What is a no-contest clause?
A no-contest clause is a clause in a will or trust that disinherits a beneficiary if he or she challenges the will or trust. In essence, a no-contest clause creates a condition on the gifts provided for in the will or trust. The beneficiary’s right to inherit is conditioned on his or her acquiescence to the terms of the will or trust. If a beneficiary challenges the will or trust, he or she is disinherited and the gift passes to someone else, usually as instructed in the will or trust. The clause puts the beneficiary to a choice: accept the terms of the will or trust as is or risk getting nothing.
What if I contest a will with a no-contest clause?
The short answer: You get nothing. The point of a no-contest clause is to decrease litigation by incentivizing the beneficiaries of a will or trust to accept what they are given. A no-contest clause allows the person creating the will or trust to ensure, to the greatest possible extent, that his or her property will pass as instructed and without legal challenge. You either accept what you are given, or you receive nothing.
Are no-contest clauses enforceable?
No-contest clauses are enforceable. California law recognizes two important public policies supporting the enforcement of no-contest clauses. First, they permit people to dispose of their property as desired by ensuring that the dispositions in the will or trust are followed. Second, they decrease litigation by discouraging beneficiary challenges to wills and trusts. No-contest clauses have been enforceable in California for many years, and they are made expressly enforceable by Probate Code section 21311.
What actions are considered “contests” violating a no-contest clause?
Much of the litigation surrounding no-contest clauses over the years has involved efforts to answer this question. Then, in 2010, the California Legislature amended the Probate Code to define more specifically what actions will violate a no-contest clause. As revised the statutes say: No-contest clauses are only enforceable against three types of “contests.”
First: A “direct contest” brought “without probable cause.” A direct contest is one that alleges the will or trust, or a portion of it, is invalid due to forgery, improper execution, lack of capacity, menace, duress, fraud or undue influence, revocation, or that a beneficiary is a disqualified beneficiary under the Probate Code. A beneficiary has “probable cause” if a reasonable person would believe that there is a reasonable likelihood that the will or trust will be found invalid after an opportunity for additional investigation or discovery.
Second: A contest alleging that the transferred property did not belong to the decedent at the time of transfer.
Third: A filing of a creditor’s claim or a legal action based on it.
A no-contest clause is only enforceable against the second and third types of transfers if the no-contest clause expressly identifies those actions as contests.
Can a no-contest clause lead to litigation?
No-contest clauses can have the effect of increasing litigation. At first, no-contest clauses tend to decrease litigation by deterring beneficiaries from initiating legal challenges to wills and trusts. However, once a contest is initiated, the no-contest clause often increases litigation because both the underlying challenge to the will or trust and the alleged violation of the no-contest clause—which the challenging beneficiary will likely deny—must now be litigated. However, these issues can often be litigated in a single proceeding, which reduces the impact of any additional litigation.
Is there a way around a no-contest clause that won’t cost me my inheritance?
It depends. Not all actions challenging a will or trust are considered “contests” that violate a no-contest clause. The language of the no-contest clause itself will affect the scope of actions constituting a contest, and the Probate Code sections governing no-contest clauses limit their enforceability to specific type of actions. YOU MUST CONSULT A QUALIFIED ATTORNEY EXPERIENCED WITH NO-CONTEST CLAUSES BEFORE TAKING ANY ACTION. Also, many actions violate a no-contest clause only if you lack “probable cause” to bring the action. That basically means you did not have a reasonable belief that your action had merit. Before taking any action, you should scrupulously document the facts supporting your claims so that you can demonstrate your probable cause if it is claimed you have violated the no-contest clause. Again, a qualified attorney can advise you on whether such facts are likely to constitute probable cause.
How do anti-SLAPP motions relate to no-contest clauses?
SLAPP stands for Strategic Lawsuit Against Public Participation. In essence, an anti-SLAPP motion, as it is commonly called, asks the court to dismiss a legal action on the ground that it violates your constitutional right to freedom of speech. In the context of no-contest clauses, the issue usually arises like this. A beneficiary files an action challenging a will or trust, but ultimately loses. The estate representative, the trustee, or another beneficiary then files a second action seeking to disinherit the beneficiary for violating the no-contest clause. The beneficiary then files an anti-SLAPP motion, asking the court to dismiss the second action because the beneficiary’s filing of the first action was a constitutionally protected act. Both of the two California appellate courts to have addressed the issue have held that the anti-SLAPP statute applies to actions to enforce a no-contest clause. The intersection of these statutes and areas of law is complex, and, regardless of which side of the dispute you find yourself on, it is important that you CONSULT WITH A QUALIFIED ATTORNEY.
What if the same person is trustee and beneficiary and faces a no-contest clause?
Often times, the estate representative or trustee is also a beneficiary under the will or trust. Things can become tricky when another beneficiary challenges the will or trust because, believe it or not, defending a challenge to the will or trust can be considered a “contest” that violates a no-contest clause. This puts the estate representative or trustee in a difficult position. On the one hand, he or she has a fiduciary obligation (a very high duty) to the estate or trust to protect and preserve it, which suggests an obligation oppose the challenge. On the other hand, doing so may jeopardize his or her inheritance under the will or trust if it is determined that the defense violates the no-contest clause. These cases often turn on the perceived motivation for the defense: Was the estate representative or trustee acting in that capacity, or was he or she merely protecting his or her own interest as a beneficiary? These situations are factually complex, and, if you are both an estate representative or trustee and a beneficiary, it is imperative that you CONSULT WITH A QUALIFIED ATTORNEY before taking action to defend a will or trust contest.