August 22, 2013

No-Contest Clause

A no-contest clause is verbiage found in a testamentary instrument that discourages a beneficiary from challenging the validity of the instrument by causing forfeiture if an unsuccessful challenge is brought. For example, a father writes in his will that his son is to receive only $25,000 from his estate even though his estate is worth millions and the son's siblings, a brother and sister, each receive $250,000. If the disfavored son legally challenges the validity of the will and loses, he may be disinherited completely as a result of the no-contest clause. 

California law has significantly altered the landscape of no-contest clauses. Whereas before the no-contest clause law was expansive, i.e. a beneficiary's unsuccessful attempt to invalidate a will or trust usually resulted in them losing their inheritance. Operative January 1, 2010, California law took a much narrower approach in defining what constituted a "direct challenge" to a no-contest clause. The result is that a beneficiary has more leeway to challenge a no-contest clause.

The California Probate Code Section 21311 states that a no-contest clause shall only be enforced against the following types of contests: