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appealprobatetrustwill
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Dreher v. Dreher, 370 S.C. 75, 634 S.E.2d 646

Facts

Julius Clarence Dreher, Jr. established the J.C. Dreher, Jr. Trust and executed a will that devised his estate to the trust. After his death, his widow, Anna Martha Dreher, filed a claim for an elective share, arguing that the trust was illusory and should be included in the calculation. The probate court found the trust valid and excluded it from the elective share calculation, leading to the appeal.

Julius Clarence Dreher, Jr., (Decedent) and Appellant were married on March 21, 1968. On April 4, 1988, Decedent established the J.C. Dreher, Jr. Trust (Dreher Trust). Decedent and his son were designated as co-trustees. During his lifetime, Decedent received disbursements from the Dreher Trust as a beneficiary.

Issue

Did the probate court err in its construction and application of S.C.Code Ann. § 62–7–112 and Seifert v. Southern National Bank of South Carolina to the Dreher Trust?

I. Did the probate court err in its construction of S.C.Code Ann. § 62–7–112 (Supp.2004)? II. Did the probate court err in its application of S.C.Code Ann. § 62–7–112 (Supp.2004) and Seifert v. Southern National Bank of South Carolina, 305 S.C. 353, 409 S.E.2d 337 (1991) to the Dreher Trust?

Rule

A revocable inter vivos trust may be declared illusory for purposes of determining a spouse's elective share rights if the settlor retains substantial control over the trust.

A revocable inter vivos trust may be declared illusory for purposes of determining a spouse's elective share rights if the settlor retains substantial control over the trust.

Analysis

The Supreme Court found that the probate court incorrectly applied the law regarding the trust's validity. The court emphasized that the trust was illusory because the decedent retained extensive control over the trust assets, which allowed the widow's claim for an elective share to include the trust assets.

We find the Dreher Trust is illusory and thus invalid for elective share purposes, but remains valid for all other purposes.

Conclusion

The Supreme Court reversed the probate court's decision and remanded the case for determination of the widow's elective share, concluding that the trust was illusory for this purpose.

We conclude Decedent retained substantial control because he retained such extensive powers over the assets of the trust that he had until his death the same rights in the assets after creation of the trust that he had before its creation.

Who won?

Anna Martha Dreher prevailed in the case because the Supreme Court determined that the trust was illusory, allowing her claim for an elective share to include the trust assets.

The probate court erred in its construction and application of § 62–7–112 and in its application of Seifert to the Dreher Trust.

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