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Planning For Children In Charleston, South Carolina

A comprehensive estate plan will protect your assets, preserve your legacy, and plan for your children. While creating a will may allow for these objectives, there are a number of trusts for minors and other mechanisms especially designed to protect the welfare of children. The best decision you can make when it comes to planning for your children is to enlist the services of an experienced trust and estate attorney.

When you consult Wiles Law Firm, LLC, our legal team will listen to all of your concerns and devise a plan to protect your children. Whether you have minor children whose future assets need to be managed, a child with special needs, or any other issues concerning your estate plan, we will provide you with trustworthy advice and careful guidance. Located in Charleston, we have a history of proudly serving individuals, couples, families and business owners throughout South Carolina.

What does a will accomplish?

A will allows you to name beneficiaries, declare your wishes for the distribution of your property and name a personal representative -- the person charged with managing your estate after your death. A will is also the only way to designate a personal guardian for your minor children. If you do not have a will or do not name a guardian, the court will intervene to make decisions that it considers to be in your children’s best interests.

It is important to remember, however, that children cannot inherit property in their own name until they reach the age of 18. Therefore, you can also name a property guardian in your will to manage the children’s assets according to the terms of the document. Because South Carolina follows the Uniform Gifts to Minors Act, the children’s money will be placed in a custodial account for their benefit until the age of 21.

Often, the personal guardian is also the property guardian, unless the designated individual is not financially savvy, in which case it may be wise to separate the roles. Nonetheless, using a property guardian means the property must go through probate. Moreover, the guardian is subject to court review, reporting requirements and strict rules for how the funds can spent. Therefore, a well-conceived estate plan will also include establishing trusts for minors.

Trusts for Children

Generally, an irrevocable Section 2503 Trust -- a Section 2503(b) Trust or a Section 2503(c) Trust -- qualifies a minor for the annual gift tax exclusion (the names are derived from the applicable sections of the Internal Revenue Code):

  • Section 2503(b) Trust -- Requires income to be distributed to the beneficiary annually, unless the child is under the age of 18 in which case the income is transferred to a custodial account and managed by the trustee. The child also has the the right to withdraw money from the trust that is, at a minimum, equal to the gift tax exclusion. Finally, the trust can continue past the age of 21 and the principal held in the trust until the beneficiary reaches a specific age.
  • Section 2503(c) Trust -- Principal and income can be used for the child until he reaches the age of 21, unlike the 2503(b) Trust. The trustee can pay the child’s college expenses from the trust proceeds. When the child turns 21, however, the remaining trust proceeds are paid out, unless the beneficiary decides to extend the trust. A key factor in choosing a Section 2503(c) Trust is whether the child would be mature enough at 21 to handle the money responsibly.

The proceeds of a Section 2503 Trust are to be distributed for the child’s health, education, maintenance and support. The trustee manages and distributes the money until the trust terminates and is required to file an annual fiduciary tax return. The trustee must also maintain an accounting that details how the money is spent and ensures that the beneficiary is spending the money according to its intended purposes.

Consider a Family or ‘Pot’ Trust for Your Children

Families with young children may set up just one trust for all of them in an arrangement that is often called a pot or family trust. This type of trust can be set up in a will or living trust, and the trustee is authorized to distribute money from the trust to each of the children. The trustee is not required to spend the same amount on each child and has the discretion to determine what each child needs. When the youngest child reaches a certain age, usually 18, the trust ends. The main caveat to a family trust is that the older children cannot receive their shares of the trust property until the youngest child turns 18. This means that they may not acquire control over their inheritance until well into adulthood.

Other Estate Planning Considerations for Children

In addition to ensuring that the money you intend your children to receive is well-managed and spent, there are other considerations such as planning for a child with special needs or one who is not capable of managing money. The following types of trusts are designed for these circumstances:

  • Special Needs Trust (SNT) -- Also referred to as a Supplemental Needs Trust, this arrangement sets funds aside to be used an individual with a disability or special needs while preserving that person’s eligibility to receive public health and disability benefits (e.g. Medicaid and Social Security disability). Because such programs require a recipient be both medically and financially eligible, a special needs individual or disabled person who receives a direct inheritance might lose his or her government benefits. The assets of an SNT are used to supplement day-to-day expenses.
  • Spendthrift Trust -- Set up to protect the beneficiary from frivolous spending and prohibit him or her from pledging the trust interest as collateral for a loan or debt. A trustee is appointed to manage the trust assets on behalf of the beneficiary and has full authority to make decisions about how the trust funds are spent. While a spendthrift trust can protect a child from creditors’ claims, it will not withstand a court order or judgment for child support or tax liens.

Why Choose Wiles Law Firm, LLC?

Knowing that we all want what’s best for our children, it makes sense to have a plan for when we are unable to care for them or not around to do so. Whether you only need a will-based estate plan or wish to establish trusts for minors as well, you need the first-rate legal representation and caring, efficient service our team is prepared to provide. Stop worrying about planning for your children, contact our office today for a free consultation.

Wiles Law Firm, LLC helps clients with their estate planning needs in Charleston, South Carolina and the surrounding areas such as West Ashley, Summerville, North Charleston, Mount Pleasant, and John's Island.

Information on this website is not legal advice. Further, viewing of the enclosed information does not create an attorney-client relationship with Wiles Law Firm, LLC. Matters will be handled by attorneys who primarily practice out of our office in Charleston County located at 852 Lowcountry Blvd., Ste. 101, Mt. Pleasant, SC 29464. M. Emerson Wiles, III is the attorney responsible for this advertisement.

Any result Wiles Law Firm, LLC may achieve on behalf of one client in one particular matter does not necessarily indicate similar results can be obtained for other clients. Please contact a South Carolina estate planning attorney or one of our attorneys with Wiles Law Firm, LLC for a consultation regarding your unique estate plan.

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