No-Contest Clause: Why Have One?

In an effort to ensure their wishes are met and avoid disputes among family members a person may include what is called a no contest clause in a will or other estate planning document. The no contest clause is a legal specification that is designed to keep people from contesting the will by threatening removal of their status as a beneficiary.

How Does a No Contest Clause Work?

Typically, a no contest clause is backed with a threat of consequences for anyone who violates it and takes steps to contest the will. The no contest clause usually states that any beneficiary who breaks the clause by contesting the will can lose his or her claim to an inheritance.

It may sound harsh, but family disagreements and misreading of wills can be an extremely complex and troubling situation for anyone involved, and many individuals choose to include the no contest clause as a way of heading off future problems. This can be particularly true if the family has had poor communication in the past, or if the estate is large or particularly complicated.

Things to Consider When Adding a No Contest Clause

There are pros and cons to using no contest clauses in wills. In many cases, the no contest clause and subsequent punishment acts as a deterrent for many, if not most, problems people might have with a will. Therefore, the clause has a way of keeping peace because when no one can argue the terms, it’s much more difficult for bitter feelings to spring up between family members who interpret the will differently.  On the other hand, the threat of a no contest clause may prevent a party with legitimate cause to challenge the will or the actions of the executor from doing so out of fear of being left out of the process entirely.

Additionally, a no contest clause is far from a guarantee as there are loopholes and exemptions that can keep it from being an absolute deterrent of all possible problems. For instance, in many states the law specifies that a beneficiary can, in fact, contest a will without consequences provided he or she has probable cause to do so. Perhaps the wording of the will is unclear, or the trustee, executor, or probate court in charge of distributing property has made a genuine mistake and misread the terms. In a situation where the beneficiary has a valid reason to contest a will, he or she may be able to file a contest without fear of repercussions in spite of the existence of a no contest clause.

Furthermore, the clause may not be a strong deterrent because some individuals might not be intimidated by the consequences of breaking the no contest clause. While the threat of losing an inheritance is a big one, consider a situation where the person in question isn’t named in the will at all. Although a no contest clause may be in place, it won’t apply to someone not named in the will. Since the individual has nothing to lose, he or she can freely contest the will, potentially creating problems for family members and other beneficiaries.

Should I Include a No Contest Clause?

Wills, living trusts, and other estate planning tools are often particularly complex due to the high emotions and tension involved as well as the complicated rules and regulations that vary by state and situation. If you’re writing your living will or trust, have a lawyer trained in drafting these types of documents assist you.

The best thing you can do to ensure your wishes are carried out peacefully without concern of people contesting the will is to state your intentions as clearly as possible and provide written documentation that outlines specific details.

Case Studies: No Contest Clauses in Estate Planning

Case Study 1: The Siblings’ Dispute

The Smith siblings found themselves in a bitter dispute over their late father’s will. The will contained a no contest clause, which threatened to disinherit any beneficiary who contested its terms.

Despite the existence of the clause, one of the siblings decided to challenge the will, believing that it did not accurately reflect their father’s wishes. The legal battle that ensued created tension and strained relationships within the family, leading to prolonged litigation and emotional distress.

Case Study 2: The Executor’s Error

In this case, a no contest clause was included in a will to discourage any challenges to its validity. However, due to an error made by the executor during the probate process, the terms of the will were misinterpreted, resulting in unintended consequences.

One of the beneficiaries, who had legitimate grounds to contest the will, was wrongly threatened with the loss of their inheritance under the no contest clause. The situation highlighted the importance of clear and precise language in estate planning documents and the potential limitations of a no contest clause.

Case Study 3: The Outsider’s Challenge

In this scenario, a wealthy individual passed away, leaving a sizable estate. The will included a no contest clause intended to deter beneficiaries from contesting it. However, an individual who was not named in the will decided to challenge its validity, as they believed they were entitled to a share of the estate.

Since the no contest clause did not apply to them, they were not deterred by the potential consequences and proceeded with their legal challenge. This demonstrated that a no contest clause may not be effective in preventing challenges from individuals outside the designated beneficiaries.