UPDATED Avoid $591/Day Penalty: Business Owners, File a BOI Report ASAP
UPDATE: Under FinCEN’s final interim rule, U.S. companies and U.S. persons involved in foreign companies no longer need to file a BOI Report. Individuals involved in a foreign company still must file a BOI Report. Now, “reporting companies” are “only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as ‘foreign reporting companies’).” Here are the links to the short statement and the longer interim rule.
UPDATE: FinCEN will not issue fines or penalties for failure to file or update BOI information by the March 21st, 2025, according to a statement put out on February 27th. FinCEN will provide an interim rule no later than March 21st with guidelines on deadlines.
UPDATE 02/25/25: The new deadline to file BOI reports is March 21, 2025, for most businesses, after the February 18th ruling by the U.S. District Court for the Eastern District of Texas in the case of Smith, et al. v. U.S. Department of the Treasury, et al.
If you were supposed to file a Beneficial Ownership Information report by December 31, 2024, but waited to see what would happen in the courts, you now have until March 21st to go ahead and file. Read the original blog post, below, for information on how to do that.
Find the official notice from FinCEN here (PDF), and stay alert for more updates, as FinCEN states it “will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.”
UPDATE: The requirement to file BOI reports is on hold – at least for now. From The National Law Review: “On December 3, 2024, the U.S. District Court for the Eastern District of Texas entered a preliminary injunction suspending enforcement of the Corporate Transparency Act (CTA) and its implementation of regulations nationwide.” In response, the Department of Justice issued a notice of appeal on December 5th.
What this means for you: If you have already submitted your BOI report(s), there’s nothing left to do. If you have not yet done so, you may choose to do so anyway or wait and see how the legal proceedings play out. As noted in the article linked above, “reporting obligations may change on short notice,” so make sure to monitor the news for updates. You can also come back to this post, which we will keep updated.
Original post published Nov. 15, 2024:
Attention U.S. business owners: If you are a beneficial owner in a non-exempt company, you must submit a Beneficial Owner Information Report. Depending on when your company was established, you may have 30 or 90 days from when your company was created or until January 1, 2025, to do so.
The penalty for failing to file is steep – over $500 per day in fines and even jail time.
The new reporting requirement is due to the Corporate Transparency Act (CTA), which was passed in late 2020 after being tacked onto a larger bill (the National Defense Authorization Act for Fiscal Year 2021). Here’s what to know about the reporting requirement and what you should do.
Frequently Asked Questions
How Do I File a Beneficial Owner Information Report?
You can file a BOIR online at https://www.fincen.gov/boi.
What is a Beneficial Owner Information Report?
A Beneficial Owner Information Report (BOIR) is a required submission to the Financial Crimes Enforcement Network (FinCEN, part of the Treasury Department) that contains information on the company and its beneficial owner(s). This information includes full name, address, date of birth, and ID.
What is a “Beneficial Owner”?
A “beneficial owner” is someone who owns or controls at least 25% of the “ownership interests” of the company or someone who exercises “substantial control” over the company.
Who Must File a Beneficial Owner Information Report?
A BOIR must be filed for every “reporting company” which is established in the U.S. or registered to do business in the U.S. and is not exempt (see below for exemptions). This may be an LLC, a corporation, or any other business entity that was created by filing with the secretary of state, as well as some trusts.
Just one BOI report is required per company, regardless of the number of beneficial owners. The report is typically filled out and filed by one of the beneficial owners, such as a member, manager, director, or corporate officer, or an attorney working at or for the company.
Which Companies Are Exempt?
Some companies qualify for an exemption, meaning they are not required to file a BOI report.
These include companies that are already subject to regulatory oversight such as banks, credit unions, insurance companies, and tax-exempt entities. “Large operating companies” are also exempt; under the CTA, a “large operating company” is one with a physical office in the U.S., more than 20 full-time employees, and over $5 million in gross receipts or sales for the previous year as reported on a federal income tax or information return.
Find the full list of the 23 exempt entities on the FinCEN website.
When is the BOIR Due?
Companies formed or established before January 1, 2024 have until January 1, 2025 to submit a BOIR. Update 02/25/25: the new deadline is March 21, 2025 for most companies. Companies that had previously been granted an extension beyond March 21st have until the later deadline, as stated in the February 18th FinCEN notice.
Companies that have ceased to exist but were still in existence as of January 1, 2024 have until January 1, 2025 to submit a BOIR. Update 02/25/25: the new deadline is March 21, 2025.
Companies formed or established between January 1, 2024 and January 1, 2025 have 90 days to submit a BOIR.
Companies formed or established after January 1, 2025 have 30 days to submit a BOIR.
Is a BOIR Due Every Year?
No, as of now, just one BOIR is required. However, substantial changes must be reported within 30 days with a new BOIR, if, for example, the beneficial owners change or a previously non-exempt company becomes exempt (or vice versa).
What is a FinCEN Identifier?
A FinCEN ID is a unique 12-digit number an individual or entity may use when submitting a BOIR. It is not required. However, if you are submitting multiple BOIRs, a FinCEN ID can help speed up the process by allowing you to submit your personal information just one time rather than repeating it again and again.
What Are the Penalties for Non-Compliance?
According to FinCEN, someone who “willfully” violates the BOI reporting requirements may be fined for each day the violation continues. The amount of the fine adjusts annually with inflation, so what was originally a $500 per day fine was (as of 2024) $591 per day.
Willful violation can also lead to up to two years in prison and a $10,000 fine.
Uncertainty Over the Future of the CTA
The stated intention of the Corporate Transparency Act is to reduce money laundering, financing of terrorism, and other financial crimes. However, it has already been challenged in a number of lawsuits, as some see it as intrusive and unconstitutional. The future of the CTA is unclear, as these legal challenges could lead to significant changes in reporting requirements.
But that’s a long way off, if it happens at all. For now, you can stay in compliance and avoid steep financial penalties (and possible imprisonment) by submitting a BOIR for any company in which you’re a beneficial owner.
Protect Your Interests, Avoid Mistakes, and Grow Your Business with Gem McDowell
For legal help and strategic advice on business in South Carolina, contact Gem of the Gem McDowell Law Group. Whether you want to establish, buy, sell, or grow your business, Gem and his team can help. Call the Myrtle Beach or Mt. Pleasant, SC office today at 843-284-1021.
Can You Prevent Future Spouses from Inheriting? Irrevocable Wills vs. Public Policy and the Ward Case
Imagine your spouse dies and you discover that not only were not provided for in the will, but that their previous will specifically barred you from inheriting anything at all. What would you do?
This is what happened to Mary K. Ward. Mary was the fourth wife of Stephen Day Ward, Jr., who had an irrevocable will from an estate plan created with his third wife, Nancy. While Stephen’s will explicitly barred future spouses from inheriting anything, South Carolina statute provides for spouses left out of the will. This led to an interesting conflict: which should prevail, public policy or a valid contract?
The matter, In RE: Estate of Stephen Day Ward, Jr., went before the South Carolina Court of Appeals in 2024 (read it here), and we go into it below.
