Do I Need a Trust in South Carolina? Four Reasons That Have Nothing to Do With Taxes

The Short Answer

Probably not for tax reasons. The federal estate tax exemption is $15,000,000 per person in 2026, and most of the families I work with are nowhere close to that number (IRS, What’s new, Estate and gift tax). South Carolina has no estate tax of its own.

So if you are asking whether you make enough to justify a trust, you are measuring the wrong thing. Control, protection, and where tomorrow’s growth ends up are the reasons that apply to almost everyone. Taxes are the reason that applies to almost no one.

Do I Make Enough Money to Even Need a Trust?

Somebody called me last week and opened with exactly that question.

What they were really asking was whether their estate is large enough to have a tax problem. And for most families, the honest answer is no, although it is a good problem to have, and I am happy to help with that.

But here is where that framing goes wrong. Taxes are one reason to use a trust. They are not the reason. And for most Charleston families, business owners, professionals, rental property owners, parents of young kids, the better reasons have nothing to do with the IRS.

What Does a Trust Actually Do? Four Things.

1. Control. A trust lets you decide who receives property, when they receive it, and under what conditions. If you want your daughter to have access to her inheritance for education and health but not for a gambling habit or a bad marriage, a trust does that. A will does not.
2. Protection. Assets held inside a properly structured trust can be shielded from a beneficiary’s creditors, from a divorcing spouse’s claims, and from a beneficiary’s own poor decisions. The money belongs to the trust, not personally to the person receiving distributions. That distinction matters enormously when things go sideways in someone’s life. That is my assessment from practice rather than a guarantee, and how much protection you actually get (and this is important to really understand) depends on how the trust is drafted.
3. Taxation, but only for some families. If your estate is approaching the exemption, or if you own a business that could appreciate significantly, trust planning can shift future growth outside your taxable estate. That is valuable if it applies to you.
4. Appreciation shifting. This is where the conversation gets interesting for people who own a business or a concentrated investment. The goal is not just to transfer what you have today. It is to make sure tomorrow’s growth belongs to your family rather than the IRS. If you own something that could be worth three times as much in ten years, getting it into the right structure now, before that appreciation happens, is one of the most powerful things estate planning can accomplish.

Does South Carolina Have an Estate Tax?

No, and this is worth understanding because it can change the math we are worried about in the first place.

South Carolina still has an Estate Tax Act on the books, and it imposes “a tax in the amount of the federal credit” (S.C. Code § 12-16-510). That federal credit is the credit for state death taxes under Internal Revenue Code § 2011, and Congress repealed § 2011 (26 U.S.C. § 2011). A tax measured by a number that no longer exists produces no tax.

So a South Carolina family has really only one estate tax to think about, the federal one, with a $15,000,000 per person exemption. That is genuinely good news, and it is a real advantage over the states a lot of my clients moved here from.

I Moved to Charleston from New York or New Jersey. Does My Old Trust Still Work?

I work with a lot of families who came to the Lowcountry from the Northeast, many of them bringing trusts they set up in New York or New Jersey. Some of those documents are excellent.

Some of them were built to solve a problem you no longer have. A trust drafted to minimize a state estate tax in a state with a low threshold is doing work that South Carolina does not require, and it may be adding complexity, cost, and restrictions in exchange for nothing. That is worth a look rather than an assumption.

The broader point is that these documents need periodic attention. Drafting and then setting them and forgetting them is not the best way to handle an estate plan.

So What Should I Actually Be Asking?

Not whether you make enough. Ask what happens to the people you care about if something happens to you, and whether the plan you have in place actually does what you think it does.

Those are different questions, and the second one is the one that surprises people.

If you want to work through that, I am happy to have the conversation. Complete our Estate Planning Questionnaire, and we will schedule a complimentary initial consultation from there.