Wednesday, February 24, 2016
No contest, or in terrorum, clauses have become increasingly common in wills and trust since it creates a strong disincentive for beneficiaries to institute legal challenges. This is due to the fact that a no contest clause will remove an unsuccessful challenger to the will or trust from benefiting in anyway from the plan. However, these clauses are not the ironclad gate to prevent challenges that some might think. The clauses, as in Virginia, will be strictly construed and enforced meaning that a court will give full effect to the drafter's wishes but interpret the clause only to the extent that the plain language of the clause indicates. In addition, some states allow a good faith exception to apply where the court will not hold the contestant to break the no contest provision when the merits of the case earned a legitimate day in court. As provisions of this type continue to grow in popularity it will be interesting to see how the estate law community will handle the increased risk in challenging estate plans.
See William W. Sleeth III, Yes, Virginia, There Is A “No Contest” Clause, Wealth Strategies Journals, February 17, 2016.
Special thanks to Dominic Jones for bringing this article to my attention.