It’s a good look at how South Carolina courts view public policy and at the powers and limitations of irrevocable wills. It’s especially important if you have or have considered getting an irrevocable will.
Should You Get an Irrevocable Will? Pros and Cons
Irrevocable wills are wills that cannot be changed or amended once signed. The only exception is divorce, which typically only blocks the ex-spouse from acting as executor and inheriting anything; the rest of the will stands. (The laws regarding this vary by state; check in your state.)
Some people, often married couples, choose irrevocable wills because they cannot be changed. They want their estate plan to be carried out as originally agreed, even if one spouse predeceases the other by many years. The surviving spouse is bound by the terms of the will(s) they created together and cannot change the terms for any reason.
Advantages of an irrevocable will over a traditional revocable will:
- Guarantee the estate plan will be carried out, even after death
- Protect assets from being passed down to the surviving spouse’s new partners, spouses, or stepchildren, or other potential heirs
- Prevent the surviving spouse from being pressured into changing terms of will
We do not draft irrevocable wills here at our law firm – neither irrevocable joint wills (one document for two or more people) nor mutual wills (separate documents for each individual).
Why not? Because things change. Life circumstances, family dynamics, personal finances, and state and federal law affecting estate planning can change drastically, but an irrevocable will can lock you into decisions you made long ago when life was very different. Further, other tools can be used to accomplish many of the same goals. We’ll go into some of those options down below.
Finally, there are no guarantees, even with an irrevocable will. Which leads us to the Ward case.
The Irrevocable Wills and Estate Plan of Stephen and Nancy
In 2013, Stephen Ward married for the fourth time, to a woman named Mary. They did not create an estate plan together during their marriage, and Stephen did not take any action with regards to the will he executed during his third marriage to wife Nancy.
Stephen died in 2016. Under the terms of his will, Mary was barred from inheriting anything.
Mary then sought, through her daughter, to be declared an omitted spouse. As an omitted spouse, she would be entitled to the share of Stephen’s probate estate that she would have received had there been no will at all, which is 50% under South Carolina’s intestacy laws.
Stephen’s children (the Appellants), acting as his co-personal representatives, disagreed that Mary should receive an inheritance. That’s because Stephen and Nancy had executed an estate plan together in 2005 which barred any future spouse from inheriting anything.
The Terms of the Estate Plan with Third Wife Nancy
The estate plan, which included Stephen’s irrevocable last will and testament (the Will) and an agreement for mutual wills and trusts (the Agreement), worked with interlocking provisions to ensure their wishes were carried out in this manner:
- After one spouse died, his or her assets would “pour over” into a trust controlled by the other
- After the death of the other spouse, the remaining assets would be dispersed among Stephen’s and Nancy’s children
These terms are quite common among couples. The Agreement contained the following terms regarding re-marriage, too:
4.2 If he or she remarries after the death of the
Predecessor, he or she will:
4.2.1 Thereafter ratify his or her Will and
Trust in the form and with the provisions
contained in his or her Will and Trust
annexed hereto; and
4.2.2 As a condition of such re-marriage,
require any person he or she re-marries to
legally and unconditionally waive his or her
right to an Elective Share in the Property
provided to them under S.C. Code Ann.
Section 62-2-201
Stephen did not carry out the terms of the Agreement after his marriage to Mary to ratify the will or to have Mary waive her right to elective share.
The matter was heard in probate court and circuit court before eventually going before the Court of Appeals of South Carolina.
The Four-Part Test for Omitted Spouses
Did Mary qualify as an “omitted spouse”? To settle the matter, the court looked to a four-part test it previously established in Green v. Cottrell (2001), which essentially turns the relevant statute (SC Code Section 62-2-301) into a checklist:
“A surviving spouse who wishes to qualify as an ‘omitted spouse’ must demonstrate:
- The decedent spouse executed the will in question prior to the marriage;
- The will does not provide for her as the surviving spouse;
- The omission was unintentional; and [sic]
- The decedent did not provide for the spouse with transfers outside the will.”
The first two points: undisputedly true.
Point #3: “Hotly disputed.” The court states that had Stephen executed the documents required by section 4.2 of the Agreement – namely, ratifying the Will and Trust and having Mary sign a waiver of elective share – the Appellants would be in a better position to argue that the omission of Mary from the Will was intentional. Since he didn’t, the court agrees with the probate court that the omission was not intentional.
(It’s worth noting that witnesses at the earlier trial testified Stephen said he still intended for his estate to be handled as described in the Will, and that getting married would not change that. However, the “Dead man’s” statute, SC Code Section 19-11-20, generally prohibits witnesses from providing testimony about conversations with the deceased if they would stand to benefit from it.)
Point #4: Also “hotly disputed.” Brian Ward, one of Stephen’s children, testified in probate court that Mary had received several things during the marriage and after Stephen’s death, including a leased Toyota Camry, a timeshare in Las Vegas, the $17,000 capital percentage from a local club membership, and approximately $13,000 in total. The Appellants argued that these assets were a transfer outside of the will. The court disagreed, saying the value does not approach what Mary would otherwise have been entitled to from an estate valued in excess of $900,000.
The court found that Mary was an omitted spouse under this test.
When a Valid Agreement and Public Policy Clash
“South Carolina treats with great deference a testator’s intent in disposing of his or her property,” says the SC Court of Appeals. Yet it also acknowledges that sometimes a testator’s intent may conflict with public policy.
In this case, there’s no dispute that the Will and the Agreement, which would bar Mary from inheriting anything, were valid. This directly clashes with South Carolina’s protections for surviving spouses from being unknowingly disinherited (read more about elective share) or from being omitted entirely (read more about omitted spouse), which is considered a matter of public policy.
Ultimately, the appeals court AFFIRMED the circuit court and the probate court, which had said that allowing “blanket” provisions to overcome an individual’s statutory rights to the omitted spouse’s share violated public policy.
Alternatives to Irrevocable Wills for Asset Protection
As stated above, we do not use irrevocable wills here at our firm. We use other estate planning tools to accomplish the same goals.
- Life estate deeds allow a surviving spouse to live in the home but ensure the home is passed to a different heir upon the spouse’s death
- Irrevocable trusts remove assets from probate estate altogether
- Testamentary trusts created by the will upon the death of the testator
- QTIP trusts provide income to surviving spouse while reserving assets for children
- Prenuptial or postnuptial agreements to waive elective share
These are just some of the options available. Speak with an estate planning attorney in your state about the right options to achieve your goals.
Personalized Estate Planning
Does your current estate plan reflect your family’s wishes? Are you as protected as you could be? For help creating, amending, or reviewing your estate plan, call Gem McDowell today. He and his team at the Gem McDowell Law Group help individuals and families in South Carolina create comprehensive, customized estate plans that help protect assets, preserve good family relationships, and provide peace of mind. Schedule your free consultation today by calling (843) 284-1021. We have offices in Myrtle Beach and Mt. Pleasant, SC, and are looking forward to speaking with you.
