On August 14, 2026, the North Carolina Supreme Court decided Face v. Face.
Ward and Smith represented Kathleen Face, the plaintiff-appellee, throughout the proceedings. J. Albert Clyburn and John M. Martin handled the trial, while Christopher S. Edwards and Alex C. Dale briefed and argued the appeal.
Face resolves a nagging jurisdictional question: Must a trial court join a revocable trust that holds title to marital property in an equitable distribution action if its settlors are already parties? The answer is “no.” That answer clarifies three decades of precedent.
The uncertainty at the Court of Appeals
Equitable distribution cases involving a trust have followed an uneven path through the Court of Appeals for thirty years. The starting point is Upchurch v. Upchurch, decided in 1996. Upchurch held that when a third party holds legal title to property claimed as marital, that third party is a necessary party to the equitable distribution proceeding because a court cannot order property distributed from the hands of someone not before it. The trust at issue in Upchurch was irrevocable, and a real third party, the trustee, stood apart from the marital estate with an actual stake in the outcome. Upchurch told trial courts to join that kind of trust under Rule 19 when one might exist.
The Court of Appeals eventually applied Upchurch to all trusts, including revocable ones. Spouses often create revocable trusts during marriage as a kind of “will substitute.” By naming themselves trustees, beneficiaries, and settlors, the spouses can retain control of their property while also settling what should happen to it after their death. These trusts serve as estate planning tools rather than adversarial third parties.
Many courts treated the failure to join a necessary party as a jurisdictional problem. Because litigants can raise jurisdictional defects at any time, even after a case is final, the Court of Appeals, relying on Upchurch, frequently vacated equitable distribution judgments after concluding that the prevailing party had failed to join a necessary party below. That’s exactly what happened, for example, in Wenninger v. Wenninger, which the Court of Appeals decided in early 2024. There, the parties stipulated that a revocable trust held title to marital property, and the court, following Upchurch, held that the trust was a necessary party.
The Court of Appeals departed from Wenninger in Face v. Face, a case decided only six months later. There, the husband raised the identical jurisdictional argument on similar facts, this time by moving to set the judgment aside while his own appeal was already pending. In Face, the husband and wife stipulated that property held in a revocable trust belonged to them individually, not the trust. On those facts, the Court of Appeals held that pretrial stipulation had effectively revoked the trust, so there was no trust left to join.
Legal commentary, including coverage in North Carolina Lawyers Weekly and the University of North Carolina School of Government’s “On the Civil Side” blog, tracked the tension between the two decisions as it developed. Practitioners drafting pretrial stipulations in cases involving a marital trust had no reliable way to know which line of cases would control, or how late in a case the argument might resurface.
The facts of Face
Kathleen and Allen Face married in 2007. During the marriage, they conveyed three properties into a revocable trust, naming themselves as co-trustees, sole beneficiaries, and settlors. The trust let either of them revoke or amend it, but only by a signed instrument delivered to the trustee by both of them together. The couple separated in 2014 and divorced in 2015. After separating, they sold two of the three properties to third parties and kept the last one, on Lismore Way, in the trust.
Each party then brought a claim for equitable distribution. In a signed pretrial order, they stipulated that all three properties were marital property, that the proceeds from the two sold properties would be divided, and that Kathleen would take title to the Lismore Way property. The trial court entered its equitable distribution order on those stipulations.
Allen appealed that order. While the appeal was pending, he also moved to set the order aside, arguing for the first time that the trial court never had subject matter jurisdiction because the trust itself, as a necessary party under Rule 19, had never been joined to the case. The trial court rejected that argument, and Allen sought review of that ruling too. The Court of Appeals affirmed, reasoning that the pretrial stipulations had revoked the trust and that a revoked trust could not be a necessary party. The Supreme Court then took the case, limiting its review to the joinder question.
In January 2025, the Supreme Court agreed to hear Face to resolve the tension between that case and Wenninger.
The Court’s reasoning
The Supreme Court resolved the case on two grounds, both matters of first impression.
The first concerns what kind of defect a failure to join a necessary party actually is. The Court of Appeals has long treated the failure to join a necessary party as a jurisdictional defect, something that could be raised at any point, even for the first time on appeal. The Supreme Court disagreed. Subject matter jurisdiction comes from the state constitution and the General Assembly, and the General Assembly gave district courts exclusive jurisdiction over equitable distribution actions by statute. Whether a court can grant complete relief without a particular third party present is a different question. The Court noted that Rule 12 itself treats the two as separate grounds for dismissal: failure to join a necessary party under Rule 12(b)(7), lack of subject matter jurisdiction under Rule 12(b)(1). If a joinder problem were truly jurisdictional, the rule would have no reason to list the two separately. The Court noted that the Court of Appeals had reached the same conclusion decades earlier, in a 1986 decision, which it had never applied in a family law matter.
That holding raised a follow-on question: if a joinder defect is not jurisdictional, had Allen waived it by raising it only after judgment, well past his first opportunity to object? The Court traced its own case law back more than a century and found it had never treated a missing necessary party as automatically waived, even though it is not jurisdictional either; North Carolina courts have long reserved discretion to reach the issue when not doing so would cause “manifest injustice.” In Face, the Court exercised its discretion to address the necessary-party argument because its answer would affect what property was actually subject to distribution.
The second holding resolves the apparent split in the Court of Appeals’ precedent. Rather than deciding whether the pretrial stipulations had actually revoked the trust, as the Court of Appeals had, the Supreme Court announced a categorical rule. When all settlors of a revocable trust are named parties to an equitable distribution proceeding, Rule 19 does not require joining the trust itself. The Court’s reasoning tracked how North Carolina’s trust code treats a settlor’s relationship to a revocable trust. A settlor retains complete, exclusive control over the trust’s property for life; the trustee’s duties run to the settlor alone; and a settlor can direct the trustee’s actions whether or not the trust document says so. And tax law backs up the point, since a revocable trust’s income is taxed to its settlor and the trust gets no separate tax identification number. Bankruptcy law treats the property the same way for purposes of a debtor’s estate. Given all of that, the Court reasoned, a judgment against the settlors binds the trust just as completely as a judgment against the trust would, without affecting anyone else’s rights.
The Court distinguished Upchurch because it involved an irrevocable trust with a genuine third-party interest, not a revocable trust controlled entirely by the named parties. And to the extent Wenninger held otherwise, the Court overruled it, noting that the distinction between revocable and irrevocable trusts had never been briefed in that case.
What this means going forward
Face provides family law and trusts and estates practitioners with a clear, categorical rule for a recurring scenario. Couples who hold marital property in a revocable trust, naming themselves as settlors, no longer need to treat the trust as a separate party. The equitable distribution judgment will reach the trust’s assets as long as the parties are the trust’s settlors.
