A New York No Contest Clause Cannot Prevent Inquiry Regarding a Trustee’s Misconduct

There are many different types of provisions that can be written in a Last Will and Testament.  The most common terms include bequests to named beneficiaries and other clauses that provide for the disposition of assets.  Also, the Will should name Executors and Trustees as well as proposed Guardians if minors are possible beneficiaries in an estate plan.

One of the more common provisions that is found in a Will is known as a “No-Contest” clause.  This language is also referred to as an “In Terrorem” clause.  The Estates, Powers and Trusts law provides the rules concerning this type of language in section 3-3.5 entitled “Conditions qualifying dispositions; conditions against contest;  limitations thereon”.  Essentially, this direction in a Will sets forth that any beneficiary who may contest the Will is to lose all rights to receive any benefits provided in the Will.  Thus, if a person were to receive a $1,000.00 bequest in the Will but unsuccessfully challenges the validity of the document, he would forefeit his right to receive the $1,000.00.   No-Contest clauses can be the source of estate litigation in the Surrogate’s Court.

The statute allows some exceptions which include discovery under Surrogate’s Court Procedure Act section 1404.  Additionally, the prohibition does not apply to an infant or incompetent.

A recent Manhattan estate case involved another limitation that would apply to a No-Contest clause.  In Estate of Aoki, decided by Surrogate Rita Mella on April 12, 2019, the Court determined that such language would not prevent beneficiaries of a testamentary trust from questioning the actions of a trustee.  The Court’s view was that a fiduciary, such as a Trustee, is responsible for his acts.  The provisions in a Will cannot insulate a trustee from his responsibilities and should not prevent beneficiaries from examining whether there has been a breach of fiduciary duty.

A Trustee, an executor and an administrator have fiduciary duties including a duty not to self-deal and undivided loyalty.  It is important that beneficiaries have the ability to inquire into a fiduciary’s actions and that the fiduciary be responsible to account for his conduct.

I have represented many individuals in estate and trust matters concerning fiduciary actions and the breach of fiduciary duty.  Call me now for a free review of your estate or trust issue.  We provide reasonable and flexible fee arrangements along with personal representation.

New York Trusts and Estates Attorney Jules Martin Haas has helped many clients over the past 30 years resolve issues relating to probate and estate settlement throughout New York City including Brooklyn and Manhattan.   If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial consultation.

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