Wishing you a beautiful start to a new, fresh week in November! Keep going, the semester is coming to an end sooner than you think! To keep you informed about current cases and what has been decided, this week I have a case regarding a will that has a no-contest clause in it. I found it to be very interesting to read because we actually learned all about no-contest clauses in my Wills and Trusts class not too long ago. Everyone, whether you are the Testator of a will or the beneficiary, should be aware of what the no-contest clause necessitates. Happy reading!
Capobianco v. Dischino, 98 Mass. App. Ct. 1101 (2020), is a recent Appeals Court case where the court upheld the enforceability of no-contest clauses in Massachusetts wills and trusts. In this case, a trust beneficiary filed a complaint seeking to remove the trustees, appoint himself as the sole trustee, stop the trustee from depleting trust assets, and request a trust accounting. The trust actually contained a no-contest clause which provides, “If any person attempts to contest or oppose the validity of this agreement, or any of its provisions, commences, continues, or prosecutes any legal proceedings to set this agreement aside, whether directly or indirectly, then that person will forfeit his or her share, cease to have any right or interest in the trust property, and will, for purposes of this agreement, be deemed to have predeceased the settlors.”
In the states where no-contest clauses are permissible, courts have the ability to forfeit the challenger’s interest in the trust. “A court will often enforce a no-contest clause when a beneficiary challenges the validity of the instrument itself or its substantive provisions. In contrast, courts often decline to enforce a no-contest clause when a beneficiary is seeking an interpretation of the will or trust”.
In the present case of Capobianco, the beneficiary was unhappy with the way the trustees were handling their duties, exactly why he filed suit. The beneficiary had the option to bring an action for breach of fiduciary duty and seek to remove the trustees, but instead, the beneficiary decided to, “file suit asking the Probate Court to disregard multiple terms of the trust, name him as the sole trustee, appoint him as the sole manager of two LLCs controlled by the trust, and prevent the current trustees from administering the trust while the litigation was pending”.
The trustees brought a declaratory judgement to enforce the no-contest clause and the court granted such judgement even though the trustees did not have standing because they had no personal interests in the matter while serving as trustees. The court found that the beneficiary triggered the no-contest clause with his lawsuit, “because he sought to disregard the provisions of the trust governing the process for how trustees are appointed and the identity of the successor trustees”.
The court stated that they will, “construe no-contest clauses narrowly because the law generally disfavors forfeitures. However, in this case, the trust instrument specifically prohibited a beneficiary from serving as the sole trustee of the trust”.
MA Lawyers Weekly Volume 49, No. 43.
Do You Think the No-Contest Clause is Fair?
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