11 Common Myths About Wills – Do You Believe These Misconceptions?
Which of these myths and misconceptions about last wills do you believe?
Myth: I have a will, so my estate will not go through probate.
Truth: Having a will does not mean your estate avoids probate.
This myth likely persists because of a misunderstanding of what probate is. Probate is simply the process of settling an estate’s debts and transferring ownership of certain assets to the appropriate heirs. To that end, a last will actually helps guide the probate process by directing what should happen to assets that are subject to probate.
Learn more about probate in South Carolina here on our blog.
Myth: Only rich people need a will.
Truth: Wealth is not the only factor to consider when it comes to creating a will.
Distributing sums of money to various heirs is not the only function of a will. In a will you can also name a guardian to take care of your minor children, specify who should receive personal property like family heirlooms, and name a personal representative / executor to be in charge of managing and closing the estate.
Making your wishes clear in a last will can be especially helpful if you have a complex family situation like second or third marriages with stepchildren or strained relationships with would-be heirs. By recording your final wishes in a will, you can help avoid litigation and arguments between beneficiaries after your death and other ramifications of Family Malpractice™.
Myth: Only old people need a will.
Truth: You don’t know when you’ll need a will; death can come at any age.
It can be hard to face your own mortality, but that’s not a good reason to put off getting a will. No matter your age, you should have a will, especially if you have children or other dependents.
Myth: My family knows what my wishes are, so I don’t need a will.
Truth: Your family does not determine what happens to your estate after your death.
If you die without a will, aka intestate, your estate is subject to your state’s intestacy laws. It’s not up to your family members to direct where your assets go, even if they did want to honor your wishes. And in many cases, sadly, they don’t want to honor the decedent’s wishes. A valid will with valid stipulations is the only legally binding way to direct where your assets that are subject to probate will go.
Myth: I don’t need a will because my spouse has power of attorney.
Truth: Your spouse’s powers under a power of attorney cease upon your death.
A power of attorney (POA) becomes invalid upon the death of the principal. So even if you grant your spouse unlimited powers over your estate through a POA during your life, those powers disappear upon your death, and your spouse has no legal authority to direct where your assets go. You can either rely on a valid will to determine what happens to your estate after death or you can rely on your state’s intestacy laws. There is no third option.
Learn more about powers of attorney here on our blog.
Myth: I don’t need a will because my only real asset is my house.
Truth: Even more reason to have a will!
If you die without a will, intestacy laws apply. In South Carolina and many other states, that means half your estate goes to your spouse and half your estate is split among your children. This can create a few different nightmare scenarios for surviving family members, such as the creation of heirs property, or a disagreement between the spouse and kids on what to do with the house. Read more about intestacy in South Carolina and what can go wrong here on our blog.
Myth: If I die without a will, my spouse will get everything, which is what I want anyway.
Truth: Maybe, maybe not. Don’t just assume your spouse will get everything.
This depends on your situation and your state’s intestacy laws. Under intestacy laws in most states, if you have a spouse and no issue (descendants) at death, your entire estate will indeed go to your spouse. But in some states, your parents or siblings could be entitled to a share. And if you do have children or grandchildren, your estate will likely be split in some manner between them and your spouse.
Myth: If I die without a will, the government will get everything.
Truth: Your estate will go to your relatives, and only in the rarest of cases will it go to the state.
Different states have different intestacy laws, but all states pass the estate on to the heirs of the deceased. The estate will go to the government as a last resort only if no heirs, close or distant, are located. But this is rare.
For example, in South Carolina, the estate will go to the surviving spouse or be divided between the surviving spouse and issue (descendants); if none, then to surviving parent(s); if none, then to issue of a parent (i.e., siblings); if none, then to grandparents or issue of grandparents; if none, then to great-grandparents or their issue. If none, only then does the estate pass to the state (see South Carolina Code Section 62-2-105).
So you can see that it would be a rare situation in which a person’s estate would go to the government. In the vast majority of cases, some surviving heir(s) will be located first.
Myth: I am the personal representative/executor for someone’s estate, so I can do what I want.
Truth: Personal representatives/executors have well-defined responsibilities and limited powers.
Personal representatives/executors do not have carte blanche to do whatever they want. Their role is to carry out the wishes of the decedent as stated in the will and settle the estate. In that role, they have a legal duty to execute the terms of the will in accordance with state law and a fiduciary duty to act in the best interest of the estate and its beneficiaries. If they fail to uphold their legal and ethical obligations, they can be held personally responsible.
Read more about the rights, responsibilities, and risks of being a personal representative on our blog.
Myth: I have a trust, so I don’t need a will.
Truth: Even with a trust, you should consider getting a “pour-over will.”
A pour-over will is a specific kind of will that ensures any assets left out of your trust(s) at the time of your death will be transferred into the trust(s). It’s not uncommon for people to create elaborate estate plan to avoid probate and forget to include an asset in the trust, meaning in addition to the expense of the trust, the estate must go through probate anyway. Getting a pour-over will should be part of your estate plan if you are determined to avoid probate.
Read more about different types of wills.
Myth: I can make small changes to my will on my own.
Truth: Changes to your will must follow legal formalities under state law to be valid.
Changes to a will are valid only if they follow the same legal formalities as the original will, such as being signed in the presence of two disinterested witnesses. This means you can’t just strike out terms and write in new ones, even if the changes you want to make are small. Make changes to your will by adding a valid codicil or drafting a new will entirely.
Two exceptions: 1. You can make changes to a handwritten memorandum if it’s legal in your state and referred to in your original will. 2. You can make changes to a holographic will, which is a type of will entirely written in the testator’s hand without a witness or notary.
Myth: My old will must be destroyed for the new one to be valid.
Truth: A new, valid will automatically renders previous wills invalid.
There’s no legal requirement to destroy an old will to make a new one valid. While some people believe there’s value in keeping old wills, in our practice we make a point to destroy them by shredding whenever possible.
Get Help with Your Will and Estate Plan in South Carolina
Do you need help with a will or trust? Whether you need a simple and straightforward will or a comprehensive estate plan for a large or complex estate, Gem McDowell and his team at the Gem McDowell Law Group can help. Call to schedule a virtual or in-person consultation at the Myrtle Beach or Mt. Pleasant, SC office today at 843-284-1021.
Different Types of Wills and How to Choose the Best One for You
Did you know that there’s more than one type of last will and testament? Having a current, valid will is a vital part of avoiding Family Malpractice™ and ensuring your wishes are carried out after you’re gone. The right type for you depends on your individual and family circumstances. In this article, we’ll look at different types of wills and the circumstances each kind is best suited for.
Note: This list does not include a living will, aka health care proxy or advance health care directive. A living will records an individual’s wishes for medical and health care while they are alive but unable to make decisions about their own care. In contrast, a last will documents an individual’s wishes for how to dispose of their estate and only comes into effect upon their death.
Types of Formal Wills
A “formal will” is one that is written down and which the testator has signed in the presence of witnesses. There are several types of formal wills, including the following:
- Simple will
- Personalized will
- Joint will
- “I love you” will
- “Brady Bunch” will
- Pour-over will
Let’s look at each in turn.
What is a Simple Will?
A simple will is the most straightforward kind of will. It contains the essential parts of a will, including the declaration of the testator, nomination of a personal representative (aka executor), and instructions on distributions to beneficiaries. If you go the DIY route and get a fill-in-the-blanks will online or from a store, it’s likely a simple will without much flexibility to address unique circumstances.
A simple will is a good choice for: Individuals with no assets and no family.
Many people come to our law offices asking for a simple will, but that’s not what they need. A true “simple will” is exceedingly rare. That’s because the kind of person it’s ideal for – someone with no assets and no family – is unlikely to get a will in the first place.
