Provisions in the Trust or Will

When doing estate planning, people sometimes ask me about putting a provision in the Trust or Will that will disinherit anyone who challenges it. This is often referred to as a "no-contest clause." 

A no-contest clause basically provides that if someone contests the estate planning documents and loses their challenge, they lose whatever distribution they would have received. 

A couple points to remember though: 

1) If the person wanting to challenge the validity of the Will or Trust is not included in it, or is already disinherited, the no-contest clause really has no effect, because they have nothing to lose for trying. It only works in dealing with those people who have a legal right in the estate to begin with, i.e., heirs and the beneficiaries named in the instrument.

2) A "contest" that triggers the no-contest clause is when someone actually files a challenge in court – it does not include whining, complaining or otherwise causing family troubles. 

Finally, under recommendation from the California Law Revision Commission, Senate Bill 1264 repealed the old no-contest law in its entirety and replaced it with Probate Code Section 21310 et seq. Generally speaking, the Commission felt that "because forfeiture is such a harsh penalty, it is disfavored as a matter of policy. Accordingly, a no-contest clause should be applied conservatively, so as not to extend the scope of application beyond what was intended." Thus, under the new law, a no-contest clause is generally enforceable only against a direct contest brought without probable cause. in other words, unless the court agrees that there was a reasonable basis for alleging that the documents were forged, not executed correctly, or that the person who signed the Will or Trust lacked capacity or free will to execute the documents, its unlikely the contest will be successful. 

It can be difficult to successfully contest a Will or Trust, but the mere act of contesting oftentimes forces the parties to come up with a settlement in which all parties walk away with less than they wanted - but without risking it all in litigation.

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