When A No-Contest Clause is Not Applicable

In the event that a decedent's trust contains a no-contest clause, does that mean that a beneficiary has no right to compel the trustee to distribute and account for the assets?
Not necessarily. Take the following real life situation for example.

Jack dies leaving his wife, Jill, as trustee. Under the trust terms, Jill is directed to pay all taxes and expenses from the trust and then distribute the balance of the trust estate into sub-trusts in this fixed order of priority: (1) $100 million for Jill; (2) $25 million for each of his two children; (3) $10 million for his brother, John. The trust also provided that the trustee had 6 months to fund these sub-trusts. But more than 2 years after Jack's death, none of the sub-trusts had been funded!

Jack's brother, John, sued Jill to compel her to distribute the assets and filed a safe harbor petition for the court to determine whether his petition violated the trust's no-contest clause. The court found that it was not in violation. Jill appealed, however The Court of Appeals affirmed the probate court on grounds that John did not attack or seek to impair or invalidate any provision of the trust and therefore did violate the no-contest clause by merely seeking to force the trustee to make the distribution exactly as specified by the trust.

If you believe that a trustee is not performing their fiduciary duties as required by the trust, you should contact a professional Estate Administration Lawyer as soon as possible.

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

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