Lessons from Litigation: No-Contest Confusion Helps a Church

by Jonathan A. Nelson

Virginia has a long and storied relationship with no-contest (or ‘in terrorem’) clauses, where a beneficiary can be cut out of an estate or trust if they bring a legal challenge to the testamentary document or certain incidents of administration.  Many people writing estate plans see such clauses as an antidote to family dissention, protection against a particular black sheep, or just a way to provide a final “don’t tread on my estate plan” from the grave.

As with any sharp tool, these clauses must be used with care; not appreciating their dangers can have unintended consequences. A Virginia Supreme Court case from 1956,  Womble v. Gunter, provides a stark warning of this possibility.  The Court begins with a near-Dickensian opening paragraph presaging the conflict to come:

George F. Parramore, Sr., died testate on June 4, 1945. His somewhat complicated will, including five codicils, was duly probated and Benj. T. Gunter, Jr., and Quinton G. Nottingham qualified as executors. The testator devised and bequeathed all of his property in various amounts and proportions to his ten living children and numerous grandchildren.

In all, there were thirty named family beneficiaries among the six documents.  The Will had a no-contest clause, which ended with, “Should all my legatees and devisees contest my will, then my entire estate shall pass to Christ Episcopal Church in Eastville.”  Although not discussed in the opinion, once admitted to probate, the will and all five codicils became treated as one document, with the result that a challenge to even one portion became a challenge to the whole unless fully successful. 

The hitherto amicable family descended into dissention, centered on a suit to invalidate the will.  When the dust had settled, the trial court concluded that all thirty beneficiaries had challenged the will and lost any benefit from the estate. 

Although not in the Supreme Court record, I think it a good assumption that at least some of the codicils reflected changes between the interests of the different beneficiaries and changes of who the executors would be; further, because the changes were by codicil, the beneficiaries could see the changes over time.  This seems supported by the court’s finding that the family had fractured, “charging each other with misrepresentation, fraud and deceit,” and the suit brought “to satiate their dissatisfaction and impatience.”

The Virginia Supreme Court dealt with a number of questions raised by different groups of beneficiaries:

• Does it matter if the contest was brought in good faith or with probable cause?  Not here.

• Does it matter if a contestant withdrew before the final order?  No, they still brought the contest.

• Does it matter if a beneficiary was a minor and the contest was brought by a representative?  No.

Of importance for estate planning, the Court interpreted the clause strictly by the terms used in the will:

The court is not concerned with whether an heir or a devisee receives the property of a decedent. The normal freedom of the owner to dispose of his property as he sees fit should not be curtailed unless the disposition violates some rule of law or is against public policy.

Used indiscriminately, a no-contest clause can create difficulties resolving genuine disputes (such as working through this series of documents or ensuring a fiduciary is handling matters correctly), can disincentivize compromise (once the suit was filed, all benefit was lost unless successful), and may result in a more severe penalty than desired.

In Virginia, no-contest clauses are still upheld on the exact language actually used, as described in Hunter v. Hunter (Va. 2020):

We have reconciled these competing values by stating that no-contest provisions are simultaneously “strictly enforced” and “strictly construed.”  By strictly enforced, we mean that we will enforce the provision without any wincing on our part concerning its alleged harshness or unfairness — so long as the testator or settlor clearly intended the forfeiture.  By strictly construed, we mean that the intent to forfeit must be very clear. .    

So, for instance, a grantor of an irrevocable trust with a no-contest clause who is also its sole beneficiary forfeits his rights as beneficiary if he challenges the trust trying to get his money back.  McMurtrie v. McMurtrie (Va. 2021, unpublished).

Much of the animosity between George Parramore’s family members seems to have come not from the litigation itself, but in recriminating each other over the application of the no-contest clause.  Ultimately, the only winner was Christ Episcopal Church in Eastville, which was probably not the result Mr. Parramore was hoping for.    If you are thinking of using a clause like this, discuss the details with an attorney who has seen how they have been applied in administration and litigation so you get the result you are looking for when the terms are “strictly enforced” and “strictly construed.”

