In November 2020, Myrtle Beach was named by U.S. News and World Report as the fastest-growing place in the U.S.[1] Having been born and raised here in Myrtle Beach, the growth and change along the entire Grand Strand has been astounding to witness. Myrtle Beach has become a true destination for families and retirees alike. Unfortunately, when people move to the Grand Strand from another state, their golf swing and their tan lines get all of the attention and their estate plan becomes as overlooked as their old snow shovel. Carefully going over your estate plan can save headaches and heartaches down the line. You may need to update your will, trust documents, title to assets, powers of attorney (durable and healthcare), and other assets. By speaking with a knowledgeable professional, you can help prevent delays and complications if you are ever incapacitated; or when your estate is ultimately distributed. Furthermore, proper planning may have a significant effect on the tax treatment of your estate.

Generally, if your wills and/or revocable trusts were executed in accordance with the laws of another state, South Carolina will consider them valid documents. Unfortunately, if your estate planning documents have reference to the laws of another state, this can slow things down and increase the cost of administration. If your heirs need to rely on the laws of your former residence to establish the validity or interpret the documents, you may need an attorney in each of the states (your former residence and South Carolina) to render any legal conclusions as to the documents and their effect. This can slow the administration down and increase costs dramatically.

Another reason we recommend speaking with us about reviewing and updating your estate planning documents is that each state has its own laws relative to estate taxes. A common provision in many of the out of state documents we review allows for devises equal to the estate tax exclusion (after taking into account state death or inheritance taxes) to pass to certain beneficiaries. Depending upon the laws of the state in which your plan was drafted this amount might change, the amount your estate pays in taxes, and ultimately who the beneficiaries are could change as well. The states with an Estate Tax or Inheritance Tax are New York (up to 16%), Maryland (Estate Tax Up to 16% AND Inheritance up to 10%), Massachusetts (up to 16%), Connecticut(up to 12%), Rhode Island (up to 16%), Vermont (up to 16%), Minnesota (up to 16%), Maine (up to 12%), Illinois (up to 16%), District of Columbia (up to 16%), Washington (up to 20%), Hawaii (up to 20%), and Oregon (up to 16%).[2] If you had estate planning documents prepared while residing in one of these states, it may be worth updating your estate plan.

If you have moved to South Carolina from a “community property” state, your assets should be reviewed to determine if additional planning is needed. The states that have Community Property Laws are Wisconsin, Texas, Louisiana, Idaho, California, Arizona, Nevada, New Mexico, and Washington. Not carefully reviewing your assets and examining title issues can cost a great deal in potential tax savings and if you had an estate plan drafted in one of these states. Furthermore, your estate plan may not ultimately do what you want it to do in South Carolina.

Another reason we suggest updating estate planning documents when moving to South Carolina is to ensure all statutory requirements and preferences are met and consistent with the law. One area we’ve seen clients encounter issues is with their powers of attorney. In 2016, South Carolina enacted the South Carolina Uniform Power of Attorney Act to codify and restate the laws affecting durable powers of attorney and health care powers of attorney. In most scenarios, your old documents should remain valid, but we have seen some pushback from financial institutions and hospitals if the documents do not conform to the South Carolina Uniform Power of Attorney Act, and it delays the process and subjects your old documents to a higher level of scrutiny.  

If you have a trust, irrevocable or revocable, reviewing the documents in order to allow for portability can also be important. Generally, the resident trust statutes consider the domicile of the Grantor (trust creator), the trustee (the manager of the trust), and the beneficiary when determining if a trust is subject to state income taxes. Being able to determine if any changes in your residence or domicile trigger any income tax considerations can also be important and you may want to  update the situs of the trust. 

A final reason we see a need to review and update estate planning documents when moving to South Carolina is to change your domicile for tax purposes. If you have a residence in New York and move to South Carolina, and you want to be treated as a resident of South Carolina for income tax purpose and a non-resident of New York, completing a new South Carolina Will can help establish domicile. This could help reduce taxes.

It is important when reviewing your estate plan to have someone knowledgeable about the probate and tax laws to assist you. Unfortunately, errors in estate plans are not often discovered until it’s too late.

[1] https://realestate.usnews.com/real-estate/slideshows/the-best-places-people-are-moving-to?slide=26

[2] https://taxfoundation.org/state-estate-tax-state-inheritance-tax-2020/