A no-contest clause, also known as an “in terrorem” clause, is a provision that a testator or a grantor can include in their wills or trusts to prevent their beneficiaries from challenging the document’s validity in court.
How does it work?
A no-contest clause outlines what will happen if a beneficiary contests the testator’s will or the grantor’s trust. This includes forfeiting their right to receive their inheritance or receiving a reduced inheritance. Specially, the process runs as follows:
- The inclusion of the no-contest clause in the will or trust: The testator or grantor includes language specifying the consequences for a beneficiary who challenges the validity of their will or trust.
- The occurrence of the will or trust contest: If during the estate administration, a beneficiary believes that the will or trust does not reflect the deceased’s true intentions for grounds such as undue influence or lack of capacity, they may challenge the document in court.
- The enforcement of the no-contest clause: Once a beneficiary challenges the will or trust, it triggers the no-contest clause. The court will then determine the validity of the challenge.
If the challenge is unsuccessful and the no-contest clause is upheld by the court, the challenging beneficiary may lose their inheritance entirely or receive only the estate portion specified by the no-contest clause.
If the court finds that the beneficiary had reasonable basis to challenge the will or trust, it may not enforce the no-contest clause. This will still depend on the specific circumstances of each case.
Should you include it in your will or trust?
Before including a no-contest clause in your estate planning documents, it is crucial to make several considerations, such as whether you expect groundless challenges, and understand the possible consequences. Ultimately, whether to include the provision in your will or trust will depend on your individual circumstances and the advice of a qualified estate planning attorney.
