One of the problems for estate planners is trying to craft a plan that does not give anyone a reason to challenge it. This can be difficult at times, but using a no contest clause can help.
It is a simple fact of estate law that people who receive inheritances are not always satisfied with what they receive. This is especially true if someone has received less than another person. For example, if one sibling receives a smaller inheritance than other siblings.
Traditionally, there was not much that could be done to prevent these people from challenging an estate. However, today estate planners are utilizing "no contest clauses" in an attempt to prevent these challenges as discussed by the Wills, Trusts & Estates Prof Blog in "New Case In Virginia Sheds Light On No Contest Clauses."
A no contest clause is a statement in a will or trust. Typically the clause provides that if someone is a beneficiary of that will or trust and challenges the validity of the document, then the challenger will be cut out of the will or trust and receive nothing. This obviously creates a strong disincentive for heirs and beneficiaries not to launch legal challenges to inherit more than an estate plan already gives them. Of course, the clauses do not prevent challenges from people who receive nothing from the will or trust.
Generally, courts will uphold no contest clauses but the clauses will be strictly interpreted. The court will not go outside of the plain meaning of the clause to disinherit challengers. In many states, an exception to enforcement of the clauses exists by law. If a court believes that a challenge was made in good faith, then the no contest clause will not be enforced.
Reference: Wills, Trusts & Estates Prof Blog (Feb. 24, 2016) "New Case In Virginia Sheds Light On No Contest Clauses."
