When drafting a Last Will and Testament, some people take the opportunity to leave gifts or inheritances with very specific conditions. Others go so far as to try to use their last wishes as a way to control some of the life choices their beneficiaries make.
For instance, in 1862, Henry Budd left 200,000 pounds in a trust to his two sons provided they never grow mustaches
Although Henry Budd’s Will has made its way into the hall of fame for strange bequests, there are many people who include conditions to the gifts they leave to their beneficiaries and attempt to protect their conditions with no-contest clauses.
In this post, we’ll discuss what a no-contest clause is and what it should and shouldn’t be used for.
What is a No-Contest Clause?
A no-contest clause (also known as an in terrorem clause) can be included in a Last Will or a Living Trust, and it generally stipulates that if an heir tries to contest any part of the Will or trust, he or she will forfeit their inheritance.
Although some people might use them as a way of controlling the lives of their beneficiaries, the main purpose of this clause is to stop your beneficiaries from squabbling over your estate after you pass away. The threat of being disinherited is meant to persuade your heirs to accept your last wishes as written instead of fighting for more assets or money.
Are No-Contest Clauses in Wills Enforceable?
The Uniform Probate Code (UPC) is the act that governs inheritances, and it allows for the inclusion of no-contest clauses. Typically, they are enforced unless the beneficiary contesting the Will has probable cause for disputing it.
Probable cause can exist in situations where the conditions of inheritance are unreasonable like a restriction on growing facial hair. However, a more reasonable condition, such as receiving a large financial gift after the beneficiary turns 21, would likely not suffice as probable cause for disputing a Will.
That being said, there are still differences from state to state as to how these clauses are accepted or struck down.
For example, let’s say a father who lives in Florida leaves the residue of his estate to his daughter on the condition that she divorces her husband. Knowing such a request would likely warrant a dispute from his daughter, the father also includes a no-contest clause in an attempt to prevent his daughter from refusing his stipulation.
The daughter might think she’s out of luck, but what she doesn’t know is that Florida is one of the states that doesn’t enforce no-contest clauses in wills and trusts at all. So it’s likely that she could take her complaint to court without losing her inheritance.
If she lived in another state where the rules of enforcement aren’t so clear, she might still be okay because a condition that acts as a restraint on marriage is one of the situations where it’s likely that a no-contest rule won’t be enforced.
Keeping Clear of Contestations
Even though the Latin term for no-contest clauses is in terrorem, they aren’t something you need to be afraid of.
If you’re going to include a no-contest clause in your Will, make sure you’re doing it for the right reasons as the clause was intended. It should be there to make the distribution of your assets easier and quicker for your beneficiaries since they won’t be held up in court battles over who gets what. It shouldn’t be used for things like trying to control who your children marry.