23 Jun COURT RULES BENEFICIARY CAN SUE EXECUTOR WITHOUT LOSING INHERITANCE DESPITE NO-CONTEST CLAUSE
It is not unusual for estate planning attorneys to insert a “no-contest” provision in a will, thus discouraging a beneficiary from contesting by risking loss of inheritance. Normally such provisions are enforceable. However, a Texas appellate court recently ruled that when a beneficiary simply sues the executor for breach of fiduciary duty, that act is not an attempt to change how assets under the will would pass. As a result, the no-contest provision is not effective as to loss of inheritance in those situations. The court ruled it would be worthless if a beneficiary could not seek remedies if there is a breach of fiduciary duty by the executor. “A beneficiary has an inherent right to challenge the actions of a fiduciary and does not trigger a forfeiture clause by doing so.” Executors and fiduciaries are held to a high standard and must act accordingly.