Wednesday, August 30, 2017
In California, no-contest clauses are regularly included in wills and trusts as a means to prevent greedy or slighted beneficiaries from challenging the validity of an estate plan. On the surface, a no-contest clause appears to be an intimidating deterrent to any beneficiary or heir daring enough to challenge the will or trust. The consequences for beneficiaries can be especially dire. Most no-contest provisions dictate disinheritance to the challenging beneficiary.
Such a provision may seem reasonable, especially from a testator/settlor’s point-of-view, but there are some potential pitfalls. An example, if a decedent originally left her son the entire estate via trust, but through the undue influence of a caregiver the child is left only a small fraction of the estate, that child may fear bringing an otherwise legitimate claim for fear of losing what little he has received.
This may be a legitimate concern, but courts typically will not enforce a no-contest clause as long as the contesting party brings the claim with probable cause. To meet this threshold, the contesting party must show that facts known to them at the time they file the claim would lead a reasonable person to believe they had a reasonable probability of succeeding on their claim after a chance at discovery.
See Henry Welles, Best in Law: The Pros and Cons of the No-Contest Clause, The Press-Enterprise, August 5, 2017.