A “simple will” is a misnomer because there’s nothing simple about it. Say you want to leave everything to your spouse, but what if your spouse predeceases you? What if you want to then leave everything to your minor children but you have no trust to hold their assets? How will assets be divided if you and your spouse have children from previous partnerships? Who should take guardianship of your minor children? And so on. Matters go from simple to complex quickly when considering matters of inheritance.
For most people, a standardized simple will doesn’t cut it; what they really need is a personalized will.
What is a Personalized Will?
There isn’t a standard term for a will that’s more complex than a simple will, so we will call it a personalized will, or a custom will. This is a will that’s drawn up by an attorney and is tailored to the individual to reflect their unique life circumstances, family dynamics, estate size and complexity, and wishes. While many people come into our offices asking for a simple will, what they really need is a personalized will.
A custom will can do more sophisticated estate planning than a simple will because it’s more flexible and tailored to you. For example, this kind of will might include testamentary trust provisions (to outline terms of a trust that may be established upon the testator’s death), employ strategies to protect assets and avoid unnecessary taxes, detail contingency planning for various scenarios, and much more.
A custom / complex / detailed will is a good choice for: Individuals with family, especially minor children or other dependents and/or larger or more complex estates and/or complicated family dynamics.
What is a Joint Will?
A joint will is one document containing the last wishes of multiple people. In practice, it’s most often used for couples, but theoretically three or more people could share a single joint will. These were much more common in the past but have now fallen out of favor.
A joint will is a good choice for: Nobody.
Here at the Gem McDowell Law Group, we do not draft joint wills, and we advise against them. That’s because they are inflexible; in South Carolina, after one spouse dies, the terms of the joint will cannot be changed. This means the surviving spouse must abide by the terms of the joint will, even if circumstances change through subsequent marriage, stepchildren, or other major life events.
Some states do allow for the revocation of a joint will after the death of a spouse. However, we still don’t recommend this type of will when there are better options available, such as the “I love you” will.
What is an “I Love You” Will?
An “I love you” will is a reciprocal will often used by spouses where the language is the same in each partner’s will except for the names being flipped. Each partner leaves their estate first to their spouse and then, if their spouse predeceases them, to their children. Couples who may have chosen a joint will in the past may choose an “I love you” will now, as it’s more flexible and allows a surviving spouse to change the terms of the will as needed.
An “I love you will” is a good choice for: Married couples with no children or with shared children (i.e., no stepchildren) who are on the same page and who trust each other. Read more about whether an “I love you” will is right for you here.
What about couples on second or subsequent marriages with children from previous partners? We find that an “I love you” will doesn’t adequately address the needs of blended families, but a “Brady Bunch” will does.
What is a “Brady Bunch” Will?
This is not a common term but one we use in our practice to describe wills that can best handle the needs of blended families which includes children from previous relationships. This is where issues of inheritance can become complex. For example, does each partner leave an equal share to all the children, or a larger share to their biological children? Does each partner leave their full estate to the surviving spouse, or divide it between their spouse and children? These are the types of issues that need to be discussed first, preferably with an attorney who has experience creating estate plans for blended families.
A “Brady Bunch” will is a good choice for: Married couples where one or both spouses has children from a previous marriage or partnership.
What is a Pour-Over Will?
A pour-over will is a particular type of will that directs all the testator’s assets to “pour over” into a previously established trust. Unlike the other kinds of wills discussed so far, this kind of will is not used on its own, but as part of a larger estate plan usually created to avoid probate.
A pour-over will is a good choice for: Someone with a large or complex estate who wants to avoid probate. It’s essential to work with an experienced estate planning attorney to ensure the pour-over will and existing trusts work together.
Other Kinds of Wills
The two types of wills here – holographic and nuncupative, or oral – are rare. They’re included on this list because you may have heard these terms and wonder what they mean, but we do not recommend depending on these types of wills for your estate plan.
What is a Holographic Will?
From the Greek words “holos” meaning “whole” and “graphos” meaning “written,” a “holographic” will is one that is wholly written and signed by the testator in their own hand without any witness or notary. The absence of any witness or notary is what differentiates a holographic will from a handwritten will, which is any will written in the testator’s hand.
The validity of holographic wills varies greatly by state. Only a handful of U.S. states permit holographic wills for anyone, while some states allow them only for certain individuals in certain circumstances, such as members of the Armed Forces. Some states, including South Carolina, don’t recognize holographic wills.
A holographic will is a good choice for: Nobody.
A holographic will is never a “good” choice, as they are difficult to validate and are more likely to be contested in court. However, it might be the last and only resort for someone in exigent circumstances, such as a soldier on the battlefield facing possible death.
What is a Nuncupative Will, aka Oral Will?
A nuncupative will (from the Latin “nuncupare” meaning “to declare”), or oral will, is one that is not written down but instead is spoken in the presence of witnesses. It is very rare and only allowed by some states and in some circumstances. For instance, some states allow nuncupative wills if the testator is a military member in armed conflict or if the testator is on their deathbed, and only for personal property.
A nuncupative will is a good choice for: Nobody.
As with a holographic will, an oral will or nuncupative will should be a last resort as it’s hard to enforce and much more likely to lead to confusion and litigation than a formal will.
Get a Will That’s Right for YOU and Your Circumstances
A last will is arguably the single most important estate planning document you can have. It’s the best way to ensure your wishes regarding your estate and your dependents are carried out after your death – but only if it’s tailored to your family’s needs and your unique circumstances.
For help creating or revising your South Carolina will, call estate planning attorney Gem McDowell at the Gem McDowell Law Group. Gem and his team will create a will just for you, whether you need a straightforward simple will or a highly customized will that addresses complex estate questions and complicated family dynamics. They can also help you with other estate planning documents like living wills, powers of attorney, trusts, and more, for a comprehensive estate plan that reflects your wishes.
Schedule your appointment or free consultation at the Myrtle Beach or Mount Pleasant, SC office by calling 843-284-1021 today.
What Is an “I Love You” Will and Is It Right for Me?
An “I love you” will is a common type of last will used by spouses. It’s a reciprocal will where the language is exactly the same in each spouse’s will, except that the names are flipped.
In a typical “I love you” will, each spouse leaves their entire estate to the other, then, if their spouse predeceases them, to their children. If both spouses die at the same time, their estate passes to their children.
This type of will is a simple and straightforward way to help avoid Family Malpractice™ and direct how the family’s estate should be handled after the death of one or both spouses. It’s a great choice for many families but not all. There are some important considerations, including how much you and your spouse trust each other.
Here’s what to know.
An “I Love You” Will is Not the Same as a Joint Will
While both types of wills are most often used by spouses or couples, there are some important differences between the two.
First, a joint will is one single document shared by two people. More importantly, a joint will is very restrictive. If one spouse dies, the surviving spouse is bound by the terms of the will and cannot change them, even after major life events like remarriage. (Some states allow for a joint will to be revoked, but the process can be difficult.)
In contrast, each spouse has their own distinct will with an “I love you” will. This is important, because it means an “I love you” will is much more flexible. A surviving spouse may keep the will as is (which would then leave the estate to the children), amend it, or replace it with a new will entirely.
At our law office, we don’t draw up joint wills and we don’t recommend them for anyone. An “I love you” will is the better choice between the two, providing more flexibility for the future.
However, it’s not right for everyone.
An “I Love You” Will Might Be Right for You If…
This type of will might be right for your family if you and your spouse:
- Have no children or only shared children (i.e., no stepchildren)
- Are on the same page about how your assets should be handled after death
- Trust each other
An “I Love You” Will Might Not Be Right for You If…
This type of will might not be a good choice for your family if you and/or your spouse:
- Have children from a previous relationship (where a “Brady Bunch” will for blended families is a better choice)
- Don’t agree on how assets should be handled after death
- Have large amounts of debt
- Have an addiction or overspending problem
- Are in a situation that could put the assets at risk
- Don’t trust each other
Trust is Key with an “I Love You” Will: Issues to Consider
On this last point, it can be difficult to face the reality that you don’t fully trust your spouse to make good choices regarding your estate after your death. But it’s worth thinking about what could happen.
