In Terrorem Clauses and Trusts

At death of Husband, the revocable trust created by Husband and Wife divided into an irrevocable trust funded with the applicable exclusion amount and a marital deduction trust amendable by the survivor. The original trust included a no contest clause. After the survivor’s death, one of the couple’s children wished to challenge amendments made to the marital trust.

The Court of Appeal upheld the trial court’s determination under Cal. Prob. Code § 21320 that a challenge to the marital trust was not a challenge to the exempt trust and could not result in forfeiture of an interest in that trust.

McIndoe v. Olivos, 33 Cal. Rptr. 3d 689 (Ct. App. 2005).

Special thanks to Rita and Joseph Solomon Prof. William P. LaPiana of the New York Law School for contributing this case.