Global View Investment Blog

Estate Planning for Everyone (Not Just Millionaires!)

Estate planning is an important part of financial planning. Not only do you want to create an easy, comfortable and relaxing retirement for yourself, but you also want to ensure that the wealth you worked so hard to accumulate is passed as you wish upon your death.

Given my background as an estate planning attorney, I get a lot of questions from Global View clients about how to leave a legacy for loved ones in a tax-efficient and asset-protected manner. So I wanted to provide an overview of the current transfer tax landscape and the probate process. Remember that without an estate plan, you are potentially leaving your care during incapacity and the ultimate disposition of wealth in the hands of the state in which you reside.


Overview of Federal Transfer Taxes

The federal government imposes three separate taxes on transfers made during your lifetime and at death: Gift tax, estate tax and generation-skipping transfer tax. While some states also assess their own transfer taxes, South Carolina does not currently do so. Given the current exemption levels, these federal taxes are not an issue for 99 percent of United States citizens, but these laws change far more regularly than we might like from a planning perspective, so regular review is required.


Gift Tax

If you make a transfer during your lifetime that is not covered by an applicable exclusion or exemption, the federal government will tax the transfer at a rate of up to 40 percent. Fortunately, you have some helpful exclusions and exemptions from the tax:

  • Annual exclusion: You may transfer $15,000 each year to as many different people as you wish without using up any of your transfer tax exemptions. This amount is indexed for inflation and may increase in the future. In order to qualify for the annual exclusion, a gift must convey a “present interest” to the recipient. Because of this, gifts in trust generally do not qualify for the annual exclusion, though there are special trusts that can receive transfers that do qualify for the annual exclusion. Transfers into Section 529 plans to fund future education expenses can also qualify for the annual exclusion.


  • Tuition and medical expenses: You may pay medical or tuition expenses for any individual without having to use any of your lifetime exemption or your annual exclusion, but these payments must be made directly to the medical provider or the educational institution. Care must be taken to ensure that the specific requirements of the Tax Code are met in this regard so that you are not deemed to have made a gift to the intended beneficiary.


  • Lifetime exemption: For 2018, you have a lifetime exemption from the federal gift tax of nearly $11.2 million that you can apply to transfers for which there is not another available exclusion. While no tax will be owed on account of such transfers, you would have to file a federal gift tax return (IRS Form 709) to report the transfers and apply some of your exemption to cover them.


Estate Tax

Transfers made at death are also potentially subject to taxation. The amount that is exempt from federal estate tax is the same as the gift tax exemption (nearly $11.2 million, indexed for inflation), but the exemption is reduced by any taxable gifts you have made during your lifetime. The top marginal estate tax rate is currently 40 percent, and the property included in your estate for tax purposes may be broader than you would expect after considering your “balance sheet.”



In addition to estate and gift taxes, there is an additional tax that can be assessed on gifts to grandchildren or more remote descendants (and, in rare cases, on transfers to unrelated individuals who are significantly younger than you). This Generation-Skipping Transfer (GST) tax is designed to ensure that wealth is taxed once at each generational level. Fortunately, you have an exemption from the GST tax that is equal to your gift and estate tax exemptions. There is also an annual exclusion from the GST tax, though the requirements for obtaining it are different in some cases than for the gift tax annual exclusion. If in the future you are interested in making lifetime gifts in trust for your descendants, it may be important to consider drafting them so that gifts into the trusts qualify for both the gift tax and the GST tax annual exclusions.

If the current law sunsets as scheduled, in 2025, all transfer tax exemption levels will revert to their pre-2018 level and be cut roughly in half.


Have additional questions about coordinating your financial and tax planning with your estate planning? Contact me directly to see how Global View can help.


The Probate Process

A will is not valid to dispose of a decedent’s property until it has been offered for probate and has been “allowed” by the applicable probate court. The probate process generally takes about one year to complete in South Carolina – longer if the estate is potentially taxable for federal estate tax purposes.

While the probate process is less onerous in South Carolina than in some other states, many clients wish to reduce the amount of property that will pass through probate upon their deaths for the following reasons:

  • Maintain privacy: Probate records are open to public review, and it is possible that South Carolina probate records (including wills) will be available online within the next few years. If you do not wish for the general public to know who is receiving your property and upon what terms, placing the dispositive provisions of your estate plan in a revocable trust (also known as a “living trust”) instead of in your will can help keep key aspects of your estate plan private. Moreover, in most cases, the value and description of assets that you have placed into your trust during your lifetime need not be disclosed on the Probate Inventory, which is a public document. There are many reasons why you may wish not to disclose the value of particular assets owned by you or your family, particularly if you own business interests at your death.


  • Reduce court fees: Transferring assets into trust during your lifetime can help reduce the legal fees that are generally associated with probate and estate administration while also lowering the probate fee charged by the court. That probate fee is generally calculated as a percentage of your probate estate and is roughly $2,500 per $1 million of probate assets. Even if you do not place all of your assets in trust during your lifetime, you will avoid probate and the related fees with respect to the assets that you did transfer to your trust prior to your death.


  • Avoid delays in management. A personal representative (i.e., executor) must be appointed by the probate court before any action can be taken with respect to probate assets, and this can take some time. Because assets that you transfer into a revocable trust during your lifetime will not be subject to the court-managed probate process at your death, your designated trustee can immediately begin managing your trust assets for your family and, when appropriate, can distribute them in accordance with the terms of your trust.


Certain assets like life insurance, retirement plans, annuities and “payable on death” accounts pass pursuant to separate beneficiary designations and are not subject to probate. Those assets would generally not be placed into revocable trusts during the owner’s lifetime, but beneficiary designations often must be updated to coordinate with your estate plan. Many attorneys neglect to advise with respect to these updates, but they are crucial if your estate plan is to function as expected.

While Global View cannot offer specific legal advice or draft documents, we can help you understand these issues and work with your attorney to ensure that you address key estate planning needs. In select cases when asked, I can help directly with document preparation through my law firm, Schumacher Law, LLC, which is a separate entity from Global View but through which I can work closely with your advisor.

Contact us if you would like to discuss your specific situation.


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Matthew Crider

Written by Matthew Crider

Matt is a CERTIFIED FINANCIAL PLANNER™ professional who has been in the financial advisory business since 2008. He holds a BA in Marketing and Management from the University of Cincinnati and his MBA from Clemson University. Prior to Global View, Matt began his career with Fidelity Investments. His specialties at Global View include asset accumulation and investment strategies; college funding strategies; budgeting discipline and analysis; multi-generational planning; and life event changes, such as marriage, kids, home purchase, retirement, etc.

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