No contest clauses, also known as in terrorem (literally, “in fear”) clauses, are a type of safeguard against will and trust challenges. Inserted by the testator (the person who made the will) or trustmaker (aka “trustor” or “grantor”), these clauses effectively tell beneficiaries, “if you try to challenge the will/trust, you will lose your share of inheritance.” Of course, this has no effect if the beneficiary wishing to contest the trust or will is not named in the instrument, or has been specifically disinherited.
No contest clauses, though strictly construed under California law, do not mean that a beneficiary is completely foreclosed from seeking legal remedies where their share of inheritance is less than they believe it was intended to be by the decedent. No contest clauses are enforceable against “direct contests” brought without “probable cause.” Per California Probate Code §21310, a “direct contest” is defined as, among other things a suit alleging the invalidity of a document based on any of the following grounds: forgery, lack of due execution, lack of capacity, menace, duress, fraud, or undue influence, or revocation of a will under certain circumstances. Probable cause exists if, at the time of filing a contest, facts known to the contestant would cause a reasonable person to believe there was a reasonable likelihood that the requested relief would be granted upon opportunity for further investigation or discovery. There is little clarifying law on what exactly constitutes “probable cause,” which is a fact-specific determination.
Moreover, no contest clauses are only valid if included in an “otherwise valid instrument.” Presumably then, if a contest challenging the validity of a trust or will is successful, the no contest clause itself is null and void, and not applicable; however, even if unsuccessful, the clause will not be enforced if it is determined there was probable cause to bring the claim.
Further, while the applicability of a no contest clause is determined on a case by case basis, suits merely to determine the construction of a will or trust are usually not considered a “direct contest.” Additionally, petitions questioning the acts or inaction of trustees or executors, or to remove them, will probably not be considered “direct contests.” Importantly, subsequent amendments to trusts or wills are not subject to no contest clauses in the underlying instrument, unless the clause specifically references later amendments, or the amendment itself contains a no contest clause.
No contest clauses can also be enforceable against challenges to a dispositive trust provision on the grounds that the settlor did not own the property, and to a creditor’s claim or prosecution of an action based on the creditor’s claim.
In determining whether to bring a challenge to a trust or will, the beneficiary should first consult with a probate or estate planning attorney on their specific facts and circumstances, and all possible options should be explored before filing suit.