For example, one client had us write up her will, but she didn’t leave her entire estate to her husband without restrictions. She suspected he might start dating after she died and give away some assets to his new girlfriend – and that’s exactly what he tried to do. Knowing him, she had used her will to protect some assets and keep them in the family. She used a certain type of trust to essentially “handcuff” him, allowing access during his life to some of her assets while preserving the rest for the children.
Another point to consider: An individual has the right to change their “I love you” will while both spouses are still alive. This could lead to an uneven situation where one spouse leaves everything to the surviving spouse in the will, but the other spouse doesn’t. The individual changing their will has an ethical obligation but no legal obligation to inform their spouse of the changes.
Finally, you must also trust that your spouse will not spend or squander the assets and leave nothing for your children, if that’s important to you. If your spouse has issues with addiction, gambling, or overspending, leaving them all your assets could not only be detrimental to your children, but to your spouse as well.
Maybe your spouse doesn’t have an addiction or spending problem but has a lot of debt or suffers from a serious medical condition that’s expensive to treat or is in a profession (like doctor) that’s likely to be sued. These are scenarios where the estate’s assets could be at risk of being spent with nothing remaining to leave to the children.
Ask yourself:
How would you feel if your spouse remarried or dated after your death and gave your assets away to a new partner or child(ren)?
How would you feel if you found out your spouse had changed their will without telling you, and your wills were no longer reciprocal?
How would you feel if your spouse spent everything on addiction, shopping, or debts, leaving nothing for your children?
There is no right or wrong answer to any of these questions. But you and your spouse should seriously consider them before deciding to move forward with an “I love you” will.
Do You Have the Right Will for Your Family?
You can see how the apparently straightforward “I love you” will can quickly become complex. This is where it’s helpful to work with an experienced estate planning attorney who can bring up potential issues and scenarios you might have never thought of. An “I love you” will is just one type of will, and maybe a different kind of will is a better choice for your family. An experienced estate planning attorney can help you figure it out.
Whether you’re getting a will for the first time, updating an old one, or simply want to review an existing one to ensure it still aligns with your priorities, we can help. Gem and his team at the Gem McDowell Law Group help individuals and families across South Carolina create wills and comprehensive estate plans that reflect each family’s unique circumstances and wishes while avoiding Family Malpractice. Schedule your appointment or free consultation at the Myrtle Beach or Mount Pleasant, SC office by calling 843-284-1021 today.
What a Will Can and Can’t Do
A last will is an important and powerful estate planning document. However, there are many things you cannot legally do through a will. Before drawing up your own will, you should know what a will can and can’t do so you can ensure your intentions are carried out.
Note that laws regarding wills vary from state to state. Speak with an estate planning attorney in your state if you have specific questions about what is and is not allowed under the law in your state.
A will can: Direct where assets subject to probate should go.
A will can direct where assets subject to probate go. Probate is the court-supervised process that settles the estate’s debts and taxes and transfers the remaining assets to the appropriate beneficiaries. Common assets subject to probate include:
- Real property solely owned or owned as tenants in common
- Bank and investment accounts without a beneficiary
- Personal property like cars, clothes, and furniture
Learn more about probate in South Carolina here on our blog.
A will cannot: Direct where assets not subject to probate should go.
A will cannot disburse assets that are not subject to probate, such as:
- Real property owned as joint tenants with rights of survivorship
- Payable on Death (POD) or Transfer on Death (TOD) accounts
- 401Ks, IRAs, and other retirement and pension accounts with a named beneficiary
- Life insurance proceeds from a policy with a named beneficiary
- Assets in irrevocable trusts and revocable living trusts
These assets are not subject to probate and go directly to the listed beneficiary or co-owner (in the case of assets owned jointly), bypassing probate altogether. Only if the assets are unable to go to the beneficiary or co-owner – if, for example, they predeceased you – would they end up going through probate.
A will can: Disinherit a blood relative.
A testator has the right to disinherit an adult child, sibling, parent, or any other blood relative in their will. (Whether an individual can legally disinherit a minor child depends on state law.)
A will cannot: Disinherit a spouse.
Spouses are protected under the law and are entitled to a portion of the deceased spouse’s estate after death, regardless of the provisions in the will. The only way to disinherit a spouse is to get their knowing consent in writing, and that must happen separately from the will.
In community property states, the surviving spouse is automatically entitled to the “community property share,” which is one half of the assets acquired during the marriage. Couples in these states may use a prenuptial agreement or postnuptial agreement to waive the surviving spouse’s right to the community property share.
Other states have something called “elective share,” a portion of the deceased spouse’s estate that the surviving spouse is entitled to under the law. This amount varies by state; in South Carolina, it’s one third. The only way to legally disinherit a spouse is for both spouses to sign a waiver of elective share. Read more about how to disinherit a spouse in South Carolina with a waiver of elective share here on our blog.
A will can: Put reasonable conditions on inheritance.
A testator is allowed to put legal, reasonable conditions on inheritance. For instance, a testator may say that their daughter will inherit the lake house when she turns 25 or that their nephew will inherit $50,000 if he earns a college degree by 30.
A will cannot: Put invalid conditions on inheritance.
A testator cannot make inheritance conditional on things that are illegal or that violate public policy. For instance, stipulating that a son will inherit his portion of the estate only if he marries someone of the same race or that a daughter will inherit $100,000 if she divorces her current husband will likely not be honored.
This is case-dependent and varies by state, so if you are considering including questionable stipulations in your will, discuss it first with an experienced estate planning attorney in your state.
A will can: Name individuals to certain roles.
The testator can name the people you’d like to be your personal representative / executor, guardian(s), and trustee(s). Naming people who are fit for the job and who have already agreed to take it on can save time in the probate process.
A will cannot: Obligate individuals to take certain roles.
An individual named in the will is not legally obligate to take on the role and may decline it. In that case, the probate judge will appoint someone else.
For this reason, it’s wise to talk with the individuals you choose to make sure they agree to take on the role and to include a back-up, just in case.
A will can: Help avoid Family Malpractice™.
Family Malpractice™ is a term we use for an individual whose actions or negligence have put their family in a bad legal situation. Most often, this happens as a result of not doing something that should have been done, such as not having a valid will drawn up. Dying without a will is one of the main causes of Family Malpractice™, as it can cause financial hardships, legal challenges, and family rifts for those left behind.
Getting a will is not just about carrying out your wishes after you’re gone, but about protecting your family and their future, too.
Get Help with Your Will and Estate Plan
Do you have a last will in place or are you relying on the government to decide where your assets should go after your death? If you live in South Carolina and you’re looking for help creating or updating a will, call estate planning attorney Gem McDowell. Gem and his team at the Gem McDowell Law Group help individuals and couples in South Carolina create wills and estate plans tailored to their circumstances and needs. Call 843-284-1021 to schedule an appointment or a consultation at the Myrtle Beach or Mount Pleasant, SC office today.
What Is a Will?
A last will and testament is arguably the single most important estate planning document you can have. Not having a valid, up-to-date will is a leading cause of Family Malpractice™ and can create legal, financial, and even personal problems for your heirs. If you’re an adult, you should have a last will, even if it’s a simple one.
But let’s start at the beginning:
What is a will?
A will is a legally binding document that directs what should happen to a person’s estate after death.
A last will is a legal instrument in which someone – the testator (or, sometimes, testatrix for a woman) – specifies what should happen to their estate and dependents after they die. In the United States, a will is subject to state laws, which vary somewhat from state to state.
