Top Five Questions About Inheriting Real Estate In South Carolina
Some of our most beautiful historic homes have been passed down through generations of Charlestonians. It’s fascinating to look through those archives that date back 400 years in some cases. We are lucky to live in a city that has houses with known provenance.
If you have inherited real estate, you might already know the answers to the most common questions that come up at the closing table about future planning on real estate. If you are at the closing table, the truth is that you will need to plan for someone to inherit that property at some point. While I am a lawyer, I’m not one in SC so I sat down with real estate attorney, William Stroud, of Butler and College, LLC to field some of the more common questions.
He clears up some of the misconceptions and clarifies some of the best ways to protect your family (and especially your home) after you have gone on.
Doesn’t my spouse automatically get everything in the event of my death?
The short answer is “Not exactly.” If you do not have will, and you have children, your spouse would only receive 1/2 of your intestate property. For example, any property with a named death beneficiary such as a bank account, safe deposit box, or investment fund would pass outside your estate and directly to that beneficiary. As for real property, if you and your spouse owned all your real estate as Joint Tenants with Rights of Survivorship, your spouse would automatically receive the entire property upon your passing.
How can I protect my spouse if I don’t have a will or trust?
I can’t think of a single good reason why you should not have an estate plan. The easiest answer is to get an estate plan in place as soon as possible. If you are leaving everything to your spouse, it’s a pretty quick process and the bulk of the work is listing all your assets. If you want to make sure your marital home passes directly and quickly to your spouse, make sure to have the deed listed in both of your names as Joint Tenants with Rights of Survivorship. And, if you have any rental properties in LLCs, make sure you have succession provisions in your LLC’s operating agreement.
What happens if I don’t have a will?
If you don’t have a will in place, your estate (i.e., everything you own at the time of your death that does not automatically pass to a named beneficiary) is governed by SC Probate Code, Article 2 Intestate Succession and Wills. The chart below shows the basics but is simplified since there are some assets (such as life insurance policies and real estate owned jointly with that special survivorship language in the deed) that can pass directly to an individual. We’ll cover that later.
Do my children get the house if something happens to both of us?
Yes… but not until they are “of age”. Even if you have a will, your children must reach majority age to legally hold title to the house.
South Carolina adheres to the Uniform Gift to Minors Act (UGMA) which governs how a gift in a will or trust is protected for a minor child. The good news is that even if you die without a will, your children will inherit the house but the court will appoint a property guardian to manage the asset.
It’s best to have a will in place that spells out exactly what happens to your property if you AND your spouse pass. Your minor children’s inheritance should to be placed in in a custodial account to be managed on behalf of that child. If you have not established a custodial account, or trust, the probate court will appoint a property guardian to manage assets until the child reaches majority age.
Can my estate, specifically my family home, bypass probate?
Yes, it can. There are two very simple ways we can talk about here: 1) put your assets into a trust and 2) hold title as Joint Tenants with Rights of Survivorship.
Putting all your assets into a trust is the simplest way to achieve a complete probate bypass and leave your beneficiaries in a place where they can grieve your loss without the extra stress of probate.
Simply put, a Revocable living Trust holds title to your assets but you control the assets and can alter the beneficiaries and terms while you are alive. One really interesting aspect of this method is that, unlike a will, which becomes part of the public record during the probate process, your trust is completely private and your assets pass through your trust under its terms and not in the public eye.
Important details to note about a revocable living trust:
Remember to change the title to all property (bank accounts, real estate, vehicles, etc.) in the name of the trust.
Note that this type of trust is fully revocable and may not protect assets from creditors or future liabilities.
Placing your businesses in a trust can help ensure that they continue to run smoothly after you are gone without being tied up in probate.
Joint Tenancy with Right of Survivorship
Joint Tenancy with Right of Survivorship allows the surviving partner to avoid probate. The property only goes through probate upon the surviving spouse’s death. Taking title as JTROS is the most common way married/partnered couples take title. It is like having a built-in plan in the event something happens to one spouse. This type of title must be specified at the time you take title to the property. The deed itself must state “x and y AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP and NOT as TENANTS IN COMMON” which means that both parties own an equal undivided share of the property.
Thanks, William for answering all our questions. While this is in NO way an exhaustive compendium of estate law, we hope it helps to offer some guidance when setting up your plan. And, if you are in search of the perfect family home, let’s talk. We have some beautiful properties that have passed through family lines for generations.