South Carolina Trusts are one of the most useful and integral estate planning vehicles employed by our Charleston estate planning attorneys. A trust is a recognized legal fiduciary relationship in which one person holds the legal title to ownership on the behalf of another. The person who creates the trust is known as the settlor, trustor, or grantor whereas the person who holds legal title to the property or asset is known as the trustee. The person who holds the equitable or beneficial title to property is known as the beneficiary. The trust property is known as the res, corpus, or principal.

Understanding which assets to incorporate into a trust agreement requires an understanding of which assets can and cannot form the trust corpus as well as an evaluation of the direct effects to estate property and taxes.

Important Trusts

Creation of Trusts in Estate Planning

South Carolina TrustsOur Charleston estate planning attorneys frequently utilize a variety of trusts for individuals, professionals and families in their estate planning. Generally, a trust is created to transfer or protect property and assets during a person’s lifetime through a declaration of trust, through a testamentary transfer in trust, or through a promise in trust by the exercise of a power appointment.

A living trust instrument, such as a revocable trust, will contain specific terms and agreements of the trust for estate planning purposes. A living trust, unlike a testamentary trust, may be altered and amended during the lifetime of the grantor and remains a fluid, living legal document. A testamentary trust on the other hand is typically created as part of a grantor’s Last Will & Testament. The execution of the will or simple will that embodies the trust must meet all South Carolina statutory requirements for a legally valid execution of a will.

It is also important to note that a trust does not have to be established through physical transfer of assets. Instead, a trust may be created by a written declaration of the owner of nonphysical property or assets, such as an insurance trust or spousal agreement trust. Trusts still require a specific identification of the beneficiary, assets, and conditions of execution in any case. In many instances, the terms of the trust are not contained in the will itself.  In a “pour over” arrangement, a testamentary disposition of property is given to a living trust.

There are three important requirements to create a valid trust: (1) an expression of intent that the property be held, at least in part, for the benefit of someone other than the grantor; (2) at least one beneficiary for whom the property is to be administered by the trustee; and (3) an interest in property that is ascertainable and is to be held for the benefit of the beneficiary.

In sum, a South Carolina trust is often used to reduce estate taxes and to shield the transfer of property and assets from being part of a public record as an estate goes through the probate process.  Each trust is created to address certain circumstances and our estate planning attorneys will advise clients to determine the most appropriate trust to be created for their individual or family estate planning objectives.  Please contact our law firm for more information regarding trusts, wills and estates.