A last will is entirely different from a living will (aka, advance directive or advance healthcare directive), which is a legal instrument outlining wishes for end-of-life care or care after incapacity. In contrast, a last will only comes into effect upon the death of the testator.
There are different types of wills, including simple wills, “I love you” wills, pour-over wills, and more. Read more about the Different Types of Wills and how to choose the best kind for you and your circumstances on our blog.
What can a will do?
A valid, up-to-date will can ensure that your intentions for what happens to your estate and your dependents after your death are known and honored.
By making your wishes clear, you can help prevent litigation, legal quagmires, and fractured relationships that can result when someone dies either without a will (this is called dying intestate) or with an invalid, unclear, or out-of-date will.
A will allows the testator to:
Direct how and where certain assets in the estate will go.
A will only directs how to handle the testator’s assets that are subject to probate, the court-supervised process of paying debts and taxes and transferring ownership of remaining assets after a person’s death. Learn more about probate in South Carolina here on our blog.
Assets subject to probate include bank accounts without a named beneficiary, real estate not owned jointly with rights of survivorship, and personal property. Assets not subject to probate include life insurance proceeds, retirement accounts, and assets held jointly, such as real property owned as a joint tenancy with rights of survivorship. These assets bypass the probate process and go directly to the named beneficiary or co-owner.
If someone dies without a will, aka dies intestate, then state statute determines what happens to their assets and children/dependents. A valid last will is the best way for you – not the government – to direct what happens to your estate after you die. Read more about dying intestate in SC here.
Make arrangements for care of dependents.
The testator can name a guardian to take on legal responsibility for any minor children or other dependents (such as an adult child who needs lifelong care). The testator may also make provisions to create a trust for minor children or dependents and name a separate trustee to manage and oversee the trust’s assets.
Name a personal representative.
The testator can name a personal representative, aka an executor (or sometimes executrix, for a woman), to carry out the intentions of the will and close the estate.
And…
Depending on the testator’s unique circumstances, a will can also be used to:
- Create one or more trusts to hold assets for beneficiaries
- Make donations to charitable organizations
- Make arrangements for care of pets
- Make final wishes for funeral/cremation/celebration of life known
On this last point, we don’t believe a last will is the ideal place to include final wishes. For one, a decedent’s will may not be located and read for several days or weeks after death, by which time it’s too late. Also, last wishes may not be legally binding. If being cremated is important to you, read about legally binding pre-authorization forms for cremation in South Carolina.
A last will has several other limitations as well. Read more about What a Will Can and Can’t Do on our blog.
Parts of a will
A will can and should be tailored to an individual’s circumstances. It may end up being simple and straightforward or long and complex, depending on the nature of the testator’s estate, wishes, and family circumstances. However, most wills typically contain the following basic sections:
Declaration of the testator. The testator gives his or her name and personal information (city and state of residence, marital status, and children), states that he or she has testamentary capacity, and states that the document that follows is intended to be his or her last will. Testamentary capacity is the legal threshold of cognitive ability the testator must meet in order to execute a valid will. This is where the phrase “being of sound mind” may occur.
Naming a personal representative / executor (executrix). The testator names someone to carry out the intentions of the will and close the estate. (Read more about the rights and roles of the personal representative in SC here on our blog.)
Settling debts and taxes. The testator directs how debts and taxes should be paid and may specify from which account or source.
Bequests/Gifts and distribution of assets. The testator lists exactly which assets should go to which beneficiary. The gifts may be specific (such as a particular diamond necklace or piece of real property) or general (such as $20,000). The testator may also specify which sources should be used, e.g., “$20,000 from my [XYZ] Bank savings account.” Alternatively, the testator may choose to divide the estate among heirs by percentages.
Note that in some states, a written memorandum can be used to bequeath personal property to beneficiaries; read more about the written memorandum below.
Appointing a guardian for children and dependents. If the testator has minor children or other dependents, he or she should name a guardian to take on legal responsibility for their care and a back-up guardian.
Signatures. The testator signs the will, often in the presence of two witnesses, though the exact requirements vary by state. Failure to follow state law here can result in the will being invalid.
Depending on an individual’s circumstances, the will may also contain sections on trusts and trustees, guardians for surviving pets, special requests for funeral or memorial services, and more.
Supplemental Parts of a Will
A testator may wish to make changes to the will sometime in the future. Having an entirely new will drawn up is one way to make changes. Alternatively, the testator may use a codicil or a written memorandum to document the changes. Here’s how these two supplementary parts of a will work and how they’re different:
Codicil. A codicil is a separate document that allows the testator to make changes to the will without drafting an entirely new will. It must be executed in the same manner as the original will (e.g., with two witness signatures) in order to be valid.
Written memorandum or personal property memorandum. Some states, including South Carolina, allow for a separate document in which the testator can bequeath personal items like family heirlooms or coin collections. A written memorandum cannot be used to distribute real property, cash, or securities like stocks and bonds. The written memorandum should be referred to in the will.
Get Help with Your Will and Estate Plan
Do you have an up-to-date last will? Having a current and valid last will is key to doing right by your family and avoiding Family Malpractice™.
If you live in South Carolina and you need to update your will or have one drawn up for the first time, contact estate planning attorney Gem McDowell of the Gem McDowell Law Group. He and his team can help you create a last will and comprehensive estate plan tailored to your circumstances, wishes, and needs.
Call to schedule an appointment or consultation at the Myrtle Beach or Mount Pleasant, SC office today at 843-284-1021.
What Exactly Are Trade Secrets? More Than Just Secret Recipes
When you hear the term “trade secrets,” you might think of the recipe for Coca Cola or the formula for WD-40. And these are certainly two of the most famous trade secrets in the world.
But the concept of “trade secret” encompasses much more than secret recipes and formulas. Did you know that even things like customer lists, payroll information, and marketing strategies can be considered trade secrets?
The broader definition is important because trade secrets are protected under state and federal law, and a company can take legal action against a party that misappropriates or misuses its trade secrets.
That’s what happened in a 2024 South Carolina Court of Appeals case, Jennings-Dill, Inc. v. Eric Israel (read the case here). The company took legal action against Israel, a former employee, alleging that he harmed the company by taking and misusing confidential personnel information. We’ll look at that case a little more closely later.
But first, what exactly is a “trade secret”?
What is a Trade Secret? State and Federal Definitions
South Carolina Code Section 39-8-20(5) defines “trade secret” as:
- information including, but not limited to, a formula, pattern, compilation, program, device, method, technique, product, system, or process, design, prototype, procedure, or code that:
(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by the public or any other person who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
This definition is almost word-for-word the same as the definition in the United Trade Secrets Act (UTSA; link to PDF), a model law created by the Uniform Law Commission. The UTSA has been adopted in some form by nearly every state (with the notable exception of New York, whose courts rely on a similar definition).
The statute continues:
- A trade secret may consist of a simple fact, item, or procedure, or a series or sequence of items or procedures which, although individually could be perceived as relatively minor or simple, collectively can make a substantial difference in the efficiency of a process or the production of a product, or may be the basis of a marketing or commercial strategy. The collective effect of the items and procedures must be considered in any analysis of whether a trade secret exists and not the general knowledge of each individual item or procedure.
At the federal level, trade secrets are also similarly defined. Under the Defense of Trade Secrets Act (18 U.S. Code Chapter 90):
- (3) the term “trade secret” means all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—
- (A) the owner thereof has taken reasonable measures to keep such information secret; and
- (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information
“Compilations” as Trade Secrets: Customer Lists, Financial Analyses, Manuals, and More
Under the definitions above, it’s easy to see how something like a special formula, recipe, piece of code, product design, or manufacturing process could be a trade secret.
But things like financial analyses, training manuals, marketing strategies, customer lists, and personnel information can also be considered trade secrets, falling under the “compilation” part of the definition. As long as the information derives economic value due to its confidential nature, and the company takes reasonable steps to maintain secrecy, it may be considered a trade secret.
