West Case Update

Challenge to Trust with No-Contest Provision Means Loss of All Trust Rights

Description
Appeals court held that a no-contest provision in a trust was valid and since there was no basis for a challenge to the structure of a trust, the beneficiary who sued to have the trust reformed lost all rights to property in the trust.

Topic Wills, Estates, and Trusts

Key Words
Trust, Will, Beneficiary, Non-Contest Provision

C A S E S U M M A R Y

Facts
The Ackermans created revocable trusts. The primary purpose was for the trusts to provide them needed support in their remaining years. After their deaths, the assets would be shared by their children, Stephen and Mary. The trust contained a no-contest provision that held that if a beneficiary would lose all right to any interest in the trust if they contested it. After the Ackerman’s death, Stephen sued for an accounting of the trust assets, for removal of the trustee, and for reformation of the trust. He contended that his mother wished for certain assets to go directly to him and not into the trust. Defendant trustee claimed that by this suit, Stephen forfeited any right to assets of the trust. The trial court agreed. Stephen appealed.

Decision
Affirmed. The trial court found that the terms of the trust were clear and that all property of Stephen’s mother had been placed by her in the trust, so there was no basis for the suit. In the District of Columbia a no contest, or in torrerem, clause in a will or a trust is valid and enforceable. In some jurisdictions a no-contest clause is unenforceable if probable cause exists for instituting proceedings, but that is not the rule in the District and in other jurisdictions. The beneficiary, by alleging that the trust was improperly constructed, and demanding a reform of the trust, lost his right to all interests he may have had from the settlor’s will and trusts.

Citation
Ackerman v. Genevieve Ackerman Family Trust, 908 A.2d 1200 (D.C., Ct. App., 2006)

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Challenge to Trust with No-Contest Provision Means Loss of All Trust Rights
Description	Appeals court held that a no-contest provision in a trust was valid and since there was no basis for a challenge to the structure of a trust, the beneficiary who sued to have the trust reformed lost all rights to property in the trust.
Topic	Wills, Estates, and Trusts
Key Words	Trust, Will, Beneficiary, Non-Contest Provision
C A S E S U M M A R Y
Facts	The Ackermans created revocable trusts. The primary purpose was for the trusts to provide them needed support in their remaining years. After their deaths, the assets would be shared by their children, Stephen and Mary. The trust contained a no-contest provision that held that if a beneficiary would lose all right to any interest in the trust if they contested it. After the Ackerman’s death, Stephen sued for an accounting of the trust assets, for removal of the trustee, and for reformation of the trust. He contended that his mother wished for certain assets to go directly to him and not into the trust. Defendant trustee claimed that by this suit, Stephen forfeited any right to assets of the trust. The trial court agreed. Stephen appealed.
Decision	Affirmed. The trial court found that the terms of the trust were clear and that all property of Stephen’s mother had been placed by her in the trust, so there was no basis for the suit. In the District of Columbia a no contest, or in torrerem, clause in a will or a trust is valid and enforceable. In some jurisdictions a no-contest clause is unenforceable if probable cause exists for instituting proceedings, but that is not the rule in the District and in other jurisdictions. The beneficiary, by alleging that the trust was improperly constructed, and demanding a reform of the trust, lost his right to all interests he may have had from the settlor’s will and trusts.
Citation	Ackerman v. Genevieve Ackerman Family Trust, 908 A.2d 1200 (D.C., Ct. App., 2006)