When preparing an estate plan, I’m often asked about including a no-contest clause, and I see attorneys and others advertising their “bullet-proof” or “ironclad” documents with no-contest clauses. While I admire their confidence, no contract or trust can be fail-safe.
I started out as a young lawyer, almost two decades ago, believing the no-contest clauses I prepared should be as strong as possible, but experience and prosecuting and defending trust litigation and probate litigation has led me to a more nuanced view. I’ve seen that financial elder abusers and physical elder abusers can take advantage of such clauses to change trusts and wills in their favor and put fear in the “rightful” beneficiaries to keep them from challenging the new instruments, or even challenging their outright theft in the guise of “gifts.” Thieves have become professionals who use the law to their advantage and hide behind strongly-worded no-contest clauses preventing challenges based on the same tools I use to undo their abuses: undue influence claims, creditor claims, elder abuse actions, property characterization petitions, gift rescission, trustee removal and breach of trust/breach of fiduciary duty petitions.
California’s recent law change is beneficial, I think, in that it allows challenges to wills and trusts and will only trigger a no-contest clause if any of the following are brought without probable cause: grounds of (1) forgery, (2) lack of due execution, (3) lack of capacity, (4) menace, duress, fraud, or undue influence, (5) revocation of the instrument, and/or (6) disqualification of a beneficiary in a fiduciary relationship to the testator/trustor; OR if specifically mentioned in the no-contest clause, a pleading challenging the transfer of property on the grounds that the property did not belong to the transferor; and if specifically mentioned in the no-contest clause, the filing of a creditor’s claim or prosecution of an action based on it.
I still use no-contest clauses, but realize that the potential for elder abuse or fraud always exists and counsel my clients accordingly. Also, for any no-contest clause to have teeth, it needs to take away a beneficiary’s gift if the contest is unsuccessful, so the beneficiary’s gift needs to have some substance or the clause is meaningless.
How can I help?
If you have questions regarding your no-contest clause, an update to your living trust or will, or an issue with financial elder abuse, physical elder abuse, or probate litigation, please feel free to contact me at (888) 503-7615 or by email. The consultation is free, and I’ve been helping people with these issues in Los Angeles, San Bernardino and Riverside counties for the last 18 years. Our offices are convenient to you in Pasadena, Los Angeles and Chino Hills.