When preparing your estate plan, you want to make sure your intentions are honored. No matter how clear you are about your wishes, there may be a disgruntled relative who wants to challenge your estate plan. One way to deal with this problem is by adding a no-contest clause.
What is a no-contest clause?
A no-contest clause is a provision in an estate document, usually a will or trust, states that your estate plan is a clear and accurate statement of your intentions, that you expect your family to honor your intentions, and that anyone who contests the document in a court action will forfeit some or all of the assets they would have received. Such a clause is less effective if the individual is completely disinherited because then they have nothing to lose. These provisions can help deter unhappy heirs from dragging your estate through the court system after your death. However, they must be used according to state statutes.
California's law regarding the "no contest" clause
No-contest clauses are fairly common in most states. In California, the law underwent a radical change in 2010, when Probate Code section 21310, was enacted. The law now provides that no-contest clauses can only be enforced under one of three scenarios:
- Direct contests brought without probable cause,
- A pleading to challenge the transfer of property on the grounds that it was not the transferor's property, and
- When there is a creditor's claim and the clause expressly applies
The definition of a "direct contest" is found in Probate Code section 21310(b). A direct contest is one which claims the invalidity of a protected instrument. This claim may be based on one or more of four grounds. The grounds are "forgery, lack of due execution, lack of capacity, and menace, duress, fraud or undue influence."
It is important to understand the uses and limitations of no-contest clauses. An experienced estate planning attorney can help avoid probate litigation or help you deal with issues which have already arisen. For more information, or for assistance with your estate planning needs, please contact us.