Do No-Contest Clauses Work?
Do you think that your will or trust will be contested when you pass away? If so, can inserting a "no-contest clause" solve this issue ahead of time? If you anticipate that a relative is going to be greatly displeased with the terms of your will or trust, there are times when a no-contest clause can prevent a relative from challenging the terms that you have laid out. It does this by effectively saying that anyone who unsuccessfully contests your will or trust will be disinherited.
When a No-Contest Clause Might Not Work
If, for instance, you have two adult children, but one of them is wasteful, you may want to award the entire estate to the other child. But if you disinherit the spendthrift completely, or nearly do so, then a no-contest clause will not deter them from challenging your will. They would not get anything as it is, and if they win the challenge, they could get as much as half of your estate.
Then there are some states where the courts may or may not disregard a no-contest clause. For instance, this clause will not be acknowledged in Florida or Indiana. If a beneficiary challenges your will or trust in either of these states, they would still get their original inheritance if they lose the contest. Nearly half of all states will adhere to no-contest clauses, except in cases where the person mounting the challenge has probable cause (a legal reason for the challenge). This is so people with valid lawsuits are not deterred, such as in cases where a will- or trust-maker has truly been swayed by undue influence, or when a document was created through fraud. This restriction on no-contests clauses is a very good thing then.
When a No-Contest Clause Is Effective
We could return to the example involving a spendthrift adult child. Let's say that you decide to leave the spendthrift $10,000, while everything else goes to the other child. Even if $10,000 is a substantially smaller portion, the spendthrift has a good deal to lose if they fail in their lawsuit. The no-contest clause could be enough to stop this sort of challenge.
That being said, the reality is that the majority of people will never have to be concerned about a will or trust contest. But if you think this might be a concern in your case, a probate lawyer may be able to provide the expertise you need to figure out your estate can avoid both probate and challenges. The good news is, regardless of where you live, you have a number of options, such as creating a spendthrift trust. Whatever the concerns are in your case, you may be able to find the legal counsel you need to achieve a solution and peace of mind when you search our directory for an experienced probate attorney today!
Posted on Feb 20, 2014 4:47pm PST