Grounds for Contesting a Will in South Carolina
If you’ve been intentionally disinherited or unintentionally left out of the will, you might be wondering what legal options you have to challenge the will.
South Carolina Code Section 62-3-407 lists six grounds for contesting a will. These six grounds are found in many states as they come from common law, but exact laws regarding contesting a will vary by state.
In South Carolina (and many other states), grounds for contesting a will are:
- Lack of testamentary intent or capacity
- Revocation
- Mistake
- Fraud
- Duress
- Undue influence
It’s not enough to simply be unhappy with the terms of the will; the burden of proof is on you to show that the will is invalid based on one of the six grounds listed above.
Let’s look at each in turn.
Lack of testamentary intent or capacity
The testator must “be of sound mind” when executing the will for it to be valid.
The standard of “testamentary capacity” is not very high, however; it’s lower than the mental capacity required to sign a contract. All that’s required is that someone is aware that they are creating a will, what a will is, and what the will says.
Possible evidence for lack of capacity: You must show that the testator was not of sound mind and/or did not understand what they were signing at the time of executing the will. This could be video evidence, witness statements, healthcare records, or medical provider statements that demonstrate lack of capacity.
Revocation
A will that’s currently being probated by the court may be contested if there’s evidence that the testator planned to revoke or replace it.
Possible evidence for revocation: Evidence could include the existence of a newer, properly executed will, a valid codicil that revokes or changes terms of the will, or witness testimony.
Mistake
This broad category includes both mistakes in execution and mistakes in fact or intent.
Mistakes in execution includes things like not signing a formal will or a codicil in the presence of two witnesses, as required by law in South Carolina and many other states. (The exact requirements for validity depend on state law and on the type of will.)
Mistakes in fact or intent includes things like using the wrong name for an heir. In one example from our practice, a couple came in to create a will and named their two daughters as heirs to their estate. One child had been born a male, and the parents were insistent on using the child’s new chosen name rather than the legal name. This might seem like a small matter, but using a non-legal name could create grounds on which to contest the will in the future. In this situation, we advised the clients to use the child’s legal name and include “who goes by [New Name]” for clarity.
Possible evidence for mistake: Evidence for mistakes in fact or intent could include testimony or documentation that demonstrate the testator’s true intentions.
Fraud
A will may be contested on the grounds of fraud if one or more of the signatures was forged, if the testator was misled into signing a document believing it was something else other than a will, if a valid will was hidden or destroyed so a previous will would be probated in its place, and similar situations.
In our experience, the most common form of fraud occurs when the testator thinks they are signing Document A but are actually signing Document B. That’s why it’s important to take the time to read through what you are signing.
Possible evidence for fraud: It depends on the type of fraud suspected; evidence could include analyses from handwriting experts, witness testimony, or proof a more recent will was created and executed.
Duress
A valid will must be the product of the testator’s free will, and evidence of coercion can be grounds for contesting the will. If the testator created or changed the will under duress, such as blackmail, physical harm, or threat of harm, the will may be declared invalid.
Possible evidence for duress: Witness testimony, medical records indicating the testator’s vulnerability, and written communications between the testator and the individual coercing the testator are some types of evidence that can show duress. In cases of duress, the final will is often substantially different from the previous will, as well, which can serve to demonstrate the testator’s mindset.
Undue influence
Like a will created under duress, a will created under undue influence does not reflect the true intentions and wishes of the testator. But undue influence is more subtle than duress and often more difficult to prove.
Undue influence occurs when the testator is psychologically manipulated or pressured into redoing or making changes to the will, usually by someone close to the testator. This often (but not always) happens in conjunction with the trusted person isolating the testator or cutting him or her off from friends and family. It’s most common with older people who are more vulnerable physically and psychologically.
Possible evidence for undue influence: Proving a will is the result of undue influence is often challenging since undue influence happens “behind closed doors,” in the words of the South Carolina Court of Appeals. Evidence might include a final will which is substantially different from previous wills; proof that the testator’s behavior and habits have changed (e.g., the testator used to go out a lot but later stayed at home with a caregiver all day); records showing the testator used to communicate with friends and family regularly but then stopped and has lost contact with them; and witness testimony.
A successful case of contesting a will on the grounds of undue influence in South Carolina is Gunnells v Harkness, 2019, in which a daughter contested her mother’s will over undue influence from her brother. We examined this case in depth in a previous blog; read it here. It’s helpful to see exactly what kind of evidence – and how much – helps convince a court that undue influence has occurred.
Note: Don’t mistake unfair or unequal terms for undue influence. It’s not uncommon for parents to leave a larger inheritance to a child who has acted as caretaker in the final years, or for a testator to leave everything to the surviving spouse and nothing to the children. On their own, these terms do not indicate undue influence. Proving undue influence is challenging and requires a large amount of evidence that shows a clear pattern over time.
Other grounds
South Carolina Probate Code specifically lists six grounds for contesting the will. In addition, South Carolina courts may also invalidate specific provisions that violate public policy if, for example, a provision incites unlawful actions or is discriminatory.
Is Contesting the Will Worth It?
Contesting a will can be a lengthy, expensive, and contentious route, and sometimes it’s not worth it. (Read more about this in our blog on being disinherited, which you can read here.)
However, sometimes contesting the will is the right thing to do, especially if you believe the will does not accurately reflect the wishes of the deceased.
Get Help Creating or Contesting a Will in South Carolina
Gem McDowell has helped individuals and families in South Carolina for over 20 years with estate planning. Whether you need help creating, updating, or reviewing a will or estate plan, or need advice or assistance probating or contesting a will, he can help. Call Gem and his team at the Gem McDowell Law Group with offices in Myrtle Beach and Mount Pleasant, SC to schedule a free, initial consultation by calling 843-284-1021 today.
I’ve Been Disinherited – Now What? (And Is Contesting the Will Worth It?)
You were expecting an inheritance, but you were left out of the will. Now what? Is there anything you can do if you’ve been disinherited?
Maybe. State law protects spouses from being intentionally and unknowingly disinherited and gives other would-be heirs grounds on which to contest the will.
In this blog we’ll look at what you can do if you’ve been disinherited – that is, intentionally left out of the will. (If you were unintentionally left out, you were not “disinherited” but “omitted” or “pretermitted.” Read our blog on omitted spouse / pretermitted child for what to do next.) We’ll also consider the question of whether contesting the will is worth it.
Note that laws governing wills and probate vary by state, so while many of the concepts below apply to other states in addition to South Carolina, be sure to speak with an estate planning attorney in your state.
First things first:
Are You Entitled to an Inheritance?
