Protecting Your Estate Plan from Challenges: No-Contest Clause Explained

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December 6, 2021

Attorney Ashley Hawley explores no-contest clauses – what they are, when they make sense, and when you should avoid them in her latest vlog.

Video Transcript:

People handle grief differently and sometimes how a person handles the death of a loved one can be both confusing and also extremely frustrating – fighting over little things like, who gets the table and the chairs, for example. I’m Ashley Hawley and I’m an attorney at Ruder Ware on our Trusts & Estates team.

Today, I want to talk no-contest clauses. A no-contest clause is a provision in your will or trust or estate plan that basically imposes a penalty if someone were to challenge it. Common ways that a person could challenge an estate plan are things like lack of capacity, they didn’t understand the estate plan when they signed it, they were influenced by another beneficiary to give that beneficiary more, maybe they didn’t have the documents witnessed appropriately, they weren’t notarized, they weren’t … I didn’t sign them the right way. Those are common challenges to an estate plan.

Let me give you a couple of examples of where no-contest clause might prevent fighting in those kinds of instances. Let’s say that I decided that I’m going to give my son more than half of my estate. I have two children, I’m going to give my son 60%, I’m going to give my daughter 40%. In that instance, instituting a clause that says if my daughter challenges the fact that it’s an unequal division, then she gets nothing, might encourage her to just accept her 40% and walk away with it, instead of filing a lawsuit to say that the document wasn’t valid or that my son influenced me to draft it in a certain way.

If I’ve already written my daughter out completely, a no-contest clause isn’t going to help because if I say my daughter gets absolutely nothing, and she files a lawsuit, and if she loses she gets absolutely nothing, she’s not encouraged to not file a lawsuit. So in those cases the no-contest clause might not work. Another area where a no- contest clause does not work is an instance where I’m concerned about my son and daughter fighting and I name one of my children as the executor, the trustee, the personal representative of the estate.

In those cases, where I list a child and I’m concerned that they’re going to fight about how things are divided out. You know how my son divided out the the table and the chairs, for example. In those kinds of cases, that is a challenge over the actions of the trustee. It’s not a challenge over the document itself. So, I encourage you in those kinds of situations to consider naming an independent trustee rather than putting in a no contest clause.

So, a no-contest clause is something to consider, something to have a conversation with your estate planning attorney about. And, if you find yourself in the instance, in the case where you’re fighting with family members about who gets the table and who gets the chairs, I would encourage you to reach out to a member of Ruder Ware’s Litigation Team to talk about ways to constructively work through those kinds of arguments.

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