Having a no-contest clause can reduce the likelihood of estate battles.
Estate planning allows you to protect and provide for loved ones.
It also enables you to disinherit certain people in your family.
Very rarely does providing for your loved ones cause conflict.
Cutting someone out of the will certainly can lead to resentment.
According to a recent Kiplinger article titled “What Do No-Contest Clauses Have to Do With Undue Influence?“ disgruntled family members often seek legal recourse to change terms of estate plans they do not like.
Is it possible to prevent an estate contest?
Although it is impossible to predict or control the actions others take entirely, it is possible to prepare for an estate battle and discourage a challenge to your estate plan.
The least effective means is to trust your executor or trustee to defend your wishes to the court.
A more proactive approach is to include a no-contest clause in your estate plan.
What is a no-contest clause?
A no-contest clause, also known as an “in-terrorem” clause if you want to add a little panache, indicates your wishes to disinherit any claimant who loses their challenge to your estate plan or files a contest to it.
Although it may deter an heir who received less than they expected, it less likely to deter an individual who was disinherited entirely.
The person who received a smaller inheritance has more to lose with such a clause than someone who received nothing!
For this reason, some estate planning attorneys advise leaving a little to family members you dislike to deter such actions.
Are no-contest clauses helpful even if you have good relationships with your heirs and do not plan to disinherit anyone?
They can be helpful if your last will omits heirs at law not directly mentioned in a last will and testament or revocable living trust because it revokes the share provided to anyone claiming a stake in your estate, seeking to increase their share, or claiming specific estate assets.
It can also be beneficial if someone wants to invalidate your whole estate plan or a provision of it.
What happens if someone was named in the last will or trust but challenges the estate plan despite the no-contest clause?
The estate will be administered as if this heir predeceased you.
If you had structured your estate to have the share of this individual go to their children, the children would inherit if this heir died before you.
If this heir had no descendants or you structured your estate plan for the share to pass to your other listed heirs, the share will be distributed to the other heirs.
By giving specific instructions, your estate executor or trustee will be better equipped to follow your instructions.
It would help if you also worked with an experienced estate planning attorney to understand how state law will impact your wishes and what language will be used in your estate plan.
What will happen if the person challenging your last will or trust has good cause to confront the estate plan?
This is often the case when someone has applied undue influence to another individual, and elder abuse or financial abuse by a caregiver is suspected.
Often, the family of the exploited individual only learns of the abuse when seeing how the estate assets have been depleted or when a new last will is submitted to the court favoring the abusive individual rather than the decedent’s family.
Unfortunately, your well-meaning loved ones could be fully disinherited by trying to protect the estate.
States treat no-contest clauses differently.
Some states will not enforce them.
Others are strict in their interpretations of the clause.
If you desire a no-contest clause to be included in your estate plan, an experienced estate planning attorney will help create a clause aligning with the laws of your state and minimizing punishment for those seeking the best interests of your estate.
Reference: Kiplinger (Sep. 1, 2023) “What Do No-Contest Clauses Have to Do With Undue Influence?”