Only a surviving spouse is protected from being unknowingly disinherited; more about this below.
No one else – not even a child of the deceased – is entitled to an inheritance in South Carolina. While there is a cultural custom and even expectation that parents will leave something to their children after death, it is not a requirement.
What To Do When You’ve Been Disinherited
Speak with an attorney in your state with experience handling will contests about your situation. Many law firms (including ours) offer a short, free consultation, which can help you understand what your options are.
The next steps depend on your unique circumstances. You may decide to do one of the following:
– Claim Spousal Elective Share
A disinherited spouse may claim “elective share,” a portion of the decedent’s estate guaranteed under the law to a surviving spouse in separate property states like South Carolina. The surviving spouse is entitled to this share regardless of the terms of the will, unless the couple has previously signed a waiver of elective share or similar document.
Read more about Elective Share in South Carolina and how to claim it here.
– Contest the Will
In general, a testator (the person writing the will) has broad authority to decide how to dispose of his or her assets, and the probate court will follow the testator’s wishes as recorded in the will. If he or she did not leave anything to you in the will, that’s usually the end of the matter.
However, there are situations in which a will, or portions of it, can be declared invalid if challenged. South Carolina Probate Code Section 62-3-407 provides the following six grounds on which to contest a will:
- Lack of testamentary intent or capacity
- Revocation
- Mistake
- Fraud
- Duress
- Undue influence
Read more about grounds for contesting a will in our blog here where we go into depth. In addition to the six statutory grounds, South Carolina courts may also invalidate provisions of a will that violate public policy, such as those that promote unlawful behavior or are discriminatory.
To contest a will, you must be an interested party, i.e., you would stand to inherit if successful in your claim. Further, the burden of proof is on you to prove the will is not valid, under the same section cited above. The presumption of the court is that the will is valid, so it’s your responsibility to provide enough evidence to overcome that presumption.
– Sue an Individual for Interference with Inheritance
Some states recognize an “intentional interference with inheritance” (IIWI) claim. This allows a would-be heir to sue someone whom they believe intentionally prevented them from receiving an inheritance through fraud, undue influence, defamation, or similar misconduct.
South Carolina does not recognize this cause of action as of August 2025, but that could change in the future.
– Accept the Terms of the Will and Not Pursue the Matter
It can be hard to accept that you were disinherited, especially if you had a good relationship with the deceased and were expecting an inheritance. You might think it’s unfair that your parent left everything to his or her spouse instead of the kids, or that siblings received unequal amounts, or that your partner left everything to the children from a previous marriage.
But wills don’t have to be fair; they often aren’t. Unfair and legally invalid are not the same thing, however. Many times, the prudent course of action is to accept the will as is and move on.
Contesting the Will: Is It Worth It?
We get calls from people who are blindsided, and often very upset, after discovering they’ve been cut out of a relative’s will. They are prepared to jump into litigation to get what they believe is rightfully theirs.
Here’s the truth: The process of contesting a will is expensive, challenging, and time-consuming – and that’s true even in the best-case scenario, when things go your way. If they don’t, you will be out a lot of money and may have irreparably damaged relationships with relatives and friends.
Before contesting a will, you need to know if it’s worth it. Ask yourself:
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What would you stand to gain in the best-case scenario?
Hint: It could be less than you think.
In many cases, people discover that the actual inheritance would be much less than what they had expected. This is especially true for estates of modest and average size. The Federal Reserve has an interesting article with data on expected vs. actual inheritance; see Panel B, which shows those in the bottom 50% by wealth, expected, on average, an inheritance of $29,400 but received just $9,700 – a substantial difference.
Why the discrepancy?
For one, inheritance comes from the decedent’s probate estate, after expenses are paid. A will only directs where assets subject to probate should go. (Read more about probate and which assets are subject to probate here on our blog.) From that, heirs inherit their portion after taxes, debts, probate fees, administrative costs, attorney fees, and funeral expenses have been paid out of the value of the estate. These expenses can eat up a large portion, leaving behind a much smaller estate to divvy up between heirs.
Also, just because a person is wealthy, it does not mean his or her probate estate will be large. Many people use trusts and other estate planning instruments to keep assets out of their probate estate. You may discover that the value of the probate estate is actually very small, even if the deceased was very wealthy.
You also have to consider how many people would share the inheritance. The number of other heirs you would split an inheritance with depends on how the probate court determines the assets should be distributed. It could be under the terms of the current will after certain provisions have been struck; under the terms of a previous will; or under state intestacy laws, which apply when someone dies without a will.
In one case we worked on, a man was upset that his mother’s will left everything to her husband (his stepfather) and nothing to him and his brothers. If he successfully contested the will, South Carolina’s intestacy laws would apply because there was no previous will. That means half would go to his stepfather and the other half would be divided between the four siblings. He’d stand to get just ¼ of ½ of the estate, or 12.5%.
Now, that figure doesn’t mean anything in and of itself; 12.5% of $10,000 isn’t a life-changing amount of money, but 12.5% of $10,000,000 is. It depends on the particular circumstances. But that brings us to the second question you should ask yourself.
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Risk Vs. Reward: What’s Your Tolerance?
Let’s say you stand to inherit 12.5% of an estate worth $10 million after all taxes, debts, and fees have been paid, which comes out to $1,250,000. It will take about $50,000 in legal fees to successfully contest the will. In this case, yes; if you have a strong case, risking $50,000 for the potential to gain $1,250,000 is worth it.
What about spending $10,000 for the potential to gain $17,000? A woman called our office upset that her mother had cut her out of the will and left everything to just one of the three sisters. If she prevailed in contesting the will, she’d split her mother’s roughly $50,000 estate with her two sisters (because there was no surviving spouse), which comes out to around $17,000. Is risking $10,000+ in fees for a shot at <$17,000 worth it?
In addition to risking her money, this woman would risk fracturing her relationships with her sisters, which brings us to the third question to ask yourself.
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Can You Accept the Non-Monetary Fallout?
Be prepared for the possible ramifications that have nothing to do with money. Contesting a will and battling over a deceased relative’s estate often leads to the destruction of previously solid relationships and family bonds. We see it every day, unfortunately.
Think about how much those relationships are worth to you before moving ahead with contesting the will.
Have You Been Disinherited? Do You Need Help with Estate Planning? Call Gem
The above is not intended to dissuade you from taking legal action, but to help you see the situation from a legal point of view. Maybe you believe the potential financial reward is worth the risk. Or maybe you’re not motivated by money but by the desire to right a wrong and ensure your loved one’s true wishes are carried out, especially if you believe there’s been fraud, duress, or undue influence. Whatever your situation is, we urge you to consider the questions above if you’re considering contesting the will.
