The Swier Law Firm Estate Planning and Probate Law FAQs

In South Dakota, a creditor of the decedent must be paid from the assets of the estate before there is any distribution of the estate property to the heirs and beneficiaries.  Determining the validity of debts and payment of those debts is usually done during the probate proceedings.  If there is money owed to the estate, these funds are usually collected during the probate proceedings.

In South Dakota, the administration of an estate typically involves these four types of expenses:

• Bond Premiums.
• Published Notices. Notices may be published during the administration of an estate. These notices are for the protection of those interested in the estate and vary in cost.
• Court costs. Court costs paid to the Clerk are in an amount set by law.
• Personal Representative and Attorney Fees. The fee received by the personal representative is set by law. The attorney who assists in the administration of an estate is hired by the personal representative of the estate and those fees are a matter of contract. The personal representative is entitled to reimbursement from the estate for payment of attorney fees in handling the estate. If the personal representative is an attorney, he will receive only one fee

No. Under South Dakota's Uniform Probate Code, it is no longer possible to disinherit a spouse, unless the spouse agrees.

South Dakota's probate laws are designed to protect the rights of heirs and creditors and to assure the orderly collection, preservation, and transfer of property.  The probate court also provides for the collection of appropriate state estate, federal estate, income, real property, sales and use taxes before the estate may be closed

In South Dakota, a Personal Representative is a "fiduciary" who (except as otherwise provided in the will) must observe the standards of care in dealing with the estate's assets that would be observed by a prudent person dealing with the property of another.

A "fiduciary duty" exists when an individual places the utmost trust and confidence in another person to manage and protect property or money.  In other words, the "fiduciary" has an obligation to act for another's benefit.

 

A codicil is a legal document written by your estate planning attorney that changes specific provisions in your will but leaves all other provisions unchanged.

Any property or assets given as a gift (including money) are subject to the federal gift tax.  However, there are numerous exceptions.  Here are some ways you can transfer assets without incurring gift taxes:

• Give an unlimited number of people gifts up to $14,000 each per year ($28,000 if you're married). These gifts are called annual exclusion gifts.
• Pay any amount toward another person's tuition or medical expenses, as long as you pay these amounts directly to the school or medical provider.
• Give any amount to your spouse.
• Give any amount to charity.

If you make contributions to a Section 529 college savings plan or prepaid tuition plan on behalf of another person, you can contribute up to five years of annual exclusion gifts, or $70,000, in a single year ($140,000 if you're married), provided that you make the proper election on a timely filed gift tax return.  If the election is made, then any additional gifts over the annual exclusion amount to that individual during the five-year period will be subject to gift tax.  If you die before the end of the five-year period, a prorated portion of your gift will be subject to estate tax.

Even if you make a taxable gift, you don't have to pay tax until you exhaust your gift tax exemption amount.  This exemption currently allows for $5.25 million of taxable gifts to be made during your lifetime before a tax payment is required.

You should always consult with your tax advisor so that your overall circumstances can be taken into consideration and that you're properly reporting the gifts.

Source:  The Vanguard Group, Inc.

Under current law, the amount of assets you can pass after your death without incurring estate tax (known as the estate tax exemption amount) varies depending upon the year of your death.

Estate tax exemption amounts

Calendar year	Estate tax exemption
2005	$1,500,000
2006	$2,000,000
2007	$2,000,000
2008	$2,000,000
2009	$3,500,000
2010	$5,000,000
2011	$5,000,000*
2012	$5,120,000*
2013	$5,250,000*

* This amount will be adjusted for inflation annually.

The estate tax exemption amount is reduced dollar-for-dollar if you've used all or part of the $5.25 million gift tax exemption during your lifetime.

Keep in mind that South Dakota does not impose an estate or inheritance tax. 

Source:  The Vanguard Group, Inc.

There are many good reasons for setting up a trust while you're alive.  These trusts are commonly referred to as living trusts or revocable trusts and are often established because:

• You want to ensure a more seamless management of your assets in the event you become incapacitated or otherwise unable to manage your financial care.
• You own property in more than one state, so that your will would have to be probated in each of those states.
• You want to avoid South Dakota's probate process.
• You'd like to better ensure that your estate plan is kept private and not made a matter of public record.

Source:  The Vanguard Group, Inc.

There are many good reasons for having a trust created upon your death.  These trusts may be created through a will or a living trust:

• You have a minor child or children with special needs or other diabilities who can't financially care for themselves.
• You have concerns that your beneficiary may not be able to effectively manage the inherited assets.
• You'd like to protect the assets from any future creditors a beneficiary may have.
• You want to provide a structure around when, under what circumstances, and for what purposes your beneficiary should receive assets.
• You'd like to minimize the amount of estate taxes that might have to be paid at the death of the beneficiary through generational tax planning.
• You want to ensure that the trust assets eventually go to specified beneficiaries, whether those are individuals or charities.

Source:  The Vanguard Group, Inc.