Enforcement vs. Contest: Strict Construction of In Terrorem Clauses in Trust Agreements

Introduction

Carlson v. Colangelo (2025 NYSlipOp 02264) arose from a dispute over the administration and enforcement of the Donald P. Dempsey Revocable Trust. After Dempsey’s death in 2015, his long‐time companion Kristine M. Carlson (the plaintiff) learned that the successor trustee, Crissy Colangelo (the defendant and named beneficiary), had refused to transfer certain real property (“the Premises”) and to pay Carlson a promised income stream. Carlson sued in New York Supreme Court seeking enforcement of her trust entitlements and recognition of a 50% membership interest in Dempsaco LLC, an entity in which she had invested $100,000 in 2005.

Central to the appeal was whether Carlson’s lawsuit “contested” the trust within the meaning of its in terrorem (no‐contest) clause—thereby forfeiting her bequests—or whether she merely sought to enforce the trust as written. The Court of Appeals unanimously held that enforcing a trust according to its explicit terms does not trigger an in terrorem clause, and that Carlson is entitled to summary judgment on her claim to the Premises.

Summary of the Judgment

Justice Rivera, writing for the majority, clarified that in terrorem clauses in trust instruments, like those in wills, are enforceable but “not favored and must be strictly construed.” The Court held:

Carlson’s complaint did not challenge the validity or legality of the trust instrument itself, but sought to enforce Dempsey’s explicit dispositions of real property and income.
Claims for distribution of the Premises and a declaration of membership interest in Dempsaco LLC did not contest the trust, and thus did not trigger the in terrorem clause.
Carlson is entitled to summary judgment on her claim to the Premises. Triable issues remain on her income‐stream claim, which may be mandatory or discretionary under the trust language.
The order below was modified: defendants’ summary‐judgment motion on the non‐Premises claims was denied; Carlson’s cross‐motion was granted as to title to the Premises and otherwise remitted for further proceedings.

Analysis

1. Precedents Cited

Matter of Singer, 13 NY3d 447 (2009): in terrorem clauses are enforceable but “not favored and must be strictly construed.”
Matter of Fairbairn, 46 AD3d 973 (3d Dept 2007): same rule applied to wills, invoked by Singer.
Matter of Piel, 10 NY3d 163 (2008): trust construction focuses on the four corners of the instrument to determine grantor’s intent.
Bazdaric v. Almah Partners LLC, 41 NY3d 310 (2024): standards for summary judgment in New York.
Matter of Ellis, 252 AD2d 118 (2d Dept 1998): broader in terrorem clause in a will intended to deter any contest “in any manner.” Distinguished by scope of language.
Matter of Tumminello v. Bolten, 59 AD3d 727 (2d Dept 2009): prior challenge to trust nullity in guardianship triggered in terrorem clause. Distinguished on its facts.
Kuehne & Nagel, Inc. v. Baiden, 36 NY2d 539 (1975): uncontested facts are deemed admitted on summary judgment—cited for procedural concession doctrine.

2. Legal Reasoning

The Court’s reasoning unfolds in two steps:

Strict Construction of In Terrorem Clauses: Following Singer and Fairbairn, the Court reaffirmed that “no‐contest” provisions in trusts are enforceable but must be construed narrowly. Courts look first at the instrument’s plain language to determine what constitutes a “contest” or attempt to “void” a distribution.
Distinguishing Contest from Enforcement: Carlson’s suit did not allege invalidity, lack of capacity, undue influence, improper execution, or attack any trust bequest. Instead, she sought what the grantor had expressly directed—distribution of the Premises and an income stream to a named beneficiary. Even her request for a 50% membership declaration in Dempsaco LLC was an effort to quantify her own asserted interest, not to upset Dempsey’s gift of “all of the Grantor’s interest” to Colangelo. The nature of Carlson’s claims—enforcement of clear gift provisions—fell outside the penal reach of the in terrorem clause.

3. Impact

This decision clarifies the boundary between permissible trust enforcement and disallowed contests:

Beneficiaries may sue to compel trustees to perform unambiguous distribution instructions without fear of automatic forfeiture under in terrorem clauses.
Courts must distinguish actions that genuinely attack a trust’s validity from those enforcing its written terms.
Trust drafters wishing to deter all forms of litigation may need stronger, broader language—but even then, such clauses remain strictly construed.
Litigants must frame trust actions carefully: a demand for distribution per the grantor’s express directions is an enforcement action, not a contest.

Complex Concepts Simplified

Revocable Trust: A living trust that the grantor can alter or revoke during life. At death, it governs how trust assets are distributed.
In Terrorem (No-Contest) Clause: A provision stating that anyone who challenges the instrument or its distributions forfeits their inheritance or trust benefits.
Pour-Over Will: A will that “pours” residuary assets into a previously established living trust on the testator’s death.
Precatory Language: Words of desire or hope (e.g., “wish,” “request”) that may or may not create a binding obligation depending on context and surrounding evidence of intent.
Strict Construction: Interpreting a clause narrowly according to its exact language rather than extending its reach by implication.

Conclusion

Carlson v. Colangelo establishes a clear rule: enforcing a trust’s plain terms is not a “contest” that triggers an in terrorem clause. By strictly construing no-contest provisions, the Court protects beneficiaries who merely seek to compel trustees to carry out the grantor’s unambiguous bequests. The decision preserves access to the courts for trust enforcement, shields legitimate enforcement litigation from penal forfeiture, and guides future litigants and drafters about the reach and limits of in terrorem clauses in trust instruments.