Mandating Consensus Through No-Contest Clauses

By R. Thomas Dunn

A “no contest clause” in a testamentary trust does not violate California public policy even if one beneficiary’s contest voids other non-contesting beneficiaries’ bequests. (Tunstall v. Wells (2nd Dist., Div. 1, 10/30/2006) B188711.) In Tunstall v. Wells, supra, a trustor formed a testamentary trust providing bequests to his five children. The father left $50,000 to three of his children with the remainder distributed to the other two. The trust contained the following no contest clause:

“For the purpose of this paragraph [the no contest clause], if any one of the Trustor’s daughters, ROBYN, JUDITH and/or DIANNE, should be the contesting person as described above, then in that even the gift [sic] to all three daughters are hereby revoked.”

Through the “safe harbor” provision of Probate Code section 21320, Robyn successfully persuaded the trial court that the no contest clause was “contrary to public policy” in that it encouraged collusion, was overbroad, and violated due process of the non-contesting beneficiaries. On appeal, the remaindermain beneficiaries argued the clause undisputedly expressed their father’s clear intent and that, although unpleasant to some, it does not violate public policy.

In a question of first impression in California, the Court of Appeal reversed the lower court and held the no contest clause does not violate public policy. The Court noted that the only difference between this “no contest clause” and a standard one expressly permitted by statute in California is that this one “brings forfeiture of the others’ bequests.” The Court acknowledged that some persons may consider this clause “unfair,” but it stressed that the well-defined intentions of the testator will be respected. Most interestingly, following the reasoning of an analogous New Jersey case, the Court considered the father knew the interpersonal dynamics involved with his children and intentionally treated them as a group to minimize needless litigation. The Court stated:

“Unlike the trial court and us, [the testator] knew his three daughters. He clearly showed an intent to treat them as a group, both by the identical bequests and by the no contes clause. This might be because [the testator] believed that the three sisters tended to act as a group, and he might have designed his amended forfeiture clause precisely to discourage them from colluding in contesting the suit by forcing them to risk all their gifts to challenge the Trust, rather than only one of the three bequests.”

Though it addressed and discounted other public policy arguments, the driving lesson practitioners and their clients should take from Tunstall v. Wells is that a testator is able to demand consensus from his or her beneficiaries after death through a “no contest clause.” For a testator that wants to devise his estate to beneficiaries that do not necessarily get alone, drafting a carefully tailored Tunstall “no contest clause” may be a good answer.