The One Big Beautiful Bill: Implications for Estate Planning & Running a Business
H.R.1 of the 119th Congress, better known as the “One Big Beautiful Bill Act,” was signed into law on July 4, 2025. This omnibus bill contains many provisions that could affect estate planning and running a business. This blog is a very brief overview highlighting some key points we believe you should be aware of.
Contact your own CPA, business attorney, and/or estate planning attorney to discuss how the bill affects you.
Implications of the OBBB for Estate Planning
The following provisions in the OBBB affect estate planning:
- $15 million applicable exclusion amount for federal estate taxes, lifetime gift taxes, and generation-skipping transfer (GST) taxes
- 1031 “Like Kind” exchanges preserved
- Step-up in basis at death is the same; it has not been repealed or capped
Check out this blog for a closer look.
Implications of the OBBB for Business Owners
OBBB affects some businesses, too.
- Expansion of Qualified Small Business Stock (QSBS) exclusion (read more about the QSBS here on our blog)
- The Qualified Business Income (QBI) deduction is now permanent (read more about the QBI deduction on the IRS website)
- Doubles available deductions under Section 179 from $1.25 million to $2.5 million
Many additional provisions in the bill have implications for yearly tax planning and managing cash flow, which you should discuss with your company’s CPA and/or tax preparer.
South Carolina Business Attorney Gem McDowell
Gem and his team at the Gem McDowell Law Group help people start, grow, and protect their businesses in South Carolina. Gem McDowell is a problem solver with over 30 years of experience in business law and commercial real estate, helping business professionals protect their interests and avoid mistakes. Call to schedule a free consultation today at (843) 284-1021.
Estate Planning After the One Big Beautiful Bill
The signing into law of the One Big Beautiful Bill Act (H.R. 1 of the 119th Congress) on July 4, 2025 has a few very important implications for estate planning. Here’s a brief look at them.
Contact your own CPA and/or estate planning attorney to discuss if and how you are personally affected.
The Combined Exclusion Amount is $15 Million, Permanent and Tied to Inflation
Each individual may transfer up to $15 million, and married couples up to $30 million, tax-free during life or after death, starting in 2026. This $15 million combines exclusions for federal estate taxes, lifetime gift taxes, and generation-skipping taxes (GST) into one.
Read more about this and the history of the applicable exclusion amount / unified credit in our blog here.
1031 “Like-Kind” Exchanges Are Fully Preserved Without Limits
Individuals and real estate investors can defer capital gains taxes by exchanging one investment property for another of “like kind.” The OBBB did not include any caps or restrictions on 1031 exchanges.
Read more about 1031 “Like-Kind” Exchanges here on our blog.
Get Help with Estate Planning in South Carolina – Call Gem McDowell
If you need help with wills, trusts, or estate plans for estates large or small, call the Gem McDowell Law Group. Gem and his team help individuals and families create personalized wills and estate plans that reflect their unique circumstances and wishes. With offices in Myrtle Beach and Mt. Pleasant, SC, we’re here to help. Call us at (843) 284-1021 today to schedule a free consultation.
Applicable Exclusion Amount Now $15 Million – Its History and Future
The One Big Beautiful Bill (OBBB) has set the applicable exclusion amount taxes at $15 million per individual, or $30 million per married couple, starting in 2026. This amount will be indexed for inflation starting in 2027.
Notably, the OBBB has made these changes permanent. It’s been common in recent decades for tax legislation to contain sunset provisions that mean specific provisions automatically expire after a period of time. As of now, the applicable exclusion amount can only be changed by an act of Congress.
Making the amount permanent without a looming expiration date allows individuals and families to plan ahead with more certainty. As you’ll see below, the exclusion amount/unified credit has changed frequently over the years, making estate planning challenging due to uncertainty.
But first, here’s what you should know about this combined $15 million exclusion amount.
$15 Million Exclusion Amount: What to Know
*An individual may transfer up to $15 million either during life or at death without triggering any federal estate taxes, lifetime gift taxes, or generation-skipping transfer (GST) taxes.
*This amount doubles to $30 million per married couple. Portability rules mean that any amount of the $15 million exclusion a spouse did not use before his or her death can be used by the surviving spouse.
*Transfers are taxed above the limit of $15 million per individual or $30 million per married couple.
*The exclusion does not apply to transfers from one spouse to his or her U.S.-citizen spouse. Transfers of money between spouses are unlimited under the unlimited marital deduction, as long as the spouse is a U.S. citizen.
History of the Applicable Exclusion Amount / Unified Credit
Simply because it’s interesting, let’s take a look at the historical exclusion / unified credit amounts and top tax rates over the years.
Notice 1. Historically, the amount of the exclusion / credit (adjusted for inflation to 2025 dollars) before 2018 has never been close to $15 million, and 2. How much the top tax rate has varied over the years, from just 10% in 1916 to an incredible 77% from the 40s to the 70s.
2011-Present: Applicable Exclusion Amount
Starting in 2011, the “applicable exclusion amount” amount combined exemptions for federal estate taxes, lifetime gift taxes, and GST taxes, just as it does today after the OBBB.
| Year of Death: | Applicable Exclusion Amount: | Top tax rate: |
| 2026 | $15,000,000 | 40% |
| 2025 | $13,990,00 | 40% |
| 2024 | $13,610,000 | 40% |
| 2023 | $12,920,000 | 40% |
| 2022 | $12,060,000 | 40% |
| 2021 | $11,700,000 | 40% |
| 2020 | $11,580,000 | 40% |
| 2019 | $11,400,000 | 40% |
| 2018 | $11,180,000 | 40% |
| 2017 | $5,490,000 | 40% |
| 2016 | $5,450,000 | 40% |
| 2015 | $5,430,000 | 40% |
| 2014 | $5,340,000 | 40% |
| 2013 | $5,250,000 | 40% |
| 2012 | $5,120,000 | 35% |
| 2011 | $5,000,000 | 35% |
1977-2010: Unified Credit
From 1977 to 2010, the “unified credit” was used, which was the total exemption amount for federal estate taxes and lifetime gift taxes. The GST tax was introduced in 1976 but had its own separate limits.
