As equitable distribution jurisprudence has developed and trial courts have contended with diverse financial and estate planning tools, the courts have wrestled with identifying which parties must be included in the case to holistically accomplish the task at issue—distributing the marital estate. In Face v. Face, 390 N.C. 1 (2026), decided August 14, 2026, the North Carolina supreme court provided clarity by stating a categorical rule regarding joinder of revocable trusts.
The Face holding offers a new (narrow) rule: when all settlors of a revocable trust are named parties to an equitable distribution proceeding, Rule 19 of the North Carolina Rules of Civil Procedure does not compel joinder of the trust. Before getting into the details of that case, let’s take a moment get oriented.
The landscape
Rule 19 requires joinder of necessary parties to an action; that is, “those who are united in interest.” Necessary parties are “those persons who have rights which must be ascertained and settled before the rights of the parties to the suit can be determined.” Equitable Life Assurance Soc’y of the U.S. v. Basnight, 234 N.C. 347, 352 (1951). In equitable distribution actions, entities or individuals are necessary parties when they own the property that is subject to distribution, or the court otherwise needs to order that entity’s or individual’s action (or inaction) to appropriately distribute the marital property. A body of case law has emerged addressing joinder of legal entities that were formed during the marriage, such as LLCs and trusts.[1] Over the years, Cheryl Howell wrote a number of blog posts on the evolution of this topic, each of which are briefly summarized below:
- Equitable Distribution: When does the marital LLC have to be joined as a party? (Feb. 12, 2016)—explaining that the court cannot enter orders affecting the property or personal rights of an individual or legal entity (including an LLC) without making it a party to the equitable distribution action.
- Equitable Distribution: When Marital Property is Not Owned by a Party… (Feb. 17, 2016)—clarifying that, because property is not marital if it is not owned by the spouse(s) on the date of separation, property that was previously transferred to an LLC, trust, or another individual cannot be distributed unless appropriate procedures are applied to vest ownership in the spouse(s) (i.e., by the imposition of a constructive trust) and the legal owner of the property is joined as a party.
- Equitable Distribution: When does a Trust have to be joined as a party? (Feb. 8, 2023)—distinguishing the distribution of a property interest in a trust (which can be done without adding the trust as a party) from the distribution of property owned by the trust, which requires the trust to be joined. This post and the cases reviewed therein seemingly concern irrevocable trusts. Although that factor did not play a meaningful role in the analyses at the time, this distinction has become increasingly significant, as explained in further detail below.
- Equitable Distribution: trial court can consider a Rule 60(b) motion during an appeal; stipulation in pre-trial order revokes a revocable Trust (Nov. 20, 2024)—reviewing the decision by the court of appeals in Face v. Face, 296 N.C. App. 306 (2024). The court of appeals held that, under the particular circumstances of that case, the revocable trust was not a necessary party. As explored below, the supreme court affirmed this holding but radically altered the reasoning.
Note that another blog post, Equitable Distribution: Stipulation in a Pretrial Order Makes Revocable Trust a Necessary Party (May 15, 2024), considered Wenninger v. Wenninger, 293 N.C. App. 791 (2024). Wenninger held that a revocable trust was a necessary party when the parties stipulated that the property owned by the trust was marital. This holding was overturned by the supreme court’s decision in Face.
What were the circumstances in Face?
In Face, the parties (the two former spouses) were equally designated as the settlors, co-trustees, and sole beneficiaries of a revocable trust. They conveyed certain properties into this trust during their marriage. During the equitable distribution proceeding the parties entered pretrial stipulations that these properties were marital, and the trial court thereby distributed the properties as the parties had stipulated. But the defendant later filed a Rule 60(b) motion to set aside the order, citing recent discovery of the trust and claiming that the trial court did not have subject matter jurisdiction to distribute the trust-owned properties because the revocable trust was not joined as a necessary party.
Both the trial court and court of appeals held that the trust was not a necessary party. Both courts grounded their holding in principles of trust law: specifically, the statutory mechanism of revocation that was available to the parties as the settlors of a revocable trust. Both courts rationalized that the parties had effectively revoked the trust through their pretrial stipulations. Revocation of the trust meant that the trust no longer owned the properties at the time of trial, so was therefore not a necessary party.
The supreme court reframed the issue.
The supreme court sidestepped the issue of statutory trust formalities, declaring that this case was not about trust revocation but about joinder. The supreme court grounded its holding in the equitable principles it described as underlying Rule 19. “[W]hile Rule 19 generally requires that all necessary parties be joined in an action, equity demands that the courts also engage in practical inquiries.” Face, 390 N.C. at 8. The practical inquiry here concerns the legal relationship between a settlor and a revocable trust.
Reviewing various state and federal laws with respect to property, the supreme court concluded that there is little distinction between property held in a revocable trust and property held by the settlors. A settlor retains complete, exclusive control over a revocable trust’s property for life. The settlor likewise retains absolute power to direct the actions of the trustee (if the trust is revocable).
“When settlors are named parties to a judgment, they are bound by it. Trust law provides settlors complete, exclusive control over a revocable trust. Therefore, a judgment against the settlors concerning property held in a revocable trust will effectively bind the revocable trust without interfering with anyone else's rights.”
Id at 9. Remember, the supreme court framed Rule 19 as rooted in equity and pragmatism—designed to provide “complete administration” of rights. Pursuant to the court's reasoning, the exclusive control afforded to settlors logically dictates that complete administration of rights regarding a property is feasible even when the revocable trust that owns it is absent from the equitable distribution proceedings (so long as all settlors are parties).
