Living in Terror(em) of Probate Litigation: No-Contest Clauses

Issue May/June 2021 June 2021 By Patricia L. Davidson and Leah A. Kofos
Probate Law Section Review
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From left: Patricia L. Davidson and Leah A. Kofos

Some parents never cease refereeing their children’s grievances, even well after the parents have died and many decades have passed since the offspring first dueled over who punched whom first. Through in terrorem, or “no-contest” clauses, testators and grantors can provide a mechanism to punish objectors for airing grievances about the terms of an estate plan or the discretion and actions of the appointed fiduciary. No-contest clauses warn would-be objectors to think long and hard before contesting a testamentary instrument or risk getting “cut out.”

Many states, including Massachusetts, have long recognized no-contest clauses. No-contest clauses are now codified under the Massachusetts Uniform Probate Code, G.L. c. 190B, §2-517: “A provision in a will purporting to penalize an interested person for contesting the will or instituting other proceedings relating to the estate is enforceable.” No-contest clauses are usually not “boilerplate,” but are adopted by testators/grantors who are aware of likely contention among beneficiaries. While a no-contest clause cannot prevent a would-be litigant from filing suit, it can and should be a significant deterrent. Indeed, some authorities argue that no-contest provisions should be strictly enforced even if the contestant had good grounds for the contest. The concept is that courts should respect and uphold the intent of a testator or settlor and advance a policy in favor of the freedom of disposition; courts should not rewrite the plain language of an instrument to reflect the court’s sense of justice.

As a result, a no-contest provision can present significant contradictions. How does a court balance a credible allegation of wrongdoing against unambiguous language in a no-contest clause? In practice, Massachusetts courts struggle with how to enforce the clauses, particularly when faced with good faith and even meritorious objections. What if the will really was the product of fraud or undue influence? What if the named personal representative really did breach a fiduciary duty? Should the court have a trial on the merits before adjudicating a no-contest provision? Does a no-contest clause permit a fiduciary to act with impunity? How does the court balance the no-contest clause with the general rule that any trust provision purporting to relieve the trustees of the duty imposed by law, e.g., filing an account, is against public policy?

A recent decision from the Massachusetts Appeals Court helps clarify how to invoke the clause and the consequences of the clauses. In Capobianco v. DiSchino, 98 Mass. App. Ct. 1101 (2020), in an unpublished decision, the Appeals Court upheld a judgment that a beneficiary of a trust had violated a no-contest clause by filing an action against the trustees. In that case, the settlors were a married couple who had each executed a trust. Each trust held title to the settlors’ LLCs. Each trust included a no-contest clause because the settlors were concerned about litigation within the family. Upon the settlors’ deaths in 2009 and 2010, Daniel Capobiano was appointed trustee of the trusts. Subsequently, the settlors’ son, Charles DiSchino, was appointed as a co-trustee.

In 2013, a beneficiary of the trusts, Dennis DiSchino, filed an equity complaint in the Norfolk Probate and Family Court seeking: (1) to replace the trustees and remove Charles as manager of the LLCs; (2) to appoint Dennis as sole trustee and manager of the LLCs; (3) to enjoin the trustees from transferring any trust assets while the action was pending; and (4) to obtain an accounting of the trusts and the LLCs. The trustees responded by seeking judgment that Dennis had violated the trusts’ no-contest clause by filing the equity complaint and, therefore, that he had forfeited his beneficial interest in the trusts. In 2015, the trustees filed an additional action in the Suffolk Probate and Family Court that sought to enforce the no-contest clause. The cases were consolidated in the Fiduciary Litigation Section (FLS).

In ruling on cross motions for summary judgment seeking a declaration on the applicability of the no-contest clause, the FLS entered summary judgment on the Suffolk action, finding that Dennis had violated the no-contest clause by filing the action in Norfolk County, and therefore had forfeited his beneficial interest in the trusts. The FLS then dismissed the Norfolk action and awarded the trustees attorney’s fees. Dennis appealed.

The Appeals Court initially found that the trustees lacked standing to bring the Suffolk case. But the Appeals Court determined that it could review de novo the decision to dismiss the Norfolk case and upheld the lower court’s findings that Dennis had violated the no-contest clause by filing the Norfolk action. The court determined that Dennis’ fatal flaw was seeking to replace the trustees with himself. Although Dennis did not try to challenge the legitimacy of the trust document itself, his prospective actions would have violated the trust terms. The court stressed that if Dennis had been successful in his request to oust and then personally replace the co-trustees, the succession of trustees would not have been carried out in accordance with the trusts’ terms. The court reiterated the concept that no third party, including any beneficiary or interested party, has the authority to recalibrate the specific directive in a trust to conform to a personal sense of what is right or wrong.

The Appeals Court stressed that because equity does not favor forfeitures, no-contest clauses should be construed narrowly. Nevertheless, it concluded that language in the trusts was intended to foreclose both challenges to the trusts and challenges to any of the provisions of the trusts, including amendments. The Appeals Court stressed that the complaint filed by Dennis in the Norfolk action pointed directly at the provisions of the trusts that govern the trustees, the appointment of successor and co-trustees, and the authority of trustees to act as managers of the LLCs.

As Capobianco demonstrates, no-contest clauses can often be useful if the settlors are worried about feuding family members challenging a validly executed will or trust. A no-contest clause is not supposed to be punitive; it is supposed to prevent adversarial proceedings, provide for the orderly administration of an estate or trust, and minimize expenses. It can also insulate fiduciaries who often have the difficult task of trying to provide order among beneficiaries, usually family members, who may be experiencing a wide variety of complex emotions and/or demonstrating questionable behaviors. While the inclusion of a no-contest clause cannot prevent beneficiaries from creating an adversarial proceeding, beneficiaries should certainly think twice before stirring up trouble. Testators and grantors/settlors who adopt no-contest clauses do not want fights after their deaths. They believe in the integrity of their documents and the integrity of their fiduciaries. And they are entitled to include arguably imprudent language in their documents.

Patricia L. Davidson is a partner at Mirick O’Connell in the Probate, Trust and Fiduciary Litigation Group and the Business and General Litigation Group. Her practice focuses on helping families resolve issues involving wills, trusts and real estate; disputes involving family and closely held businesses; and litigation of complex business issues that arise out of breach of fiduciary duty claims, breach of contract claims, shareholder disputes, corporate dissolutions, trade secret issues and real estate matters.

Leah Kofos is an associate in Mirick O’Connell’s Trusts and Estates Group. She focuses her practice in estate planning, estate and trust administration, guardianships and conservatorships, and elder law.