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litigationappealtrialtrust
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Tunstall v. Wells, 144 Cal.App.4th 554, 50 Cal.Rptr.3d 468, 06 Cal. Daily Op. Serv. 10,182

Facts

Robert and Hazel Wells created a living trust in 1986, which was amended in 2004 to include a no contest clause that voided the gifts of all three daughters if any one of them contested the trust. After Robert's death in 2005, one daughter, Robyn, filed a 'safe harbor' application to determine the validity of the no contest clause, arguing it was against public policy. The trial court struck the clause, but Elizabeth, another daughter and trustee, appealed the decision.

Robert and Hazel Wells, parents of the parties in this case, created a living trust in November 1986. When Hazel died in 1994, the trust assets were divided into a survivor's trust, a bypass trust, and an exemption trust pursuant to the living trust's terms. Robert Wells (Wells), trustee of the survivor trust, distributed all of that trust's assets to himself, then in January 2004 created the Robert Sheaff Wells Family Trust (Trust) and transferred the survivor trust assets into it.

Issue

Did the no contest clause in the testamentary trust violate public policy and therefore render it void?

Did the no contest clause in the testamentary trust violate public policy and therefore render it void?

Rule

No contest clauses in testamentary instruments are generally valid under California law, provided they do not contravene specific statutory protections or public policy.

No contest clauses in wills or trusts, sometimes called 'in terrorem' or forfeiture clauses, provide that for beneficiaries to take gifts under a testamentary instrument, they must acquiesce to the terms of that instrument.

Analysis

The court analyzed the no contest clause in light of California law, emphasizing that the testator's intent is paramount. It found that the clause was not overly broad or punitive, and it did not prevent beneficiaries from raising legitimate public policy concerns through a safe harbor application. The court noted that the clause served to discourage litigation, aligning with public policy goals.

The court analyzed the no contest clause in light of California law, emphasizing that the testator's intent is paramount. It found that the clause was not overly broad or punitive, and it did not prevent beneficiaries from raising legitimate public policy concerns through a safe harbor application.

Conclusion

The Court of Appeal reversed the trial court's decision, holding that the no contest clause was valid and did not violate public policy.

The Court of Appeal reversed the trial court's decision, holding that the no contest clause was valid and did not violate public policy.

Who won?

Elizabeth H. Wells prevailed in the case because the Court of Appeal upheld the validity of the no contest clause, affirming the testator's intent to discourage litigation among beneficiaries.

Elizabeth contends that the Trust's no contest clause is neither overbroad nor against public policy, and that a provision conditioning a testamentary gift to a beneficiary on there being no contest by another beneficiary is valid under California law.

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