How does this holding interact with prior case law?
Our court of appeals has consistently held that trial courts cannot exercise control over a separate legal entity’s property or “person” without joining it as a party to the equitable distribution action. See, e.g., Campbell v. Campbell, 241 N.C. App. 227 (2015); Nicks v. Nicks, 241 N.C. App. 487 (2015). The Face holding is distinguishable because, under the specific circumstances to which the Face holding applies (all settlors of a revocable trust are named parties), the court is not ordering a separate legal entity to act or otherwise impacting its rights. The implication of the settlors’ total and exclusive control over the revocable trust is that a court order which purportedly impacts the trust practicably only impacts the settlors. This is an exception to the standard rule requiring joinder when property is owned by a third party, not a challenge to the rule itself.
Similarly, the rule in Face does not impact the law regarding irrevocable trusts. The supreme court explicitly distinguished its holding in Face from Upchurch v. Upchurch, 128 N.C. App. 461 (1998) because that case concerned an irrevocable trust. Settlors to an irrevocable trust do not retain the complete control over the trust that underlies the Face rationale. Therefore, the reasoning which allows a court to proceed without joining a revocable trust—that no process is due the revocable trust or the trustee because the settlors’ control over the trust and trustee is absolute—cannot be comparably applied to an irrevocable trust.
Finally, the supreme court pronounced “[t]o the extent the Court of Appeals held otherwise in Wenninger v. Wenninger, 293 N.C. App. 791 (2024), it is overruled.” Face, 390 N.C. at 7 n.3. The footnote surmises that in Wenninger, the court was seemingly not briefed by the parties on the legally significant distinction between a revocable and irrevocable trust.
In Wenninger, just as in Face, the parties stipulated that property titled in the name of a revocable trust was marital. The trial court did not join the trust, nor did it distribute the property, on the grounds that the property was not owned by either spouse on the date of separation (and thus not subject to equitable distribution). But the court of appeals held that the trust was a necessary party because (1) the trial court had a duty to address all property subject to distribution and (2) the parties’ stipulation (that the trust-owned property was marital) obligated the trial court to distribute that property. That obligation in turn necessitated joinder of the trust as the owner of the property.
If the trust in Wenninger had been irrevocable, that decision would not be upended by Face. But retroactively applying the Face rationale alters the analysis: the property in Wenninger could have been properly distributed without joinder of the trust based on the parties’ power as the revocable trust’s only settlors.
How broadly should this holding be applied?
The supreme court stated that this holding was a categorical rule: if (a) a trust is revocable, and (b) all its settlors are parties to the equitable distribution proceeding, then (c) joinder of the trust is not required.[2]
The dissent expressed concerns that this rule “erases any distinction” regarding a revocable trust’s existence as a separate and distinct legal entity, Face, 390 N.C. at 13, further lamenting that “clever lawyers will begin piercing trusts through procedural maneuvering.” Id. at 12. In attempting to understand the impact of the supreme court’s decision in Face, it is worth taking a moment to appreciate the unique and narrow circumstances that were presented to the court in this case.
The husband and wife were the only individuals holding any role relative to the trust, and they jointly held all roles: settlors, trustees, and beneficiaries. Although the Face rule only requires that settlors be named parties, if there is a third-party trustee, it may nevertheless be prudent to join the trustee as a party. Similarly, the holding that the trust is not a necessary party does not belie the wisdom of joining the trust permissively when it may be prudent to do so.
What is less clear in Face—the consequences of failing to join a necessary party.
In addition to its limited holding about joinder of a trust, the supreme court in Face also held “that the failure to join a necessary party pursuant to Rule 19 is not an issue of subject matter jurisdiction.” Face, 390 N.C. at 5. The implications and proper application of this part of the holding are not clear. The Face opinion offered no guidance regarding how broadly it should be applied nor how it interacts with the present body of case law on this topic. Any further analysis will be reserved for a future post.
For now, the following takeaways are helpful:
- The law applicable to irrevocable trusts has not changed: an irrevocable trust is still a necessary party when it owns property requested to be distributed in an equitable distribution hearing.
- The Face holding applies only when all settlors to the trust are already parties to the equitable distribution proceeding.
- When all settlors of a revocable trust are parties to an equitable distribution proceeding:
- Trial courts do not need to engage in a statutory analysis of whether a trust has been revoked by the settlors, and
- An equitable distribution order entered without joinder of the trust is not inevitably void based on the absence of the trust as a party.
- Although failure to join a necessary party is not a subject matter jurisdiction issue, it can still be considered at later stages in the case and courts can decline to deem it waived (particularly when needed for the equitable distribution proceeding to function properly).
- It is prudent to promptly raise the issue of whether a trust should be joined as a party.
[1] Although our case law often discusses joinder of a trust, the proper party to be joined is generally the trustee (in whom the property owned by the trust is titled). See N.C.G.S. 1A-1, Rule 17(a); G.S. 36C-4-401.
[2] While not directly addressed by the supreme court in Face, it should be noted that under the North Carolina Uniform Trust Code (NCUTC), the term “revocable” has a specific statutory meaning. G.S. 36C-1-103(16) provides that when applied to a trust, the term revocable means that the trust is "revocable by the settlor without the consent of the trustee or a person holding an adverse interest." In performing the analysis of whether to add a trust as a party to an equitable distribution action, it may be prudent for a court to review the trust instrument to see if the act of revoking the trust requires that the settlor obtain the consent of the trustee or an adverse party (and, if it did, the trust would not be a revocable trust within the meaning of the NCUTC).
