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:
"(1) A direct contest that is brought without probable cause.
(2) A pleading to challenge a transfer of property
on the grounds that it was not the transferor’s property at the time of
the transfer. A no contest clause shall only be enforced under this
paragraph if the no contest clause expressly provides for that
application.
(3) The filing of a creditor’s claim or
prosecution of an action based on it. A no contest clause shall only be
enforced under this paragraph if the no contest clause expressly
provides for that application."
A key change to the no-contest clause law is that the contestant will not be penalized if they had probable cause to bring a challenge. Probable cause "exists if, at the time of filing a contest, the facts
known to the contestant would cause a reasonable person to believe that
there is a reasonable likelihood that the requested relief will be
granted after an opportunity for further investigation or discovery."
Prob C § 2131(b).
Prob C § 2131(b).
From the example above, disfavored son knew that his dad was frail and vulnerable. He was a widower who lived in a large house by himself. He recently had met a much younger and attractive woman at the country club one day. The woman had a reputation as a gold digger amongst club members. The other brother and daughter were largely absent from their father's life. When the disfavored son approached the jezebel, she became infuriated that he had the audacity to wreck her malevolent plans. The woman then told the father of disfavored son's behavior and the father essentially cut said son from his estate since he had been brainwashed by her. When the father passed away, his will provided the woman with millions, the absentee children with $250,000 each and disfavored son with $25,000. Determined that his father was the victim of undue influence, disfavored son challenged the will despite the no-contest clause. Since there was probable cause, disfavored son's inheritance would remain intact even if the lawsuit proved unsuccessful.