Speaking with an estate planning / probate attorney in your state is a good first step. An attorney can help you claim elective share (if you’re a disinherited spouse) or help you determine whether taking legal action like formally contesting a will is likely to succeed.
Call estate planning attorney Gem McDowell for help probate, creating a will, contesting a will, or other estate planning matter in South Carolina. Gem and his team at the Gem McDowell Law Group help individuals and families across South Carolina create personalized wills and comprehensive estate plans for peace of mind, as well as handle issues of probate and inheritance. Call Gem and his team at their Myrtle Beach or Mt. Pleasant, SC offices today at 843-284-1021 to schedule a free consultation.
A “Class of One” May Bring a Derivative Action in S.C. – The Boathouse Case
What can a member of an LLC do when another member is mismanaging company money, using it to support his other failing business ventures, and (allegedly) spending it on personal expenses like exotic travel and polo ponies?
This is not theoretical; these are some of the facts in the 2024 South Carolina Court of Appeals case The Boathouse at Breach Inlet, LLC v. Richard W. Stoney (find it here). In it, one LLC member brought a derivative action, a lawsuit brought on behalf of a company/LLC by one or more of its shareholders/members, against another member.
A derivative action is often the only remedy shareholders/members have when management has failed to take action to protect the company. That’s why the Boathouse decision is important: It now gives standing to bring a derivative action to a “class of one” even if he or she is not “similarly situated” to other shareholders/members. It also looks at factors for determining whether the individual can maintain the claim.
We’ll look at what this all means and how the court came to its decision below.
(Note that a petition to rehear the case is currently pending before the Supreme Court of South Carolina. We will update this article with any new information.)
Very Brief Background of Boathouse
The background to this case is extremely detailed so this summary gives the broad strokes only. In short:
Richard Stoney (Richard) founded a number of interrelated LLCs starting in the 1990s. One was an LLC for the Boathouse on Breach Inlet (the Boathouse), a popular restaurant in the Charleston area, which he co-owned with other family members and business partners. Another was Crew Carolina, LLC (Crew Carolina), solely owned by Richard, which managed his other LLCs and restaurants. Using a sweep account for banking, revenue from the Boathouse and other restaurants went into the Crew Carolina bank account each night.
The Boathouse did well, but Richard’s other ventures did not. He began taking money from the Boathouse via Crew Carolina and using it to keep other enterprises afloat, as he later admitted to in divorce proceedings (Stoney v Stoney, 2018). Others testified that his misuse of company funds, including use for personal expenses, led to instances of not being able to make payroll, owing the IRS money, and incurring late fees. Richard was advised to stop these practices, yet they continued until at least May 2019.
Eventually, Crew Carolina owed the Boathouse LLC over $4 million.
No Support for Laurance’s Derivative Action
In October 2015, Laurance Stoney brought a derivative action on behalf of the Boathouse against Richard and Crew Carolina (collectively, Defendants). Laurance is Richard’s first cousin and one of the original co-owners of the Boathouse at Breach Inlet, LLC, owning 5%.
The derivative action asserted:
- Breach of fiduciary duty
- Conversion
- Unlawful distributions
- An accounting
- Unjust enrichment
Understandably, the Defendants asserted various claims against the action. In addition, two other members opposed the derivative action and moved to intervene.
In a non-jury trial, the circuit court issued an order holding that Laurence was not a “fair and adequate” representative to bring the action, saying that his motivations for doing so were vindictive and personal, rather than seeking to correct a corporate wrong. Further, it said the equitable remedy he sought was tainted by his own inappropriate conduct, especially since 90% of the Boathouse LLC’s membership opposed the action.
This appeal followed.
The Court Finds a “Class of One” Who Is Not “Similarly Situated” Has Standing To Bring a Derivative Action
The plain language of both South Carolina Code Section 33-44-1101 and rule 23(b)(1) of the South Carolina Rules of Civil Procedure allow for an individual to bring a derivative action.
However, the latter also specifies “The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of the shareholders or members similarly situated in enforcing the right of the corporation or association.” (Emphasis added.)
And here’s where the court’s decision becomes interesting. The court notes that “The parties stipulated Laurence was not similarly situated to the other members, and Laurence admitted that no other members officially supported his action.” Yet it looks to other jurisdictions for guidance on interpreting “similarly situated” and how to determine what makes a valid “class of one” plaintiff. Among others, the court cites:
*A Utah Supreme Court case (Angel Invs. LLC v. Garrity, Utah 2009) holding that a single shareholder could maintain a derivative action as a “class of one” when the shareholder:
- Seeks by its pleading[s] to enforce a right of the corporation and
- Does not appear to be similarly situated to any other shareholder
(Emphasis added.)
And
*A Texas Supreme Court case (Eye Site, Inc. v. Blackburn, Texas 1990), which found that the rule guiding who may bring a derivative action “does not place any minimum numerical limits on the number of shareholders who must be ‘similarly situated.’ It follows that if the plaintiff is the only shareholder ‘similarly situated,’ he is in compliance with both the letter and the purpose of the rule.”
The South Carolina Court of Appeals found that even though, by the admission of multiple parties, Laurence was not “similarly situated” to other LLC members, he did have standing to bring a derivative action. “We agree with the above cases and hold that under the appropriate circumstances, a single member of a limited liability company may ‘fairly and adequately represent the interests of’ a class of one and have standing to maintain a derivative action. To hold otherwise would be to deprive a sole dissenting shareholder from seeking relief from another shareholder’s wrongdoing.”
Davis Factors and Requirements for Representation
Standing to bring a claim is one thing. Being able to maintain the claim is another.
The court looks to the Sixth Circuit Court of Appeals case Davis v. Comed, Inc. (1990), which set forth the following factors for evaluating whether a plaintiff meets the requirements for representation:
- Economic antagonisms between representative and class
- The remedy sought by plaintiff in the derivative action
- Indications that the named plaintiff was not the driving force behind the litigation
- Plaintiff’s unfamiliarity with the litigation
- Other litigation pending between plaintiff and defendants
- The relative magnitude of plaintiff’s personal interests as compared to his interest in the derivative action itself
- Plaintiff’s vindictiveness toward the defendants
- The degree of support plaintiff was receiving from the shareholder he purported to represent
These factors are not exclusive, and the court must consider the totality of the circumstances.
To determine whether Laurance is a good representative of the company who can maintain the action, the Appeals Court of South Carolina addresses these factors, with particular emphasis on the two cited in the circuit court’s decision:
Lack of support: The court said it must consider the motives of the other LLC members for opposing the action. Based on the evidence, the court determined it was “evident” that Richard and the other co-owners opposing the action were “motivated by their individual interests.”
