Often when people are drafting estate planning documents, they will be advised to include a “no contest clause” in their last will and testament. A no-contest clause – also called a “penalty clause,” or in legal circles, an “in terrorem” clause – is meant to prevent beneficiaries from challenging the will after the individual dies.
What is a No Contest Clause in a Will?
A no contest clause in a will typically states that a beneficiary who unsuccessfully challenges the terms of the will forfeits any gift or bequest the will grants them. A revocable living trust may also be written with a no contest clause.
A will is a legal document that expresses a person’s wishes as to how their property is to be distributed after their death. It seems reasonable that an individual bequeathing money and/or property to heirs, charities, their alma mater, etc., might stipulate that their instructions must not be altered. But a beneficiary of a will or trust may have a legitimate reason to challenge it. They must then decide whether it is worth the risk.
If you have reason to contest a will or trust in California, the attorneys at Albertson & Davidson, LLP can help you. We can help determine whether there is a no contest clause in the will or living trust for which you are a beneficiary, discuss the grounds for your claim, and help you weigh the pros and cons of taking action. We have extensive probate litigation experience in courtrooms throughout California and have recovered more than $130 million in court verdicts and negotiated settlements for our clients. Contact us for a complimentary case evaluation.
California’s Legal Framework for No Contest Clauses in Wills
Under current California law, a no contest clause will only be enforced if:
- A beneficiary contests a will or trust without probable cause.
- A transfer of property is challenged because it was not the transferor’s property at the time of the transfer.
- A creditor files a claim or takes legal action against the estate based on such a claim.
To be enforceable, the no contest clause must expressly state that it applies to challenges of property transfers or creditors’ claims.
For other beneficiaries, “probable cause” to contest a will or trust is a low bar to meet. The contestant (person or entity making the challenge) must only believe at the time of the challenge that there is a “reasonable likelihood” that their request will be granted “after further inquiry and discovery” – a closer look at the facts of the case.
Grounds for Contesting a Will or Trust with a No Contest Clause
There are several grounds to challenge a will or trust with a n no contest clause.
Direct Challenge
A challenge to a will or trust is usually known as a “direct challenge.” A direct challenge alleges that one or more terms of the will or trust is invalid based on one or more of the following grounds:
- Forgery
- Lack of due (legally correct) execution
- Lack of capacity of the testator (the deceased)
- Menace, duress, fraud, or undue influence affecting the testator
- Previous revocation of the will or trust
- Disqualification to be a beneficiary. For example, California law presumes that a gift to a person who was a care custodian to a testator who was a dependent adult of the care custodian was the product of fraud or undue influence.
Most direct challenges are based on a lack of capacity and/or undue influence.
A claim that the testator lacked the capacity to execute the will would primarily be proven with medical records and testimony from an expert witness, such as a medical doctor who reviews the medical records and provides an opinion on the testator’s mental defect in court. Family, friends, and associates might also testify how the testator exhibited a cognitive decline and eventual incapacity.
California Probate Code Section 811 requires evidence of a mental defect to challenge a person’s capacity but states that “the mere diagnosis of a mental or physical disorder shall not be sufficient in and of itself to support a determination that a person is of unsound mind or lacks the capacity to do a certain act.” Evidence must show that the defect “significantly impairs the person’s ability to understand and appreciate the consequences of his or her actions with regard to the type of act or decision in question.”
Undue influence is often proven with circumstantial evidence and, thus, is a harder claim to win. A person wrongly pressuring someone to change their will or otherwise wielding undue influence over them is not likely to do so openly. But the burden to prove they did not engage in undue influence shifts to the wrongdoer if you can establish three facts:
- The influencer had a confidential relationship with the testator.
- The influencer actively participated in creating or changing the will or trust.
- The influencer unfairly benefitted from the change in a will or trust.
Transfer of Property Challenge
This lawsuit asserts that the decedent did not actually own property their will or trust distributes to someone other than the plaintiff and that the plaintiff owns said property. A valid property deed or title would be the primary evidence in this claim.
But such a claim can be a problem if the will or trust has a no contest clause that specifically bars challenges to property transfers. In this case, the challenger loses all rights to any benefit from the will or trust just by making the challenge. Even a successful challenge activates the no contest clause. But, to reiterate, there must be a no contest clause that expressly applies to challenging property transfers.
Therefore, to determine whether filing the suit is worthwhile, you would have to weigh the value of the property in question and its return to you against losing other inheritance you would have derived from the will or trust.
Creditor’s Claim or Legal Action
This is a claim or lawsuit by an individual or entity that the estate owes money or property to. A no contest clause would have to specifically address creditor claims or legal actions for the penalty – forfeiture of any benefits from the will or trust – to apply.
Most creditors would not be a beneficiary of the will or trust, so they would have nothing to lose by suing for what they are owed. But consider a beneficiary of the will who had contracted to buy the deceased’s house. They paid the asking price of $250,000, and the house has since appreciated and is worth $500,000. Meanwhile, they are one of three heirs to the estate, which will be worth $3 million once assets are sold off and debts are settled.
Because of the no contest clause, just by filing a claim, the plaintiff gives up a $1 million inheritance. But a successful claim will enforce the contract to sell the house. This may be worthwhile for a $500,000 house in a market expected to keep booming or to retain a cherished piece of real estate. This creditor/heir has an important decision to make.
Contact a California Will and Trust Contest Lawyer
California probate laws are complex, and rules allowing “no contest” clauses in wills and trusts are meant to discourage contests. But that doesn’t mean you have to be cheated out of your rightful inheritance.
The will and trust contest lawyers of Albertson & Davidson LLP can review the will or trust documents in question, compile evidence to support your claim, and help determine the best path forward. We will stand and fight with you if a will or trust contest is required to recover the inheritance you are due. Contact Albertson & Davidson today by calling (855) 928-0542. We stand. We fight. We win.
