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Are Trustees Protected from Fiduciary Breaches by No Contest Clauses?

Not according to the California courts.

In the case of Christopher Gene Fazzi v. Norma Jean Klein, 2010 Cal. App. LEXIS 2112,
Christopher sought to remove his mother, Norma, has the sole trustee for cause, but was concerned that he could be in violation of a no-contest clause.

The court found that, assuming the claim was not frivolous, Christopher's request to remove his mother for cause was not a violation of the no-contest clause because the trust did not contain a prohibition or any provision on an action to remove an individual trustee for cause. The court also stated that even if a no-contest clause had specifically prohibited any action to remove a trustee, the provision can not be enforced because a trustee cannot hide behind a no-contest clause and willfully commit breaches of fiduciary duty with impunity.

For more information trusts please contact one of our attorneys at The Law Offices of David A. Shapiro.

*This blog entry was not written by an Attorney and should not be constituted as professional legal advice.