Gerry W. Beyer of Texas Tech Univeristy Law School writes about a recent Virginia Supreme Court Decision, Rafalko v. Georgiadis, No. 141533, 2015 WL 6746821 (Va. Nov. 5, 2015)in which the court examines the relationship between an exculpatory clause and the possible violation of a no contest clause by the case’s beneficiaries . The article begins as follows:

The settlor’s revocable trust made his spouse the sole beneficiary for her life after his death and postponed any distributions to his descendants of his first marriage until the spouse’s death. After he died, his children sent a letter to his attorney requesting that the attorney preserve all documents related to the trust and also sent a letter to their stepmother suggesting that they agree to terminate the trust and divide the trust property equally among them. Unbeknownst to the children, their father had amended and restated the trust shortly before his death to include a no contest clause and language making the trustee’s decision that a beneficiary had violated the clause final absent “proof of fraud, dishonesty, or bad faith.”

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Posted by Logan Davis, Associate Editor, Wealth Strategies Journal.