Using A Trust To Control Assets

A trust is a versatile estate planning document that can be used in many different ways and for many different reasons. One benefit of a trust is that it can provide instructions for how money or assets are to be distributed. There are numerous possibilities for using a trust to control assets. Some examples of how a trust can be used to control money and/or assets are as follows:

Minor or Disabled Individuals:

Care and Support of a Minor or Disabled Individual: Some minors and disabled individuals acquire their own money or property through employment, inheritance, or case settlements. An individual can establish a trust to protect the money or property owned by the minor or disabled person. For example, the trust can state that money in a specific bank account is to be used only for food, clothing, housing or education. Creating a trust can be especially useful to ensure that the parent or guardian for the minor or disabled individual does not spend the money inappropriately.

Property after Death

Post-Death Control of Property: Some people want to make sure that their heirs spend the inherited money wisely. Other people want to maintain a certain amount of control over their money and property after they are gone. For example, a parent can create a trust stating that his or her children will only receive the inherited money if they graduate from college. By setting up a trust, parents can encourage their children to take certain actions even if they are not around to guide them.

Control of Property

Pre-Death Control of Property: Sometimes, it may be desirable to use a trust account as a way of controlling one’s own assets and property during one’s lifetime. For example, a person who wins the lottery might want to limit how much money can be spent per month in order to make sure that the money lasts as long as possible. It is possible to establish a trust restricting access to your own money. This can be a useful estate planning tool for people who are concerned about their inability to control their spending or manage their own money properly.

Types of Trusts Under South Carolina Law

An overview of trust structures under South Carolina law demonstrates the various estate planning tools available to protect assets, manage tax liabilities, and ensure proper wealth distribution across generations.

Living vs. Testamentary Trusts

The timing and mechanism of a trust’s creation define its operational category under the South Carolina Trust Code (S.C. Code Ann. § 62-7-101 et seq.).

Revocable Living Trusts

A revocable living trust is established during the grantor’s (settlor’s) lifetime. The primary advantage of a revocable trust is flexibility: the grantor retains complete control over the trust assets, serves as the initial trustee, and reserves the right to amend, modify, or completely revoke the trust at any point during their lifetime, provided they retain mental capacity.

• Probate Avoidance: Assets properly funded into a revocable trust pass directly to named beneficiaries upon the grantor’s death, bypassing the South Carolina probate court process. This preserves privacy and reduces administration time and costs.
• Incapacity Management: If the grantor becomes incapacitated, a designated successor trustee steps in to manage the trust property without requiring a court-appointed conservator or guardian.
• Tax & Creditor Considerations: Because the grantor maintains full control, assets in a revocable trust are still considered part of the grantor’s gross estate for federal estate tax purposes and remain subject to claims by the grantor’s creditors during their lifetime.

Irrevocable Trusts

Unlike a revocable trust, an irrevocable trust generally cannot be altered, amended, or terminated once executed, except under limited judicial or non-judicial modification procedures permitted under South Carolina law (such as decanting or beneficiary consent under S.C. Code Ann. § 62-7-411).

• Asset Protection: By surrendering control and ownership of the assets transferred to the trust, the grantor effectively removes those assets from their personal estate. This shields trust property from future personal creditors and lawsuits.
• Tax Minimization: Irrevocable trusts are often used to reduce or eliminate federal estate and gift taxes by removing appreciating assets from the grantor’s taxable estate.
• Medicaid Planning: Irrevocable trusts can assist individuals in qualifying for long-term care benefits (such as Medicaid) by moving countable assets out of the individual’s name ahead of the statutory look-back period.

Testamentary Trusts

A testamentary trust does not exist during the grantor’s lifetime. Instead, it is created through the terms of the grantor’s Last Will and Testament and takes effect only upon the grantor’s death.

• Probate Requirement: Because the trust is created via a will, the assets funding the trust must first pass through the South Carolina probate court.
• Flexibility & Control: Until death, the grantor can freely modify or remove the testamentary trust provision by updating their will. Once the grantor passes away and the court validates the will, the testamentary trust becomes irrevocable.

Specialized Trust Categories Under SC Law

Beyond basic living and testamentary structures, South Carolina recognizes specialized trusts designed to accomplish specific planning goals:

Special Needs Trusts (SNTs)

Special Needs Trusts allow individuals with disabilities to hold funds or receive inheritance without jeopardizing their eligibility for vital government assistance programs, such as Supplemental Security Income (SSI) and Medicaid.

• First-Party SNTs: Funded with the beneficiary’s own assets (e.g., a personal injury settlement). Under federal and SC guidelines, these trusts require a payback provision reimbursing the state for Medicaid expenses upon the beneficiary’s death.
• Third-Party SNTs: Funded with assets belonging to parents, relatives, or other third parties. These do not require a Medicaid payback provision upon the beneficiary’s death, allowing remaining funds to pass to other family members.

Charitable Trusts

Charitable trusts allow grantors to support tax-exempt organizations while securing income or tax benefits for themselves or their heirs.

• Charitable Remainder Trusts (CRTs): Provide income payments to non-charitable beneficiaries for a term of years or lifetime, with the remaining trust principal passing to a designated charity.
• Charitable Lead Trusts (CLTs): Pay income to a designated charity first for a specified duration, after which the remaining assets transfer to non-charitable beneficiaries (such as children or grandchildren).

Credit Shelter and Marital Trusts

Often used by married couples with substantial estates, these trusts optimize the federal estate tax marital deduction and applicable exclusion amounts, preserving wealth across generations while ensuring the surviving spouse is cared for.

Tailoring Your Estate Plan

Trust requirements, tax implications, and execution formalities under South Carolina law require careful drafting. Consulting an experienced South Carolina estate planning attorney ensures that your trust is properly executed, funded, and aligned with your long-term wealth preservation and family protection goals.

At the De Bruin Law Firm in Greenville, South Carolina, our estate planning attorneys can analyze your needs and create the right type of trust that accomplishes your goals. Contact the De Bruin Law Firm today to schedule an appointment with one of our estate planning attorneys.

Last Updated: September 2026