What to Do When Trade Secrets Are Stolen
When trade secrets are misappropriated, the owner of the intellectual property (usually a company) can bring a civil suit against the suspected thief. In some circumstances, criminal charges may be brought by the government; this is more common at the federal rather than the state level, and typically only in situations involving economic espionage or significant financial harm.
In civil suits, plaintiffs often seek injunctive relief to prevent the trade secrets from being further disseminated. This is important because once a trade secret is widely known, it ceases to be a trade secret and is not protected under trade secrets laws. Plaintiffs may seek monetary damages as well, usually as lost profits or unjust enrichment of the defendant.
Jennings-Dill, Inc. v. Eric Israel: Personnel Information as Trade Secrets
That’s what happened in Jennings-Dill, Inc. v. Eric Israel. The appeals court case mainly focuses on when it’s appropriate to grant injunctive relief, which we won’t go into here, but the background facts center on company personnel information as trade secrets.
Eric Israel worked for Jennings-Dill, Inc. (JDI), a commercial plumbing and gas piping company in Greenville, SC, for eleven years before resigning in the summer of 2021. In his role as superintendent, Israel was given a company iPad with access to confidential information. He was subject to company policy which, among other things, forbids employees with a company iPad from copying sensitive data.
Around the time of his resignation, Israel downloaded files from the company iPad with confidential information including personal contact details and pay rates for all JDI employees.
JDI alleges that Israel used that information to solicit JDI employees to leave JDI and come work for Israel’s new employer. One JDI employee testified that within three weeks of Israel’s resignation, twelve of the 29 employees in the plumbing division left the company. This adversely affected JDI, it said, as it had to withdraw from projects worth over $2.5 million and would need a long time to recruit and train new plumbers.
JDI took legal action, seeking a preliminary injunction preventing Israel from using or disclosing confidential information and trade secrets from the documents he downloaded. JDI stated it considers the compilation of employee names, contact information, and pay rates to be a trade secret because it has economic value, is not readily available to the public, and gives JDI a competitive advantage.
The circuit court granted JDI’s request for injunctive relief, which the South Carolina Court of Appeals upheld after Israel appealed. The case did not go to trial – the parties ended up agreeing on a five-year-long permanent injunction preventing Israel from using JDI’s confidential information (PDF here) – but the fact that the preliminary injunction was granted before the full facts of the case were heard shows how South Carolina courts view the importance of protecting trade secrets.
Contact Business Attorney Gem McDowell
If you believe your company’s trade secrets have been misappropriated, speak to an intellectual property attorney in your state, preferably one with experience handling trade secrets cases.
For help with other legal business matters in South Carolina, including starting, running, buying, or selling a business, contact Gem McDowell of the Gem McDowell Law Group. He and his team help business owners avoid costly mistakes and make smart decisions in order to grow their businesses and thrive. Call Gem and his team at the Myrtle Beach or Mount Pleasant, SC office today to schedule a free consultation at 843-284-1021.
Rights to Land You Don’t Own? Prescriptive Easements and Braswell v. Amick.
A farmer in Newberry County, SC, purchased land that was cut off from the main road. To access his land, he habitually used a dirt road on land owned by a neighbor. This went on for years. At first, the neighbor on the adjacent parcel gave the farmer permission to use the dirt road, but after many years, he no longer wanted the farmer using the road.
Should the farmer have the right to use the neighbor’s land to access his own farm? Or does the neighbor have the right to deny the farmer access to the dirt road on his land?
What do you think?
Easements: Rights to Land You Don’t Own
The scenario above is real, and it’s at the center of the 2024 South Carolina Court of Appeals case Braswell v. Amick (read it here).
The court ruled that the farmer, James L. Braswell, Sr., does have the right to use the dirt road partially located on land owned by his neighbor, James F. Amick.
But why should someone have rights to another’s land? Because of easements. In this case, a prescriptive easement, to be exact.
An easement is the right a party has to land owned by another for a specific purpose. Many common easements, such as utility easements, are typically established by contract, deed, or other legal instrument.
In contrast, a prescriptive easement is not established through documentation but through habitual land use. The party claiming the easement must show open, continuous, and adverse use of the land for a certain period of time to establish the easement.
We previously covered prescriptive easements in a blog here on the Supreme Court of South Carolina case Simmons v. Berkeley Electric Cooperative (2016). The Braswell case aligns with and reinforces the Simmons decision. (Note that the Braswell opinion goes into exceptional detail, but this blog will only address the pertinent background and facts.)
Factors to Establish a Prescriptive Easement in South Carolina
In the Simmons opinion, the court laid out the following requirements for establishing a prescriptive easement in South Carolina:
“In order to establish a prescriptive easement, the claimant must identify the thing enjoyed, and show his use has been open, notorious, continuous, uninterrupted, and contrary to the true property owner’s rights for a period of twenty years.”
Open means the use has not been stealthy or done in an attempt to hide use from the landowner.
Notorious means the use was known by the landowner or widely known in the neighborhood.
Continuous and uninterrupted means use that’s consistent over a long period of time (in South Carolina, that’s 20 years) without large pauses or gaps in use.
Contrary to the true property owner’s rights means use that is somehow disruptive, obtrusive, or otherwise unwanted by the true property owner.
Once a prescriptive easement has been established, the property owner cannot interfere with the other party’s specific rights to the land. For example, the true property owner could not block a road that the other party has rights to under a prescriptive easement.
Braswell v. Amick Background and Decision
For years, Braswell, his sons, his employees, and others accessed the Braswell Property by taking a dirt road partially located on the Amick Property. Amick was okay with this at first, and even gave Braswell a key to the gate he installed on the dirt road after buying the property. Later, he no longer wanted anyone on his property, saying that Braswell started “abusing the situation.”
Braswell then sought a judgment declaring a right-of-way over Amick’s property from Highway 76 to his (Braswell’s) farm. Amick denied the existence of the right-of-way.
The circuit court found in Braswell’s favor. Amick appealed and brought up two main issues the appeals court addressed:
- Was Braswell’s use “open” and “notorious”?
- Can the 20 years of continuous, uninterrupted use include time when the land in question was leased?
Let’s look at both in turn.
Issue 1: Was Braswell’s use “open” and “notorious”?
Amick contended that the circuit court erred by not applying the test set forth in Simmons correctly.
In its opinion, the appeals court says that while the exact words “open” and “notorious” were not used in the circuit court’s order, the circuit court did address whether Braswell used the land in an “adverse” manner under a claim of right contrary to Amick. It determined that he did, and adverse use implies open and notorious use. Therefore, the fact that the lower court failed to use the words “open” and “notorious” does not constitute a reversible error.
Unfortunately for Amick, it was the fact that he objected to Braswell’s use of his land after so many years that allowed Braswell to make the claim of adverse use. If Amick had given full permission to Braswell to use the dirt road, Amick could have raised a defense of permissive use, which would have undermined the requirement of using the land contrary to the true owner’s rights.
Issue 2: Can the 20 years of continuous, uninterrupted use include time when the land in question was leased?
Braswell leased land for a time from Sula Miller in order to run his farm before purchasing the land in 1972. Amick contended that during that time, Miller presumably gave Braswell the right to use the land he now claims a right-of-way on. Therefore, that time period cannot be counted towards the 20 years of “continuous, uninterrupted” use as required to establish a prescriptive easement, since use during that time was not adverse, argued Amick.
The appeals court disagreed. It ruled that Braswell did satisfy the requirement of 20 years of “continuous, uninterrupted” land use to establish a prescriptive easement, as there was no evidence of permissive use at the time in the record. The court also cited previous case law (specifically, Simmons and Kelley v. Snyder [SC Court of Appeals, 2012]) rulings that the 20-year time period can be satisfied by “tacking” together periods of adverse land use on the same land as long as those periods were continuous and uninterrupted.