Vindictiveness: The circuit court found that Laurance was motivated by vindictiveness. But the appeals court notes that high emotions are common in such disputes in closely held corporations, and that the hostility between the parties in this case is “not fatal” to Laurance maintaining the derivative action.
“We further hold the remaining Davis factors support Laurence’s standing to bring this action,” the court says.
(Read the opinion for the specifics on why the court came to these conclusions.)
Get Strategic Legal Advice from Business Attorney Gem McDowell
Gem McDowell and his team at the Gem McDowell Law Group help businesses in South Carolina grow and succeed while protecting the interests of the individuals involved and the business itself. If you need advice or help starting, growing, buying, or selling a business, or you want strategic advice from a problem solver with over 30 years of experience, call Gem. We have offices in Myrtle Beach and Mt. Pleasant, SC, and offer a free initial consultation. Schedule yours by calling (843) 284-1021 today.
UPDATED Avoid $591/Day Penalty: Business Owners, File a BOI Report ASAP
UPDATE: Under FinCEN’s final interim rule, U.S. companies and U.S. persons involved in foreign companies no longer need to file a BOI Report. Individuals involved in a foreign company still must file a BOI Report. Now, “reporting companies” are “only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as ‘foreign reporting companies’).” Here are the links to the short statement and the longer interim rule.
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.
Can You Prevent Future Spouses from Inheriting? Irrevocable Wills vs. Public Policy and the Ward Case
Imagine your spouse dies and you discover that not only were not provided for in the will, but that their previous will specifically barred you from inheriting anything at all. What would you do?
This is what happened to Mary K. Ward. Mary was the fourth wife of Stephen Day Ward, Jr., who had an irrevocable will from an estate plan created with his third wife, Nancy. While Stephen’s will explicitly barred future spouses from inheriting anything, South Carolina statute provides for spouses left out of the will. This led to an interesting conflict: which should prevail, public policy or a valid contract?
The matter, In RE: Estate of Stephen Day Ward, Jr., went before the South Carolina Court of Appeals in 2024 (read it here), and we go into it below.
It’s a good look at how South Carolina courts view public policy and at the powers and limitations of irrevocable wills. It’s especially important if you have or have considered getting an irrevocable will.
Should You Get an Irrevocable Will? Pros and Cons
Irrevocable wills are wills that cannot be changed or amended once signed. The only exception is divorce, which typically only blocks the ex-spouse from acting as executor and inheriting anything; the rest of the will stands. (The laws regarding this vary by state; check in your state.)
Some people, often married couples, choose irrevocable wills because they cannot be changed. They want their estate plan to be carried out as originally agreed, even if one spouse predeceases the other by many years. The surviving spouse is bound by the terms of the will(s) they created together and cannot change the terms for any reason.
Advantages of an irrevocable will over a traditional revocable will:
- Guarantee the estate plan will be carried out, even after death
- Protect assets from being passed down to the surviving spouse’s new partners, spouses, or stepchildren, or other potential heirs
- Prevent the surviving spouse from being pressured into changing terms of will
We do not draft irrevocable wills here at our law firm – neither irrevocable joint wills (one document for two or more people) nor mutual wills (separate documents for each individual).
Why not? Because things change. Life circumstances, family dynamics, personal finances, and state and federal law affecting estate planning can change drastically, but an irrevocable will can lock you into decisions you made long ago when life was very different. Further, other tools can be used to accomplish many of the same goals. We’ll go into some of those options down below.
Finally, there are no guarantees, even with an irrevocable will. Which leads us to the Ward case.
The Irrevocable Wills and Estate Plan of Stephen and Nancy
In 2013, Stephen Ward married for the fourth time, to a woman named Mary. They did not create an estate plan together during their marriage, and Stephen did not take any action with regards to the will he executed during his third marriage to wife Nancy.
Stephen died in 2016. Under the terms of his will, Mary was barred from inheriting anything.
Mary then sought, through her daughter, to be declared an omitted spouse. As an omitted spouse, she would be entitled to the share of Stephen’s probate estate that she would have received had there been no will at all, which is 50% under South Carolina’s intestacy laws.
Stephen’s children (the Appellants), acting as his co-personal representatives, disagreed that Mary should receive an inheritance. That’s because Stephen and Nancy had executed an estate plan together in 2005 which barred any future spouse from inheriting anything.
The Terms of the Estate Plan with Third Wife Nancy
The estate plan, which included Stephen’s irrevocable last will and testament (the Will) and an agreement for mutual wills and trusts (the Agreement), worked with interlocking provisions to ensure their wishes were carried out in this manner:
- After one spouse died, his or her assets would “pour over” into a trust controlled by the other
- After the death of the other spouse, the remaining assets would be dispersed among Stephen’s and Nancy’s children
These terms are quite common among couples. The Agreement contained the following terms regarding re-marriage, too:
4.2 If he or she remarries after the death of the
Predecessor, he or she will:
4.2.1 Thereafter ratify his or her Will and
Trust in the form and with the provisions
contained in his or her Will and Trust
annexed hereto; and
4.2.2 As a condition of such re-marriage,
require any person he or she re-marries to
legally and unconditionally waive his or her
right to an Elective Share in the Property
provided to them under S.C. Code Ann.
Section 62-2-201
Stephen did not carry out the terms of the Agreement after his marriage to Mary to ratify the will or to have Mary waive her right to elective share.
The matter was heard in probate court and circuit court before eventually going before the Court of Appeals of South Carolina.
The Four-Part Test for Omitted Spouses
Did Mary qualify as an “omitted spouse”? To settle the matter, the court looked to a four-part test it previously established in Green v. Cottrell (2001), which essentially turns the relevant statute (SC Code Section 62-2-301) into a checklist:
“A surviving spouse who wishes to qualify as an ‘omitted spouse’ must demonstrate:
- The decedent spouse executed the will in question prior to the marriage;
- The will does not provide for her as the surviving spouse;
- The omission was unintentional; and [sic]
- The decedent did not provide for the spouse with transfers outside the will.”
The first two points: undisputedly true.
Point #3: “Hotly disputed.” The court states that had Stephen executed the documents required by section 4.2 of the Agreement – namely, ratifying the Will and Trust and having Mary sign a waiver of elective share – the Appellants would be in a better position to argue that the omission of Mary from the Will was intentional. Since he didn’t, the court agrees with the probate court that the omission was not intentional.
