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In-service Marital Rollover™

Federal and  South Carolina state law allow a spouse to transfer all or a portion of his/her qualified retirement account to the other spouse.

This allows a spouse to transfer her 401(k) or Other qualified account to the other spouse who then can roll it over to an IRA and have more control and flexibility, among other benefits.

A will directs what happens to your assets at the time of your death.

If someone dies without a will they are said to have died intestate, meaning that their assets will be disposed of by the State’s laws of intestate succession. Essentially, this acts as a generic will for all residents who die without a will. Because it is one-size-fits-all, the laws of intestacy often have unwanted results. For example, in South Carolina if a spouse (with children) dies, the other spouse will receive only half (1/2) of the deceased spouse’s estate and the children will receive the other half (1/2). In other words, a beloved spouse may become dependent on her children for adequate support.

A will does not control all assets at death. A will only controls your probate assets, i.e. assets that will be subject to probate. Not all assets are subject to the probate process, such as assets that transfer by operation of law. The most common assets of this type are beneficiary designations on life insurance and retirement accounts, payable on death and transferable on death (POD/TOD) accounts, and joint property with right of survivorship.


Probate is the process of proving a will. In order to be effective all wills must go through the probate process and are subject to the probate court. This makes all relevant matters public and generally slow. 

Probate is often expensive, as there are court fees, personal representative fees, document fees, and attorney fees. Attorney fees are the largest expense. General practice among attorneys is to charge by the hour. Given that almost all estates take over 8 months to probate, attorney fees can get quite high. Even for a moderate estate you can expect to pay thousands in attorney fees. At $200 dollars an hour, only 20 hours of work over the course of months will cost around $4,000 dollars! 

It is possible to entirely avoid the costs, delays, and publicity of probate by properly using a Living Trust.


A Trust is a legal device that holds assets for the benefit of someone else (or the same person if there are other beneficiaries). There are many kinds of trusts.

The most popular estate planning trust is primarily designed to avoid probate and is often called a Living Trust or a Revocable Trust.

A Living Trust is a trust that is created by the owner(s) for the benefit of the owner(s) and some other beneficiaries. With a Living Trust, the owner transfers assets to the trust and retains full control over the assets and the trust. There are no tax advantages or disadvantages by utilizing a Living Trust, it is simply a tax neutral device. At the death(s) of the owner(s) all assets are transferred to the beneficiaries (at once or even over a period of time) as the owner wished, without the delays, hassles, publicity, or expenses of probate. All assets can be transferred to the beneficiaries in as little as two weeks whereas probate would take months and possibly more than a year to complete.

Power of Attorney

A Power of Attorney is an agreement between a principal (the person granting the power) and an agent (the person receiving the power) giving the agent the ability to act as the principal in certain financial matters or all financial matters depending on the scope of the agreement.


A person can only grant a Power of Attorney to another when he or she has capacity, which means when someone becomes incapacitated he or she cannot then create a Power of Attorney; it would be too late. Thus, it is very important for you to create a Power of Attorney in advance; otherwise, a person would have to petition the probate court to appoint the principal a guardian and/or a conservator. 

Powers of Attorney can be durable. Only a Durable Power of Attorney remains in effect after the principal becomes incapacitated. 

A Springing Power of Attorney is a Power of Attorney that becomes effective only at the occurrence of a certain event. Most often, a Springing Power of Attorney is designed to come into effect upon the incapacity of the principal. This is often a good idea as it allows only the principal to have full control until he or she can no longer make decisions for herself or himself.

Health Care Power of Attorney

A Health Care Power of Attorney gives an agent the right to make medical decisions for the principal if the principal becomes incapacitated. An agent is required to act in the best interests of the principal. Every person should designate a trusted individual to be his or her medical decision maker if he or she is ever unable to make decisions for himself or herself; otherwise, a judge may designate a person for you.

Living Will

A Living Will is a legally binding document that explains how you would like to be treated medically dealing mostly with end of care treatment. Where a Health Care Power of Attorney gives a person the right to decide medical decisions for you, a Living Will explains how you would like to be treated medically in certain situations.

Charitable Planning

Charitable planning entails not only giving to great causes but deals with giving in the most tax efficient manner. For example, giving a charity your IRA at death often makes more sense than giving the IRA to an heir and giving charity cash or a non-tax favored portfolio, because a qualified charity is exempt from taxes and will have no gain on IRA withdrawals, unlike a person. Further, at a person’s death, their heir will receive a step-up in basis on many assets resulting in a tax-free basis on a stock portfolio and other assets. Bequeathing an IRA to a child and stocks to a charity would be a very costly mistake and, unfortunately, occurs often. 