Additionally, aerial photos from the 1980s show a dirt road on the present day Amick Property running to the present day Braswell Property, countering Amick’s testimony that the land was overgrown and inaccessible for a period of time. “These photographs support Braswell’s claim and the circuit court’s finding that Braswell was able to continuously use the road,” says the court.
You Must Be Proactive in Preventing Prescriptive Easements from Being Established
Ultimately, the SC Court of Appeals affirmed the lower court’s decision in favor of Braswell. He now has the right to use the dirt road partially located on Amick’s land, and Amick can’t stop him from doing so.
If you are looking to establish a prescriptive easement, you can see the factors (listed above) that are required in South Carolina. You can also see that in recent years, some important decisions coming out of South Carolina’s courts have been favorable to parties seeking a prescriptive easement.
But if you are a landowner who wants to prevent a prescriptive easement from being established, you need to be proactive when you see parties using your land. Some options:
- Stop the land use: Post “no trespassing” signs, erect fences or other physical barriers, send written notices to the party using your land to stop, and/or speak with an attorney about legal actions you can take
- Give permission: Allow the party to use the land so the land use is permissive rather than adverse; be sure to document this in writing and provide a copy to the party using your land
- Sell the land: Consider selling part of the land outright to the party using it
(Note: This list is not exhaustive and does not constitute legal advice.)
Once a prescriptive easement is established, it’s hard to have it reversed. An easement on your property can mean loss of privacy, loss of control, inconvenience, and disruption for you. It can also affect your property’s value and your ability to sell it in the future by complicating or clouding the title and turning potential buyers off.
Call Attorney Gem McDowell for Legal Help and Advice
For help with commercial land transactions, contracts, and more, contact Gem and his team at the Gem McDowell Law Group. He helps individuals, families, and businesses in South Carolina from his offices in Myrtle Beach and Mount Pleasant, SC. Gem is a problem solver who can help you avoid mistakes and protect your interests. Schedule an appointment or a complimentary consultation by calling 843-284-1021 today.
Stuck with the Terms: Adhesion Contracts After the Landmark 2024 Huskins Ruling
Adhesion contracts are “take-it-or-leave-it” contracts where the contract-writing party dictates the terms and the contract-signing party has little to no room to negotiate. It’s often a large company writing the contract and an individual consumer signing it. We recently covered the topic in our blog “Can I Get Out of a One-Sided Contract? Adhesion Contracts and Unconscionability in South Carolina,” which you can read here.
The conclusion of that blog was that you usually cannot get out of a contact you signed, and that even if a particular term or clause is not enforceable, the court may simply sever it and enforce the rest of the contract.
But the recent 2024 South Carolina Supreme Court decision in Huskins v. Mungo Homes, LLC, (read the decision here) changes things.
The Future of Adhesion Contracts in South Carolina
Up to now, parties drafting an adhesion contract in South Carolina had nothing to lose by including terms that were highly favorable to themselves and unfavorable to the signing party. At best, the parties would adhere to the terms as written and unchallenged, to the benefit of the contract-writing party. At worst, a court might sever the offending term(s) and enforce the rest of the agreement – again, to the benefit of the contract-writing party.
But now, parties insisting on adhesion contracts must be prepared to abide by the contract as written, even to their detriment. In Huskins (2024), the court rejected the idea of severing contract terms that violate public policy in the absence of a severability clause.
This decision will likely affect how companies (in particular, home builders) write their contracts and how courts interpret adhesion contracts in the state moving forward.
That’s the decision and its implications in a nutshell. To understand the court’s reasoning behind this decision, read on.
Brief Background of Huskins v Mungo Homes
Amanda and Jay Huskins (the Huskins) signed a purchase agreement when they bought a house from Mungo Homes, LLC (Mungo) in June 2015. The purchase agreement included the following arbitration clause:
“Each and every demand for arbitration shall be made within ninety (90) days after the claim, dispute or other matter in question has arisen, except that any claim, dispute or matter in question not asserted within said time periods shall be deemed waived and forever barred.”
This clause clearly violates South Carolina law, which typically gives a statute of limitations of three years for such claims, not just 90 days. It also violates South Carolina Code Section 15-3-140 (2005), which renders void contract clauses that attempt to shorten the statute of limitations for claims.
The Huskins filed a complaint over provisions in the purchase agreement, including the arbitration agreement, which they argued violated public policy. The circuit court disagreed; it sided with Mungo and granted its motion to dismiss the complaint and compel arbitration.
On appeal, the appeals court AFFIRMED AS MODIFIED the circuit court’s decision (find that decision here). While it held that the clause limiting claims to 90 days was unconscionable and unenforceable, it also held that the offending section could be severed, allowing the rest of the arbitration agreement to stand.
The South Carolina Supreme Court took up the case in 2024 and REVERSED AND REMANDED the appeals court’s decision. It voided the entire arbitration agreement and remanded the case back to the circuit court.
The Court’s Reasoning
The supreme court went into depth on a number of issues:
Lack of Severability Clause
The court noted that the Mungo Homes contract did not contain a severability clause “or any hint that the parties intended for the arbitration agreement to stand if any part of it fell.”
South Carolina courts are not allowed to rewrite contracts, the court says, and instead are to enforce contracts according to their terms as written: “This is true even when the parties include a severability term. When they do not add such a term, we are reluctant to force one upon them.”
Violation of Public Policy
The appeals court found the clause limiting claims to 90 days was unconscionable and unenforceable.
The supreme court instead found the clause unenforceable because it’s illegal as a matter of public policy. “Because it is unenforceable, we need not decide whether it is also unconscionable. The only question we are left with is whether we should sever the illegal term and let the remainder of the arbitration agreement stand.”
Not Obtained in Good Faith
Courts have routinely stricken illegal parts from contracts and upheld the legal parts. This practice came to the U.S. from English common law and is part of the Restatement (Second) of Contracts.
The Restatement says a court may strike a contract term that’s unenforceable because it violates public policy and enforce the rest as long as:
- The part deemed unenforceable is not an “essential” part of the exchange, and
- The party that wants to enforce the term “obtained it in good faith and in accordance with reasonable standards of fair dealing”
Comments on the Restatement (Second) of Contracts section 184 says “a court will not aid a party who has taken advantage of his dominant bargaining power to extract from the other party a promise that is clearly so broad as to offend public policy by redrafting the agreement so as to make a part of the promise enforceable.”
Was the Mungo Homes contract term “obtained in good faith an in accordance with reasonable standards of fair dealing”?
The South Carolina Supreme Court says three reasons help in determining intent:
- The lack of severability clause
- The existence of a merger clause stating the contract “embodies the entire agreement” which can only be modified or amended in writing by the Huskins and Mungo
- The fact that it is, at Mungo’s own admission, an adhesion contract
On the third point, the court says: “Mungo wrote the contract and deemed its terms nonnegotiable. Huskins could not even edit it. This forceful proof of Mungo’s intent that the contract not be tinkered with convinces us that we should not rewrite it now.” As an adhesion contract, it’s “highly doubtful” the parties intended severability.
“Skirting” of Public Policy
The contract term shortening the time to 90 days from what’s typically three years is not an ancillary matter, but “a brash push” to use arbitration to do something that South Carolina statute forbids.
The court says that rather than including the arbitration provision as an alternative method to resolve disputes, Mungo included it to cut down the number of disputes entirely by drastically reducing the time frame in which to bring a claim. “We conclude Mungo’s manipulative skirting of South Carolina public policy goes to the core of the arbitration agreement and weighs heavily against severance.”
For Help with Contracts and More
The “take-it-or-leave-it” nature of the purchase agreement originally put the Huskins at a disadvantage, but now “Mungo is stuck with its choice,” in the words of the court.
