Reproduced with permission of Trusts & Estates magazine (February 2007).
In Florida, no-contest clauses ó aka in terrorem clauses ó are void as against public policy, thought to chill citizens' access to the courts for redress. In Washington, D.C., they are strictly enforced. In Illinois, courts say they are enforceable but go to great lengths to find reasons not to do so. California law allows a plaintiff to check the water temperature before jumping in the pool.
Consider the following two recent cases, one out of strict Washington D.C. and the other from the more forgiving California:
In Washington, D.C.'s Ackerman v. Genevieve Ackerman Family Trust, 908 A.2d 1200 (D.C. App. 2006), the settlor and her husband created and funded similar trusts that would be irrevocable when the first of them died and, when the survivor died, be divided between their son, Stephen J. Ackerman, Jr., and daughter, Mary Frances Abbott. Both trusts named the couple's son-in-law as trustee. The settlor's husband died first. Each trust contained a no-contest clause stating that a contestant's interest in both trusts would be forfeited and the contestant treated as predeceased, if he filed a contest to any of either trust's provisions. The trusts included a residence where the son lived.
After the husband died, the son filed a petition to reform the trust to exclude the residence, contending that the settlors never intended to place the residence in the trust, but rather intended to leave the property directly to him. As the court noted, "This was not a unilateral hope on appellant's part. Before her death, his aunt, who then owned the [residence]...jointly with...[Genevieve] Ackerman, had voiced her intention to leave it to appellant. Before she created the trust, his mother had stated the same intention."
But the court found no evidence that the residence was improperly included in the trust and so enforced the no-contest clause against the son, causing him to forfeit his entire interest in both trusts.
Of particular note is the fact that the court reached this result notwithstanding the settlor/mother's own testimony that she had misunderstood her attorney's inclusion of the language and that she found the provision to be "inhuman." The court stated that Washington precedent allows for no exceptions to enforcing a no-contest provision.
We can only image the strain this ruling put on relations between the Ackerman children. In sharp contrast, California law...