“No-Contest” Clauses in Wills and Trusts
Why do people make an estate plan? There are many reasons: to provide for family members, to have peace of mind about the future, and to make sure their wishes are known and carried out. Creating a will or trust gives people peace of mind precisely because those documents make it clear what they want to happen to their property upon their death.
If a deceased person had a will or trust, most of the time, their assets are distributed according to the terms of the estate plan. Occasionally, though, someone will be dissatisfied with their inheritance under the will or trust, perhaps asserting that the deceased lacked testamentary capacity, or that someone exerted undue influence on the deceased to get them to create a will or trust in that person’s favor. If someone believes strongly enough that the will or trust should not be considered valid, they may contest its validity in court.
What do you do if you don’t want your heirs to challenge your will, but you suspect they might? One option is including a “no-contest” or “in terrorem” clause in the document. This type of clause is just what it sounds like: it is designed to put an heir in fear of challenging an estate plan. Here’s how.
How “No-Contest” Clauses Work
In essence, a no-contest clause provides that if an heir or beneficiary tries to contest a will or trust, or a provision in a will or trust, they will forfeit their inheritance. If the no-contest clause is effective, the will or trust will generally treat any bequest to the challenger as if that person had died before the deceased. There is no required wording for a no-contest clause, but a typical example might look something like this:
“The bequests contained in this, my Last Will and Testament, are made on the express condition that no beneficiary shall challenge or contest the validity of this instrument. Should any beneficiary attempt to challenge any portion of this Last Will and Testament, or to assist another person in doing so, that beneficiary will forfeit any bequest that he or she would have received under the terms of the Will.”
Most states, including New Mexico, consider no-contest clauses valid and enforceable. However, they are somewhat less common than they used to be. Public policy concerns arose that the presence of a no-contest clause in a will or trust would deter people from making challenges that actually had merit. Accordingly, the law of New Mexico and many other states provides that a no-contest clause will not be effective to void the inheritance of a person who challenged a will in good faith with a reasonable belief that it was not valid.
Should You Have a No-Contest Clause in Your Will or Trust?
If you are concerned about one of your heirs challenging your will, an experienced estate planning attorney can craft a no-contest clause that should discourage any will contests. However, you should be aware that in order for a no-contest clause to be effective, there has to be something at stake for the potential challenger.
For instance, imagine that George had an estate valued at $2,000,000. In his will, he left the entire estate to his daughter Judy, bequeathing only one dollar to his son Elroy. George’s previous will divided his estate equally among his two children. The new will contains a no-contest clause. If Elroy believed that Judy had unduly influenced George to change his will and effectively disinherit Elroy, there would be little reason for Elroy not to challenge the will. Even if the court upheld the new will, Elroy would only lose a dollar.
However, if George had left Elroy $100,000 in his latest will, Elroy might think twice about challenging it. On the one hand, if the court found Elroy’s challenge meritorious, he would stand to inherit a million dollars. On the other hand, if the court rejected his challenge, he would lose his $100,000 bequest.
Likewise, if you plan to disinherit someone entirely, a no-contest clause in your will is unlikely to prevent a challenge to a determined heir; they would simply have nothing to lose. If you are genuinely concerned about a will contest, speak to your attorney when making your estate plan. There may be other ways to prevent a challenge, such as communicating clearly in your estate plan document about your reasons for making the bequests you did.
If you plan to leave the bulk of your estate to one person, and significantly less to others who might expect a larger bequest, it is best not to have your largest beneficiary involved in your estate planning in any way. Don’t even have them drive you to the lawyer’s office. That will help to avoid claims that they pressured you to favor them in your estate plan. You may also want to have your doctor examine you and establish that you are not cognitively impaired shortly before or after you update your estate plan. Doing so will help to refute any suggestions that you were not of sound mind when you made your will.
If you have questions about how to prevent a will contest, or how to challenge a will that contains a no-contest clause, please contact our law office to schedule a consultation.