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.

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.

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.

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.

UPDATE 07/26/25: In a similar case, the South Carolina Court of Appeals sided with homebuyers in a dispute with the homebuilder Eastwood Homes. The court upheld a 2024 ruling that found some provisions in Eastwood Homes’ contract unconscionable. One provision allowed the builder to unilaterally cancel a contract if “a bona fide dispute should arise between the Buyer and [Eastwood], in [Eastwood]’s sole judgment,” at any time, right up until closing. Read the court’s opinion here and see a summary from the Post and Courier here (note: P&C has a paywall). This is another win for homebuyers.

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.

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 15^th.

Compare with the legal rate of interest in 2024.

I Want to Be Cremated; Does My Family Have to Follow My Wishes?

The short answer is “Yes, IF…”

Yes, If You Complete a Pre-Need Cremation Authorization Form

South Carolina law (Chapter 8 Title 32) provides that an individual may pre-authorize their own cremation. This pre-authorization is a legally binding agreement between the individual and his or her chosen crematory that gives the crematory permission to cremate the individual’s remains.

You can download the PDF of this form here or find it on the South Carolina Labor Licensing Regulation website here (scroll down to the “Forms” section, click on “Cremation Forms,” and select “Cremation Authorization – Pre-Need”).

This form must be signed in ink by the individual requesting cremation services in the presence of two witnesses. It remains enforceable unless and until the individual provides written notice to the funeral establishment and the crematory.

Are Cremation Wishes in a Last Will Legally Binding?

No. Many people choose to include their last wishes relating to funeral arrangements, burials, cremation, and so on, in their last will, but they are not legally binding. If you live in South Carolina and your wish is to be cremated, you should consider filling out the pre-need cremation authorization form linked above.

Get Help with Estate Planning in South Carolina

What will happen to your assets and your remains when you die? Decide for yourself by creating an up-to-date estate plan to help ensure your last wishes are known and followed after you’re gone.

For help with last wills, living wills, trusts, powers of attorney, and more, call Gem McDowell at the Gem McDowell Law Group in Myrtle Beach and Mt. Pleasant, SC. Gem and his team help individuals and families in South Carolina review and create comprehensive estate plans for peace of mind. Call 843-284-1021 today to schedule a free consultation or get in touch through this form.

What Happens When Easements Are Abandoned?

What happens if an easement is abandoned? While most easements in South Carolina last indefinitely, abandonment is one way to extinguish an easement. In that instance, the original rights revert to the property owner(s).

This sounds straightforward enough, but, as with many legal matters, sometimes straightforward things get complicated.

Case in point: the 2023 South Carolina Court of Appeals case Myers v. Town of Calhoun Falls (read it here). In short, a railroad line built on properties through the use of easements was abandoned and dismantled, and property owners sought to regain their property rights approximately thirty years later.

Questions the court looked at:

Was the railroad properly abandoned, thus giving the court subject matter jurisdiction and authority to declare the easements terminated?
Did the property owners wait too long to attempt to regain their rights, and should the doctrine of laches have barred them?

(For a refresher on easements in South Carolina, read more here on our blog.)

Brief Background of Myers vs. Town of Calhoun Falls (2023)

The railroad

Way back in 1878, South Carolina chartered the Savannah Valley Railroad Company to construct a railroad. This necessitated several easements on properties in McCormick County and Abbeville County, SC.

Over the years, the rights to the properties have been conveyed to successors of the Savannah Valley Railroad Company and have been recorded in deeds on the affected properties. The wording in a sample deed presented to the court included language stipulating that the easement was for the purpose of a railroad.

By the 1970s, the railroad was owned and operated by Seaboard Systems Railroad, Inc. (Railroad), which eventually sought permission from the Interstate Commerce Commission to close down the track. Permission was granted, and the railroad was entirely dismantled and removed by the end of February 1980.

Part of the Railroad’s interests in the properties eventually ended up in the possession of the Town of Calhoun Falls and another part in the possession of Savannah Valley Trails, Inc. (SVT), together the Appellants in this case.

The lawsuits

SVT began construction of a walking trail where the railway used to be. Not long after, Annie L. Myers and many other present-day owners of the affected properties (Respondents) took legal action, requesting declaratory relief as to the property rights of the easements. (Separate but similar actions by property owners in McCormick County and Abbeville County were consolidated by the trial court.)

In February 2020, the trial court found that Railroad had abandoned the line, and consequently the easements terminated and the associated property rights reverted to the property owners.

The matter then went to the South Carolina Court of Appeals in 2023.

Proving Abandonment – Which Party Has the Burden of Proof?

SVT argued that the trial court did not have subject matter jurisdiction because Respondents failed to prove the railroad was properly abandoned, meaning the issue was still under the jurisdiction of the Surface Transportation Board (previously the Interstate Commerce Commission, or the ICC).

