No matter how carefully planned your estate is, there is still a risk of an inheritance dispute after you're gone. The best you can do is take steps to minimize that risk. One way to do that is to include a “no contest clause” in your will or trust.

What is a “no contest clause”?

A no contest clause is a provision in a will or trust that states that anyone who contests the document (challenges its validity) loses the gift they would otherwise receive under the document.

Example: Child is left a $50,000 gift under a will. Beneficiary is not happy with this gift and seeks to invalidate the will (Child would receive a larger share via intestacy if the will is held invalid). Child files an action in court contesting the will and loses. Per the no contest clause, Child may lose the $50,000 gift as a result, and be left with nothing.

What is the purpose of such a clause?

The purpose of such a clause is to discourage litigation. Going to court is an expensive and time-consuming process, which often significantly depletes the available trust or estate resources. For this reason, public policy favors such provisions, and they are valid and enforceable under California law, although subject to certain restrictions, described below:

What is the law regarding no contest clauses?

In recent years, the law regarding these provisions has changed in order to make them more restrictive. In other words, they are less likely to be enforced than they used to be. For instruments that became irrevocable on or after January 1, 2001, the applicable law is found in Probate Code Section 21311, which states in relevant part the following:

“§ 21311. Enforcement of a no contest clause

(a) A no contest clause shall only be enforced against the following types of contests:

(1) A direct contest that is brought without probable cause.

(2) …

(3) …

(b) For the purposes of this section, probable cause exists if, at the time of filing a contest, the facts known to the contestant would cause a reasonable person to believe that there is a reasonable likelihood that the requested relief will be granted after an opportunity for further investigation or discovery.” (emphasis added)

The following definitions from Probate Code Section 21310 are helpful:

• A “contest” generally means a pleading filed with the court (usually a petition)
• A “direct” contest is one that tries to invalidate a document based on the following:
  • Forgery
  • Lack of due execution
  • Lack of capacity
  • Menace, duress, fraud, undue influence
  • Revocation
  • Disqualification of beneficiary

The common law (court case decisions) still governs documents that became irrevocable prior to January 1, 2001. If you are unsure what law controls a particular clause, you should consult an attorney.

Helix Law Firm can help with estate planning

If you think there is a chance of a dispute over your estate planning documents after you're gone, we can help. A properly drafted no contest clause is just one of many ways to help prevent inheritance disputes.

If you're interested in learning more, please call us at (619) 567-4447 to schedule a free consultation.