(It’s worth noting that witnesses at the earlier trial testified Stephen said he still intended for his estate to be handled as described in the Will, and that getting married would not change that. However, the “Dead man’s” statute, SC Code Section 19-11-20, generally prohibits witnesses from providing testimony about conversations with the deceased if they would stand to benefit from it.)
Point #4: Also “hotly disputed.” Brian Ward, one of Stephen’s children, testified in probate court that Mary had received several things during the marriage and after Stephen’s death, including a leased Toyota Camry, a timeshare in Las Vegas, the $17,000 capital percentage from a local club membership, and approximately $13,000 in total. The Appellants argued that these assets were a transfer outside of the will. The court disagreed, saying the value does not approach what Mary would otherwise have been entitled to from an estate valued in excess of $900,000.
The court found that Mary was an omitted spouse under this test.
When a Valid Agreement and Public Policy Clash
“South Carolina treats with great deference a testator’s intent in disposing of his or her property,” says the SC Court of Appeals. Yet it also acknowledges that sometimes a testator’s intent may conflict with public policy.
In this case, there’s no dispute that the Will and the Agreement, which would bar Mary from inheriting anything, were valid. This directly clashes with South Carolina’s protections for surviving spouses from being unknowingly disinherited (read more about elective share) or from being omitted entirely (read more about omitted spouse), which is considered a matter of public policy.
Ultimately, the appeals court AFFIRMED the circuit court and the probate court, which had said that allowing “blanket” provisions to overcome an individual’s statutory rights to the omitted spouse’s share violated public policy.
Alternatives to Irrevocable Wills for Asset Protection
As stated above, we do not use irrevocable wills here at our firm. We use other estate planning tools to accomplish the same goals.
- Life estate deeds allow a surviving spouse to live in the home but ensure the home is passed to a different heir upon the spouse’s death
- Irrevocable trusts remove assets from probate estate altogether
- Testamentary trusts created by the will upon the death of the testator
- QTIP trusts provide income to surviving spouse while reserving assets for children
- Prenuptial or postnuptial agreements to waive elective share
These are just some of the options available. Speak with an estate planning attorney in your state about the right options to achieve your goals.
Personalized Estate Planning
Does your current estate plan reflect your family’s wishes? Are you as protected as you could be? For help creating, amending, or reviewing your estate plan, call Gem McDowell today. He and his team at the Gem McDowell Law Group help individuals and families in South Carolina create comprehensive, customized estate plans that help protect assets, preserve good family relationships, and provide peace of mind. Schedule your free consultation today by calling (843) 284-1021. We have offices in Myrtle Beach and Mt. Pleasant, SC, and are looking forward to speaking with you.
The One Big Beautiful Bill: Implications for Estate Planning & Running a Business
H.R.1 of the 119th Congress, better known as the “One Big Beautiful Bill Act,” was signed into law on July 4, 2025. This omnibus bill contains many provisions that could affect estate planning and running a business. This blog is a very brief overview highlighting some key points we believe you should be aware of.
Contact your own CPA, business attorney, and/or estate planning attorney to discuss how the bill affects you.
Implications of the OBBB for Estate Planning
The following provisions in the OBBB affect estate planning:
- $15 million applicable exclusion amount for federal estate taxes, lifetime gift taxes, and generation-skipping transfer (GST) taxes
- 1031 “Like Kind” exchanges preserved
- Step-up in basis at death is the same; it has not been repealed or capped
Check out this blog for a closer look.
Implications of the OBBB for Business Owners
OBBB affects some businesses, too.
- Expansion of Qualified Small Business Stock (QSBS) exclusion (read more about the QSBS here on our blog)
- The Qualified Business Income (QBI) deduction is now permanent (read more about the QBI deduction on the IRS website)
- Doubles available deductions under Section 179 from $1.25 million to $2.5 million
Many additional provisions in the bill have implications for yearly tax planning and managing cash flow, which you should discuss with your company’s CPA and/or tax preparer.
South Carolina Business Attorney Gem McDowell
Gem and his team at the Gem McDowell Law Group help people start, grow, and protect their businesses in South Carolina. Gem McDowell is a problem solver with over 30 years of experience in business law and commercial real estate, helping business professionals protect their interests and avoid mistakes. Call to schedule a free consultation today at (843) 284-1021.
Estate Planning After the One Big Beautiful Bill
The signing into law of the One Big Beautiful Bill Act (H.R. 1 of the 119th Congress) on July 4, 2025 has a few very important implications for estate planning. Here’s a brief look at them.
Contact your own CPA and/or estate planning attorney to discuss if and how you are personally affected.
The Combined Exclusion Amount is $15 Million, Permanent and Tied to Inflation
Each individual may transfer up to $15 million, and married couples up to $30 million, tax-free during life or after death, starting in 2026. This $15 million combines exclusions for federal estate taxes, lifetime gift taxes, and generation-skipping taxes (GST) into one.
Read more about this and the history of the applicable exclusion amount / unified credit in our blog here.
1031 “Like-Kind” Exchanges Are Fully Preserved Without Limits
Individuals and real estate investors can defer capital gains taxes by exchanging one investment property for another of “like kind.” The OBBB did not include any caps or restrictions on 1031 exchanges.
Read more about 1031 “Like-Kind” Exchanges here on our blog.
Get Help with Estate Planning in South Carolina – Call Gem McDowell
If you need help with wills, trusts, or estate plans for estates large or small, call the Gem McDowell Law Group. Gem and his team help individuals and families create personalized wills and estate plans that reflect their unique circumstances and wishes. With offices in Myrtle Beach and Mt. Pleasant, SC, we’re here to help. Call us at (843) 284-1021 today to schedule a free consultation.
Applicable Exclusion Amount Now $15 Million – Its History and Future
The One Big Beautiful Bill (OBBB) has set the applicable exclusion amount taxes at $15 million per individual, or $30 million per married couple, starting in 2026. This amount will be indexed for inflation starting in 2027.
Notably, the OBBB has made these changes permanent. It’s been common in recent decades for tax legislation to contain sunset provisions that mean specific provisions automatically expire after a period of time. As of now, the applicable exclusion amount can only be changed by an act of Congress.
Making the amount permanent without a looming expiration date allows individuals and families to plan ahead with more certainty. As you’ll see below, the exclusion amount/unified credit has changed frequently over the years, making estate planning challenging due to uncertainty.
But first, here’s what you should know about this combined $15 million exclusion amount.
$15 Million Exclusion Amount: What to Know
*An individual may transfer up to $15 million either during life or at death without triggering any federal estate taxes, lifetime gift taxes, or generation-skipping transfer (GST) taxes.
