What is a No Contest Provision in a will or trust?
A no contest provision is language in a will or trust that provides that in the event that any person directly or indirectly attacks the trust or conspires with or assists anyone associated with such attack, then the maker of the trust disinherits that person and such person's descendants. That means that all interests and properties given to or created for the benefit of that person would be forfeited and such property shall be disposed of as if such person has predeceased the Maker--which further means the person contesting takes nothing.
The acts that would constitute no contest include a direct or indirect attack by anyone who seeks to impair or invalidate any provisions of the trust on any grounds whatsoever.
The Wyoming Supreme Court spoke regarding no contest provisions in a trust in March of 2022 in an opinion regarding a woman who made a trust and amended it to name herself and one of her sons as co-trustees, and further amended her trust to include a no contest provision. Typically, the trustee would then notify the trust's beneficiaries that they have 120 days to contest the trust, which is a statutory notice (W.S. 4-10-604(a)(ii) when the trust became irrevocable. In this case, the notice was delivered by first class mail to the beneficiaries. One of the beneficiaries filed a lawsuit for claim for part of of the trust's property, and an accounting.
The court found that the lawsuit triggered the no-contest provision, and the court found the beneficiary that filed the lawsuit was prohibited from taking under the trust.
The law in Wyoming on no contest
No contest clauses are valid in Wyoming. The Wyoming Supreme Court has stated that the intent of the settlor (maker) regarding contests to a trust are controlling. That intent is determined from the plain language in the trust.
If you contest the trust with a no contest provision, are you still a beneficiary? No.
In this case, because of the language in the trust, the beneficiary that attacked or challenged the trust lost his beneficiary status by violating the no contest provision. He is not a beneficiary. Effectively, the beneficiary that attacked the trust is disinherited.
Reminder: Duties of trustees to beneficiaries.
In Wyoming, the Uniform Trust Code imposes a duty of loyalty and a duty to inform and report upon the trustee. W.S. 4-10-802(a). These duties are owed to the beneficiaries and qualified beneficiaries of a trust. Who is a beneficiary and who is a qualified beneficiary are defined by law in Wyoming and by the language in the trust.
The definition of a beneficiary is: "a person that has a present or future beneficial interest in a trust, vested or contingent, or in a capacity other than that of trustee or trust protector, holds a power of appointment over trust property".
The definition of a qualified beneficiary is: "a beneficiary who is entitled to mandatory distributions of income or principal from the trust or has a vested remainder interest in the residuary of the trust which is not subject to divestment". W.S. 4-10-103.
The statute provides: A trustee shall keep the qualified beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests.
Trustees take note: You have a duty to report.
If you would like to review your duties as trustee to report, what information must be provided, who is a beneficiary, accountings and other requirements of your trust, I would be pleased to speak with you. My telephone is 307.200.1914.