Your island property deserves a plan

For many families, a Hilton Head Island home or villa is one of their most meaningful assets. It may be a full-time residence, a vacation home the family has visited for decades, or a rental property. Each of these situations raises different estate planning questions, and the answers depend on South Carolina law as well as the law of the state where you live.

Smith Law, LLC helps island homeowners plan for what happens to that property, and to the rest of their estate, from our office at 200 Okatie Village Drive, Suite 103, in Bluffton.

If you live in another state and own on the island

When someone dies owning real estate in a state other than their home state, the family often faces two probate proceedings: one where the person lived, and an ancillary proceeding in South Carolina for the island property. For Hilton Head Island property, that second proceeding would be in the Beaufort County Probate Court.

Common ways families plan around this include:

  • A revocable trust that holds the island property. If the property is deeded to you as trustee of your trust, the property can usually pass to the beneficiaries without a South Carolina probate.
  • An LLC for rental property. Some owners hold rental villas in a limited liability company for management and liability reasons. The membership interest is then handled through the owner’s estate plan. When it fits the owner’s goals, we recommend this approach. Ownership changes can affect property tax classification: South Carolina assesses an owner-occupied legal residence at 4 percent of fair market value and most other real property at 6 percent (South Carolina Code Section 12-43-220(c) and (e)), so a primary home moved into an LLC can lose the 4 percent ratio. The Town of Hilton Head Island also issues short-term rental permits to a person, not a business entity, so LLC ownership of a rental villa needs to be coordinated with the Town’s current permit rules.
  • Joint ownership with right of survivorship. South Carolina allows this form of ownership, but it has to be stated correctly in the deed (South Carolina Code Section 27-7-40).

We review your current deed and documents and coordinate with your home state attorney where needed.

If you live on the island full time

Full-time residents need the core documents every South Carolina resident should have:

1. A will or a will paired with a revocable trust.

2. A durable power of attorney for financial matters.

3. A health care power of attorney and a living will.

4. A plan for who will manage the property, and how, if you can no longer do so.

If you moved from another state, we also review your old documents. A will from another state may still be valid, but powers of attorney and health care documents often work better as South Carolina versions. A will valid where it was signed is generally valid here (South Carolina Code Section 62-2-505).

Planning for a shared family vacation home

Many island homes are shared by several generations. Without a plan, a home left to several children equally can lead to disagreements about use, costs, and whether to sell. Some families address this with a trust that sets rules for use and expenses, or with an LLC and an operating agreement. We talk through the options with the whole family in mind.

Rental income and management

If your villa is rented, your plan should name someone who can step in to deal with the rental company, the POA or regime, insurance, and taxes. A durable power of attorney and a successor trustee can both fill that role.

Frequently asked questions

Will my family have to probate my Hilton Head Island home if I live in Ohio?

Possibly. If the home is titled in your individual name, an ancillary probate in Beaufort County may be needed. Holding the home in a revocable trust can often avoid that.

If I live in Ohio, which state’s death taxes apply to my island home?

South Carolina does not currently collect an estate or inheritance tax, so the island home does not add a South Carolina death tax. Your home state’s rules and federal estate tax are the ones to check, and we coordinate with your home state attorney on them.

Can I deed my villa into my trust myself?

We recommend having an attorney prepare and record the deed. A deed that is prepared incorrectly can cause title and tax problems later.

Do I need to update my plan if I bought on the island after signing it?

Yes. A plan signed before the purchase may not address the new property at all.

Own property on Hilton Head Island? Call Smith Law, LLC at 843.705.4400 to talk about a plan for it. Our office is at 200 Okatie Village Drive, Suite 103, Bluffton, South Carolina 29909, and we also meet by video.

Related pages

This page is general information, not legal advice. Contacting us does not create an attorney-client relationship.