*This amount doubles to $30 million per married couple. Portability rules mean that any amount of the $15 million exclusion a spouse did not use before his or her death can be used by the surviving spouse.
*Transfers are taxed above the limit of $15 million per individual or $30 million per married couple.
*The exclusion does not apply to transfers from one spouse to his or her U.S.-citizen spouse. Transfers of money between spouses are unlimited under the unlimited marital deduction, as long as the spouse is a U.S. citizen.
History of the Applicable Exclusion Amount / Unified Credit
Simply because it’s interesting, let’s take a look at the historical exclusion / unified credit amounts and top tax rates over the years.
Notice 1. Historically, the amount of the exclusion / credit (adjusted for inflation to 2025 dollars) before 2018 has never been close to $15 million, and 2. How much the top tax rate has varied over the years, from just 10% in 1916 to an incredible 77% from the 40s to the 70s.
2011-Present: Applicable Exclusion Amount
Starting in 2011, the “applicable exclusion amount” amount combined exemptions for federal estate taxes, lifetime gift taxes, and GST taxes, just as it does today after the OBBB.
| Year of Death: | Applicable Exclusion Amount: | Top tax rate: |
| 2026 | $15,000,000 | 40% |
| 2025 | $13,990,00 | 40% |
| 2024 | $13,610,000 | 40% |
| 2023 | $12,920,000 | 40% |
| 2022 | $12,060,000 | 40% |
| 2021 | $11,700,000 | 40% |
| 2020 | $11,580,000 | 40% |
| 2019 | $11,400,000 | 40% |
| 2018 | $11,180,000 | 40% |
| 2017 | $5,490,000 | 40% |
| 2016 | $5,450,000 | 40% |
| 2015 | $5,430,000 | 40% |
| 2014 | $5,340,000 | 40% |
| 2013 | $5,250,000 | 40% |
| 2012 | $5,120,000 | 35% |
| 2011 | $5,000,000 | 35% |
1977-2010: Unified Credit
From 1977 to 2010, the “unified credit” was used, which was the total exemption amount for federal estate taxes and lifetime gift taxes. The GST tax was introduced in 1976 but had its own separate limits.
| Year of Death: | Unified Credit Amount | Adjusted for inflation to 2025 dollars (rounded): | Top tax rate: |
| 2010* | $5,000,000* | $7,330,000 | 35% |
| 2009 | $3,500,000 | $5,250,000 | 45% |
| 2008 | $2,000,000 | $3,000,000 | 45% |
| 2007 | $2,000,000 | $3,140,000 | 45% |
| 2006 | $2,000,000 | $3,200,000 | 46% |
| 2005 | $1,500,000 | $2,500,000 | 47% |
| 2004 | $1,500,000 | $2,570,000 | 48% |
| 2003 | $1,000,000 | $1,750,000 | 49% |
| 2002 | $1,000,000 | $1,800,000 | 50% |
| 2001 | $675,000 | $1,200,000 | 55% |
| 2000 | $675,000 | $1,270,000 | 55% |
| 1999 | $650,000 | $1,260,000 | 55% |
| 1998 | $625,000 | $1,230,000 | 55% |
| 1987-1997 | $600,000 | $1,200,000-$1,700,000 | 55% |
| 1986 | $500,000 | $1,500,000 | 55% |
| 1985 | $400,000 | $1,200,000 | 55% |
| 1984 | $325,000 | $1,000,000 | 55% |
| 1983 | $275,000 | $890,000 | 60% |
| 1982 | $225,000 | $760,000 | 65% |
| 1981 | $175,000 | $640,000 | 70% |
| 1980 | $161,000 | $660,000 | 70% |
| 1979 | $147,000 | $680,000 | 70% |
| 1978 | $134,000 | $681,000 | 70% |
| 1977 | $120,000 | $650,000 | 70% |
*2010 was unusual. For most of the year, there was no federal estate tax, as a 2001 tax law repealed it for the year 2010. In December 2010, Congress passed a law retroactively reinstating federal estate tax above the exemption amount of $5 million with a 35% top tax rate. Executors/personal representatives had a choice to opt in to the $5 million limit or opt out and use carryover basis rules.
1916-1976: Estate Tax Exemption
Prior to 1977, the federal estate tax had its own exemption amount. The gift tax was not introduced until 1932, and had its own separate exemption.
| Year of Death: | Federal Estate Tax Exemption Amount | Adjusted for inflation to 2025 dollars (rounded): | Top federal estate tax rate: |
| 1942-1976 | $60,000 | $343,800- $1,200,000 | 77% |
| 1941 | $40,000 | $900,000 | 77% |
| 1940** | $40,000 | $910,000 | 70%** |
| 1935-1939 | $40,000 | $908,000-$930,000 | 70% |
| 1934 | $50,000 | $1,200,000 | 60% |
| 1933 | $50,000 | $1,230,000 | 45% |
| 1932 | $50,000 | $1,110,000 | 45% |
| 1926-1931 | $100,000 | $1,780,000-$2,000,000 | 20% |
| 1925 | $50,000 | $918,000 | 40% |
| 1924 | $50,000 | $918,000 | 40% |
| 1918-1923 | $50,000 | $945,000- $1,135,000 | 25% |
| 1917 | $50,000 | $1,360,000 | 25% |
| 1916 | $50,000 | $1,530,000 | 10% |
**In 1940, a 10% surtax added on the total tax liability to raise funds for wartime, which increased the top rate from 70% to an effective rate of 75.4%, according to the IRS.
Data taken from the IRS Estate Taxes page, IRS publication “The Estate Tax: Ninety Years and Counting” (for years 1916-2007), and IRS publication 950 (Rev. October 2011).
In the past, many more families were affected by federal estate taxes, lifetime gift taxes, and GST taxes. Now that the exclusion amount is $15 million/$30 million, most families in America do not have to factor it into their estate planning.
Estate Planning in South Carolina
For help with wills, trusts, and more, call Gem at the Gem McDowell Law Group. Gem and his team help individuals and families in South Carolina create the customized, comprehensive estate plans they need to protect their interests and provide peace of mind. Call today to schedule your free initial consultation at (843) 284-1021.
QSBS – What is QSBS? Changes to QSBS Exemption in 2025
The Qualified Small Business Stock (QSBS) exclusion has been significantly expanded with the passage of the One Big Beautiful Bill (OBBB) Act on July 4, 2025. This change could mean savings of thousands or even millions of dollars in taxes for those who invest in small businesses.
Here’s a high-level overview on what QSBS is and what’s changed with the OBBB. We recommend speaking with your own CPA and/or business attorney about what these changes could mean for your business.
What is the QSBS Exemption?
