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No-contest clauses are genuine concerns in Minnesota trusts

On Behalf of | May 17, 2024 | Probate & Estate Law

Trusts are a must-have estate planning tool because they offer flexibility and control over asset distribution after the grantor’s passing. However, disputes can arise, and beneficiaries may have legitimate concerns about a trust’s administration.

In Minnesota, trusts often include no-contest clauses. These clauses aim to deter challenges to the trust’s validity. But what happens when a beneficiary has a genuine legal concern? Can a no-contest clause prevent them from raising it?

What are no-contest clauses

A no-contest clause essentially discourages beneficiaries from contesting the trust in court. If a beneficiary challenges the trust’s validity and loses, they risk forfeiting their inheritance under the clause. This may seem like a blanket restriction, but there are crucial nuances.

Genuine vs. frivolous challenges

No-contest clauses are not meant to silence legitimate concerns. If a beneficiary has a strong legal basis to believe the trust was forged, the grantor lacked mental capacity when signing or there’s been mismanagement of trust assets, they can still challenge the trust. The key here is the legitimacy of the concern. Frivolous or baseless challenges would likely trigger the no-contest clause’s forfeiture provision.

Burden of proof

The burden of proof usually falls on the trustee to demonstrate that the beneficiary’s challenge falls under the no-contest clause. This means the trustee needs to show the challenge lacks merit and is intended to disrupt the trust, not address a genuine concern.

Minnesota specifics

State courts generally uphold no-contest clauses as long as they are drafted clearly and meet specific requirements. However, state law also allows beneficiaries to raise certain issues without triggering the clause. These include:

  • Breach of fiduciary duty by the trustee
  • Improper accounting practices
  • Distribution errors

Navigating the legalities of no-contest clauses is best done with the help of a legal representative. This can help ensure a legally informed assessment of the validity of the concern to determine if it falls under the no-contest clause.

No-contest clauses serve a purpose, but they shouldn’t prevent beneficiaries from raising genuine concerns about a trust. By understanding the nuances of such clauses, the grounds for contesting a trust and the specific legal landscape in Minnesota, beneficiaries can better protect their rights while respecting a trust grantor’s wishes.