Trusts & Estates – ‘Trust Business’ – Probate Court’s Authority

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The master-in-equity erred in concluding that the term “trust business” excludes the services of personal representatives, conservators, guardians, and agents and that these roles are outside the State Board of Financial Institutions’ regulatory jurisdiction.

We reversed and remanded.

The State Board of Financial Institutions (BOFI), sought review of an order of the Master-in-Equity concluding that Respondents were not required to seek BOFI’s approval pursuant to section 34-21-10 of the South Carolina Code (2020) before providing services as a personal representative of an estate, a conservator, a guardian, or an agent pursuant to a power of attorney because these services do not fall within the undefined term “trust business” for purposes of section 34-21-10.1 BOFI argued the legislature intended to include all fiduciary services within the meaning of a trust business. BOFI also challenged the master’s conclusion that the probate court‘s authority over personal representatives, conservators, guardians, and agents automatically preempts BOFI’s regulatory authority over them. BOFI contended its regulatory authority and the jurisdiction of the probate court can coexist.

First, BOFI asserted the master erred by determining that the undefined term “trust business” in section 34-21-10 excludes the services of a personal representative, conservator, guardian, and agent pursuant to a power of attorney. Respondents argued that the plain language of section 34-21-10 limits a trust business to one that administers trusts only. Giving the term “trust business” its “ordinary meaning” establishes that all institutional fiduciaries fall within BOFI’s regulatory authority. The usual and customary meaning of the term “trust” is recognized in secondary sources of law as including a range of fiduciary relationships. Respondents also argued that the usual and customary meaning of “trust business” excludes service as a personal representative, conservator, guardian, or agent: “It has been said that the primary and ordinary conception of a trust company is a corporation or institution organized to take and administer trusts, rather than carry on the ordinary functions of banking.” 9 C.J.S. Banks and Banking § 650 (December 2024 Update). However, this statement merely distinguishes between two different types of businesses—banks versus trust companies—and does not exclude certain services from “a corporation or institution organized to take and administer trusts,” as evidenced by the title of section 650, i.e., “Distinction between bank and trust company.” As to the context in which section 34-21-10 appears, there are numerous sections within the same general statutory law that show the legislature’s intent to include personal representatives, conservators, guardians, and agents within the term “trust business.”

Based on the foregoing, the term “trust business” necessarily encompasses fiduciary services provided by not only the trustee of a trust but also a personal representative, conservator, guardian, or agent. Therefore, we reversed the master’s conclusion to the contrary.

Next, BOFI assigned error to the master’s conclusion that South Carolina’s probate courts regulate personal representatives, conservators, guardians, and agents and, therefore, BOFI “does not control [or] regulate these functions.” We agreed with BOFI that the jurisdiction of the probate court and the regulatory authority of BOFI can coexist, “allowing the probate courts to adjudicate protective proceedings and matters of estate administration while BOFI oversees and regulates the business activities of entities serving in fiduciary capacities.” We disagreed with the master’s reasoning that matters regulated by the Probate Code cannot also fall within BOFI’s authority. The master implicitly recognized that the two can coexist when he accepted BOFI’s argument that it has regulatory authority over institutions serving as trustees despite sections 62-1-102 and 62-3-913 of the South Carolina Code (2022) giving the probate court authority over testamentary trusts.

We agreed with BOFI that the Banking Code addresses the qualification of non-exempt entities serving in fiduciary appointments in a more specific and definite manner than the Probate Code. Citing to section 34-15-10 of the South Carolina Code (2020), BOFI correctly asserts, “the Banking Code directly acknowledges and incorporates the probate court’s general power of appointment, while also establishing BOFI’s specific oversight of the qualifications for a trust company to serve under such a court appointment.” We agreed with BOFI that this provision acknowledges the probate court’s power to appoint a person as a personal representative, guardian, or conservator but also establishes the requirement for a banking corporation or trust company to be legally qualified to accept an appointment, and in this respect, serves as a “qualifier of” the Probate Code’s provisions regarding fiduciary appointments by dealing with the “identical issue in a more specific and definite manner.” Moreover, the probate court does not have the authority to examine or investigate any person or entity whereas BOFI does have this authority.

Reversed and remanded.

South Carolina Board of Financial Institutions v. CDM Corporation Inc. (Lawyers’ Weekly No. 012-029-25, 15 pp.) (Per Curiam) Appealed from Georgetown County (Joe M. Crosby, Master-in-Equity) William J. Condon, Jr., of West Columbia, and Shawn David Eubanks, of Columbia, for Appellant; James Dunbar Myrick, of Charleston, and Matthew Todd Carroll, of Columbia, both of Womble Bond Dickinson (US) LLP, and Molly McKenna McDermid, of Charleston, for Respondents; Attorney General Alan McCrory Wilson, Solicitor General Robert D. Cook, Deputy Solicitor General J. Emory Smith, Jr., and Assistant Deputy Solicitor General Thomas Tyler Hydrick, all for Amicus Curiae South Carolina Attorney General. South Carolina Court of Appeals Unpublished