8 Steps to Avoid Probate in South Carolina
Probate is a cumbersome process that slows down the ability of your loved ones to inherit assets after you die. Although some estates can avoid probate altogether, others are mired in this court-supervised process for a year or longer. It is perfectly understandable to want to avoid probate. In this article, our Aiken estate planning lawyer gives step-by-step advice on how to leave assets to loved ones outside of probate. In our experience, most assets can be left using something other than a will. Call us for assistance.
Step 1. Identify your assets.
You can avoid probate by using different techniques, but you first need to fully identify all the assets in your estate. Take a spare moment to go through and list everything you own, including cash, retirement assets, vehicles, and even digital assets.
Step 2. Pick who will inherit each asset.
You should give some thought to identifying who will inherit from you. This is a necessary step in the creation of any estate plan. Sometimes, the answer is easy. But other options are hard. For example, you might own a small business. Who inherits from you matters enormously, especially if you want to keep the business in the family. Leave it to the wrong person, and your business could tank and go bankrupt, or they sell the business. The good news is you can change who will inherit later if you change your mind (in most cases).
Step 3. Set up a Payable-on-Death designation for bank accounts.
This is an easy way to designate a beneficiary to inherit the account. You can set it up at the bank. Typically, people use a POD designation for savings accounts, checking accounts, and certificates of deposit. The beneficiary has no power over the account while you are alive. However, they inherit it without the need for probate when you die. Typically, all they need to do is present certain documents (like a death certificate) to the bank.
Step 4. Own real estate as joint tenants with rights of survivorship.
This is another way to avoid probate. Any property owned in joint tenancy will automatically pass to surviving owners at your death. Many spouses own a home in this way. When a spouse dies, the other automatically owns the entire property.
Step 5. Use Transfer-on-Death registration for securities.
Many people own stocks and bonds through a brokerage company. South Carolina will allow you to name a beneficiary to inherit the investments without the need for probate. Contact your brokerage company to identify how to create a Transfer-on-Death designation.
Step 6. Name beneficiaries on retirement accounts and life insurance policies.
The beneficiary will inherit the account or receive the insurance proceeds. If you forgot to name a beneficiary, then the asset will need to pass through probate. Helpfully, naming a beneficiary is a standard process when opening a retirement account like a 401(k) or Individual Retirement Account, as well as when purchasing life insurance.
If you want to change your beneficiary designation, contact the plan administrator and ask how to do so. You might even be able to make a change online, or else you can complete a paper form.
Step 6. Make gifts while living.
You don’t have to leave assets in a will. Instead, you can make gifts while you are alive. Many people avoid making gifts because of confusion about gift tax.
There’s good news. There is a federal annual gift tax exclusion. In 2023, this amount was $17,000, which jumps to $18,000 for 2024. You can give up to this amount to any person and not owe gift tax. The exclusion amount applies per person, so you can give up to $18,000 in 2024 to as many people as you want. The exclusion amount is adjusted annually, and it doubles if you and your spouse are making a gift.
There is also a lifetime gift tax exclusion, which could kick in if you end up giving more than $18,000 to someone in 2024. Very few people end up paying gift tax unless they are very wealthy and giving away large amounts of money throughout their lifetime. Consult our estate planning lawyer for more information.
Step 7. Create a living trust.
A living trust is a great tool for avoiding probate. It is easy to create, requiring only a simple form. Any asset can be owned by a trust, such as real estate, motor vehicles, cash, household furnishings, and so forth.
We recommend using the above options first. For example, owning real estate as a joint tenant with right of survivorship is often superior to putting the trust’s name on the deed. The same is true of using POD designations for bank accounts. You can use a trust for remaining assets, like household goods, jewelry, and digital assets.
With a trust, you will appoint a trustee to manage the assets on behalf of beneficiaries. While living, you can name yourself as both trustee and beneficiary. You can also include directions in the trust for who should inherit the property when you die. In this way, a living trust works like a substitute for a will. Unlike a will, however, a trust isn’t probated.
Step 8. Relax.
The more assets you can transfer outside probate, the better. If you follow the above steps, the vast majority of your assets will transfer without any need for probate.
Contact Our Estate Planning Attorney for Help
Surasky Law Firm is committed to providing the highest level of representation to our South Carolina clients. We have created many estate plans for clients, and we realize that there’s no one-size-fits-all approach to planning for the future. If you call, we can meet to go over your estate and discuss different strategies for avoiding probate.
And if you are serving as a personal representative, we can discuss your options, too. South Carolina allows small estates to either avoid probate or have a summary administration. Either option is much faster than a full administration. Please call our law firm to schedule a confidential meeting with our experienced probate lawyer.