Trust Beneficiary Permitted to Contest Trust Despite No-Contest Clause

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Key Takeaway: In Ginsberg et. al. v. Ginsberg et. al., Judge Leibensperger ruled that a trust beneficiary could assert a trust was procured by fraud despite the presence of a in terrorem or no-contest clause. Judge Leibensperger noted that such a challenge “is an all or nothing venture by the challenging party.” If the challenging party is successful in proving fraud, the entire trust falls. But if the challenging party is unsuccessful, that party loses all benefits from the trust.

Background: The plaintiff, Faye Ginsberg, and the defendant, Bruce Ginsberg, are siblings and beneficiaries of a trust. Faye and Bruce’s mother executed the trust three months before her death. Faye alleged that Bruce improperly influenced their mother to change the trust documents to leave Bruce assets that had long been promised to Faye. Bruce moved to dismiss the claim based on the no-contest clause. Judge Leibensperger’s denial of the motion to dismiss allows Faye to proceed with her claims. 

The Massachusetts Approach to No-Contest Provisions: The majority American rule under the Uniform Probate Code is that clauses imposing a forfeiture or other penalty on a person challenging a will are invalid if probable cause existed for the contest. Massachusetts law provides that no-contest clauses are enforceable, subject to the exception illustrated here where a party allegedly procured a trust through fraud.

Eric Berkman provides a full write-up of the case in Massachusetts Lawyers Weekly (link here)

Ginsberg et. al. v. Ginsberg et. al.

December 14, 2017

Full decision here.

 

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