We are often asked about what a no-contest clause can and cannot do in California when setting up a Will or a revocable trust. Basically, a no-contest clause is language in a Will or trust that results in a challenging person losing their inheritance if they lose the contest battle (the court action). You must however ensure that the Will or trust has a no-contest clause in it for it to be useful.
Many changes to the California no-contest law have occurred over the last twenty years. The current law is contained in California Probate Code Section 21310, et al. Enforcement of no-contest clauses do have limitations. There are only a few situations where they can be enforced, including where (1) there is a direct contest that is brought without probable cause, (2) a challenge is made that the property subject to the challenge was not owned by the Will maker or trust grantor; or (3) creditor claims issues.
Here are some common examples of a direct contest to a Will or trust:
- Lack of Capacity
- Undue Influence
In the situation where a direct contest is filed, a reasonable person standard is applied. This means that if the person who filed the lawsuit has facts that would cause a “reasonable person” to believe that there is a likelihood that the lawsuit would be won, then the no-contest clause in the Will or trust would NOT apply. The most common contests filed are based around lack of capacity and undue influence over the trust grantor or will maker.
Note too that challenging the actions of a Trustee or regarding the financial reporting (accountings) of the Will or Trust do not trigger a no-contest clause to come into effect. These are legitimate challenges that will not prevent an heir or beneficiary from inheriting.
If you would like help establishing or updating your estate plan, please reach out to our team at (760) 448-2220 or at https://www.geigerlawoffice.com/contact.cfm.