How can you ensure that the distribution wishes expressed in your Will (or Trust) will be honored after your death? Many people include a “no contest clause” in their Will.
A no contest clause typically refers to a clause in a Will which threatens to disinherit a beneficiary if that beneficiary challenges the terms of the Will in court. California recently changed its no contest clause law as of January 1, 2010.
The current law generally assumes that a no contest clause is unenforceable with few exceptions to the general rule.
In essence, a beneficiary contesting a Will (which contains a no contest clause) may still be able to inherit if he or she can show that it was reasonable to believe that the Will maker did not make a valid Will.
The exceptions under which a no contest clause shall be enforced are:
- a direct contest that is brought without probable cause,
- a challenge to a transfer of property on the basis that it was not the transferor’s property at the time of the transfer only if the no contest clause specifically provides for this and
- a filing of a creditor’s claim or prosecution of an action based on it only if the no contest clause specifically provides for this.
Since the latter two exceptions are very specific, it is likely that most of the future debate will center around the interpretation of the first exception.
For example:
Mom died with a Will which left her entire estate to her two daughters.Mom left nothing to her son.
Her son, claiming his sisters unduly influenced mom, wants to challenge the Will.
If mom’s Will contains a no contest clause, the general rule allows son to challenge mom’s Will so long as he has probable cause to think his sisters unduly influenced mom. This result may not be what mom intended.
How courts deal with these issues under the new law remains to be seen.
