What’s a ‘No Contest’ Clause?

WHAT'S A 'NO CONTEST' CLAUSE? One way to defend a claim is to let your personal representative or trustee defend your choices. A second way is to include a no-contest clause that disinherits all claimants if they lose their challenge or for even filing the challenge in the first place, explains Kiplinger’s recent article entitled, “What Do No-Contest Clauses Have to Do With Undue Influence?”

A no-contest clause can be a powerful deterrent for a beneficiary who believes they are entitled to more than the share provided, if they know that simply filing the challenge will forfeit even that share. However, it isn’t a deterrent for a relative omitted from the estate plan. Ask an experienced estate planning attorney drafting your estate plan to add these typical terms to your document:

1. To omit all heirs at law not specifically mentioned in the document.
2. To revoke the share provided for any person seeking:

• To claim a share of your estate, to increase their share, or to claim certain assets in your estate
• To invalidate your document or any provision in your document
• To take any part of your estate in a manner not specifically described in the document

Many no-contest clauses will treat a challenger as having predeceased you (or having predeceased you, leaving no issue), thereby passing their share according to other terms in the document. However, note that some states include a specific direction as to what happens to their forfeited share.

Not all states treat a no-contest clause the same. Some states refuse to enforce them as a matter of public policy, and some strictly construe the no-contest clause because they disfavor any forfeitures. In these states, an overly broad or vague provision may be voided.

Other considerations may weigh against enforcing a no-contest clause, and you should consider these if you want to tailor your no-contest clause or exclude it from your documents:

1. Allowing a court to determine the fairness of a challenge that may protect your intentions.
2. Revealing any undue influence that depleted your estate or impacted your decisions if you were wrongly isolated from family or subjected to financial or personal abuse by a caregiver or relative.:
3. Avoid punishing a proper challenge brought in good faith by excluding any petition or suit brought by a person

• Only seeking more information about your estate
• Seeking documentation of expenditures by a caregiver or relative in charge of your finances before you died
• Seeking the court’s interpretation of your last will or trust instruments
• Seeking to deny the probate of a last will drafted and executed under questionable circumstances
• Filing an appearance to question the appointment of the personal representative or the purported state of residence

Schedule your phone meeting: THE LAW OFFICES OF CLAUDE S. SMITH, III

WHAT'S A 'NO CONTEST' CLAUSE?

Reference: Kiplinger (Sep. 1, 2023) “What Do No-Contest Clauses Have to Do With Undue Influence?”