The process of distributing your assets to your beneficiaries, called probate, can be an expensive hassle for those you leave behind. Even if you have a will, your estate’s assets must go through probate unless you establish an estate plan to avoid probate. In South Carolina, one way to avoid significant probate involvement is by creating a living trust.
A living trust, sometimes called a revocable living trust, is one way to transfer your assets outside of the probate process by transferring them to another entity – the trust – before your death. When you pass away, assets in the trust pass directly to your beneficiaries without having to go through probate. During your lifetime, your living trust holds titles to your assets while you or another administrator, called a trustee, manages them for you. You can designate a successor trustee to manage your trust’s assets if you become incapacitated or pass away.
Creating a Trust
South Carolina’s laws provide the basic guidelines for establishing a living trust. Under these statutes, you can create a trust only if you have the capacity to create the trust, you indicate an intention to create the trust and the trust has a definite beneficiary. You cannot create a trust if you have lost your mental capacity, such as through a disease like dementia. Your trust documents can state that you intend to create a trust and name your trust’s beneficiary along with giving other detailed instructions for your trustee.
Trust Administration Process
South Carolina requires certain notices when a trust does business with someone, along with certain notices to beneficiaries, but trustees do not necessarily have to file forms with the court. Once you pass away, your successor trustee administers the trust by inventorying the trust’s assets, determining whether estate taxes are required, determining how to divide the trust’s assets, filing the necessary tax forms and distributing assets to the trust’s beneficiaries. You can help shorten this process by keeping your trust well organized so your trustee can more easily inventory and distribute your assets.
Living trusts are revocable at any time while you are alive, but they become irrevocable after your death. However, under some circumstances, the South Carolina court can modify or terminate a trust. For example, the court can modify a trust’s terms or terminate the trust if such modification or termination furthers the purposes of the trust. The trust can also be modified or terminated if continuation of the trust as established would be wasteful or impair the trust’s administration. These provisions allow some flexibility when unforeseen circumstances occur, altering the effectiveness of the trust.