The railroad had been abandoned as a matter of fact: the track was dismantled and removed, and Railroad sent a letter to the ICC stating that the line was officially abandoned on February 15, 1980. But SVT argued that Respondents did not produce Railroad’s journal entries documenting the abandonment of the line as requested by the ICC, so the abandonment was incomplete.

The appeals court stated that the burden of proof was on SVT to show that the abandonment was incomplete, not on Respondents to show the abandonment occurred in a particular manner. True, the appeals court noted, the record did not include journal entries as requested by the ICC. But neither did the record contain evidence that Railroad did not comply with its requests. SVT did not meet the burden of proof.

Therefore, the appeals court found that the trial court did have subject matter jurisdiction and had the authority to make a judgement on the easements.

Waiting Too Long – Should Laches Have Barred the Respondents’ Claim?

SVT also argued that Respondents’ claims should have been barred by the trial court by the doctrine of laches.

Laches is an equitable doctrine stemming from common law. It is, as described in Hallums v. Hallums (1988) and quoted by the court in the current opinion, “neglect for an unreasonable and unexplained length of time, under circumstances affording opportunity for diligence, to do what should have been done.” In other words, if a party waits too long to take action on a legal issue – like asserting or regaining their rights – they may have lost their chance for good.

Respondents waited approximately 30 years to seek declaratory relief regarding their property rights, despite having the opportunity to do so. The trial court did find this delay unreasonable.

But “The failure to assert a right ‘does not come into existence until there is a reason or situation that demands assertion’” (citing Mid-State Tr., II v. Wright, 1996, quoting Ex parte Stokes, 1971). Additionally, “the party asserting laches must show it has been materially prejudiced by the other person’s delay” (citing the same case).

On this last point, the trial court found that SVT failed to provide evidence demonstrating how Respondents’ delay affected them financially or made them liable if the walking trail were not completed. Since SVT was not able to prove material prejudice due to Respondents’ delay, the appeals court agreed with the trial court that the doctrine of laches did not apply. Respondents were not barred from making a claim.

Get Legal Help from Gem McDowell and His Team

The South Carolina Court of Appeals ultimately affirmed the trial court’s decision granting declaratory relief. The court found that the rights to the properties reverted to the property owners (Respondents) at the time the railroad was abandoned and the easements terminated.

Note that it wasn’t until the property owners took legal action that they secured their rights again. If you are in a similar situation looking to regain full rights to your property after the termination of an easement, don’t expect it to happen automatically. You will likely have to take affirmative action to regain your rights just like Respondents did in this case.

For help with easements and more, contact attorney Gem McDowell at the Gem McDowell Law Group in Myrtle Beach and Mt. Pleasant, SC. Gem has over 30 years of experience handling legal matters in South Carolina, including easement disputes commercial real estate, business law, and estate planning. Call Gem and his team to schedule a free consultation at 843-284-1021 or fill out this form today.

What is a Certificate of Tax Compliance and Why Should You Get One for a Business Closing?

If you are planning on buying or selling a business in South Carolina, or a significant portion of its assets, you need to know what a Certificate of Tax Compliance is.

A Certificate of Tax Compliance is not mandatory in South Carolina, but we strongly advise our clients to get one prior to a business closing because it provides protection to the buyer.

Here’s what a Certificate of Tax Compliance is, how to get one, and how it can protect you.

What is a Certificate of Tax Compliance in South Carolina?

A Certificate of Tax Compliance is a document issued by the South Carolina Department of Revenue (SCDOR) that confirms a taxpayer has filed and paid all taxes due.

Any taxpayer in the state – business or individual – may request a certificate, which is valid for 30 days. If the taxpayer is current on taxes, the certificate is typically issued within 7-10 days of the request. If not, the SCDOR gives the taxpayer 30 days to file returns and/or remit payments to become up to date, after which a certificate will be issued. The taxpayer can request an extension if 30 days is not enough time.

How Do I Get a Certificate of Tax Compliance in South Carolina?

To request a Certificate of Tax Compliance (also called a Certificate of Compliance by the SCDOR), fill out Form C-268 and return it to the SCDOR by fax, email, or mail along with a $60 fee. Find the form and get more details on the SCDOR website and in the separate procedure document (PDF).

The request may be made either by the taxpayer (e.g., the business owner/seller) or by a third party (e.g., the prospective buyer) with a Power of Attorney authorizing the third party to request the certificate. Plan to get the certificate no more than 30 days before the business closing.

Why Get a Certificate of Compliance for Business Closings in South Carolina?

As stated above, a Certificate of Tax Compliance is not required by law for a business closing in South Carolina. But it serves an important purpose: it protects the buyer from any liens placed on the business assets due to unpaid taxes at the time of closing.

South Carolina Code § 12-54-124 (2022) states:

“In the case of the transfer of a majority of the assets of a business, other than cash, […] any tax generated by the business which was due on or before the date of any part of the transfer constitutes a lien against the assets in the hands of a purchaser, or any other transferee, until the taxes are paid. Whether a majority of the assets have been transferred is determined by the fair market value of the assets transferred, and not by the number of assets transferred. The department may not issue a license to continue the business to the transferee until all taxes due the State have been settled and paid and may revoke a license issued to the business in violation of this section.

