South Carolina Lawyer
SC Lawyer, January 2007, #2.
The S.C. Elective Share: Where Are We Now?
South Carolina LawyerJanuary 2007Navigating the Shoals of the South Carolina Elective ShareBy Tonya L. Sayers and John M. JolleyAs most South Carolina attorneys know, a portion of a decedent's estate is subject to a claim by a surviving spouse for an "elective share" under S.C. Code Ann. § 62-2-201, et seq. Which assets are subject to a claim and which assets are available for the satisfaction of a claim for an elective share has been the subject of debate among South Carolina practitioners. Recently, the S.C. Supreme Court clarified several important issues relating to the elective share.
The enactment of the South Carolina Probate Code in 1987, S.C. Code Ann. §§ 62-2-201 and 62-2-202, ushered in the so-called "elective share" into South Carolina. The elective share is South Carolina's response to other more complicated spousal protection statutes enacted in other states. One-third of a decedent's probate estate is subject to a surviving spouse's right of election. The probate estate is defined as the decedent's property passing under the decedent's will and passing by intestacy reduced by funeral and administration expenses and enforceable claims (S.C. Code Ann. § 62-2-202). These Code sections read together do not seem to provide much controversy. However, with the S.C. Supreme Court's decision in Seifert v. Southern National Bank of South Carolina, 305 S.C. 353, 409 S.E.2d 337 (1991), anyone advising a married South Carolina resident had to carefully navigate through uncharted waters.
1991 through 2006 - the interaction of Seifert and S.C. Code Ann. § 62-7-112
In Seifert, the Court held a trust invalid when a spouse sought to avoid the payment of the elective share by creating a trust over which he retained substantial control. The Court reasoned the settlor's substantial control rendered the trust illusory and therefore invalid.
The Supreme Court held, in order for a settlor to be considered as having "substantial control" over the assets of the trust, he or she must have such extensive control as to have the same rights in the assets after the creation of the trust that he or she had before its creation. In Seifert, the settlor retained control over the trustee's powers of sale and investments. Additionally, the settlor retained the right to amend or revoke the trust.
The Court found the South Carolina Code did not preclude the proceeds of the trust from being included in a decedent's probate estate. It was...