Virginia attorney Jonathan A. Nelson uses his extensive legal knowledge and trial experience to resolve conflicts, negotiate settlements, navigate compliance matters, and vigorously advocate in the courtroom in order to achieve the best possible outcomes for his clients. He practices in estate planning, probate, trust and estate administration, corporate law, and civil litigation related to these fields.

The attorneys of Smith Pugh & Nelson, PLC, offer the experienced counsel, personal attention, and customized legal services needed to address the many complex issues surrounding estate planning, probate, and trust administration. Contact us at (703) 777-6084 to schedule a consultation.

Lessons from Litigation: Draft for Longevity so You Don’t “Barr” Your Rights

by Jonathan A. Nelson

The Virginia Court of Appeals recently issued an unpublished opinion regarding a 1914 right of way easement used for logging, in Barr v. Garten Development, LLC.  An unpublished opinion is not precedent, but does yield practical advice.  Here are two lessons for drafting documents we can gain from the 100 years of history in this case.

First, keep the certainty of change in mind.  In Barr, the 1914 Deed establishing the right of way reserved the right to place across the land “a broad gauge railroad, and for narrow gauge railroad tracks to and from any mines… [and] wagon roads.”  Had the deed stopped there, the subsequent changes in transportation (coupled with the economic realities which led to releasing the mineral rights in 1979) might have decided this case before it started. 

Fortunately for the owner of the easement, the attorney in 1914 included a catch-all phrase reserving “all necessary rights of way… and more particularly for the proper ingress and egress….”  These were enough for the Court of Appeals to find the right of way included improving an unpaved road to the standards of the Department of Forestry for use by logging trucks.

I can see the benefit of applying this principle in a number of contexts. If I am writing a medical directive and someone has a strong preference regarding, say, being put on a ventilator, am I leaving enough flexibility and authority for the agent if the technology is radically different in ten years?  If I am creating a trust making sure minor children are taken care of, do I also write it so that if it doesn’t kick in until they are 50 they aren’t treated like children?  When crafting a transition plan for a family business, have I adequately provided for what happens if someone dies before the transition is completed?  Not everything can be anticipated, but attorneys should balance details and principles so we don’t build any time bombs into the documents.

Second, keep the terminology of previous documents as they were used, even if the language seems antiquated or just different from your usual wording.  A 1979 deed included a release of some rights; the landowner, who didn’t want logging trucks driving on a new and improved road over their land, argued that the release included the 1914 right of way.  The Court found, however, that the release of “all restrictions, easements and mineral rights” did not include the right of way because “on the face of the 1914 Deed, the terms ‘easement’ and ‘rights of way’ are not used interchangeably.”  Regardless of what the 1979 landowner thought he was getting, since abandonment of a right of way has to be “clear and unequivocal” on the face of the deed, he didn’t get it, and it may have been because the attorney drafting the deed didn’t preserve the original word usage.  If necessary, provide explanations of how the terms are used going forward, but don’t omit it; tell the story.

Sometimes attorneys need more time or documentation than a client expects, but this lost continuity is exactly the kind of issue we want to avoid – if we put land into a trust in a way that a divorce decree or premarital agreement prohibited, or try to transfer ownership of an LLC in a way that triggers a buyback with tax consequences, we aren’t doing the client any favors.  It is also a caution to those drafting their own documents, using online forms, or working outside their expertise: if you miss a term of art or don’t understand that in 1914 attorneys used a word differently, you may inadvertently create a big problem that we will read about in a Court of Appeals opinion.

Next in the Lessons From Litigation series: No-Contest Confusion Helps a Church

Virginia attorney Jonathan A. Nelson uses his extensive legal knowledge and trial experience to resolve conflicts, negotiate settlements, navigate compliance matters, and vigorously advocate in the courtroom in order to achieve the best possible outcomes for his clients. He practices in estate planning, probate, trust and estate administration, corporate law, and civil litigation related to these fields.

The attorneys of Smith Pugh & Nelson, PLC, offer the experienced counsel, personal attention, and customized legal services needed to address the many complex issues surrounding estate planning, probate, and trust administration. Contact us at (703) 777-6084 to schedule a consultation.