Recently, there was a claim made in the Charleston, South Carolina Family Court that an overseas trust was fraudulent and being used to hide marital assets. From what I have heard, these allegations were made in good faith and were supported by credible evidence. At the beginning of the first day of the trial (scheduled for three weeks), the trial judge ruled that the Family Court had no jurisdiction over the trust and dismissed the case!
Was he correct to do so? Likely so, but I’d love to hear your thoughts!
Who Has Jurisdiction over Trusts (Illusory or Otherwise)?
The SC Probate Code states that:
“(T)he probate court has exclusive original jurisdiction over all subject matter related to: ….(3) trusts, inter vivos or testamentary, including the appointment of successor trustees;” S.C. Code § 62-1-302.
The Probate Code further grants concurrent jurisdiction to the Family Courts:
“(T)o hear and determine issues relating to … (the) interpretation of marital agreements in connection with estate, trust, guardianship, and conservatorship actions pending before it, concurrent with that of the family court pursuant to Section” S.C. Code § 62-1-302 (Emphasis added).
The SC Code of Laws grants the Family Court concurrent jurisdiction with the Probate Court limited only to:
“… matters dealing with the estate, trust, and guardianship and conservatorship actions before the probate court.” S.C. Code § 63-3-530 (Emphasis added).
Family Court only has jurisdiction over a trust issue if it is pending before both the Probate and Family Courts concurrently.
So it seems very clear.
The only way the Family Court can have jurisdiction over matters dealing with a trust issue is if the trust issue is pending before both the Probate and Family Courts at the same time. In the case to which I referred at the beginning of this blog, no claim had been made against the overseas trust, so the family court in Charleston had no concurrent jurisdiction to make a ruling regarding the “illusory” nature of the trust.
In my opinion, the Charleston family court judge was correct. Since I have recently learned that no appeal has been requested, the Supremes won’t be weighing in on this one.
Let me know your thoughts!
WATCH: Attacking and Defending Trust Assets in Divorce
In this video, a trusts & estates lawyer and a family lawyer discuss when a trust can – or can’t – be accessed, offering key questions to ask when attacking or defending trust assets in divorce.
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When irrevocable trusts include ex-spouses as beneficiaries, family law practitioners should be aware of the options to reduce or eliminate those interests.