Wednesday, March 12, 2014
A Nevada case examined the application of a no-contest clause. Joseph Dugan's trust had a no-contest clause. The three beneficiaries, Kelly, Sean, and Casey, jointly filed two petitions for an accounting, compelling compliance with the trust's terms, removal of trustees, and appointment of two trustees. The trustees then filed a notice of disinheritance because they claimed the beneficiaries contested the trust. However, the trustees only filed notices with respect to Sean and Casey. The trustees claimed Kelly's actions did not give rise to disinheritance. Since the trustees did not attempt to disinherit all beneficiaries, the Nevada Supreme Court denied the disinheritance stating the petitions did not play a role in the the trustees' decision to disinherit the beneficiaries.
See Luke Lantta, Nevada Trustees Not Permitted To Disinherit Trust Beneficiaries For Alleged Violation Of No-Contest Clause, Bryan Cave Fiduciary Litigation, Feb. 27, 2014.