We live in a litigious society. Unfortunately, even family members sometimes file lawsuits because they are dissatisfied with what their parents or loved ones leave them in a will or trust. Some are so disgruntled that they decide to contest or challenge the validity of a will or trust, which can delay its administration for years and result in thousands of dollars in legal fees. If you are concerned that any of your beneficiaries may seek to challenge your will or trust, a no-contest clause might be one method you can use to discourage them from pursuing this course of action.
What Is a No-Contest Clause?
A typical no-contest clause provides that a beneficiary who disputes the validity of a will or trust will forfeit any inheritance or benefit they otherwise would have received according to its terms. It will not prevent someone who is not a beneficiary named in your will or trust from contesting it though.
Are They Enforceable?
State law varies regarding the enforceability of no-contest clauses. They are unenforceable in only one state: Florida. In other states, no-contest clauses are enforceable unless “probable cause” exists to institute a lawsuit challenging the validity of the will or trust, the contest is based on “good faith, ” or the contest is based on both probable cause and good faith. Still others enforce no-contest clauses without regard to probable cause or good faith.
What Are the Pros and Cons?
These types of clauses have some advantages as well as some disadvantages, as listed below:
Pros of a no-contest clause
- Honors your right to give your property to the parties you have chosen in the way you want, as expressed in your will or trust
- Discourages baseless challenges to a will or trust by a disgruntled beneficiary
- Discourages meritless lawsuits aimed at forcing a settlement by a dissatisfied beneficiary
- Avoids lengthy and expensive litigation that will deplete your estate and delay administration
Cons of non-contest clause
- Causes a beneficiary to suffer a forfeiture of his or her inheritance for enforcing his or her right to challenge the will's validity
- Impedes the court's ability to determine if the will or trust is valid and ensure that it was not executed as a result of unlawful means, for example, where an unscrupulous child convinces an elderly parent with dementia to sign a new will beneficial to that child shortly before the parent's death
What Legal Actions Will Be Considered a Contest?
A lawsuit that challenges the validity of a will or trust, or some of its terms, based on allegations of forgery, lack of due execution, lack of capacity, or menace, duress, fraud, or undue influence is typically considered to be a contest. However, under some circumstances, a will or trust could be considered to have been contested even if the beneficiary does not assert that it is invalid, but instead files a lawsuit that affects or changes the way money or property is distributed or prevents the will or trust from being administered according to its terms, for example, by challenging the method by which property is transferred into a trust. Some courts have found that a no-contest clause has been violated even if a lawsuit contesting a will or trust is later withdrawn.
What Legal Actions Will Not Be Considered a Contest?
Although state law varies, certain types of lawsuits are typically not considered to be a contest of a will or trust. Lawsuits brought to ask the court to interpret or construe the language of the will or trust or to determine whether a personal representative or trustee has acted consistently with the terms of the will or trust are generally not considered to be a contest. In addition, in some states, beneficiaries are allowed to first ask the court to determine whether a particular challenge would trigger the no-contest clause, and those actions are typically not considered a contest that would result in a forfeiture of an inheritance for the beneficiary who filed the action. For example, in a case recently decided by the Virginia Supreme Court, Hunter v. Hunter, trust beneficiaries that filed an alternative pleading initially seeking a declaratory judgment as to whether a proposed claim would trigger a no-contest clause were held not to have triggered the clause by filing the declaratory judgment action.
What Are the Possible Outcomes of a Successful Will or Trust Contest?
The outcome of a will or trust contest depends upon several factors. If a will or trust is declared invalid and there is no earlier will, then the deceased person's money and property will be distributed according to state intestacy law, which specifies how it should be divided up and distributed when there is no will. When there is an earlier will, that will could take the place of a later one that is declared invalid. If only part of the will or trust is declared invalid, then the rest of the instrument will be upheld: The intestacy law will apply only to the part of your estate not addressed in the valid portion.
Let Us Help You Create an Estate Plan That Keeps the Peace
If you see trouble brewing and are concerned that family members could contest your will or trust, a no-contest clause is one tool that could discourage dissatisfied beneficiaries from seeking to have it declared invalid. Another possibility that could forestall a will or trust contest is to conduct a family meeting during which you can explain your reasons for distributing your money and property in the way you have. Allow us to help you create the best estate plan for your unique circumstances and to employ all available tools to decrease possible conflict within the family. Give us a call to set up a meeting: We are happy to meet with you over the phone or via video conference if you prefer.
 __ Va. __, 838 S.E.2d 721 (2020).