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In South Carolina, an executor is referred to as a Personal Representative (“PR”). Generally, a PR’s duties consist of collecting the probate assets, paying the debts of the decedent’s estate, and distributing the remainder to those persons entitled to receive them. A Last Will and Testament is probated and a person appointed PR by filing the original Will and an “Application for Informal Probate and Appointment” with the local Probate Court. Either the Probate Court or the PR arranges for the publication of a Notice to Creditors in the local newspaper once a week for three (3) successive weeks. South Carolina’s statute gives creditors eight (8) months from the date of first publication to file a claim against the estate. Within one (1) month of his appointment, a PR is required to give written notice of his appointment to all devisees under the Will and potential heirs. A copy of the “Information to Heirs and Devisees” is filed in the Probate Court along with an affidavit known as a “Proof of Delivery.” Within ninety (90) days of his appointment, a PR is required to file an “Inventory and Appraisement” describing and valuing the assets of the decedent’s taxable estate. If the gross taxable estate is more than the applicable exclusion (which is currently $1,500,000), a PR is required to file a federal and South Carolina Estate Tax Return (Form 706) within nine (9) months of the decedent’s date of death. If the estate receives sufficient gross income between January 1 and the decedent’s date of death, a final Individual Income Tax Return (Form 1040) is required. If the Estate receives $600 of gross income during its taxable year, an Income Tax Return for Estates and Trusts (Form 1041) is also required. When applying for insurance proceeds, a PR should request a Form 712 (Life Insurance Statement) from each insurance company. After the eight (8) month claims period has passed, a PR can petition the Probate Court to discharge the PR of his or her responsibilities. A copy of the “Petition for Settlement,” “Final Accounting,” “Proposal for Distribution” and “Notice Of Right To Demand A Hearing” is mailed to all devisees and potential heirs. The original of such documents is filed with the Probate Court, along with a Proof of Delivery. For real estate, a Deed of Distribution is recorded at the office of the Register of Deeds, with a copy filed at the Probate Court. A PR distributes all assets before the PR is discharged and the estate is closed. If a Form 706 is filed, the Probate Court will not close the estate until the Court receives an Estate Tax Closing Letter from the South Carolina Department of Revenue and the IRS.
The above description is intended to provide Web site browsers with some general information about the subject matter covered but is provided with the understanding that this Web site is not engaged in rendering legal services. If legal advice pertaining to estate administration is required, the services of an attorney at Buist Moore Smythe McGee P.A. should be sought.
After a divorce, individuals sometimes forget to change the designated beneficiary of such nonprobate assets as life insurance, IRAs and 401(k) accounts. It is incumbent for a divorcee to update his or her estate plan. A client advised to “update his estate plan” may execute a new Last Will and Testament and powers of attorney, but not think about updating payable on death designations. If an individual does not update their Last Will, S.C. Code Ann. §62-2-507 revokes the portion of the Will which would leave any property to the ex-spouse and any provision in the Will which names the ex-spouse as executor. I am not aware of any statute which would revoke an ex-spouse’s right to serve as an attorney-in-fact under a power of attorney. The following line of cases deals with the effect a divorce has on nonprobate transfers and hinges primarily on the language used in the separation agreement:
Auten v. Snipes, 370 S.C. 664, 636 S.E.2d 644 (S.C.App. 2006).
Stribling v. Stribling, 369 S.C. 400, 632 S.E.2d 291 (S.C.App. 2006).
Rushton v. Lott, 330 S.C. 418, 499 S.E.2d 222 (S.C.App. 1998).
Estate of Revis v. Revis, 326 S.C. 470, 484 S.E.2d 112 (S.C.App. 1997).
Duncan v. Investors Diversified Servs. Inc., 285 S.C. 467, 330 S.E.2d 295 (1985).
A recently decided case deals with qualified retirement plans governed by ERISA. Regardless of what a separation agreement provides, an ERISA plan will be governed by the “plan document rule.” Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, 129 S.Ct. 865, 172 L.Ed.2d 662 (Jan. 26, 2009).
The U.S. Supreme Court said that a plan administrator need look no further than the terms of the plan document. Assume you have a separation agreement in which one party specifically waives his/her rights to the other party’s 401(k) account. Since the 401(k) plan documents will probably provide that the only way to change a designated beneficiary is by delivering a completed form to the plan administrator, the separation agreement will not terminate the designation of the former spouse as the beneficiary of the 401(k) account. The plan administrator will pay the account to the former spouse upon the death of the participant. The participant’s heirs or successors may have a claim against the former spouse, but they will have no claim against the administrator of the 401(k) plan.
To ensure compliance with requirements imposed by the IRS, please note that any Federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
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