Matter of Bates, 247 AD 3d 754 [2d Dept. 2026]
Blood may be thicker than water, but sewage – or at least the family business disposing of it – is thicker than both. The decedent in Matter of Bates owned the family septic tank business. Following her death, her children and grandchildren engaged in a trust contest to sit on the porcelain throne, i.e., control the company.
- The Terms of Decedent’s Revocable Trust
Paragraph 8 of Decedent’s revocable trust leaves the property where the company operated, “together with all contents,” to a trust for the benefit of Son #1.
Paragraph 18 of the trust distributes one-third shares of the residuary estate: (1) to a trust for the benefit of Son #1, (2) to a trust for the benefit of Son #2, and (3) outright to Decedent’s three grandchildren.
The revocable trust contains an in terrorem clause – i.e., a no contest clause – stating that if any person institutes an “action or proceeding to set aside, invalidate, contest or otherwise attack this trust or any provisions thereof, or should an[y] person claim and establish any right, title, or interest in or to the Trust Estate other than herein provided, such person and any other person who inaugurates or abets any such action, proceeding or claim, shall forfeit any and all rights or interest that he or she otherwise have under this trust or in or to the Trust Estate.”
- The Litigations Below
The battle between the Sons and Grandchildren turned on whether the language “together with all contents” in paragraph 8 of the trust included ownership of the operating business itself. The Grandchildren struck the first blow. While the probate proceeding was pending, they commenced a separate Supreme Court action seeking a declaratory judgment that they owned one-third of the company pursuant to paragraph 18 of the revocable trust, leaving the Grandchildren one-third of the trust's residuary. They also sought the appointment of a temporary receiver for the company, on the basis that the Sons were draining the company’s assets.
Son #1 countered that the trust left the septic tank company to him based on the language in paragraph 8, leaving the septic tank business’ real property, “together with all contents,” to Son #1. The Surrogate’s Court consolidated the Supreme Court action with the probate proceeding. The Sons moved for summary judgment, seeking to dismiss the Grandchildren’s claims to all trust assets on the basis that their filing of an action in the Supreme Court challenging Son #1’s ownership of the company violated the trust’s in terrorem clause.
The Grandchildren cross-moved to compel production of stock certificates reflecting their alleged 1/3 ownership interest in the company and argued that the Sons had violated the in terrorem clause by challenging their 1/3 ownership interest in the company and its assets.
The Surrogate found that Decedent intended to leave the company and its assets to Son #1 and dismissed the Grandchildren’s claims to the company and denied the Grandchildren’s application for a temporary receiver. The Court then denied the applications of both the Grandchildren and Sons to enforce the trust’s in terrorem clause against each other, reasoning that neither party sought to delay administration of the decedent’s estate with “unfounded or baseless claims.”
- The Second Department Decision
The Sons and Grandchildren each appealed from the Surrogate’s decision to the Second Department. While their appeal was pending, the Court of Appeals issued a significant decision on the scope of in terrorem clauses in Carlson v. Colangelo, 44 NY 3d 116 [2025]. In Carlson, the Court held that a party commencing litigation to enforce the terms of a trust does not trigger an in terrorem clause, even where the party’s interpretation ultimately fails.1 Applying Carlson, the Second Department affirmed the portion of the Surrogate’s Court decision denying the applications of the Grandchildren and Sons to enforce the trust’s in terrorem clause against one another, reasoning that no party had challenged the validity of the trust instrument itself.
- The Takeaway
Matter of Bates reinforces that New York courts construe in terrorem clauses narrowly. Beneficiaries may litigate good-faith disputes over the meaning and application of trust provisions without forfeiting their interests, so long as they do not challenge the validity of the instrument itself.
This significantly limits the deterrent effect that in terrorem clauses were once thought to provide. For testators, settlors, and practitioners, these decisions warrant a reassessment of when and why no‑contest clauses are included in New York wills and trusts, especially in cases where the instrument provides a substantial gift to a beneficiary whom the testator or settlor might otherwise omit as an incentive to prevent litigation. While in terrorem clauses still serve a purpose in discouraging outright validity challenges, they are unlikely to prevent beneficiaries from pursuing interpretive or enforcement‑based litigation.
Winter is coming . . . but Thicker Than Water will return long before then.
1 A full discussion of the Carlson decision is set forth in our post: “How Is This Lawsuit Different From Other Lawsuits? – Court Of Appeals Holds Lawsuit Seeking To Enforce Trust Provisions Does Not Trigger No Contest Clause.”
