No one is especially anxious to think about their mortality, but passing away is one of the absolute certainties of life itself. As a responsible adult, you should take the right steps to make sure that your legacy is passed along optimally.
In this post, we will look at the five keys to effective estate planning to provide some insight to take with you as you enter the process.
Resolve to End the Procrastination
Caring.com has been conducting surveys annually that measure the estate planning preparedness of American adults. There are slight variations, but they consistently find out that about two-thirds of Americans do not have wills or trusts in place.
With this in mind, the first step is a very simple one. You should recognize the fact that estate planning is an important responsibility and make up your mind to take action to establish a plan.
All self-supporting adults should have a basic estate plan at minimum, but it is less important for single young people with no children. As soon as you have others depending on you, estate planning becomes an absolute must.
Consider Potential Asset Transfer Methods
Postmortem asset transfers are at the core of the estate planning process. A lot of people assume that a simple will is all you need to accomplish this objective. While it is true that a will can be sufficient for some people, you should understand the limitations and drawbacks.
Probate Process
If you use a will to state your final wishes regarding asset transfers, you name an executor to administer the estate after your passing. Your administrator will not be able to act independently without court supervision.
Under the laws of the state of South Carolina, the will would be admitted to probate. The court would preside while the estate is being administered by the executor.
During probate, the executor will identify, inventory, and secure assets and contact the beneficiaries. Final debts must be paid before the assets can be distributed, and the executor is required to notify creditors.
Asset appraisals and liquidation will often be necessary, and final taxes will be taken care of by the executor during probate.
Probate Drawbacks
This is a public proceeding and interested parties can obtain the records, so there is a loss of privacy. The process will take about nine months even if there are no major complications, and no inheritances are distributed during this interim.
Probate expenses are another pitfall. There is a filing fee with the court, the executor’s remuneration, appraisal and liquidation expenses, legal and accounting fees, and other incidentals.
Trusts
You can use a trust instead of a will to facilitate asset transfers. The revocable living trust is very popular because you would maintain complete control of the assets while you are living.
After your passing, the trustee that you name in the document would administer the trust. The probate court is not involved when a trust is being used to transfer assets.
This is just one of many different types of trusts that can be used. There are many tools in the toolkit, and you can use a particular trust to achieve a specific goal.
Don’t Overlook Incapacity Planning
Your estate plan should address end-of-life eventualities. While it is a disconcerting thought, a significant percentage of the oldest old become incapacitated at some point. Plus, some younger people lose their decision-making capabilities due to devastating injuries and illnesses.
If you do not take this matter into your own hands in advance and you become incapacitated, the state could be petitioned to appoint a guardian to act for you. This will not be necessary if you include the appropriate incapacity planning documents.
A living will is used to state your life-support utilization preferences. You can name someone to make other types of medical decisions for you if it becomes necessary in a durable power of attorney for healthcare.
You can name a disability trustee to act as the trust administrator if you have a living trust. For the management of property that is not held by a trust, you can name an agent in a durable power of attorney for property.
Understand Tax Consequences
Knowledge is the key to effective estate planning, so you should gain an understanding of the potential taxes that can be levied on inheritances. Here’s the good news: generally speaking, inheritances are not considered to be taxable income.
On the other side of the coin, there is a federal estate tax, and it carries a 40 percent maximum rate. However, most people do not have to be concerned about this tax because there is a large credit or exclusion.
The exclusion is an amount that you can transfer free of taxation. Only the portion of an estate that exceeds the exclusion is taxable. At the time of this writing in 2024, the federal estate tax exclusion is $13.61 million.
This level indexed for inflation will be in place through next year. Unless there are legislative changes in the meantime, the exclusion is going to be radically reduced on New Year’s Day in 2026. At that time, the exclusion will go down to the 2017 level of $5.49 million indexed for inflation.
Regarding capital gains taxes, if you inherit assets that appreciated while they were held by the person that left you the inheritance, the assets would get a stepped-up basis. This means that you would not be responsible for the gains that accumulated during the life of the decedent.
Legal Counsel Is Invaluable
Here’s the last thing that you need to know about effective estate planning: legal counsel will make the process far easier on every level. As a layperson, you can do your homework, but there is no substitute for professional guidance.
When you work with our firm, we will learn about your situation and your objectives and help you develop a tailor-made plan that is perfect for you and your family. As time goes on, we will be just a phone call away when life changes necessitate estate plan updates.
To set the wheels in motion, call our Bluffton, South Carolina estate planning office at 843-815-8580 or send us a message through the contact form on this site.
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- How Long Will My Heirs Have to Wait for Their Inheritances? - July 15, 2026
