Can a Family Court Break an Allegedly Illusory Trust?- Family Lawyer Magazine

Can a Family Court “Break” an Allegedly Illusory Trust?

Recently, a trial judge ruled that the Family Court had no jurisdiction over an allegedly fraudulent overseas trust and dismissed the case. Was he right to do so?

By Guy VitettaUpdated: May 10, 2022

illusory trusts: man standing on island of cash with red flag reading "offshore accounts"

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!

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Categories: Legal Issues Financial Issues

Tags: trusts and estates

Published on: April 06, 2022

About the Author

Guy Vitetta

Guy J. Vitetta has been a practicing trial lawyer since 1991 and has practiced exclusively family and divorce law in Charleston since 2002. He has earned a reputation for excellence in Family law representation and continues to hold an AV® Peer Rating*, the highest given by Martindale–Hubbell, which was awarded in 2005. This award is given to an attorney by his/her colleagues to honor their high regard for his or her professional and ethical skills.

Guy has represented hundreds of clients in all types of Family Law matters, including divorce, custody, child support, modification of prior orders, and adoptions

Eleven years as a public defender made Guy an effective and decisive litigator. His trial and litigation skills are critical to the evaluation of and strategic planning in any legal case and when a Family Law case goes to trial, Guy employs all of those skills.

But a majority of cases involving families are settled before going to trial. To conduct the process most appropriate to a client’s particular situation, Guy draws on extensive experience with all available tools, including litigation, mediation, arbitration, collaborative practice, and negotiated settlements.

Upon seeing the reality of domestic relations law, Guy saw room for improvement in how family disputes were handled in South Carolina. He sought alternatives, and in 2003, he became the first attorney in South Carolina trained in Collaborative Law.

He is a founding member and past president of the South Carolina Academy of Collaborative Professionals. He is also a Certified Family Court Mediator in South Carolina and co-founded the Mediation and Meeting Center of Charleston. Guy is seen as a leader in Family Law and has mentored many new lawyers. Guy currently serves on the Practice and Procedures Committee of the South Carolina Bar.

Guy is committed to improving the options for managing the financial aspects of Family Law matters. In early 2016, Guy and colleague Sean Keefer released an innovative software program – Settlyd.com – for Judges and attorneys in South Carolina to assist in the organization and secure management of client financial data. Settlyd improves greatly the collection, calculation, and secure storage of complex financial data, which are central to all family legal matters.

Originally from Philadelphia, PA, Guy graduated from Ohio’s Kenyon College with a B.A. in history and religion. As a community activist addressing consumer and environmental issues, Guy decided his most influential avenue for making a difference in the community was in the practice of law. He graduated from Capital University Law School in Columbus, Ohio in 1991. He worked on appeals for Death Row inmates while clerking in the Death Penalty Section of the Ohio Public Defender Commission during Law School. He then served as a Public Defender in Columbus, Ohio for two years and then in Charleston County, South Carolina for nine years before opening his private practice in Charleston, South Carolina.