Gregory A. Neibarger: Case offers lessons for challenging no-contest clauses

A no-contest clause — sometimes called an “in terrorem” clause — is a provision in a will or trust designed to discourage beneficiaries from challenging the document’s terms. The consequences are severe: The offending beneficiary is typically treated as having predeceased the grantor, causing disinheritance.

A recent unpublished decision from the Minnesota Court of Appeals, In re the Gus A. Chafoulias Revocable Trust (Feb. 23, 2026), raises an important caution: Even asking a court whether a particular action would violate a no-contest clause can itself trigger the clause.

What happened in the Chafoulias case?

In 2005, Gus Chafoulias created a revocable trust, restated in 2015 and amended in 2020. Upon his death in late 2020, the trust became irrevocable and named his son, Andrew, as sole trustee. Both Andrew and his sister, Ann, were residual beneficiaries. The trust included several provisions central to this dispute:

• Trustee removal restrictions. Andrew could remove trustees at any time. Ann could only remove a trustee of her own discretionary trusts — and not if the trustee was Andrew.
• Alternative dispute resolution preference. The trust directed administration “with freedom from judicial intervention” and appointed a “trust advisor” empowered to construe terms, settle disputes and remove trustees other than Andrew.
• The no-contest clause. Article 16 provided that a beneficiary’s interest would be determined as if the beneficiary had predeceased Gus if that beneficiary “seeks to obtain adjudication in any court proceeding that [the trust] or any of its provisions is void, or otherwise seeks to void, nullify, or set aside [the trust] or any of its provisions.”

Ann’s grievances and her petitions

After Gus’s death, Ann grew concerned about Andrew’s management. Andrew’s 2020 accounting disclosed nearly $17 million in unreturned loans he had taken from the trust, his 2021 inventory omitted valuable items, and he gifted trust property to nonbeneficiaries. As trustee of Ann’s discretionary trusts, Andrew made only a single distribution to Ann between 2020 and 2024.

Ann initially filed a petition alleging breach of trustee duties and seeking to remove Andrew. She then filed an amended petition seeking declaratory relief on whether the no-contest clause was valid and whether a removal petition would trigger it. The district court ruled in Andrew’s favor, and the Minnesota Court of Appeals affirmed.

The appellate court’s holdings:

• Asking the court to rule on a no-contest clause’s validity triggers it. The court interpreted the clause to be triggered whenever a beneficiary “presents a question of the validity of a provision to a judicial forum.” Ann’s amended petition — asking whether the no-contest clause was valid — squarely satisfied this condition.
• The anti-forfeiture preference does not override grantor intent. Ann argued that Minnesota law disfavors forfeitures, which should lead to a narrower construction. The court acknowledged this principle but held that the “ultimate objective to enforce grantor intent trumps this preference.”
• The probable cause exception does not apply to trusts. Ann urged the court to extend to trusts the “probable cause” exception that applies to no-contest clauses in Minnesota wills. The court rejected this, holding that the exception is a substantive rule — not a “rule of construction” — and does not automatically extend to trusts.
• The second declaratory-relief request also triggered the clause.The court also found that Ann’s request asking whether a removal petition would trigger the clause independently violated it, reading this as “an attempt to circumvent the trust provisions that establish Andrew as trustee.”

Why this decision matters

This decision is significant on several fronts.

• A cautionary precedent, even if nonprecedential. The Chafoulias decision is nonprecedential but significant. The reasoning reflects a trend toward a substance-over-form approach: If the practical effect of a beneficiary’s court filing is to challenge a trust provision, the court may find a violation regardless of how the filing is labeled.
• Unique facts that shaped the outcome. Several features of the trust likely influenced the outcome: explicit language favoring “freedom from judicial intervention,” alternative dispute resolution mechanisms, a trust advisor with authority to resolve disputes and Ann’s original direct removal petition before switching to declaratory relief.
• The gap in probable cause protection for trust beneficiaries. The court’s refusal to extend the probable cause exception to trusts means that a trust beneficiary with genuine concerns about trustee misconduct may face disinheritance for raising those concerns in court — even where a will beneficiary would be protected.

Tips for Indiana practitioners

While Chafoulias is a Minnesota case, Indiana practitioners should take note. Indiana has not addressed this precise issue, and courts often look to persuasive authority from other jurisdictions.

When drafting trusts containing no-contest clauses in Indiana:

• Express the grantor’s intent comprehensively. Include clear language on preferred dispute resolution methods, the no-contest clause’s scope and any intended exceptions. Indiana Code §§ 30-4-3-24.4 and 24.5 emphasize honoring grantor intent.
• Consider including carve-outs. Build specific safe harbors into the instrument — for example, permitting beneficiaries to petition for accountings or seek trustee removal without triggering the clause.
• Appoint an independent trust advisor or trust protector. Indiana Code § 30-4-9 recognizes trust protectors and advisors. This gives beneficiaries a path to raise concerns outside of court.

When advising Indiana beneficiaries:

• Do not assume a “cautious” approach will provide protection. The Chafoulias court held that asking for a declaratory judgment can itself constitute a violation. Indiana could adopt similar reasoning.
• Exhaust all non-judicial remedies first. Where the trust provides for mediation, arbitration, or a trust advisor, pursue those avenues before considering court action.
• Research state-specific precedent. Indiana has limited case law on no-contest clauses in trusts. Monitor developments and advise clients of the uncertainty.•

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Neibarger is a partner in Dentons’ Indianapolis office and co-chair of the Fiduciary Litigation practice group.