State’s Court of Appeals Clarifies What Triggers a No-Contest Clause
Many people who want to be sure that their estate planning wishes will be honored include no-contest provisions in their wills and trusts. Also known as in terrorem clauses, these instructions are designed to deter beneficiaries from contesting the legality of a testamentary instrument by preventing someone who issues a challenge from collecting what was left to them. A recent decision from New York’s top court centered whether no-contest language in a will and trust could apply when a beneficiary challenged the administration of the instruments.
In Carlson v. Colangelo, the decedent, Donald Dempsey, created a will and a trust that seemingly barred challengers from receiving distributions. Crissy Colangelo, daughter of Dempsey’s former romantic partner, was named to administer the instruments. Dempsey’s trust directed that a stream of income be provided for Kristine Carlson, a nurse who became Dempsey’s romantic partner through the end of his life. The total distribution was not to exceed $350,000 and Dempsey stated in the documents that someone who challenged the legality of the will or trust would be barred from any distribution as if they had predeceased him.
A couple of years after Dempsey died, Colangelo notified Carlson that Dempsey had miscalculated his financial holdings and that Carlson would not receive any more income, even though the $350,000 threshold had not been met. As trustee, Colangelo said the trust language regarding the “stream of income” gave her the discretion to decide if payments should be sent. There was also a dispute about Carlson’s partial ownership of a legal entity created by Dempsey. In exchange for Carlson accepting ownership of a property, Colangelo requested that Carlson give up her right to any further income. Carlson refused, and sued Colangelo in her capacity as trustee.
In response, Colangelo moved to dismiss the case and prevent any further distribution to Carlson based on the no-contest clause. When the case reached the Court of Appeals, the decision noted that in terrorem provisions must be strictly construed. As to the merits, a slim four-three majority held that the no-contest language could not be applied because Carlson was not trying to question the legality of either legal instrument, but was seeking to enforce the terms as she believed they were written. The judges noted that the specific in terrorem clause did not bar all challenges, but rather prevented a beneficiary from “contest[ing] any aspect of this Trust, or the distribution of the Grantor’s assets” or “attempt[ing] to set aside, nullify, contest or void the distribution thereof in any way.”
Carlson v. Colangelo reflects a nuanced understanding that the grantor’s intent is paramount, and it would be contrary to this intent to prevent a beneficiary from pursuing what might be rightfully theirs under a will or trust. This ruling offers valuable guidance regarding the importance of precise language for people who seek to include a no-contest provision in their estate planning instruments.
At the Law Office of Maurice J. Verrillo, P.C. in Rochester, we have more than 35 years of experience advising Western New York clients on estate planning matters and other legal issues. Please call our office at 585-563-1134 or contact us online to schedule a free 30-minute consultation.
August 5, 2025 Posted in Wills & Probate Tagged estate planning, in terrorem, no-contest Comments Off on State’s Court of Appeals Clarifies What Triggers a No-Contest Clause