The QSBS exemption incentivizes investment in small businesses. It allows investors, startup founders, early employees, and others to drastically reduce – or entirely eliminate – taxes on capital gains from certain qualifying stocks.
The amount that can be excluded is the greater of:
- $15 million in capital gains or
- 10 times the adjusted basis
for qualifying stocks issued after July 4, 2025. (The pre-OBBB limit of $10 million applies to QSBS purchased before this date.)
The exemption amount applies per issuer, meaning if an investor separately invests in ten companies, he or she could potentially have 10 x the $10 million or $15 million cap (depending on when the stock was purchased).
What Qualifies as a Qualified Small Business Stock?
Only certain shares in U.S. C corporations that meet the following criteria from 26 U.S. Code Section 1202 of the Internal Revenue Code qualify as QSBS:
- Domestic C corporation only
- Excludes many industries, including health, law, consulting, performing arts, brokerage services, banking, financing, farming, and more
- Corporation’s gross assets cannot be more than $75 million when stock is issued
- Business must be active, with at least 80% of assets used to conduct business
- Stock must be purchased directly from the corporation itself
- Stock must be held for at least three years to get any tax benefits, and at least five years to get full tax benefits
- Stock must be issued after Aug. 10, 1993
Individuals, trusts, and pass-through entities can hold QSBS and take advantage of the exemption. C corporations are the only entity that can issue QSBS, but they are not allowed to benefit from the QSBS exemption themselves.
How Has the QSBS Exemption Changed with the One Big Beautiful Bill Act?
Previously: The exemption limit per issuer was $10 million (or 10 times the adjusted basis).
Now: The exemption limit is now $15 million (or 10 times the adjusted basis) for stocks purchased on or after July 4, 2025. This amount will be adjusted for inflation starting in 2027.
Previously: QSBS needed to be held for at least five years to get the tax benefits. It was all or nothing; if the shares were sold before five years, there was no tax benefit.
Now: It’s no longer an “all-or-nothing” scenario; for QSBS purchased on or after July 4, 2025:
- 50% exclusion available for stocks held between 3 and 4 years
- 75% exclusion available for stocks held between 4 and 5 years
- 100% exclusion available for stocks held at least 5 years
Previously: To qualify, a corporation could have no more than $50 million in assets at the time the stock was issued.
Now: To qualify, a corporation must have no more than $75 million in assets at the time stock is issued. This amount will be adjusted for inflation starting in 2027.
Strategy and Legal Help for Businesses in South Carolina
Gem McDowell is a business attorney with over 30 years of experience handling business and commercial real estate transactions in South Carolina. Gem and his team help businesses protect their interests, grow, and thrive, while helping business owners and professionals protect their own interests, too. Give Gem a call at the Gem McDowell Law Group, with offices in Myrtle Beach and Mt. Pleasant, SC, at (843) 284-1021 today to schedule your free consultation.
What is Covenant of Good Faith and Fair Dealing? About the How, Not the What, and Road, LLC.
If you sign a contact, you and the other parties signing are automatically subject to the covenant of good faith and fair dealing, an implied principle that holds parties to a standard of fairness and honesty in carrying out the contract.
The covenant does not create or impose new obligations on parties to a contract; it applies to the how of the parties’ behavior, not the what. This is an important distinction that was reinforced in a 2024 South Carolina Supreme Court decision, Road, LLC. v. Beaufort County (find it here), which we’ll look at below.
But first, more about the covenant of good faith and fair dealing, and what it does and doesn’t do.
The Covenant of Good Faith and Fair Dealing
The concept of the covenant of good faith and fair dealing comes from English common law and is now an implied covenant in agreements in American jurisprudence. “Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement,” according to Section 205 of the Restatement (Second) of Contracts, a legal resource on contract law used by legal professionals across the country.
A key aspect of the covenant is that a party must not undermine or interfere with the other party’s ability to fulfill their obligations under the agreement or to benefit from it. A party who intentionally behaves in such a way is in breach of the covenant.
The covenant of good faith and fair dealing does not mean that a contract itself or its terms are fair. That is, just because one party believes the contract isn’t fair, that doesn’t mean the other party has violated the covenant of good faith and fair dealing.
This is the issue in the Road case. Essentially, the plaintiff did not like how a deal turned out, but does that necessarily mean another party breached the covenant of good faith and fair dealing? Let’s see what the court said.
Did Beaufort County Violate the Covenant of Good Faith and Fair Dealing? The Road case
The background to Road, LLC v. Beaufort County (2024) is long and rather convoluted, so we’ll just cover the most pertinent facts here.
In 2006, a developer purchased some undeveloped waterfront property in Beaufort County with the intention of developing it. The 229-acre property is a peninsula connected to the mainland via an access road on a narrow isthmus.
Two lawsuits soon arose from this, one of which was about Beaufort County denying the developer’s request to relocate and improve the access road. Both lawsuits were settled in a 2011 agreement (the Settlement Agreement) which meant the developer could continue developing the property.
Road, LLC (Road) was not a party to the Settlement Agreement. But it stepped in at this point to help out the developer by buying an 0.85-acre parcel of land at the end of the access road from the neighbors for $1.3 million. The developer agreed to buy back that same parcel of land from Road for $5 million once development was complete, giving Road a nice profit.
Here’s where it gets interesting. The developer defaulted on the loan for the peninsula property before developing it, so the lender ultimately took possession of it. Beaufort County then purchased the peninsula property with the express intention of preserving it and not allowing further development.
Road sued.
The Lawsuit: Road Contends Beaufort County Breached the Covenant
Road, LLC and Pinckney Point, LLC (the original 2006 purchaser of the peninsula property) sued Beaufort County, alleging (among other things) that the County breached the implied covenant of good faith and fair dealing. The matter eventually went to the Supreme Court of South Carolina, which issued its decision in May 2024.
Road contended that all parties to the Settlement Agreement expected the peninsula property to be developed eventually, even if not by the original developer. Road also argued that facilitating the development of the peninsula property was, in fact, the purpose of the Settlement Agreement.
By purchasing the land with the express intent of not developing it – and doing so quickly, without allowing another developer the chance to see and purchase it – Beaufort County effectively destroyed Road’s opportunity to sell the 0.85-acre parcel at the expected profit in the future. This, Road contended, constituted a breach of the covenant of good faith and fair dealing.
The question before the supreme court boiled down to this: Did the Settlement Agreement impose an obligation on Beaufort County not to interfere with Road’s opportunity to find another developer for the peninsula property?
The court’s answer: No.