| Year of Death: | Unified Credit Amount | Adjusted for inflation to 2025 dollars (rounded): | Top tax rate: |
| 2010* | $5,000,000* | $7,330,000 | 35% |
| 2009 | $3,500,000 | $5,250,000 | 45% |
| 2008 | $2,000,000 | $3,000,000 | 45% |
| 2007 | $2,000,000 | $3,140,000 | 45% |
| 2006 | $2,000,000 | $3,200,000 | 46% |
| 2005 | $1,500,000 | $2,500,000 | 47% |
| 2004 | $1,500,000 | $2,570,000 | 48% |
| 2003 | $1,000,000 | $1,750,000 | 49% |
| 2002 | $1,000,000 | $1,800,000 | 50% |
| 2001 | $675,000 | $1,200,000 | 55% |
| 2000 | $675,000 | $1,270,000 | 55% |
| 1999 | $650,000 | $1,260,000 | 55% |
| 1998 | $625,000 | $1,230,000 | 55% |
| 1987-1997 | $600,000 | $1,200,000-$1,700,000 | 55% |
| 1986 | $500,000 | $1,500,000 | 55% |
| 1985 | $400,000 | $1,200,000 | 55% |
| 1984 | $325,000 | $1,000,000 | 55% |
| 1983 | $275,000 | $890,000 | 60% |
| 1982 | $225,000 | $760,000 | 65% |
| 1981 | $175,000 | $640,000 | 70% |
| 1980 | $161,000 | $660,000 | 70% |
| 1979 | $147,000 | $680,000 | 70% |
| 1978 | $134,000 | $681,000 | 70% |
| 1977 | $120,000 | $650,000 | 70% |
*2010 was unusual. For most of the year, there was no federal estate tax, as a 2001 tax law repealed it for the year 2010. In December 2010, Congress passed a law retroactively reinstating federal estate tax above the exemption amount of $5 million with a 35% top tax rate. Executors/personal representatives had a choice to opt in to the $5 million limit or opt out and use carryover basis rules.
1916-1976: Estate Tax Exemption
Prior to 1977, the federal estate tax had its own exemption amount. The gift tax was not introduced until 1932, and had its own separate exemption.
| Year of Death: | Federal Estate Tax Exemption Amount | Adjusted for inflation to 2025 dollars (rounded): | Top federal estate tax rate: |
| 1942-1976 | $60,000 | $343,800- $1,200,000 | 77% |
| 1941 | $40,000 | $900,000 | 77% |
| 1940** | $40,000 | $910,000 | 70%** |
| 1935-1939 | $40,000 | $908,000-$930,000 | 70% |
| 1934 | $50,000 | $1,200,000 | 60% |
| 1933 | $50,000 | $1,230,000 | 45% |
| 1932 | $50,000 | $1,110,000 | 45% |
| 1926-1931 | $100,000 | $1,780,000-$2,000,000 | 20% |
| 1925 | $50,000 | $918,000 | 40% |
| 1924 | $50,000 | $918,000 | 40% |
| 1918-1923 | $50,000 | $945,000- $1,135,000 | 25% |
| 1917 | $50,000 | $1,360,000 | 25% |
| 1916 | $50,000 | $1,530,000 | 10% |
**In 1940, a 10% surtax added on the total tax liability to raise funds for wartime, which increased the top rate from 70% to an effective rate of 75.4%, according to the IRS.
Data taken from the IRS Estate Taxes page, IRS publication “The Estate Tax: Ninety Years and Counting” (for years 1916-2007), and IRS publication 950 (Rev. October 2011).
In the past, many more families were affected by federal estate taxes, lifetime gift taxes, and GST taxes. Now that the exclusion amount is $15 million/$30 million, most families in America do not have to factor it into their estate planning.
Estate Planning in South Carolina
For help with wills, trusts, and more, call Gem at the Gem McDowell Law Group. Gem and his team help individuals and families in South Carolina create the customized, comprehensive estate plans they need to protect their interests and provide peace of mind. Call today to schedule your free initial consultation at (843) 284-1021.
QSBS – What is QSBS? Changes to QSBS Exemption in 2025
The Qualified Small Business Stock (QSBS) exclusion has been significantly expanded with the passage of the One Big Beautiful Bill (OBBB) Act on July 4, 2025. This change could mean savings of thousands or even millions of dollars in taxes for those who invest in small businesses.
Here’s a high-level overview on what QSBS is and what’s changed with the OBBB. We recommend speaking with your own CPA and/or business attorney about what these changes could mean for your business.
What is the QSBS Exemption?
The QSBS exemption incentivizes investment in small businesses. It allows investors, startup founders, early employees, and others to drastically reduce – or entirely eliminate – taxes on capital gains from certain qualifying stocks.
The amount that can be excluded is the greater of:
- $15 million in capital gains or
- 10 times the adjusted basis
for qualifying stocks issued after July 4, 2025. (The pre-OBBB limit of $10 million applies to QSBS purchased before this date.)
The exemption amount applies per issuer, meaning if an investor separately invests in ten companies, he or she could potentially have 10 x the $10 million or $15 million cap (depending on when the stock was purchased).
What Qualifies as a Qualified Small Business Stock?
Only certain shares in U.S. C corporations that meet the following criteria from 26 U.S. Code Section 1202 of the Internal Revenue Code qualify as QSBS:
- Domestic C corporation only
- Excludes many industries, including health, law, consulting, performing arts, brokerage services, banking, financing, farming, and more
- Corporation’s gross assets cannot be more than $75 million when stock is issued
- Business must be active, with at least 80% of assets used to conduct business
- Stock must be purchased directly from the corporation itself
- Stock must be held for at least three years to get any tax benefits, and at least five years to get full tax benefits
- Stock must be issued after Aug. 10, 1993
Individuals, trusts, and pass-through entities can hold QSBS and take advantage of the exemption. C corporations are the only entity that can issue QSBS, but they are not allowed to benefit from the QSBS exemption themselves.
How Has the QSBS Exemption Changed with the One Big Beautiful Bill Act?
Previously: The exemption limit per issuer was $10 million (or 10 times the adjusted basis).
Now: The exemption limit is now $15 million (or 10 times the adjusted basis) for stocks purchased on or after July 4, 2025. This amount will be adjusted for inflation starting in 2027.
Previously: QSBS needed to be held for at least five years to get the tax benefits. It was all or nothing; if the shares were sold before five years, there was no tax benefit.
Now: It’s no longer an “all-or-nothing” scenario; for QSBS purchased on or after July 4, 2025:
- 50% exclusion available for stocks held between 3 and 4 years
- 75% exclusion available for stocks held between 4 and 5 years
- 100% exclusion available for stocks held at least 5 years
Previously: To qualify, a corporation could have no more than $50 million in assets at the time the stock was issued.
Now: To qualify, a corporation must have no more than $75 million in assets at the time stock is issued. This amount will be adjusted for inflation starting in 2027.
Strategy and Legal Help for Businesses in South Carolina
Gem McDowell is a business attorney with over 30 years of experience handling business and commercial real estate transactions in South Carolina. Gem and his team help businesses protect their interests, grow, and thrive, while helping business owners and professionals protect their own interests, too. Give Gem a call at the Gem McDowell Law Group, with offices in Myrtle Beach and Mt. Pleasant, SC, at (843) 284-1021 today to schedule your free consultation.
What is Covenant of Good Faith and Fair Dealing? About the How, Not the What, and Road, LLC.
If you sign a contact, you and the other parties signing are automatically subject to the covenant of good faith and fair dealing, an implied principle that holds parties to a standard of fairness and honesty in carrying out the contract.
The covenant does not create or impose new obligations on parties to a contract; it applies to the how of the parties’ behavior, not the what. This is an important distinction that was reinforced in a 2024 South Carolina Supreme Court decision, Road, LLC. v. Beaufort County (find it here), which we’ll look at below.
