Trust Document Can Provide for Attorney Fees in Battle

John O’Grady, O’Grady Law

“No-contest” clauses are designed to discourage beneficiaries from contesting wills and trusts by specifying that those who do so forfeit what they would have received under the will or trust. A “no-contest clause with teeth” contains a defense provision, authorizing the trustee to use trust funds to pay for legal expenses when beneficiaries contest wills and trusts.

Susan Doolittle filed a petition to nullify her mother’s trust by charging the trustee, Exchange Bank, with inability to execute the trust, excessive influence over her mother and financial elder abuse. Doolittle then filed another petition challenging Exchange Bank’s right to pay legal fees using funds from the trust, while Exchange Bank petitioned for their right to do so. A trial court ruled that the defense provision was not a no-contest clause, which allowed the trustee to defend against Doolittle’s petitions using trust funds but didn’t disinherit her for contesting the trust.

The appellate court affirmed, explaining that because the defense provision was not a no-contest clause itself, it was not necessary to first make a determination that Doolittle’s claims were asserted without merit or probable cause before it granted authorization for fees to defend the trust.

It’s essential to work with your estate planning attorney to ensure that your trust document clearly reflects your intentions with respect to attorney fees in the event of battle. Doolittle v. Exchange Bank, Cal.App 3rd (2015).

About the author:

John O’Grady leads a full service estate and trust law firm in San Francisco.  He served as the 2012 Chair of BASF’s Estate Planning, Trust & Probate Section His practice includes Estate Planning & Administration, Probate & Trust Litigation, Collaborative Practice, Mediation, Conflict Coaching, Elder Law & Taxation.