Testacy vs. Intestacy
At its most basic, a Last Will and Testament (“Will”) is a legal document that provides for the distribution of your assets (often referred to as your “probate estate”) upon your death. Generally, your Will does not control the disposition of non-probate assets on your death. Common examples of non-probate assets include an interest in real property that is titled as joint tenants with rights of survivorship, or accounts which pass by beneficiary designation (e.g., life insurance or retirement accounts). In addition to providing for the distribution of your assets, a Will can nominate someone to manage your assets until such assets are distributed to the beneficiaries under your Will. In South Carolina, this nominated person is called a Personal Representative (formerly known in South Carolina as an “Executor”).
When a person dies with a Will they are referred to as being “testate.” Alternatively, when a person dies without a Will they are considered “intestate.” In South Carolina, if you die without a Will, your property is distributed, and your affairs are managed, in accordance with South Carolina’s intestacy laws. For example, assume a family consisting of a married couple and two (2) children resides in South Carolina. If one spouse dies, then pursuant to South Carolina law one-half (½) of the dying spouse’s probate estate passes to the surviving spouse and the remaining half passes to the two (2) children in equal shares (i.e., each child would receive one-quarter (¼) of the dying spouse’s probate estate).
A few other examples of “default” estate plans under the intestacy statutes of South Carolina are as follows:
- If a married individual dies leaving no children or descendants, then all probate assets would pass to the individual’s surviving spouse.
- If an unmarried individual dies leaving surviving children, then all probate assets would pass to such children in equal shares.
- If an unmarried individual dies leaving no surviving children or descendants, then all probate assets would pass to the individual’s surviving parent or parents.
- If an unmarried individual dies leaving no children and the individual’s parents have predeceased the individual, then all probate assets would pass in equal shares to the individual’s siblings. 1Intestacy provisions vary by state. The foregoing examples are based on the application of South Carolina’s intestacy statute. You should consult a licensed attorney to understand the specifics regarding your state’s intestacy laws.
For many people, the above “default” estate plans via intestacy do not devise their probate estate in a satisfactory manner. People with charitable intent or who wish to devise property to more distant relatives (e.g., cousins) or friends will often find their state’s intestacy provisions do not suit them.
Who can make a Will?
A person who signs a Will is called a “testator.” Generally, a testator needs (i) to have testamentary capacity and (ii) to have attained the eighteen (18) years of age. However, two (2) exceptions to the age limit are that a married individual who is under the age of eighteen (18) or an emancipated minor may sign a valid Will.
Testamentary capacity is often considered a lower standard than how the public views medical mental competency generally. Under South Carolina law, to have testamentary capacity, a testator must understand and know (a) what assets they have and (b) the parties to whom he or she wishes to leave such assets. Professional legal advice should be sought if there is any question regarding an individual’s capacity or ability to execute a valid Will. Testamentary capacity is one of the most common issues leading to estate litigation and often may be avoided by seeking professional legal advice.
Other reasons to execute a Will
In addition to the considerations above, there are several other reasons to consider executing a Will. A Will allows an individual with minor children to nominate a guardian to care for such minor children in the case of the individual’s death. 2In South Carolina, an individual may nominate a guardian in a Will, but ultimately, the appointment of a guardian is made by the probate court and the probate court is not bound to appoint such person or persons nominated in the Will. This is often the most important consideration for many young families. Furthermore, if so desired, the individual could nominate a conservator or trustee (discussed in more detail below) to manage the property that is left to the minor children until they attain eighteen (18) years of age in the case of a conservator or potentially much older in the case of a trustee.
An additional downside of intestacy is that if a minor (whether a relative or otherwise) is left property on your death, then upon the minor’s attainment of eighteen (18) years of age, any inheritance remaining in the hands of such minor’s conservator is distributed to such individual reaching the age of majority regardless of their maturity level or financial literacy. At the minimum, a Will can provide for a simple “back-up” trust which provides ground rules for using the assets for the benefit of the minor and can delay the outright distribution of such assets until a later age, often age twenty-five (25) or thirty (30) years, and a more complex Will can provide for a lifetime trust for such minor or person. Furthermore, in conjunction with a revocable trust, an individual’s Will and estate plan may also provide for probate avoidance and simplify the administration of his or her estate upon his or her death.
Lastly, another reason to execute a Will (and to consider estate planning overall) is to either minimize taxes or address the payment of taxes owed at your death. A detailed review of the federal estate and gift tax regime is complex and beyond the scope of this blog post. However, there are many tax considerations not just limited to the imposition of the federal estate tax which individuals may wish to consider. For example, the disposition of retirement benefit accounts (e.g., 401(k)s, 403(b)s, IRAs, Roth IRAs, etc.) or the inclusion of assets in your estate for federal estate tax purposes to obtain what is commonly referred to as a “step-up in basis” may all have real tax implications for your beneficiaries and are something that should be discussed with a licensed attorney.
If you have any questions about Wills or any other aspects of estate planning, we invite you to contact an attorney at Thomas, Fisher & Edwards, P.A. at (864) 232-0041.
This blog post is for informational purposes only and is not meant to be taken as legal advice. By using this website and reading this blog post, you understand and agree that no information is being provided within the scope of an attorney-client relationship. The topics covered in this blog post are not comprehensive and should not be substituted for competent legal advice from a licensed attorney. Thomas, Fisher & Edwards, P.A. makes no representations or warranties as to the timeliness, availability, accuracy, or completeness of any information contained in this post.