A deceased person's last will is not ironclad. Beneficiaries can contest the provisions made in the will if they feel that they've been cheated out of their fair share of the estate. To avoid this, testators might put the bulk of their estate in trust and use a no-contest clause to prevent contestation. However, as any estate planning attorney in Los Angeles will tell you, the clause is not always a deterrent.
What is a No Contest Clause?
In its most basic form, a no-contest clause means that if a beneficiary challenges the terms of the trust or will in court and loses, they will also lose whatever inheritance they had. They disinherit themselves.
The idea is that beneficiaries are less likely to contest the terms of a will or trust if there's a risk that they'll lose everything. Not only will they lose it all, but they'll also be left with hefty legal fees, which can run into tens of thousands of dollars. In some cases, legal fees can even run into the hundreds of thousands of dollars.
That's not to say that a trust beneficiary should never contest a will or trust. If you think you have a case, discuss the matter with a trust lawyer in Los Angeles. They give you legal advice about the strength of your case and whether the potential challenge is worth taking to court.
Beneficiaries Who Have Nothing To Lose
What the will or trust creator may not have considered is the determination of someone who has nothing to lose. For example, if all they inherited was a grandfather clock they never wanted, it might be worth contesting the will in court.
Someone who was left out of the will entirely also has nothing to lose in estate litigation, except a Los Angeles estate planning lawyer's fees.
Why Use a No Contest Clause?
A no-contest clause is often used when testators make last-minute changes to their will. The decision is usually based on new information or circumstances that change their outlook.
For example, you may have removed your ex-husband from your will when you divorced 10 years ago, but then you find out that he's struggling financially. In a final act of goodwill, you leave him 15% of your estate. To do so, you take 3% from your two children. Their relationship with their father is tattered, and despite the enormous risk, they decide to contest the change.
It could also go the other way around. Your ex-husband believes he deserves a significant share of your estate, despite the rocky nature of your relationship. He might feel cheated when he gets only 5%, and then, because his risk is low, he contests your will to get a larger share.
Discuss Changes With Your Heirs
Discuss any changes to your estate plan with your most significant beneficiaries, usually your children. They are more likely to understand your thinking and less likely to dispute the change if you are open and honest with them.
This gives them the chance to raise objections and perhaps settle arguments before they die, so there is no acrimony when they pass.
When Does a No Contest Clause Apply?
The aim of a no-contest clause is to prevent challenges and arguments over the terms in a will or trust. In fact, it's often added to keep the peace between beneficiaries. However, beneficiaries don't always see it that way.
The clause applies when testators make clear their wishes that a very specific part of their will be honored. They foresee potential problems down the line and want to circumvent them.
In this instance, discretion is the better part of valor, so instead of completely disinheriting a family member, an estate attorney might suggest that it's worthwhile to leave them something that has some value at least. Sometimes all they want is to be recognized, and the token suffices.
Other times, they might decide that it's actually not worth the time or money to challenge the will.
Once again, talking about your options with an experienced estate planning attorney in Los Angeles is a good idea. They might recommend a meeting with those concerned to thrash out the details of your estate documents.
A Californian lawyer will also be able to explain how the state deals with no-contest clauses in estate planning. The laws differ from state to state, so you need to ensure that your will, and clauses, comply with Californian law.
How Does a No Contest Clause Work in a Will or Trust in California?
Generally, no-contest clauses are tricky to enforce in California. The revised contest law favors challenges, especially if they involve minor children or the challenger has reasonable (probable) cause to contest the will.
One of the situations that enforces no-contest clauses, according to Probate Code Section 21311, is a direct contest without probable cause. This includes contestation that alleges invalidity based on grounds that include:
- Forgery
- Lack of due execution
- Lack of capacity
- Menace, duress, fraud, or undue influence
- Revocation of a will under certain sections
- Beneficiary disqualification under certain sections
Probable cause is at the court's discretion. If the court decides that the challenge was based on reasonable grounds, even if they were erroneous, they won't lose any assets they may have inherited.
Attorneys Specialize in Wills and Trusts and No Content Clauses
Your last will and testament is your lasting legacy, and as such, it's important for you to draw up an estate planning document that is legally sound, with or without a no-contest clause.
McKenzie Legal & Financial has a department of estate planning attorneys in Los Angeles, CA, who can ensure your will complies with California's no-contest laws while upholding your wishes.
For a consultation to discuss your will and the distribution of your estate, complete the online form on our website or contact us at 562-594-4200 and we’ll get back to you today!
