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Agoura Hills Estate Planning, Probate & Trust Attorneys

California Supreme Court determines No-Contest Clause Unenforceable

Providing Peace of Mind One Estate Plan at A Time

In its most recent ruling about wills and trusts, the California Supreme Court in Donkin v. Donkin (December 26, 2013) ruled that a challenge to a Trust does not trigger the Trust's "no-contest" clause.

In other words, the Donkin Trust beneficiaries may pursue their claims (a petition to compel an accounting, a petition to remove the Trustee, and a petition to compel Trust distributions) without risk of being disinherited, even if their claims ultimately fail.

The probate court ruled that the claims would not trigger the no-contest clause. The appellate court reversed, in favor of the Trustee. The Supreme Court disagreed.

In reversing the court of appeal, the Supreme Court ruled that the Trust's no-contest clause was unenforceable both under the old law and the current law. Current Probate Code §21311 enforces no-contest clauses only in three specific cases: (1) a direct contest brought without probable cause; (2) a challenge to a transfer of property; or (3) the filing of a creditor's claim.

Said the Court, "[we] conclude that under the current law, the no contest clauses in the amended Family Trust instrument are unenforceable against the beneficiaries' proposed petition."

The Court also noted the California legislature's desire to restrict no-contest clauses "in furtherance of the public policy of eliminating errant fiduciaries"; in other words, bad Trustees.

[For information only; may NOT be used as legal advice.]