413 P.3d 106
Wyo.2018Background
- Allen F. Willey created a revocable trust (2001) owning the Willey Ranch; his son Spencer and Spencer's minor children E.W. and A.W. were initial beneficiaries/successor trustee at various times.
- Trust was amended several times (2006, 2009, 2010). A 2014 amendment changed successor trustee, barred Spencer/lineal descendants from trusteeship, and added an in terrorem (no‑contest) clause disinheriting descendants if they or anyone acting for them challenged the trust.
- In May 2014 Spencer filed suit against Willey (as trustee) alleging incapacity, undue influence, and seeking to void provisions allowing sale of the ranch; he amended the complaint in 2015; the jury later found no undue influence and appellate review affirmed aspects of the litigation (Willey v. Willey).
- After Willey’s death (while Spencer’s appeal was pending), Spencer filed the present suit as "next friend" for his children seeking to enjoin sale, declare the in terrorem clause inapplicable to them, remove First Federal as trustee, and seek damages. Defendants moved for summary judgment arguing the 2014 suit triggered the in terrorem clause and forfeited E.W. and A.W.’s interests.
- The district court granted summary judgment for appellees, concluding Spencer’s 2014 suit was a challenge that triggered the in terrorem clause and that clause did not violate public policy; the court also disqualified Spencer as the children’s representative and appointed a guardian ad litem.
Issues
| Issue | Plaintiff's Argument (Spencer/E.W., A.W.) | Defendant's Argument (Trustees/Beneficiaries) | Held |
|---|---|---|---|
| Does res judicata/standing prevent Spencer’s 2014 suit from qualifying as a "challenge" that triggers the in terrorem clause? | Spencer lacked standing in 2014 (per Willey), so his suit is void and cannot trigger forfeiture. | Spencer did challenge the trust in 2014; the district court tried and resolved claims on the merits (jury on undue influence), so the suit was a challenge that triggers forfeiture. | Court: Spencer’s 2014 suit was a challenge; there was no judicial finding he lacked standing that would negate the challenge. |
| Does the in terrorem clause (forfeiting minors’ interests by acts of a parent/third party) violate Wyoming public policy or constitutional rights (due process, open courts)? | Clause is void as against public policy because it allows a parent’s lawsuit to strip minors of property and impairs access to courts/due process. | Testator’s clear intent controls; Wyoming precedent upholds no‑contest clauses and legislature declined to adopt UPC §3‑905 protections. | Court: Clause does not violate public policy; enforceable under Wyoming law and Dainton precedent. |
| Can a challenge filed during the settlor’s lifetime trigger the in terrorem clause, or only post‑mortem contests? | Challenges while the settlor is alive cannot trigger forfeiture; settlor’s failure to remove minors after 2014 shows intent not to apply clause. | The 2014 suit was filed after the relevant trust amendments and squarely challenged the trust; settlor’s inaction (not removing beneficiaries) does not alter plain trust language. | Court: A suit during the settlor’s lifetime may constitute a challenge that triggers the clause; settlor’s inaction is irrelevant to interpreting the trust’s plain terms. |
| Did the district court err by disqualifying Spencer as the children’s representative/next friend? | (Argues error under W.R.C.P.17(c) and statute governing representation of trust beneficiaries.) | District court found inherent conflict and appointed GAL; defendants do not contest that decision. | Court: Issue not argued on appeal; appellate court declines to consider it. |
Key Cases Cited
- Willey v. Willey, 385 P.3d 290 (Wyo. 2016) (prior litigation resolving undue influence and related issues involving the Willey trust)
- Dainton v. Watson, 658 P.2d 79 (Wyo. 1983) (Wyoming upholds enforceability of no‑contest clauses and declines to import UPC §3‑905 protections)
- Tunstall v. Wells, 144 Cal. App. 4th 554 (Cal. Ct. App. 2006) (upholding an in terrorem clause that revoked gifts to multiple beneficiaries if any one challenged the trust)
- In re Houston's Estate, 89 A.2d 525 (Pa. 1952) (upholding a forfeiture provision that conditioned legacies on others' conduct; fairness is not a ground to invalidate clause)
- Perry v. Rogers, 114 S.W. 897 (Tex. Civ. App. 1908) (enforcing a no‑contest clause that could operate to forfeit devisees’ interests even if caused by others, including when a beneficiary was a minor)