Can a boilerplate binding-effect clause save a personal services contract from terminating at death? Nikols v. Nikols Explained

Background and facts

John Nikols was a Utah restaurateur and property developer who, over decades, relied on his son Michael to manage his business ventures. In 2019, John established a living trust naming all four of his children as equal primary beneficiaries upon his death, with a per stirpes provision directing that any deceased child’s share pass to remaining siblings if that child left no issue. In 2020, John and Michael signed a “Comprehensive Business Development and Investment Agreement” (the Development Agreement) granting Michael sweeping authority over trust properties, a 15% management fee, a 10% success fee, and an Irrevocable Right of First Refusal (IRFR) to purchase trust properties at 75% of fair market value or a bona fide offer — exercisable “at any time . . . for the term of” the agreement. John died in August 2023; Michael died unexpectedly in December 2023 without children. His widow, Angela, claimed succession to Michael’s trust interest, his rights under the Development Agreement, and the IRFR. The district court granted partial summary judgment against Angela on all three claims, and the Utah Court of Appeals affirmed.

Key legal issues

Three distinct issues reached the Court of Appeals: (1) whether the trust’s Deferral Provision superseded the Per Stirpes Provision to vest Michael’s beneficiary interest before his death; (2) whether the Development Agreement was a personal services contract that terminated at Michael’s death; and (3) whether the IRFR survived independently of the Development Agreement as an assignable property interest.

Court’s analysis and holding

On the trust beneficiary question, the court held that the Deferral Provision required the trust instrument itself — not an external agreement — to direct distribution into separate trusts. Because the Development Agreement was a separate document, it could not trigger the Deferral Provision, and the Per Stirpes Provision controlled. On the Development Agreement, the court acknowledged the general presumption of assignability but applied the personal services exception, which applies when “the personal needs, characteristics or personality of the obligee are dominant factors in the reason for contracting.” The agreement’s explicit grounding in Michael’s “loyalty, love and affection,” his decades-long shared vision with John, and the extraordinarily broad delegation of authority — including the power to administer John’s future trusts and wills — demonstrated that personal trust was the dominant contracting motive. Critically, the court held that standard boilerplate binding-effect language purporting to bind “heirs, beneficiaries, assigns, successors” does not override an otherwise intensely personal contract. Finally, because the IRFR was expressly exercisable only “for the term of” the Development Agreement, it expired when the agreement terminated at Michael’s death — regardless of whether it also constituted an independent purchase option.

Practice implications

Practitioners drafting long-term development, management, or compensation agreements must treat the personal-services analysis as a threshold drafting concern, not an afterthought. Binding-effect boilerplate alone will not preserve an agreement or embedded rights against a personal-services termination argument. Agreements intended to survive the performing party’s death should expressly disclaim personal-services character, identify successor-performers by objective criteria, and — critically — anchor any rights of first refusal or purchase options to a fixed calendar term that operates independently of the underlying agreement’s survival. Litigators challenging or defending such agreements should recognize that the inquiry is intensely fact-specific, centering on whether personal trust, loyalty, or unique skill was the dominant contracting motive as revealed by the contract’s language and surrounding circumstances.