Purported suit for guidance violates no contest clause.
Richard Solem created a revocable trust for the benefit, after his death, of his daughters and a charitable foundation. The trust agreement included a broad no contest clause. Richard later drafted a “modification” memorandum and a “summary” concerning the trust that purported to remove the daughters as both beneficiaries and successor trustees. Richard died after executing the modification and summary. A number of years later, Richard’s daughters brought suit asking the court for “guidance and clarification”, but asked the court to declare that the modification and summary did not effectively amend the trust and that they were still beneficiaries.
The federal district court, applying Virginia law, held that the daughters’ suit was a contest to the trust that triggered the no contest clause, and was not merely a suit seeking interpretation and clarification of the trust terms. The court found that the relief requested was declaratory in name only and that, as such, the action violated the no contest clause because the daughters were effectively challenging the terms of the trust. The court further held that the contest to the trust was barred by the Virginia two-year statute of limitations. The daughters appealed, and on appeal, the U.S. Court of Appeals for the District of Columbia affirmed the district court’s ruling on the grounds stated by the district court.