However, giving to charity during your lifetime is sometimes the best way to give, because it will generate current income tax deductions and, thus, could lower your taxes.

One of the best tools for charitable planning is a Charitable Remainder Trust. A Charitable Remainder Trust allows you to give highly appreciated assets, such as real estate, to the Trust for the current benefit of yourself and the future benefit of the charity. You will receive a large tax deduction based on the future value of the gift to charity, and you will receive income for a term of years or for your life, all without having to pay the large amount of capital gains tax at the sale. 

A Charitable Remainder Trust allows you to dispose of highly appreciated assets without paying any taxes and reinvest the proceeds in a diversified portfolio of assets that can provide a more secure and safe income for you and/or your family.

Medicaid Trust

Medicaid is a jointly funded, Federal-State health insurance program for low-income and people in need. Most people will never qualify for Medicaid benefits until later in life when they need long term care, such as nursing home care. Because nursing home care is so expensive (often over $100,000) this often diminishes a couples’ lifetime retirement savings to virtually nothing. When a person qualifies for Medicaid, long term care services will be paid by the state. However, to qualify you must have sufficiently low income and assets levels.

However, once a person receives any long-term care services paid by Medicaid, the state is federally required to try to recover the amounts paid. The federal government has given the states discretion in deciding how aggressive the state can be in asset recovery. South Carolina has chosen a moderate approach and will go after virtually all assets and interests that the Medicaid applicant owned at his or her death, unless the assets were held in trust. This means that whatever Medicaid pays for a person’s long-term care needs South Carolina will try to recover that amount from the person’s estate (or the estate of the spouse). This often effectively makes the State the person’s sole heir, meaning the desired heirs will often receive nothing. 

To avoid this outcome, and to ensure that a person will leave something to their desired heir(s), many people will add a joint tenant, such as a son or daughter, to their home, or retain a life estate in the home and give the remainder to a son or daughter. However, these are often inferior planning strategies. Both methods have serious control issues and negative tax ramifications. To sell the house (its entire interest) all parties would have to agree. Further, the interests given are likely completed gifts and will require the filing of a gift tax return. Furthermore, taxable gain upon the sale will likely be attributed to multiple parties and not everyone would qualify for the principle residence taxable gain exclusion (IRC 121). Worst of all, any joint tenant can sever the tenancy and sell his share or even his creditors could get to his share.

Medicaid requires that all gift transfers must occur 5 years before the transferor applies for Medicaid. Thus, in order to protect your estate from Medicaid recovery and to be eligible for Medicaid, all transfers (other than fair market value sales) must have occurred over 5 years prior. Proper Medicaid planning requires forward planning.

If one is unlikely to afford long term care costs, likely not need care for at least 5 years, and would like to ensure that something is passed to a desired heir, then an Irrevocable Medicaid Trust is often the best choice. Any type of asset can be given to the trust, but most commonly a person’s home is transferred to the trust. The settlor (person who creates the trust) is given the exclusive right to live in the home for life and to receive all income from the property. The person designates a beneficiary who will inherit the home at the settlor’s death. Specific provisions in the trust will allow the home to be sold and another bought in its place, all while meeting the requirements of IRC 121, and allowing the settlor to exclude up to $250,000 of gain ($500,000 for a married couple). Further, the trust will be structured as a grantor trust, meaning no separate trust tax return will be required. Most importantly, the trust will still qualify for a step-up in basis under IRC 1014, which means an heir can receive a home with a low tax basis and not have any gain upon its sale. Lastly, a gift tax return will likely not be required as the gift will be deemed incomplete. If the 5-year requirement is met, the trust will avoid Medicaid recovery.

Medicaid crisis planning is planning that usually occurs after a person needs Medicaid assistance. Because of the 5-year lookback on transfers, transfers that will avoid recapture are generally not possible. However, depending on the situation, there may still be ways in which assets can be protected from Medicaid estate recovery.

Currently, assets held within a Living Trust avoid Medicaid recovery in South Carolina. This is the easiest way to avoid recovery right now, but this method could cease to be effective at any moment. A proper Medicaid trust is often the better way to protect your estate from recovery.

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