Beaufort County Did Not Breach the Covenant
“The implied covenant of good faith and fair dealing cannot create new contractual duties not already expressed or implied in the contract,” the court said in its decision, which affirmed the result but not the reasoning of the appeals court.
Continuing: “Rather, the implied covenant serves only to govern the manner in which parties to a contract enforce their existing contractual rights and carry out their existing contractual duties—express or implied.”
The Settlement Agreement did not expressly require Beaufort County to give another developer the opportunity to purchase the peninsula land. The court determined there was no such duty from implied contract terms, either, as the Settlement Agreement contained language stating it was the full and complete agreement between parties. Finally, since, in the court’s words, “the covenant may not be relied on to create new contractual duties not expressly stated or fairly implied in the contract itself,” no such duty existed under the covenant of good faith and fair dealing, either.
Additionally, the court says that the purpose of the Settlement Agreement was not to facilitate the development of the peninsula property, as Road contended. It was clearly to settle the two pending lawsuits regarding the land.
Had Road, LLC been a party to the Settlement Agreement, perhaps the court would have interpreted things differently. It might have found that Beaufort County did indeed violate the spirit of the agreement and its intended purpose. We don’t know for sure. But as it is, unfortunately for Road, it took a gamble and lost.
Takeaway: Contract Language Matters
As we’ve covered many times on this blog before, the language in a contract matters. Do not depend on implied contract terms or the unwritten understanding of the purpose of the agreement. If something is important to you, put it in writing.
For help with contracts, business law, and commercial real estate transactions in South Carolina, call Gem at the Gem McDowell Law Group. Gem and his team help start, grow, and sell businesses across the state. Gem has over 20 years of experience solving problems, preventing mistakes, and helping businesses thrive. Call or contact us today to schedule your free consultation.
Spousal Elective Share: What It Is and How to Claim It In South Carolina
“Elective share” is the portion of a deceased person’s estate that a surviving spouse is entitled to under the law in separate property states. A surviving spouse may claim it regardless of the provisions of the will. This concept comes from English common law and prevents a surviving spouse from being completely disinherited.
Here’s what to know about spousal elective share.
A surviving spouse is entitled to a portion of the deceased spouse’s estate.
The amount of the estate a surviving spouse is entitled to varies by state, usually one third or one half. In South Carolina, it’s one third.
Also, in South Carolina, the elective share comes out of the estate subject to probate. In some other states, the elective share is taken from the augmented estate, which includes probate assets and some non-probate assets.
Elective share applies only when there is a will.
Elective share is applicable when the deceased spouse had a will but the will did not leave anything to the surviving spouse or left less than what the elective share would be. A spouse may claim this portion unless the couple previously signed something like a waiver of elective share or a pre- or post-nuptial agreement. Read more about how to disinherit your spouse in South Carolina.
If the spouse dies without a will (aka, dies intestate), then the surviving spouse inherits a portion of the estate – often 50% or 100% – under intestacy laws, which vary by state. Read more about what happens if you die without a will in South Carolina here on our blog.
Some states, like South Carolina, also have an omitted spouse provision. If it’s clear that the spouse was left out of the will unintentionally, then the surviving spouse can claim a portion of the estate that they would have received under intestacy laws. Read more about the omitted spouse provision on our blog.
It is elective – not automatic.
The “elective” part of spousal elective share means the surviving spouse must elect to take it; it is not automatically distributed to the surviving spouse.
The process to claim the elective share varies by state. In South Carolina under SC Code 62-2-205, the surviving spouse must file with the court and inform the personal representative generally within eight months after the decedent’s death.
Get help with wills, probate, estate planning in South Carolina
Gem McDowell is an estate planning attorney with over 20 years of experience helping individuals and families in South Carolina. He and his team will work with you to create a will and an estate plan personalized to you and your family’s circumstances and needs. They also help families after a death by guiding the probate process or help contesting a will when the situation arises. Call Gem and his team at their Myrtle Beach or Mt. Pleasant, SC offices today at 843-284-1021 to schedule a free consultation.
Left Out of the Will – Now What? Omitted Spouse, Pretermitted Child
What happens if you’ve been left out of the will?
It depends – on state law, your relationship to the deceased, and other factors.
Under state law, some parties are entitled to a portion of the estate when the testator has unintentionally left them out of the will. That’s what we’ll look at today.
Disinherited or Omitted?
Were you left out of the will intentionally or unintentionally? While many people use the word “disinherited” for both circumstances, they are different.
Someone left out of the will intentionally has been disinherited. We will cover what to do if you’ve been disinherited in a future blog.
Someone left out of the will unintentionally may be referred to as pretermitted or omitted. Unintentional omission typically occurs when the testator doesn’t update his or her will after getting married or having or adopting a child. The assumption is that had the testator updated the will, the new spouse and/or child would have been included. State law determines what a spouse or child who was accidentally left out of the will is entitled to, and laws can vary greatly by state.
The Omitted Spouse or Pretermitted Spouse
South Carolina law protects the omitted spouse. If it’s clear the spouse was left out of the will unintentionally (rather than intentionally disinherited), the surviving spouse can claim the portion of the estate they would have received under intestacy laws, i.e., had there been no will at all. Read more about the omitted spouse provision on our blog.
Many other states have similar omitted spouse or pretermitted spouse laws. However, not all do, so it’s important to speak with an attorney in your state.
The Pretermitted Child
South Carolina law (Section 62-2-302) also protects the pretermitted child, which is a child who was born or adopted after a will is executed. The pretermitted child is entitled to a portion of the estate that they would have received under South Carolina’s intestacy laws, unless:
- It appears the omission was intentional, or
- The testator left “substantially all his estate to his spouse,” or
- The testator “provided for the child by transfer outside the will” with the clear intention of that being in place of inheritance through the will
If the will was executed after the child was born or adopted, the child is not considered a “pretermitted child” and the above does not apply. The court will assume that the omission was intentional.
Many other states have similar laws, but they vary widely, so check with an attorney in your state.
Other Parties
Only the spouse and child(ren) of the deceased may have a claim under state law, and that varies by state. If you were not named in the will but believe the testator intended to leave you an inheritance, you might want to look into grounds for contesting the will.
Get help with wills, probate, estate planning in South Carolina
If you need help with probate, creating a will, contesting a will, or other estate planning matter in South Carolina, call Gem McDowell. Gem and his team at the Gem McDowell Law Group help individuals and families across South Carolina create estate plans that are personalized to reflect their unique circumstances and wishes. They also help with matters of probate, whether straightforward or complicated. Call Gem and his team at their Myrtle Beach or Mt. Pleasant, SC offices today at 843-284-1021 to schedule a free consultation.