But first, more about the covenant of good faith and fair dealing, and what it does and doesn’t do.
The Covenant of Good Faith and Fair Dealing
The concept of the covenant of good faith and fair dealing comes from English common law and is now an implied covenant in agreements in American jurisprudence. “Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement,” according to Section 205 of the Restatement (Second) of Contracts, a legal resource on contract law used by legal professionals across the country.
A key aspect of the covenant is that a party must not undermine or interfere with the other party’s ability to fulfill their obligations under the agreement or to benefit from it. A party who intentionally behaves in such a way is in breach of the covenant.
The covenant of good faith and fair dealing does not mean that a contract itself or its terms are fair. That is, just because one party believes the contract isn’t fair, that doesn’t mean the other party has violated the covenant of good faith and fair dealing.
This is the issue in the Road case. Essentially, the plaintiff did not like how a deal turned out, but does that necessarily mean another party breached the covenant of good faith and fair dealing? Let’s see what the court said.
Did Beaufort County Violate the Covenant of Good Faith and Fair Dealing? The Road case
The background to Road, LLC v. Beaufort County (2024) is long and rather convoluted, so we’ll just cover the most pertinent facts here.
In 2006, a developer purchased some undeveloped waterfront property in Beaufort County with the intention of developing it. The 229-acre property is a peninsula connected to the mainland via an access road on a narrow isthmus.
Two lawsuits soon arose from this, one of which was about Beaufort County denying the developer’s request to relocate and improve the access road. Both lawsuits were settled in a 2011 agreement (the Settlement Agreement) which meant the developer could continue developing the property.
Road, LLC (Road) was not a party to the Settlement Agreement. But it stepped in at this point to help out the developer by buying an 0.85-acre parcel of land at the end of the access road from the neighbors for $1.3 million. The developer agreed to buy back that same parcel of land from Road for $5 million once development was complete, giving Road a nice profit.
Here’s where it gets interesting. The developer defaulted on the loan for the peninsula property before developing it, so the lender ultimately took possession of it. Beaufort County then purchased the peninsula property with the express intention of preserving it and not allowing further development.
Road sued.
The Lawsuit: Road Contends Beaufort County Breached the Covenant
Road, LLC and Pinckney Point, LLC (the original 2006 purchaser of the peninsula property) sued Beaufort County, alleging (among other things) that the County breached the implied covenant of good faith and fair dealing. The matter eventually went to the Supreme Court of South Carolina, which issued its decision in May 2024.
Road contended that all parties to the Settlement Agreement expected the peninsula property to be developed eventually, even if not by the original developer. Road also argued that facilitating the development of the peninsula property was, in fact, the purpose of the Settlement Agreement.
By purchasing the land with the express intent of not developing it – and doing so quickly, without allowing another developer the chance to see and purchase it – Beaufort County effectively destroyed Road’s opportunity to sell the 0.85-acre parcel at the expected profit in the future. This, Road contended, constituted a breach of the covenant of good faith and fair dealing.
The question before the supreme court boiled down to this: Did the Settlement Agreement impose an obligation on Beaufort County not to interfere with Road’s opportunity to find another developer for the peninsula property?
The court’s answer: No.
Beaufort County Did Not Breach the Covenant
“The implied covenant of good faith and fair dealing cannot create new contractual duties not already expressed or implied in the contract,” the court said in its decision, which affirmed the result but not the reasoning of the appeals court.
Continuing: “Rather, the implied covenant serves only to govern the manner in which parties to a contract enforce their existing contractual rights and carry out their existing contractual duties—express or implied.”
The Settlement Agreement did not expressly require Beaufort County to give another developer the opportunity to purchase the peninsula land. The court determined there was no such duty from implied contract terms, either, as the Settlement Agreement contained language stating it was the full and complete agreement between parties. Finally, since, in the court’s words, “the covenant may not be relied on to create new contractual duties not expressly stated or fairly implied in the contract itself,” no such duty existed under the covenant of good faith and fair dealing, either.
Additionally, the court says that the purpose of the Settlement Agreement was not to facilitate the development of the peninsula property, as Road contended. It was clearly to settle the two pending lawsuits regarding the land.
Had Road, LLC been a party to the Settlement Agreement, perhaps the court would have interpreted things differently. It might have found that Beaufort County did indeed violate the spirit of the agreement and its intended purpose. We don’t know for sure. But as it is, unfortunately for Road, it took a gamble and lost.
Takeaway: Contract Language Matters
As we’ve covered many times on this blog before, the language in a contract matters. Do not depend on implied contract terms or the unwritten understanding of the purpose of the agreement. If something is important to you, put it in writing.
For help with contracts, business law, and commercial real estate transactions in South Carolina, call Gem at the Gem McDowell Law Group. Gem and his team help start, grow, and sell businesses across the state. Gem has over 20 years of experience solving problems, preventing mistakes, and helping businesses thrive. Call or contact us today to schedule your free consultation.
Spousal Elective Share: What It Is and How to Claim It In South Carolina
“Elective share” is the portion of a deceased person’s estate that a surviving spouse is entitled to under the law in separate property states. A surviving spouse may claim it regardless of the provisions of the will. This concept comes from English common law and prevents a surviving spouse from being completely disinherited.
Here’s what to know about spousal elective share.
A surviving spouse is entitled to a portion of the deceased spouse’s estate.
The amount of the estate a surviving spouse is entitled to varies by state, usually one third or one half. In South Carolina, it’s one third.
Also, in South Carolina, the elective share comes out of the estate subject to probate. In some other states, the elective share is taken from the augmented estate, which includes probate assets and some non-probate assets.
Elective share applies only when there is a will.
Elective share is applicable when the deceased spouse had a will but the will did not leave anything to the surviving spouse or left less than what the elective share would be. A spouse may claim this portion unless the couple previously signed something like a waiver of elective share or a pre- or post-nuptial agreement. Read more about how to disinherit your spouse in South Carolina.
If the spouse dies without a will (aka, dies intestate), then the surviving spouse inherits a portion of the estate – often 50% or 100% – under intestacy laws, which vary by state. Read more about what happens if you die without a will in South Carolina here on our blog.
Some states, like South Carolina, also have an omitted spouse provision. If it’s clear that the spouse was left out of the will unintentionally, then the surviving spouse can claim a portion of the estate that they would have received under intestacy laws. Read more about the omitted spouse provision on our blog.
It is elective – not automatic.
The “elective” part of spousal elective share means the surviving spouse must elect to take it; it is not automatically distributed to the surviving spouse.
The process to claim the elective share varies by state. In South Carolina under SC Code 62-2-205, the surviving spouse must file with the court and inform the personal representative generally within eight months after the decedent’s death.
Get help with wills, probate, estate planning in South Carolina
Gem McDowell is an estate planning attorney with over 20 years of experience helping individuals and families in South Carolina. He and his team will work with you to create a will and an estate plan personalized to you and your family’s circumstances and needs. They also help families after a death by guiding the probate process or help contesting a will when the situation arises. Call Gem and his team at their Myrtle Beach or Mt. Pleasant, SC offices today at 843-284-1021 to schedule a free consultation.
