Does requesting a trust accounting trigger a no-contest clause?
Key takeaway
Requesting a trust accounting does not automatically trigger a no-contest clause. A Massachusetts court said the clause would not apply if a beneficiary simply sought an accounting, and general practitioners describe requests for trust information and accountings as usually outside such clauses. Treatment can depend on the relief sought and the state rule, including when an owner or beneficiary raises other trustee-related claims.
An accounting request can stand on its own
A beneficiary who simply sought an accounting would not have triggered the clause in a Massachusetts decision. The court cited a rule that a trust provision waiving trustees' duty to account was against public policy.
General practitioners describe compelling access to trust information or preparation of accountings as actions that in most cases do not violate a no-contest clause.
The requested relief affects the analysis
The claim's desired outcome can affect the treatment of a trust or will interpretation action, according to Georgia practitioners. Practitioners describe declaratory actions to interpret an instrument as generally not violating an in terrorem clause.
Georgia law makes an in terrorem condition unenforceable against an individual who sues to interpret or enforce a trust, seeks an accounting or trustee removal or other relief, or enters a settlement. This rule is specific to Georgia.
Trustee conduct has distinct treatment
California's former law included public policy exceptions covering challenges to successor trustees' actions. Separately, the California Supreme Court said disputes over interpreting an instrument were not ordinarily treated as violations under the common law.
New York practitioners describe courts as treating no-contest provisions as unenforceable when they would prevent beneficiaries from seeking fiduciary removal or challenging fiduciary conduct. Utah law makes a no-contest provision unenforceable when a beneficiary had probable cause to challenge a trustee's acts or bring other trust proceedings.