“This section does not apply if the purchaser receives a certificate of compliance from the department stating that all tax returns have been filed and all taxes generated by the business have been paid. The certificate of compliance is valid if it is obtained no more than thirty days before the sale or transfer.” (Emphasis added.)

For just a $60 fee, a Certificate of Tax Compliance offers excellent protection for prospective business buyers, and that’s why we always strongly recommend our clients get one.

Contact South Carolina Business Attorney Gem McDowell

Gem and his team at Gem McDowell Law Group help business owners and employers in South Carolina with business creation, business acquisition and sales, business planning, and commercial real estate transactions. Gem has over 30 years of experience in South Carolina which includes multi-million-dollar real estate transactions, and he and his team have the knowledge and experience to help businesses grow and thrive. The Gem McDowell Law Group has offices in Myrtle Beach and Mt. Pleasant, SC. Call today at 843-284-1021 to schedule a free consultation to discuss your business needs.

How to Disinherit a Spouse in South Carolina Through Elective Share Waiver (Or: Pillow Talk Is Not Enforceable)

A lady came to our offices for help with her estate plan which included setting up a new trust to hold her assets. She planned to leave everything to her kids and nothing to her husband, which she said her husband had agreed to. He never signed anything on paper to that effect, but she insisted that he was okay with the arrangement.

Literally the following week, she died. Her husband then filed for elective share, which is the portion of a deceased person’s estate that a surviving spouse is entitled to by law. There was nothing barring the husband from receiving a portion of his wife’s estate, despite her wishes.

What could the wife have done differently?

Below we’ll look at elective share and how to disinherit a spouse in South Carolina.

Elective Share in South Carolina

A surviving spouse is entitled to a portion of the deceased spouse’s estate under the law regardless of the terms of the deceased spouse’s will. This portion is called the elective share, or spousal elective share. The portion the surviving spouse can claim varies by state; in South Carolina, it’s one third.

The surviving spouse may claim elective share even if the couple was estranged or in divorce proceedings at the time at the time of death. We previously covered a case on this blog in which a surviving spouse was able to claim elective share after the court granted the couple’s divorce, since the husband happened to die in between the court’s decision and the clerk filing and recording the divorce decree. [Read about that case, Hatchell-Freeman v. Freeman (2000) here.]

What the Surviving Spouse is Entitled To

In South Carolina, the surviving spouse is entitled to one third of the deceased spouse’s estate. This third includes assets that are not subject to probate, such as life insurance proceeds, retirement accounts, property owned jointly with right of survivorship, and assets in revocable trusts. The value of these and other interests due to the surviving spouse count towards the elective share first, along with the value of anything that was renounced or disclaimed. Only then is the balance due taken from the probate estate.

Claiming elective share usually means a surviving spouse will inherit assets that would otherwise have gone to other heirs named in the deceased spouse’s will. Because of this, the surviving spouse has a duty under South Carolina code Section 62-2-205(b) to inform recipients of the probate estate whose interests are adversely affected of the time and date of the hearing set to determine elective share.

Disinheriting a Spouse in South Carolina: A WRITTEN Waiver of Elective Share

The laws regarding elective share ensure that a spouse is not easily disinherited.

But an individual can fully disinherit a spouse in South Carolina. This may happen, for example, in blended families when each spouse wants to leave their assets to their own children and knows that the other spouse is financially secure. Or an individual may wish to disinherit a spouse because of estrangement or separation.

Whatever the reason, it’s important to know that drawing up a will or creating an estate plan that intentionally leaves out the spouse is not enough. The couple must take active steps to disinherit a spouse in South Carolina.

Written Waiver of Elective Share

A spouse may voluntarily agree to give up all or part of their elective share. The spouse who is to be disinherited must agree to waive the right to elective share in writing. Such a waiver is often part of a prenuptial or postnuptial agreement but may be a standalone document.

The spouse waiving their right to elective share in whole or in part must be fully aware of what they are giving up. South Carolina code Section 62-2-204 requires that the disinheriting spouse provide “fair and reasonable” disclosures of their property and financial obligations in writing to the waiving spouse.

Schedule a Free Consultation with Estate Planning Attorney Gem McDowell

For legal help and advice on waiver of elective share, prenuptial or postnuptial agreements, probate, or other estate planning concerns, call Gem McDowell of the Gem McDowell Law Group of Mt. Pleasant and Myrtle Beach. Gem and his team help families in the greater Charleston and Myrtle Beach areas create and review estate plans to help ensure their wishes are carried out.

Gem can also help you understand the consequences and potential downsides of your estate plan. Sometimes estate plans created with the best of intentions can lead to unintended consequences, disputes, and fractured relationships between family members and heirs.

If you have a complicated family situation, a large estate, or you simply want a basic estate plan put in place for your peace of mind, call Gem and his team today at 843-284-1021.

12 Next