You would learn a lot if you had a chance to talk shop with an estate planning lawyer. With this in mind, we decided to share a hypothetical question-and-answer session between an estate planning lawyer and a curious acquaintance.
I don’t need an estate plan until I am a senior citizen, right?
This is a question you can answer without any help if you are honest with yourself. The average life expectancy is about 78 years, but we all know that people pass away at all ages every day.
You can take that risk, and if you are single and you do not have much to pass along, it may be worth it. On the other hand, if you are married, someone is relying on you. It would be irresponsible to go through life completely unprepared.
When you have children, estate planning becomes absolutely essential. You should certainly carry sufficient life insurance, and you should designate a guardian in a will.
What’s the difference between a living trust and a living will?
A living will is an advance directive for health care. You use this document to record your preferences with regard to the implementation of life-sustaining measures.
The living trust is an estate planning device that is used to facilitate asset transfers after you pass away.
Why would you use a living trust?
If you use a simple will to state your final wishes, it would be admitted to probate. This is a time-consuming and costly legal process that takes place under the supervision of a court.
The inheritors that are named in the will would receive lump sums all at once, so there would be no spendthrift protections at all.
When a living trust is used, the trustee would be able to distribute assets outside of probate, so the process would be much more efficient.
You can include a spendthrift clause to protect the principal from the beneficiary’s creditors, and you can provide limited distributions over an extended period.
Is this the trust that people use to avoid the estate tax?
A living trust is revocable until you pass away, and if you create this type of trust, you would act as the trustee. Simply put, you would control the assets in every way.
Because you retain control, the assets would be part of your estate for tax purposes. They would not be protected from your own creditors, and they would count if you were to apply for Medicaid to pay for nursing home care.
There are irrevocable trusts that are used to accomplish these objectives. You cannot act as the trustee when you have an irrevocable trust, and you do not have access to the principal.
Speaking of estate taxes, how much do the inheritors have to pay?
For most people, the answer is zilch. You can transfer as much as $13.61 million before the tax kicks in. This is the exclusion in 2024, and there are annual adjustments to account for inflation.
It should be noted that this figure will be shaved down to the 2017 level of $5.49 million indexed for inflation at the end of 2025 under currently existing laws.
The maximum rate for people who are exposed is a significant 40 percent. In addition to the federal estate tax, there are 12 states that have state-level estate taxes. We practice in South Carolina, and this is not one of the 12 states.
However, you are not necessarily out of the woods if you are a South Carolina resident. If you own property in one of these states, and its value exceeds the exclusion in that state, the tax would apply to your estate.
The state-level exclusions are typically lower than the federal exclusion, and considerably lower in some instances. For example, there is an estate tax in Massachusetts with a $2 million exclusion.
Is there anything else I should know?
You should definitely understand the importance of incapacity planning. Over 30 percent of people who are 85 years of age and older have Alzheimer’s disease, and this is not the only cause of cognitive impairment.
In addition to cognitive incapacity, physical medical conditions can make it impossible for patients to communicate their own decisions.
We have already touched upon the value of a living will, and there are some other documents that should be part of your incapacity plan.
A durable power of attorney for health care should be included to name someone to act as a representative for medical decision-making. This would apply to situations that are not directly related to the utilization of life support.
If you have a living trust, you can name a disability trustee to administer the trust if it ever becomes necessary. To account for assets that are not in a trust, you can add a durable power of attorney for property.
Attend a free webinar
People learn in different ways, and we have plenty of content here for those who like to absorb information through the written word. In addition, if you find that you benefit from direct interactions in real time, we have you covered.
Attorney Hunter Montgomery conducts webinars on an ongoing basis that cover all the most important topics. They couldn’t be any more convenient, and there is no charge, so this is a great opportunity to build on your knowledge as you connect with our firm.
To see the dates and obtain more information, head over to our estate planning webinar page.
Schedule a consultation today!
We are here to help if you are ready to have a real conversation with a Hilton Head, SC estate planning attorney from our firm. You can send us a message to request a consultation appointment, and we can be reached by phone at 843-815-8580.
- What’s the Difference Between a Will and a Trust? - August 15, 2026
- When Is an Estate Tax Return Due? - August 1, 2026
- How Long Will My Heirs Have to Wait for Their Inheritances? - July 15, 2026
