive family and asset information for your attorney. This will include a list of children, grandchildren, other descendants, parents and former spouses. The attorney will also need a list of all bank accounts, retirement plans, IRAs, business interests, real estate interests, stocks, bonds, brokerage accounts, life insurance policies and other assets. Mortgage or loan balances must also be provided.
This information is necessary to analyze the tax issues and to determine how these assets will pass at the time of your death. A will does not control the disposition of all of your assets; in fact it can only control the disposition of probate property, which is property that is titled solely in your name and does not have a beneficiary designation. Non-probate property is property that passes outside of the decedent's will because of the manner in which title is held or because of some contractual arrangement.
Examples of non-probate property include real estate held as joint tenants with rights of survivorship, life insurance payable to a named beneficiary, retirement plans or IRAs payable to a named beneficiary and jointly held bank or brokerage accounts ("and," "or," "and/or"). All other property that is held by a decedent at the time of his death is probate property that passes under the terms of the decedent's will. The first step in the estate planning process is to gather a detailed list of all assets and beneficiary designations.
Planning for Incapacity.
To plan for incapacity, you should have a Durable Power of Attorney and a Healthcare Power of Attorney. The Durable Power of Attorney is a written instrument by which one person, as the principal, appoints another person as his agent and grants the agent the power to handle his financial and legal affairs and deal with his property.
The person executing the power of attorney must have the requisite capacity to understand the nature and significance of his act at the time of the execution. The power can be drafted so that it does not become effective until the principal is incompetent, and special provisions can be included to give the agent the ability to make gifts from the principal's property, if desired. The Healthcare Power of Attorney allows an agent to make healthcare decisions for the principal, such as consenting or withholding consent to healthcare.
The Healthcare Power of Attorney allows an agent broader discretion than a Living Will. A Living Will is a direction from the principal to his doctors specifying that life sustaining treatment and artificial nutrition and hydration either be or not be provided, but only applies in two limited circumstances, (1) if the principal is terminal and is likely to die in a relatively short period of time, or (2) if the principal is in a permanent coma.
Avoiding Probate.
At the time of your death, your will must be admitted to probate in the county where you reside. As outlined above, probate assets are assets that pass pursuant to the terms of the will. Under South Carolina law, the probate court is entitled to a fee of 1/4 of 1% of the fair market value of all probate assets ($2,500 for every $1 million of probate assets). In addition, the terms of your will are available for the public to review and an accounting must be filed with the court to detail the income and distributions of your probate assets.
Your estate must also be administered in every county in which your own real property, which is called ancillary probate. In order to avoid probate, we normally use revocable trusts together with a pourover will as our primary estate planning documents. Generally, the revocable trust is a trust created during a person's lifetime. The creator of the trust is called the Grantor. Any assets that have been transferred to the trust prior to the Grantor's death are not subject to probate.