This case highlights the importance of contracts. You must understand the terms of the contracts you sign. And if you’re the party writing the contract, avoid including terms that violate public policy and consider including a severability clause.
For help with contracts and other business-related legal matters such as creating governance documents, buying or selling a business, or starting a new business in South Carolina, contact Gem McDowell. Gem and his team at the Gem McDowell Law Group help business owners across the state solve problems, avoid mistakes, and grow their businesses, with offices in Myrtle Beach and Mount Pleasant, SC. Call today to schedule your free consultation.
Avoid $591/Day Penalty: Business Owners, File a BOI Report ASAP
UPDATE: FinCEN will not issue fines or penalties for failure to file or update BOI information by the March 21st, 2025, according to a statement put out on February 27th. FinCEN will provide an interim rule no later than March 21st with guidelines on deadlines.
UPDATE 02/25/25: The new deadline to file BOI reports is March 21, 2025, for most businesses, after the February 18th ruling by the U.S. District Court for the Eastern District of Texas in the case of Smith, et al. v. U.S. Department of the Treasury, et al.
If you were supposed to file a Beneficial Ownership Information report by December 31, 2024, but waited to see what would happen in the courts, you now have until March 21st to go ahead and file. Read the original blog post, below, for information on how to do that.
Find the official notice from FinCEN here (PDF), and stay alert for more updates, as FinCEN states it “will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.”
UPDATE: The requirement to file BOI reports is on hold – at least for now. From The National Law Review: “On December 3, 2024, the U.S. District Court for the Eastern District of Texas entered a preliminary injunction suspending enforcement of the Corporate Transparency Act (CTA) and its implementation of regulations nationwide.” In response, the Department of Justice issued a notice of appeal on December 5th.
What this means for you: If you have already submitted your BOI report(s), there’s nothing left to do. If you have not yet done so, you may choose to do so anyway or wait and see how the legal proceedings play out. As noted in the article linked above, “reporting obligations may change on short notice,” so make sure to monitor the news for updates. You can also come back to this post, which we will keep updated.
Original post published Nov. 15, 2024:
Attention U.S. business owners: If you are a beneficial owner in a non-exempt company, you must submit a Beneficial Owner Information Report. Depending on when your company was established, you may have 30 or 90 days from when your company was created or until January 1, 2025, to do so.
The penalty for failing to file is steep – over $500 per day in fines and even jail time.
The new reporting requirement is due to the Corporate Transparency Act (CTA), which was passed in late 2020 after being tacked onto a larger bill (the National Defense Authorization Act for Fiscal Year 2021). Here’s what to know about the reporting requirement and what you should do.
Frequently Asked Questions
How Do I File a Beneficial Owner Information Report?
You can file a BOIR online at https://www.fincen.gov/boi.
What is a Beneficial Owner Information Report?
A Beneficial Owner Information Report (BOIR) is a required submission to the Financial Crimes Enforcement Network (FinCEN, part of the Treasury Department) that contains information on the company and its beneficial owner(s). This information includes full name, address, date of birth, and ID.
What is a “Beneficial Owner”?
A “beneficial owner” is someone who owns or controls at least 25% of the “ownership interests” of the company or someone who exercises “substantial control” over the company.
Who Must File a Beneficial Owner Information Report?
A BOIR must be filed for every “reporting company” which is established in the U.S. or registered to do business in the U.S. and is not exempt (see below for exemptions). This may be an LLC, a corporation, or any other business entity that was created by filing with the secretary of state, as well as some trusts.
Just one BOI report is required per company, regardless of the number of beneficial owners. The report is typically filled out and filed by one of the beneficial owners, such as a member, manager, director, or corporate officer, or an attorney working at or for the company.
Which Companies Are Exempt?
Some companies qualify for an exemption, meaning they are not required to file a BOI report.
These include companies that are already subject to regulatory oversight such as banks, credit unions, insurance companies, and tax-exempt entities. “Large operating companies” are also exempt; under the CTA, a “large operating company” is one with a physical office in the U.S., more than 20 full-time employees, and over $5 million in gross receipts or sales for the previous year as reported on a federal income tax or information return.
Find the full list of the 23 exempt entities on the FinCEN website.
When is the BOIR Due?
Companies formed or established before January 1, 2024 have until January 1, 2025 to submit a BOIR. Update 02/25/25: the new deadline is March 21, 2025 for most companies. Companies that had previously been granted an extension beyond March 21st have until the later deadline, as stated in the February 18th FinCEN notice.
Companies that have ceased to exist but were still in existence as of January 1, 2024 have until January 1, 2025 to submit a BOIR. Update 02/25/25: the new deadline is March 21, 2025.
Companies formed or established between January 1, 2024 and January 1, 2025 have 90 days to submit a BOIR.
Companies formed or established after January 1, 2025 have 30 days to submit a BOIR.
Is a BOIR Due Every Year?
No, as of now, just one BOIR is required. However, substantial changes must be reported within 30 days with a new BOIR, if, for example, the beneficial owners change or a previously non-exempt company becomes exempt (or vice versa).
What is a FinCEN Identifier?
A FinCEN ID is a unique 12-digit number an individual or entity may use when submitting a BOIR. It is not required. However, if you are submitting multiple BOIRs, a FinCEN ID can help speed up the process by allowing you to submit your personal information just one time rather than repeating it again and again.
What Are the Penalties for Non-Compliance?
According to FinCEN, someone who “willfully” violates the BOI reporting requirements may be fined for each day the violation continues. The amount of the fine adjusts annually with inflation, so what was originally a $500 per day fine was (as of 2024) $591 per day.
Willful violation can also lead to up to two years in prison and a $10,000 fine.
Uncertainty Over the Future of the CTA
The stated intention of the Corporate Transparency Act is to reduce money laundering, financing of terrorism, and other financial crimes. However, it has already been challenged in a number of lawsuits, as some see it as intrusive and unconstitutional. The future of the CTA is unclear, as these legal challenges could lead to significant changes in reporting requirements.
But that’s a long way off, if it happens at all. For now, you can stay in compliance and avoid steep financial penalties (and possible imprisonment) by submitting a BOIR for any company in which you’re a beneficial owner.
Protect Your Interests, Avoid Mistakes, and Grow Your Business with Gem McDowell
For legal help and strategic advice on business in South Carolina, contact Gem of the Gem McDowell Law Group. Whether you want to establish, buy, sell, or grow your business, Gem and his team can help. Call the Myrtle Beach or Mt. Pleasant, SC office today at 843-284-1021.
What Is the Legal Rate of Interest in South Carolina in 2025?
On January 6, 2025, the Supreme Court of South Carolina issued an order regarding interest rates on money decrees and judgments for the upcoming year. The legal rate of interest for money decrees and judgments in South Carolina is 11.50% compounded annually for the period between January 15, 2025 and January 14, 2026. (Read the original order in PDF format.)
The rate “is equal to the prime rate as listed in the first edition of the Wall Street Journal published for each calendar year for which the damages are awarded, plus four percentage points, compounded annually,” according to South Carolina Code § 34-31-20 (B) (2020). The law also provides that the SC Supreme Court updates the interest rate every year by January 15th.
Compare with the legal rate of interest in 2024.
Mortgage Due-on-Sale Clauses: What Homeowners Need to Know About Garn-St. Germain
Due-on-sale clauses are common in mortgages. A due-on-sale clause allows a lender to demand payment in full on the balance of the loan when the mortgaged property is sold, transferred, or otherwise affected. Fortunately for everyday homeowners, there are exceptions to when a due-on-sale clause can be enforced, thanks to what’s known as the Garn-St. Germain Act.
