Should I include a “No-Contest” clause in my Will or Revocable Trust?
Worried about challenges to your estate plan?
Estate planning is about protecting your family and ensuring that your wealth is distributed according to your wishes. So the idea that someone might challenge your estate plan can be disconcerting. One strategy for protecting your plan is to include a “no-contest” clause in your Will or Revocable Trust (or both).
What’s a no-contest clause?
A no-contest clause essentially disinherits anyone who contests your Will or Trust (typically on grounds of undue influence or lack of testamentary capacity) and loses. It’s designed to serve as a deterrent against frivolous challenges that would create unnecessary expense and delay for your family.
However, if the contestant is not included as a beneficiary, s/he has no interest which would be forfeited under a no-contest clause. There is then no risk for the beneficiary who may be deciding whether to file a contest. For the no-contest clause to have effect, there must be a sufficient “disincentive gift” for the beneficiary to risk losing by contesting the Will or Trust. Clients sometimes request a “give them one dollar if they contest” clause, which I point out is not much of a deterrent to a beneficiary considering a contest.
Most, but not all, states permit and enforce no-contest clauses. Under California law, courts won’t enforce the clause if a challenger has “probable cause” for bringing the challenge.
No-contest clauses may also be enforceable against a challenger to a Will or Trust provision who claims ownership of the disputed property, such as by a prior gift, or as a creditor’s claim.
Are there alternative strategies?
A no-contest clause can be a powerful deterrent, but it’s also important to design your estate plan in a way that minimizes incentives to challenge it. To avoid claims of undue influence or lack of testamentary capacity, you may have a qualified physician or psychologist examine you – preferably near the time you will be signing your Will or Trust – and attest in writing to your mental competence. Also, it is important to have credible witnesses present when you sign your documents, who would later be able and willing to testify if needed in a contest proceeding.
Of course, you should also make an effort to treat your children and other family members fairly, remembering that “equal” isn’t necessarily fair depending on the circumstances. Still, someone with a rightful claim to payment from your estate, or to question documents signed under improper circumstances, may be silenced unjustly by a strict no-contest clause.
Protect yourself
As you develop or update your estate plan, it’s important to think about ways to protect this important expression of your wishes against possible challenges by disgruntled heirs or beneficiaries. We can help you determine if a no-contest clause may an effective tool for discouraging such challenges.