Monday, June 14, 2010

New Developments in South Carolina Probate Law

Governor Sanford recently signed three bills making changes to the South Carolina Probate Code. Summaries of these bills, provided by JP Lee, are set out below.

H3803(Signed by the Governor on June 7, 2010), full text here

Colloquially known as the “Summons Bill” among South Carolina trust and estate practitioners, the new law makes certain procedural amendments to the South Carolina Probate Code, and clarifies that petitions required or authorized by the Probate Code now require a summons in addition to the actual petition.

Previously many sections in the South Carolina Probate Code, such as the petition for allowance of a creditor’s claim at South Carolina Code §62-3-806, required only a “petition”, with no mention of a summons. This caused confusion among laypersons and practitioners, as some Probate Judges required the serving of a summons when a petition was filed, despite no express statutory requirement for same. The new law clarifies that effective June 7, 2010, petitions required or authorized by the Probate Code require a summons.

H3803 also made certain technical corrections to the South Carolina Trust Code, such as substituting the term “person” for “parent”, and “issue” for “children” in numerous Trust Code sections, deleting the requirement of a taxpayer identification number on the Certification of Trust pursuant to South Carolina Code §62-7-1013, and other minor technical changes and corrections.

S372 (Signed by the Governor on May 28, 2010), full text here.

This bill relates to the South Carolina elective share provision, and provides that an interest of the surviving spouse as a beneficiary of a testamentary trust or intervivos trust created by the decedent shall be considered and chargeable to the surviving spouse’s elective share right. The statutory elective share previously was limited to the “probate estate” pursuant to South Carolina Code §62-2-201 and §62-2-202, but was expanded by the South Carolina Supreme Court in Seifert v. Southern Nat. Bank of South Carolina, 305 S.C. 353 (1991) to include assets of the decedent’s revocable trust. S372 codifies Seifert, and makes clear that in addition to property passing by will, intestacy, homestead allowance, and by revocable trust, any beneficial interest of the surviving spouse in a testamentary trust created by the decedent will be considered in satisfying the surviving spouse’s elective share.

S1348 (Signed by the Governor on June 11, 2010), full text here

For decedents who died after December 31, 2009 or who die before January 1, 2011, this bill provides a procedure to determine the decedent’s intent when the will, trust, or other instrument created by the decedent contains a formula that is based on the federal estate or generation-skipping transfer tax.

Many will and trust documents are drafted using formulas based on federal estate or generation-skipping transfer tax provisions. Currently there is no federal estate or generation-skipping transfer tax for decedents dying after December 31, 2009 and before January 1, 2011, creating significant problems of interpretation for any will and trust documents containing formulas that are based on tax laws that do not exist for decedents dying in 2010. This provision allows a personal representative, trustee, or any affected beneficiary under a will, trust, or other instrument of a decedent to bring a proceeding to determine the decedent’s intent when the instrument contains a formula that is based on the federal estate or generation-skipping transfer tax. The proceeding must be commenced within twelve months following the death of the decedent.

S1348 makes no presumptions regarding the decedent’s intention. It will be up to the petitioner(s) and respondent(s) in a proceeding brought under this section to persuade the Probate Judge regarding the decedent’s intent.