The Garn-St. Germain Depository Act of 1982 mainly addressed deregulation of savings and loans institutions and took other measures to modernize the financial sector. But it also provided protection for homeowners by forbidding lenders from requiring payment in full in many common circumstances, such as:
- Inheritance by a relative
- Transfer to a spouse or child
- Divorce or legal separation
- Taking out a second mortgage or similar loan
- Renting out the property
If you own interest in a property subject to a mortgage, you should know about due-on-sales clauses and when they can and cannot be enforced. Read on for more specifics on the exceptions listed above and others.
When Mortgage Due-on-Sale Clauses Cannot Be Enforced
The exceptions listed in the Garn-St. Germain Act apply to “residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home […]” (*Find 12 U.S. Code section 1701j-3(d) copied in full at the bottom of this post or online here [PDF].)
Situations in which a mortgage’s due-on-sale clause cannot be enforced under the Garn-St. Germain Act:
Transfer of the interest in a property to a family member upon death of the borrower. This is a common situation, as property is often inherited by a spouse, child, or other relative either through a will or other estate planning document or via intestacy laws (i.e., when there is no will). Heirs do not have to worry about satisfying a due-on-sales clause in this case.
Transfer to the surviving joint tenant(s) in a joint tenancy upon the death of the borrower. This situation is common among married and partnered couples in South Carolina who own property as joint tenants with rights of survivorship. When one dies, the property is then wholly owned by the surviving spouse or partner. Lenders cannot enforce a due-on-sales clause when this transfer happens “by devise, descent, or operation of law” – that is, through a will, intestacy laws, or automatically by law.
Note that the statute includes a type of tenant that South Carolina does not recognize, “tenant by the entirety.” Read more about tenancy types in SC on our blog here.
Transfer to a spouse or child. You can transfer your interest in the property to a spouse or child while still alive without having to worry about the due-on-sale clause being enforced.
Transfer to the borrower’s spouse upon divorce or legal separation. If you transfer your interest in the property to your (soon-to-be) ex as the result of the dissolution of marriage, legal separation agreement, or incidental property settlement agreement, the due-on-sale clause cannot be enforced.
Taking out certain loans secured by the property. You can take out a loan that’s subordinate to the primary mortgage without triggering the due-on-sale clause as long as it doesn’t relate to a transfer of rights of occupancy. This includes a second mortgage, a HELOC, or other similar lien or encumbrance.
Renting out the property for no more than a three-year term without the option to purchase. A renter may live in the property for more than three years but should not sign a single lease with a term longer than three years or the lender may be allowed to enforce the due-on-sale clause. Additionally, including an option to buy on a lease of any length means the due-on-sale clause may be enforceable.
Transfer into an inter vivos trust where the borrower remains a beneficiary and the rights of occupancy stay the same. A transfer into an inter vivos trust (also called a living trust) is protected from triggering the due-on-sale clause as long as you are and remain a beneficiary of the trust and occupancy rights don’t change.
Financing household appliances with a purchase money security interest. Getting financing for expensive household appliances through a store’s financing program is often done through a purchase money security interest (PMSI). This specific exception in the Garn-St. Germain Act stops lenders from enforcing due-on-sale clauses when a PMSI is created for household appliances.
In addition to the eight circumstances listed above, due-on-sale clauses are also barred from being enforced upon “any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.”
When Mortgage Due-on-Sale Clauses CAN Be Enforced
We just went over the circumstances in which a lender cannot enforce a mortgage’s due-on-sale clause. But there are still many common situations in which the due-on-sale clause could be enforced, depending on your mortgage’s terms, which you should be aware of. Just some examples include:
- Inheritance of your interest in the property upon your death by a non-relative beneficiary, including a long-term girlfriend/boyfriend
- Transfer during your life to someone other than a spouse or child, such as a parent, sibling, or girlfriend/boyfriend
- Transfer into a trust, except under the specific circumstances described above
- Renting out the property with a lease that lasts longer than three years and/or provides an option to buy
This list is not exhaustive. If in doubt, speak to your mortgage lender and to an attorney about your situation.
What happens if the due-on-sale clause is enforced? In the worst-case scenario, the lender can begin foreclosure proceedings on the house if the borrower can’t pay. More likely, the new owner(s) can take out a new mortgage that will satisfy the old mortgage. Still, this may not be ideal, especially at times when interest rates are high.
Estate Planning, Problem Solving, and More – Call Gem McDowell
Many people do not read mortgage documents thoroughly before signing, so it can come as an unwelcome surprise to have the mortgage lender demand payment in full on the loan citing a due-on-sale clause. That’s why it’s important to know about the due-on-sale clause and when it can and can’t be enforced.
Smart estate planning can help you avoid unwelcome surprises, save your family headaches, and carry out your wishes now and after you’re gone. For help with wills, trusts, powers of attorney, and more, call estate planning attorney Gem McDowell. He and his team help individuals and families in South Carolina create up-to-date estate plans for smart planning and peace of mind. Schedule your free consultation or appointment at the Myrtle Beach or Mt. Pleasant, SC office by calling 843-284-1021 today.
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*Text from the Garn-St. Germain Depository Act of 1982, 12 U.S. Code Section 1701j-3 https://www.govinfo.gov/content/pkg/USCODE-2011-title12/pdf/USCODE-2011-title12-chap13-sec1701j-3.pdf, subsection (d):
(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon—
(1) the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of rights of occupancy in the property;
(2) the creation of a purchase money security interest for household appliances;
(3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;
(4) the granting of a leasehold interest of three years or less not containing an option to purchase;
(5) a transfer to a relative resulting from the death of a borrower;
(6) a transfer where the spouse or children of the borrower become an owner of the property;
(7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property;
(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or
(9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.
The Omitted Spouse: When the Spouse is Left Out of the Will
What happens if you leave your spouse out of your will? Or your spouse leaves you out of his or her will?
This happens more often than you think. Many couples get married after one or both partners already executed a last will, meaning the new spouse has been unintentionally left out.
But that doesn’t mean the surviving spouse receives nothing. The law provides for the omitted spouse so that he or she is not unintentionally disinherited.
What the Omitted Spouse is Entitled To
Under South Carolina Code section 62-2-301, an omitted spouse is entitled to the same share of the testator’s estate that would have been received had the testator died without a will.
South Carolina intestacy laws determine the share of inheritance in such cases. If the testator dies with no children, the spouse inherits everything (i.e., all the assets subject to probate). If the testator dies with a spouse and children, the surviving spouse is entitled to 50% of the estate. The remaining 50% is divided according to the terms of the will.
The omitted spouse does not automatically receive the assets but must claim his or her share within a certain time frame.
When the Omitted Spouse Provision Does Not Apply – Spousal Elective Share
The purpose of the omitted spouse is to provide for a spouse left out of the will unintentionally.
But what if the spouse was left out of the will intentionally?
Under the same law cited above, if it appears that the omission was intentional or if the testator provided for the spouse through transfers outside of the will, then the omitted spouse provision does not apply.
The surviving spouse may still make a claim for elective share, however. A surviving spouse is entitled to one third of the testator’s probate estate in South Carolina even if the testator intentionally left the spouse out of the will. That’s because the only way to legally disinherit a spouse in South Carolina is to have both partners knowingly sign a waiver of elective share. (Read more about disinheriting a spouse and spousal elective share here on our blog.)
The Solution: An Intentional and Current Estate Plan
Laws regarding omitted spouses and elective share have helped many people who would otherwise have been disinherited. But having a purposeful, up-to-date will and estate plan is better than relying on the law to carry out your wishes.
For help with last wills, trusts, powers of attorney, and other estate planning documents, call estate planning attorney at the Gem McDowell Law Group. Gem and his team help individuals and families in South Carolina create estate plans that take into account unique circumstances, carry out personal wishes, and give peace of mind.
Whether you’ve never had an estate plan drawn up before or your existing plan is in need of a review, Gem and his team can help. Call today to schedule a free consultation virtually or at the Myrtle Beach or Mt. Pleasant, SC, at 843-284-1021.
