If you are considering creating an estate plan, one of the first questions you’re probably wondering is: Should I choose a Will or a Trust? It’s one of the most common questions we get, and an important one to ask. While there’s no one-size-fits-all answer, understanding the key differences and how they apply to your unique set of circumstances is essential.
Estate planning can feel overwhelming, but we’re here to guide you. The framework below will help you understand the pros and cons of each option so you can make confident, informed choices. Then, our experienced attorneys can tailor a plan to meet your goals and protect what matters most.
1. Start With an Inventory of Assets
You cannot accurately determine whether a Will or Trust is right for you without first identifying your assets and their values. Many clients ask, “Why do I need to list every asset I own, it’s value, and how it’s titled?”
This process may seem invasive, but here’s why it is necessary: the nature, ownership, and value of your assets directly determine who is entitled to them, how they are administered when you become incapacitated or pass away, whether taxes are owed from them, among other variables. It comes down to this – you can make a plan or something you haven’t accounted for. Without this clarity, you run the risk of wasting time and money preparing the wrong documents.
Our firm provides a helpful worksheet prior to your estate planning consultation that guides you through the variety of assets you might have – everything from cash and real estate to insurance policies, investments, businesses, and more.
2. Classify Your Assets
Once your inventory is complete, each asset needs to be classified to understand how it will be administered. This step ensures that your documents complement the types of assets you have. Remember, you cannot accurately alter the disposition of your assets if you don’t know how they are held in the first place.
Take, for instance, real property (i.e. your home, lot, rental). Ownership of this type of asset is reflected on a deed, which is recorded with the Register of Deeds in the county where it sits. The language of the deed explains who has what rights to the property, while an appraisal or tax record is what gives insight into its value. Here are a few examples of how real estate can be classified and how that changes the disposition of the property:
- Individually Owned. If one person’s name is listed on the deed, the property will be probated on that person’s death.
- Joint Ownership (e.g. with a spouse). If there are two or more names, the language of the deed will determine whether a deceased person’s interest in the property must be probated or if the property automatically vests with the surviving owner(s) on death.
- Owned by an LLC. When an LLC owns a property, the deceased person’s membership interest in the LLC passes through probate.
- Held in a Trust. When a trust owns a property and the Grantor of the trust dies, the property is administered according to the trust’s terms, often without probate.
Different titles produce different legal results. This is why proper inventory and classification isn’t just helpful—it’s critical. We will assist you with this classification process to ensure each asset is aligned with the proper planning tool.
3. Understand the Role of Spouses
Who you’re legally or personally connected to impacts how your estate is distributed. Of all relationships, the one with your spouse often carries the greatest legal weight.
- Elective share. Even if a Last Will & Testament disinherits a spouse, a surviving spouse may still be able to access part of an estate in South Carolina. Under the South Carolina Probate Code, your spouse has the right to claim one-third of the probate estate—regardless of your instructions—if you were domiciled in the state at death, assuming he or she did not waive the right to do so in a prenuptial or postnuptial agreement. Under this law, the assets that the spouse would calculate their one-third election from include all assets passing through the probate matter, either pursuant to the decedent’s Last Will and Testament or by the general law of inheritance called “intestacy”. That value is reduced, however, by funeral expenses, administration expenses, and enforceable claims filed against the estate.
- Unintentional disinheritance. Blended families (second marriages, children from previous marriages) often fall victim to this scenario – it’s a tale as old as time. Often, people will decide to leave significant assets to their spouse when they die, assuming it will trickle down to their children when the spouse dies. Unfortunately, there are so many ways this can go wrong. That surviving spouse might later (purposefully or unintentionally) leave the remaining assets solely to their own children or a new spouse, unintentionally disinheriting the decedent’s children.
Thoughtful planning helps avoid this. Our attorneys regularly work with blended families to craft solutions that honor everyone involved.
4. Define Your Goals
Ultimately, no estate plan is complete without understanding your personal objectives.
- Who do you want to receive your assets?
- When should they receive them?
- Should any protections or conditions apply?
We’ll walk you through each of these questions and develop a plan that reflects your intent and honors your values, whether that means using a Will or a Trust.
If you are in need of assistance, the attorneys at Collins Family & Elder Law Group can help.
