Divorce And Estate Planning In South Carolina

What happens when a divorce proceeding is interrupted by the death of a spouse? How is the estate divided or undivided? The South Carolina Supreme Court has recently reexamined this issue and settled the law on what precisely a death can abate. This post will first reflect on the status of a spouse whose partner dies during a divorce proceeding before analyzing the status of their property. Finally, it will offer some guidance in planning for and navigating such situations.

Death before Final Divorce Order: Hatchell-Freeman v. Freeman

Subsection 62-2-802(a) of the South Carolina Probate Code states that a separate maintenance decree does not terminate the couple’s marriage. Subsection (c) further declares that a “divorce or annulment is not final until signed by the court and filed in the office of the clerk of court.” Hatchell-Freeman v. Freeman (Ct. App. 2000) remains the most authoritative and demonstrative example of what happens when a spouse dies before a judge issues the formal order granting divorce. In this case, the spouse, Angela, had initiated an action in family court seeking a divorce from her husband. The husband passed away intestate on October 7th, two weeks after the final hearing granting the divorce. Unfortunately, the family court judge signed the order granting divorce on October 10th. The decedent’s father applied to be a personal representative of the estate without notifying Angela as a prospective heir. Upon learning of his appointment, Angela filed a notice of election by a surviving spouse to inherit her share and petitioned for appointment as its personal representative. 

The main issue examined in court was whether Angela and her husband remained married at the time of his death. The lower courts responded in the affirmative to the question. On appeal, the Court of Appeal cited Section 62-2-802 to show that a marriage is not final until signed by the court and filed by the clerk of court. Furthermore, they turned to Louthian and Merritt, P.A. v. Davis, (1979) to show that an action for divorce is strictly personal and terminates on the death of either spouse. Despite the unfortunate circumstances, the husband’s death abated the divorce proceeding. Without the filing of a final decree, the couple remained married.

Furthermore, the decedent’s father asserted that Angela is estopped from her petition. She could not have petitioned the court for the divorce, signed its agreement, and then ignored these past actions to apply as the personal representative and heir to the decedent’s estate. The court disagreed. Typically, the court estopped spouses in similar cases when they obtained a divorce order in a foreign jurisdiction, then challenged the validity of the divorce decree in South Carolina. In this case, the death of the decedent deprived the family court of jurisdiction. These cases are not analogous, as the intervening death deprived the court of jurisdiction, and Angela was not asserting two contrary judicial determinations. She was entitled to assert herself as a spouse, be considered an heir, and take over as the personal representative.

Death’s Effects on Marital Property Division: Seals v Smalls

The question of whether the division of marital property can continue past a spouse’s death was recently examined in Seels v Smalls (2022). Olivia Seels Smalls had filed a petition for divorce and the equitable apportionment of the marital estate. The husband, denying allegations of abuse and adultery, also sought a divorce and equitable apportionment. The couple began mediation, but Olivia’s recurrent cancer prevented them from formally signing an agreement. Olivia passed away unexpectedly shortly thereafter, leaving behind a valuable estate. Among their shared property were a dozen and a half rental properties, the marital home, and significant retirement, checking, savings, and investment accounts. Her personal representative and brother Joe Smalls petitioned the court to be substituted as the party in the marital property apportionment proceedings. In response, Olivia’s husband filed a motion to dismiss for lack of subject matter jurisdiction because his wife’s death abated the proceeding. 

The Family Court found in favor of Olivia’s Estate, stating that while issues of divorce and support are abated by the death of a spouse, the division of property is not abated since each party’s interest in the marital property is vested and fixed when they file the petition. The Family Court retains the jurisdiction to apportion marital property even after death. They ultimately issued an order apportioning the marital property into equal shares and denied the husband’s motion to dismiss. The South Carolina Court of Appeals affirmed this judgment.

Seels v Smalls: Supreme Court Opinion

Surprisingly, the South Carolina Supreme Court accepted the husband’s second appeal and analyzed the Family Court’s jurisdiction. First, it noted that its authority is given by statute, specifically the South Carolina Code Section 63-3-530. It is indisputable that the court had subject matter jurisdiction at the time of the petition. Section 63-3-530 grants the court exclusive jurisdiction over marital property and its equitable apportionment. Furthermore, 20-3-620(a) clearly states that the court will make a final equitable apportionment between parties upon the request by either spouse in the pleadings. While the Probate Court also has jurisdiction over the decedent’s property, this is an area of concurrent jurisdiction between the Family Court, Probate Court, and Circuit Court. The appellant’s claim that only Probate Court held jurisdiction failed. 

The court also drew heavily from Hodge v. Hodge (1991), which also examined the status of an equitable apportionment after a spouse had passed away. In its review, the Supreme Court affirmed that the Family Court has exclusive jurisdiction over the rights of the parties to marital property in the course of marital litigation. The wife’s right in the marital estate was vested upon her initiation of marital litigation, and the court could apportion it despite her death. Historically, claims of a personal nature abate upon a party’s death, but claims based on property interests do not. Therefore, the personal representative of a decedent’s estate may continue as a party to the apportionment. The Family Court was correct in apportioning their assets. 

Estate Planning and Divorce

What are the best steps for spouses adapting their estate plan during or while planning a divorce? Divorcing spouses should properly create or update a will to reflect their separation and upcoming divorce. Failing to do so may allow their ex-partner to inherit if a divorce order is not filed in time. Following the clarification in Seels, spouses should petition the Family Court for an equitable apportionment of their marital property. Simply filing marital litigation will grant the Family Court the power to continue equitably dividing the property after one spouse’s death. 

Those concerned their ex-partner will take an elective share of their estate should rest assured by paragraph 62-2-802(b)(2) of the Probate Code. A spouse who is a party to a proceeding that concludes by an order terminating marital property rights, an order for the equitable distribution of marital property, or an order of divorce is prevented from claiming surviving spouse status. Section 802’s numerous ways to revoke the surviving spouse’s status also impact other spousal benefits in Section 62-2-507. A 2014 amendment to the Probate Code revoked beneficiary designations for a spouse upon a filed order or decree for divorce or an order “terminating all marital property rights or confirming equitable distribution.” The beneficiary designations include life insurance or 401Ks. Furthermore, Section 507 revokes testamentary dispositions, personal representative nominations, and severs joint tenancies. However, the court may not respect the decedent’s wishes if they pass away before any such order is issued. 

Ultimately, these issues may be avoided far before divorce through a prenuptial agreement. As Wilson v. Dallas (2013) demonstrates, a prenuptial agreement may be enough to preclude a spouse’s right to an elective share or other benefits. Otherwise, quickly negotiating a divorce may be preferable for aging divorcees who are worried about the integrity of their estate plan. It is never too early to plan for the possible complications of one’s estate plan. A testator should be aware of the implications a drawn-out divorce may have on their testamentary intentions. 

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