Court Applies No-Contest Clause to Bar Beneficiary Who Filed an Action Against the Trust
As part of her estate, Helene Eicoff Barrington formed three trusts (“Living,” “Irrevocable,” and “Barrington”), one of which (the “Barrington” trust) named her granddaughters, Leanne and Amber, as beneficiaries. In the Barrington Trust instrument, Helene included a no-contest clause that would disinherit any beneficiary and void their interest if that person:
(a) Contests the Will of the Grantor, the Living Trust Agreement, or this [Barrington] Trust Agreement or, in any manner, attacks or seeks to impair or invalidate any of the provisions thereof . . .
(i) Attacks or seeks to impair or invalidate any of the following, whether or not any such attack or attempt is successful:
(i) any designation made or to be made by the Grantor during her lifetime, of beneficiaries for any insurance policy on the Grantor’s life;
(ii) any designation made or to be made by the Grantor during her lifetime, of beneficiaries for any pension, profit sharing, or retirement plan benefits or IRA account;
(iii) any trust that the Grantor created or may create during the Grantor’s lifetime or any provision thereof . . . .(Barrington Trust Agreement §14.1(a)).
Even with its strong language, the instrument is subject to the Delaware statute that provides that a no-contest clause may become unenforceable in any action where the beneficiary “substantially prevails.” (12 Del. C. §3329(b)(2)).
After Helene’s death, Leanne filed two Florida actions: one to be appointed the personal representative over the administration of the estate and the other to contest the trustee’s designation of beneficiaries of the Irrevocable Trust. The trustees responded by filing a petition for instruction. They alleged that Leanne triggered the no-contest clause of the Barrington Trust with her filings. Leanne followed with a set of duplicative suits in Florida and Delaware challenging the validity of the Living Trust and the Barrington Trust.
Notably, Leanne dismissed her Florida actions without prejudice and filed to stay all Delaware actions except those regarding the Barrington Trust and the petition for instructions. In the latter, the trustees moved for summary judgement.
Based on Leanne’s dismissal of her Florida actions, the Court granted summary judgement as it concluded the Delaware cases were mere placeholders and that the Florida dismissal triggered the no-contest clause.
Note: This law firm is counsel to one of the parties in this case.
This blog entry was co-authored by Autumn Moore.