Left Out of the Will – Now What? Omitted Spouse, Pretermitted Child
What happens if you’ve been left out of the will?
It depends – on state law, your relationship to the deceased, and other factors.
Under state law, some parties are entitled to a portion of the estate when the testator has unintentionally left them out of the will. That’s what we’ll look at today.
Disinherited or Omitted?
Were you left out of the will intentionally or unintentionally? While many people use the word “disinherited” for both circumstances, they are different.
Someone left out of the will intentionally has been disinherited. We will cover what to do if you’ve been disinherited in a future blog.
Someone left out of the will unintentionally may be referred to as pretermitted or omitted. Unintentional omission typically occurs when the testator doesn’t update his or her will after getting married or having or adopting a child. The assumption is that had the testator updated the will, the new spouse and/or child would have been included. State law determines what a spouse or child who was accidentally left out of the will is entitled to, and laws can vary greatly by state.
The Omitted Spouse or Pretermitted Spouse
South Carolina law protects the omitted spouse. If it’s clear the spouse was left out of the will unintentionally (rather than intentionally disinherited), the surviving spouse can claim the portion of the estate they would have received under intestacy laws, i.e., had there been no will at all. Read more about the omitted spouse provision on our blog.
Many other states have similar omitted spouse or pretermitted spouse laws. However, not all do, so it’s important to speak with an attorney in your state.
The Pretermitted Child
South Carolina law (Section 62-2-302) also protects the pretermitted child, which is a child who was born or adopted after a will is executed. The pretermitted child is entitled to a portion of the estate that they would have received under South Carolina’s intestacy laws, unless:
- It appears the omission was intentional, or
- The testator left “substantially all his estate to his spouse,” or
- The testator “provided for the child by transfer outside the will” with the clear intention of that being in place of inheritance through the will
If the will was executed after the child was born or adopted, the child is not considered a “pretermitted child” and the above does not apply. The court will assume that the omission was intentional.
Many other states have similar laws, but they vary widely, so check with an attorney in your state.
Other Parties
Only the spouse and child(ren) of the deceased may have a claim under state law, and that varies by state. If you were not named in the will but believe the testator intended to leave you an inheritance, you might want to look into grounds for contesting the will.
Get help with wills, probate, estate planning in South Carolina
If you need help with probate, creating a will, contesting a will, or other estate planning matter in South Carolina, call Gem McDowell. Gem and his team at the Gem McDowell Law Group help individuals and families across South Carolina create estate plans that are personalized to reflect their unique circumstances and wishes. They also help with matters of probate, whether straightforward or complicated. Call Gem and his team at their Myrtle Beach or Mt. Pleasant, SC offices today at 843-284-1021 to schedule a free consultation.
11 Common Myths About Wills – Do You Believe These Misconceptions?
Which of these myths and misconceptions about last wills do you believe?
Myth: I have a will, so my estate will not go through probate.
Truth: Having a will does not mean your estate avoids probate.
This myth likely persists because of a misunderstanding of what probate is. Probate is simply the process of settling an estate’s debts and transferring ownership of certain assets to the appropriate heirs. To that end, a last will actually helps guide the probate process by directing what should happen to assets that are subject to probate.
Learn more about probate in South Carolina here on our blog.
Myth: Only rich people need a will.
Truth: Wealth is not the only factor to consider when it comes to creating a will.
Distributing sums of money to various heirs is not the only function of a will. In a will you can also name a guardian to take care of your minor children, specify who should receive personal property like family heirlooms, and name a personal representative / executor to be in charge of managing and closing the estate.
Making your wishes clear in a last will can be especially helpful if you have a complex family situation like second or third marriages with stepchildren or strained relationships with would-be heirs. By recording your final wishes in a will, you can help avoid litigation and arguments between beneficiaries after your death and other ramifications of Family Malpractice™.
Myth: Only old people need a will.
Truth: You don’t know when you’ll need a will; death can come at any age.
It can be hard to face your own mortality, but that’s not a good reason to put off getting a will. No matter your age, you should have a will, especially if you have children or other dependents.
Myth: My family knows what my wishes are, so I don’t need a will.
Truth: Your family does not determine what happens to your estate after your death.
If you die without a will, aka intestate, your estate is subject to your state’s intestacy laws. It’s not up to your family members to direct where your assets go, even if they did want to honor your wishes. And in many cases, sadly, they don’t want to honor the decedent’s wishes. A valid will with valid stipulations is the only legally binding way to direct where your assets that are subject to probate will go.
Myth: I don’t need a will because my spouse has power of attorney.
Truth: Your spouse’s powers under a power of attorney cease upon your death.
A power of attorney (POA) becomes invalid upon the death of the principal. So even if you grant your spouse unlimited powers over your estate through a POA during your life, those powers disappear upon your death, and your spouse has no legal authority to direct where your assets go. You can either rely on a valid will to determine what happens to your estate after death or you can rely on your state’s intestacy laws. There is no third option.
Learn more about powers of attorney here on our blog.
Myth: I don’t need a will because my only real asset is my house.
Truth: Even more reason to have a will!
If you die without a will, intestacy laws apply. In South Carolina and many other states, that means half your estate goes to your spouse and half your estate is split among your children. This can create a few different nightmare scenarios for surviving family members, such as the creation of heirs property, or a disagreement between the spouse and kids on what to do with the house. Read more about intestacy in South Carolina and what can go wrong here on our blog.
Myth: If I die without a will, my spouse will get everything, which is what I want anyway.
Truth: Maybe, maybe not. Don’t just assume your spouse will get everything.
This depends on your situation and your state’s intestacy laws. Under intestacy laws in most states, if you have a spouse and no issue (descendants) at death, your entire estate will indeed go to your spouse. But in some states, your parents or siblings could be entitled to a share. And if you do have children or grandchildren, your estate will likely be split in some manner between them and your spouse.
Myth: If I die without a will, the government will get everything.
Truth: Your estate will go to your relatives, and only in the rarest of cases will it go to the state.
Different states have different intestacy laws, but all states pass the estate on to the heirs of the deceased. The estate will go to the government as a last resort only if no heirs, close or distant, are located. But this is rare.
For example, in South Carolina, the estate will go to the surviving spouse or be divided between the surviving spouse and issue (descendants); if none, then to surviving parent(s); if none, then to issue of a parent (i.e., siblings); if none, then to grandparents or issue of grandparents; if none, then to great-grandparents or their issue. If none, only then does the estate pass to the state (see South Carolina Code Section 62-2-105).
So you can see that it would be a rare situation in which a person’s estate would go to the government. In the vast majority of cases, some surviving heir(s) will be located first.
Myth: I am the personal representative/executor for someone’s estate, so I can do what I want.
Truth: Personal representatives/executors have well-defined responsibilities and limited powers.
