There is value in the story of an older client who had seen a very interesting clause employed in a will. There was a great deal of money at stake and the many family members had little reason to love each other, because they had never met and never knew of each other’s existence. It was expected that the will would be heavily contested on several different fronts in every conceivable way. The testator realized that a truly lengthy contest would result with the bulk of his estate in the hands of people he really didn’t care for in the least: Lawyers.
In fact, that is not an unworthy consideration in a heavily contested will or long fought divorce; lawyers may end up with the bulk of the estate or marital property. The move to arbitration is one of the ways that the legal profession is trying to prevent these unseemly outcomes. The clause that this client had seen employed in his grandfather’s will was like the following, “Anyone named in and contesting this will receives the maximum bequest of $1, regardless of the outcome.” This clause meant that regardless of whether the litigant had proven undue influence or diminished capacity or fraud, they would still only receive $1 as a bequest specifically because of having brought and proven their claim. Since none of the family knew or trusted one another a great deal, this effectively eliminated potential contests.
Often testators anticipate their will to be contested and they wish to insert what is called a no-contest clause in their will. The no contest clause is exactly what this elderly client had described, because it was designed to terrorize a would-be contestor of the will into thinking twice about facing the threat of getting just a dollar rather than the sum they had been left. Such clauses are also sometimes called terrorem clauses, because they are designed to scare the beneficiaries into accepting the bequest they are given. The no-contest clause described above was executed correctly in that each relative was wisely given something in the will that was worth the fear of losing.
In drafting a no contest clause, it is important not to entirely disinherit someone or to give them a bequest that is not something that they are afraid to lose. If someone is entirely disinherited, then they risk nothing by contesting the will. If they are successful, they may be able to have the will nullified in whole or in part. That is risked when the testator decides not to give someone who would traditionally receive money nothing at all. That is a mistake, a crucial error in such a clause, where the person who might challenge is given nothing to fear losing and therefore has no reason not to contest the will with every possible means. This situation is made worse when there is a group of people who are “disinherited,” and contesting the will. When this happens, the rest of the family must wait to inherit, which may cause substantial hardship on those who have done nothing wrong and are often those who are nearest and dearest to the testator.
Many jurisdictions refuse to strictly enforce no contest clauses because they discourage valid and invalid contests alike. These states look to “probable cause” to bring the contest and, if there is any, refuse to enforce the penalty against the challenger. Furthermore, no-contest clauses are falling out of vogue legally and are being construed very narrowly by courts. Many enquires into the will are not deemed contests in the eyes of these courts, because they wish to see no contest clauses become a thing of the past.
Before deciding to insert such a clause you should ask your attorney how your state is handling them and what is likely to happen in the future. In addition, you must make sure that those whom you decide not to make a substantial part of your will and attempt to intimidate with a no contest clause are left some amount of money that they would think twice about losing.
However, there may be better ways to leave your assets to those you choose rather than that traditional will. For many reasons the living trust is the superior instrument for most people’s needs. It is important to consult your attorney to find out the best way to protect your assets and whether a will with a no contest clause is a viable option in your state. A will, in many ways, is too encumbered with restrictions that make a trust a much better option if you would like to leave your assets to those that you choose and reduce the chances of your desires being challenged. Again, as always, ask your local attorney for advice about your wishes and find out whether no contest clauses are becoming a thing of the past in your jurisdiction.
Ronald Hudkins is a retired U.S. Army Military Police member that was assigned as a staff researcher. He has coordinated with military and criminal investigators, set on court marshals and worked closely with the Staff Judge Advocate Generals Office (JAG). He has a keen sense of legal matters - their interpretation, initiatives and guidelines. For imperative financial planning needs he suggests his book "Asset Protection and Estate Planning for All Ages." Additionally, he offers a Free Newsletter at his web site: http://www.AssetProtectNow.com.