§ 371 FAMILY SETTLEMENT AGREEMENTS

• Jurisdiction: South Carolina
• Section: Chapter 3 Wills

§ 371 Family settlement agreements

A couple of recent cases considered, among a number of issues, the effect of a family settlement agreement. In Parker v. Shecut,⁵⁰¹ the testator devised her estate in equal shares to her daughter and two sons. She named her two sons as co-personal representatives. Several months after the testator's death, her children began arguing about the distributions of her estate. One son, a farmer, wanted some farm land, while the other son and daughter wanted some commercial property and a beach house. They entered into a family settlement agreement which essentially divided the property according to their preferences. The nonfarmer son and the daughter formed a partnership to control their share of the property.

Some time after the agreement, the farmer son realized that the agreement did not include several pieces of farming equipment. The children eventually signed an addendum to the family settlement agreement, which allocated the farm equipment to the farmer son. To effectuate the agreement, an attorney prepared deeds of distribution transferring the estate's rights in the property to the three children in equal shares—according to the will—with a set of individual cross-deeds to allocate the property among the children according to their agreement. The co-personal representatives signed the deeds of distribution and the cross-deeds, but the daughter refused to sign the cross-deeds and instead brought an action, with a lis pendens against the estate property, demanding an accounting.

The master in equity ruled that the family settlement agreement was valid. Consequently, the master also determined that the daughter's filing of the lis pendens damaged the farmer son by preventing him from receiving a subsidy and from selling timber at favorable prices and the nonfarmer son by preventing him from taking a mortgage against the property to secure a loan to buy into a new business.

On appeal, the Court of Appeals rejected the daughter's claim that the sons abandoned the agreement because they executed deeds of distribution, which were not contemplated by the agreement. Although the court "express[ed] no opinion as to whether such a process is necessary for a proper chain-of -title under similar circumstances,"⁵⁰² it noted that the sons relied on the attorney's opinion that the two-step process of executing deeds to effectuate the agreement was appropriate. Consequently, the sons did not abandon the agreement, but rather intended to effectuate it by signing the deeds of distribution. The court also rejected the daughter's argument that the agreement merged into the deeds of distribution because they clearly did not intend a merger.

The daughter also claimed that her brothers fraudulently induced her to enter into the agreement by making loans from the estate, which constituted a breach of their fiduciary duty. The court recognized that, "[w]here there is a duty to speak, a fiduciary's nondisclosure may be fraudulent."⁵⁰³ Because the sons disclosed the loans to the daughter, however, the court rejected the daughter's argument.

The master ruled that the estate held the nonfarmer's house in a constructive...