Personal representatives/executors do not have carte blanche to do whatever they want. Their role is to carry out the wishes of the decedent as stated in the will and settle the estate. In that role, they have a legal duty to execute the terms of the will in accordance with state law and a fiduciary duty to act in the best interest of the estate and its beneficiaries. If they fail to uphold their legal and ethical obligations, they can be held personally responsible.
Read more about the rights, responsibilities, and risks of being a personal representative on our blog.
Myth: I have a trust, so I don’t need a will.
Truth: Even with a trust, you should consider getting a “pour-over will.”
A pour-over will is a specific kind of will that ensures any assets left out of your trust(s) at the time of your death will be transferred into the trust(s). It’s not uncommon for people to create elaborate estate plan to avoid probate and forget to include an asset in the trust, meaning in addition to the expense of the trust, the estate must go through probate anyway. Getting a pour-over will should be part of your estate plan if you are determined to avoid probate.
Read more about different types of wills.
Myth: I can make small changes to my will on my own.
Truth: Changes to your will must follow legal formalities under state law to be valid.
Changes to a will are valid only if they follow the same legal formalities as the original will, such as being signed in the presence of two disinterested witnesses. This means you can’t just strike out terms and write in new ones, even if the changes you want to make are small. Make changes to your will by adding a valid codicil or drafting a new will entirely.
Two exceptions: 1. You can make changes to a handwritten memorandum if it’s legal in your state and referred to in your original will. 2. You can make changes to a holographic will, which is a type of will entirely written in the testator’s hand without a witness or notary.
Myth: My old will must be destroyed for the new one to be valid.
Truth: A new, valid will automatically renders previous wills invalid.
There’s no legal requirement to destroy an old will to make a new one valid. While some people believe there’s value in keeping old wills, in our practice we make a point to destroy them by shredding whenever possible.
Get Help with Your Will and Estate Plan in South Carolina
Do you need help with a will or trust? Whether you need a simple and straightforward will or a comprehensive estate plan for a large or complex estate, Gem McDowell and his team at the Gem McDowell Law Group can help. Call to schedule a virtual or in-person consultation at the Myrtle Beach or Mt. Pleasant, SC office today at 843-284-1021.
Different Types of Wills and How to Choose the Best One for You
Did you know that there’s more than one type of last will and testament? Having a current, valid will is a vital part of avoiding Family Malpractice™ and ensuring your wishes are carried out after you’re gone. The right type for you depends on your individual and family circumstances. In this article, we’ll look at different types of wills and the circumstances each kind is best suited for.
Note: This list does not include a living will, aka health care proxy or advance health care directive. A living will records an individual’s wishes for medical and health care while they are alive but unable to make decisions about their own care. In contrast, a last will documents an individual’s wishes for how to dispose of their estate and only comes into effect upon their death.
Types of Formal Wills
A “formal will” is one that is written down and which the testator has signed in the presence of witnesses. There are several types of formal wills, including the following:
- Simple will
- Personalized will
- Joint will
- “I love you” will
- “Brady Bunch” will
- Pour-over will
Let’s look at each in turn.
What is a Simple Will?
A simple will is the most straightforward kind of will. It contains the essential parts of a will, including the declaration of the testator, nomination of a personal representative (aka executor), and instructions on distributions to beneficiaries. If you go the DIY route and get a fill-in-the-blanks will online or from a store, it’s likely a simple will without much flexibility to address unique circumstances.
A simple will is a good choice for: Individuals with no assets and no family.
Many people come to our law offices asking for a simple will, but that’s not what they need. A true “simple will” is exceedingly rare. That’s because the kind of person it’s ideal for – someone with no assets and no family – is unlikely to get a will in the first place.
A “simple will” is a misnomer because there’s nothing simple about it. Say you want to leave everything to your spouse, but what if your spouse predeceases you? What if you want to then leave everything to your minor children but you have no trust to hold their assets? How will assets be divided if you and your spouse have children from previous partnerships? Who should take guardianship of your minor children? And so on. Matters go from simple to complex quickly when considering matters of inheritance.
For most people, a standardized simple will doesn’t cut it; what they really need is a personalized will.
What is a Personalized Will?
There isn’t a standard term for a will that’s more complex than a simple will, so we will call it a personalized will, or a custom will. This is a will that’s drawn up by an attorney and is tailored to the individual to reflect their unique life circumstances, family dynamics, estate size and complexity, and wishes. While many people come into our offices asking for a simple will, what they really need is a personalized will.
A custom will can do more sophisticated estate planning than a simple will because it’s more flexible and tailored to you. For example, this kind of will might include testamentary trust provisions (to outline terms of a trust that may be established upon the testator’s death), employ strategies to protect assets and avoid unnecessary taxes, detail contingency planning for various scenarios, and much more.
A custom / complex / detailed will is a good choice for: Individuals with family, especially minor children or other dependents and/or larger or more complex estates and/or complicated family dynamics.
What is a Joint Will?
A joint will is one document containing the last wishes of multiple people. In practice, it’s most often used for couples, but theoretically three or more people could share a single joint will. These were much more common in the past but have now fallen out of favor.
A joint will is a good choice for: Nobody.
Here at the Gem McDowell Law Group, we do not draft joint wills, and we advise against them. That’s because they are inflexible; in South Carolina, after one spouse dies, the terms of the joint will cannot be changed. This means the surviving spouse must abide by the terms of the joint will, even if circumstances change through subsequent marriage, stepchildren, or other major life events.
Some states do allow for the revocation of a joint will after the death of a spouse. However, we still don’t recommend this type of will when there are better options available, such as the “I love you” will.
What is an “I Love You” Will?
An “I love you” will is a reciprocal will often used by spouses where the language is the same in each partner’s will except for the names being flipped. Each partner leaves their estate first to their spouse and then, if their spouse predeceases them, to their children. Couples who may have chosen a joint will in the past may choose an “I love you” will now, as it’s more flexible and allows a surviving spouse to change the terms of the will as needed.
An “I love you will” is a good choice for: Married couples with no children or with shared children (i.e., no stepchildren) who are on the same page and who trust each other. Read more about whether an “I love you” will is right for you here.
What about couples on second or subsequent marriages with children from previous partners? We find that an “I love you” will doesn’t adequately address the needs of blended families, but a “Brady Bunch” will does.
What is a “Brady Bunch” Will?
This is not a common term but one we use in our practice to describe wills that can best handle the needs of blended families which includes children from previous relationships. This is where issues of inheritance can become complex. For example, does each partner leave an equal share to all the children, or a larger share to their biological children? Does each partner leave their full estate to the surviving spouse, or divide it between their spouse and children? These are the types of issues that need to be discussed first, preferably with an attorney who has experience creating estate plans for blended families.
A “Brady Bunch” will is a good choice for: Married couples where one or both spouses has children from a previous marriage or partnership.
What is a Pour-Over Will?
A pour-over will is a particular type of will that directs all the testator’s assets to “pour over” into a previously established trust. Unlike the other kinds of wills discussed so far, this kind of will is not used on its own, but as part of a larger estate plan usually created to avoid probate.
A pour-over will is a good choice for: Someone with a large or complex estate who wants to avoid probate. It’s essential to work with an experienced estate planning attorney to ensure the pour-over will and existing trusts work together.
Other Kinds of Wills
The two types of wills here – holographic and nuncupative, or oral – are rare. They’re included on this list because you may have heard these terms and wonder what they mean, but we do not recommend depending on these types of wills for your estate plan.
What is a Holographic Will?
From the Greek words “holos” meaning “whole” and “graphos” meaning “written,” a “holographic” will is one that is wholly written and signed by the testator in their own hand without any witness or notary. The absence of any witness or notary is what differentiates a holographic will from a handwritten will, which is any will written in the testator’s hand.
The validity of holographic wills varies greatly by state. Only a handful of U.S. states permit holographic wills for anyone, while some states allow them only for certain individuals in certain circumstances, such as members of the Armed Forces. Some states, including South Carolina, don’t recognize holographic wills.
A holographic will is a good choice for: Nobody.
A holographic will is never a “good” choice, as they are difficult to validate and are more likely to be contested in court. However, it might be the last and only resort for someone in exigent circumstances, such as a soldier on the battlefield facing possible death.
What is a Nuncupative Will, aka Oral Will?
A nuncupative will (from the Latin “nuncupare” meaning “to declare”), or oral will, is one that is not written down but instead is spoken in the presence of witnesses. It is very rare and only allowed by some states and in some circumstances. For instance, some states allow nuncupative wills if the testator is a military member in armed conflict or if the testator is on their deathbed, and only for personal property.
A nuncupative will is a good choice for: Nobody.
As with a holographic will, an oral will or nuncupative will should be a last resort as it’s hard to enforce and much more likely to lead to confusion and litigation than a formal will.
Get a Will That’s Right for YOU and Your Circumstances
A last will is arguably the single most important estate planning document you can have. It’s the best way to ensure your wishes regarding your estate and your dependents are carried out after your death – but only if it’s tailored to your family’s needs and your unique circumstances.
For help creating or revising your South Carolina will, call estate planning attorney Gem McDowell at the Gem McDowell Law Group. Gem and his team will create a will just for you, whether you need a straightforward simple will or a highly customized will that addresses complex estate questions and complicated family dynamics. They can also help you with other estate planning documents like living wills, powers of attorney, trusts, and more, for a comprehensive estate plan that reflects your wishes.
Schedule your appointment or free consultation at the Myrtle Beach or Mount Pleasant, SC office by calling 843-284-1021 today.
What Is an “I Love You” Will and Is It Right for Me?
An “I love you” will is a common type of last will used by spouses. It’s a reciprocal will where the language is exactly the same in each spouse’s will, except that the names are flipped.
In a typical “I love you” will, each spouse leaves their entire estate to the other, then, if their spouse predeceases them, to their children. If both spouses die at the same time, their estate passes to their children.
This type of will is a simple and straightforward way to help avoid Family Malpractice™ and direct how the family’s estate should be handled after the death of one or both spouses. It’s a great choice for many families but not all. There are some important considerations, including how much you and your spouse trust each other.
Here’s what to know.
An “I Love You” Will is Not the Same as a Joint Will
While both types of wills are most often used by spouses or couples, there are some important differences between the two.
First, a joint will is one single document shared by two people. More importantly, a joint will is very restrictive. If one spouse dies, the surviving spouse is bound by the terms of the will and cannot change them, even after major life events like remarriage. (Some states allow for a joint will to be revoked, but the process can be difficult.)
In contrast, each spouse has their own distinct will with an “I love you” will. This is important, because it means an “I love you” will is much more flexible. A surviving spouse may keep the will as is (which would then leave the estate to the children), amend it, or replace it with a new will entirely.
At our law office, we don’t draw up joint wills and we don’t recommend them for anyone. An “I love you” will is the better choice between the two, providing more flexibility for the future.
However, it’s not right for everyone.
An “I Love You” Will Might Be Right for You If…
This type of will might be right for your family if you and your spouse:
- Have no children or only shared children (i.e., no stepchildren)
- Are on the same page about how your assets should be handled after death
- Trust each other
An “I Love You” Will Might Not Be Right for You If…
This type of will might not be a good choice for your family if you and/or your spouse:
- Have children from a previous relationship (where a “Brady Bunch” will for blended families is a better choice)
- Don’t agree on how assets should be handled after death
- Have large amounts of debt
- Have an addiction or overspending problem
- Are in a situation that could put the assets at risk
- Don’t trust each other
Trust is Key with an “I Love You” Will: Issues to Consider
On this last point, it can be difficult to face the reality that you don’t fully trust your spouse to make good choices regarding your estate after your death. But it’s worth thinking about what could happen.
For example, one client had us write up her will, but she didn’t leave her entire estate to her husband without restrictions. She suspected he might start dating after she died and give away some assets to his new girlfriend – and that’s exactly what he tried to do. Knowing him, she had used her will to protect some assets and keep them in the family. She used a certain type of trust to essentially “handcuff” him, allowing access during his life to some of her assets while preserving the rest for the children.
Another point to consider: An individual has the right to change their “I love you” will while both spouses are still alive. This could lead to an uneven situation where one spouse leaves everything to the surviving spouse in the will, but the other spouse doesn’t. The individual changing their will has an ethical obligation but no legal obligation to inform their spouse of the changes.
Finally, you must also trust that your spouse will not spend or squander the assets and leave nothing for your children, if that’s important to you. If your spouse has issues with addiction, gambling, or overspending, leaving them all your assets could not only be detrimental to your children, but to your spouse as well.
Maybe your spouse doesn’t have an addiction or spending problem but has a lot of debt or suffers from a serious medical condition that’s expensive to treat or is in a profession (like doctor) that’s likely to be sued. These are scenarios where the estate’s assets could be at risk of being spent with nothing remaining to leave to the children.
Ask yourself:
How would you feel if your spouse remarried or dated after your death and gave your assets away to a new partner or child(ren)?
How would you feel if you found out your spouse had changed their will without telling you, and your wills were no longer reciprocal?
How would you feel if your spouse spent everything on addiction, shopping, or debts, leaving nothing for your children?
There is no right or wrong answer to any of these questions. But you and your spouse should seriously consider them before deciding to move forward with an “I love you” will.
Do You Have the Right Will for Your Family?
You can see how the apparently straightforward “I love you” will can quickly become complex. This is where it’s helpful to work with an experienced estate planning attorney who can bring up potential issues and scenarios you might have never thought of. An “I love you” will is just one type of will, and maybe a different kind of will is a better choice for your family. An experienced estate planning attorney can help you figure it out.
Whether you’re getting a will for the first time, updating an old one, or simply want to review an existing one to ensure it still aligns with your priorities, we can help. Gem and his team at the Gem McDowell Law Group help individuals and families across South Carolina create wills and comprehensive estate plans that reflect each family’s unique circumstances and wishes while avoiding Family Malpractice. Schedule your appointment or free consultation at the Myrtle Beach or Mount Pleasant, SC office by calling 843-284-1021 today.
