DBTC Law Firm

The “terror” of no-contest clauses

Clients, seeing or hearing of bitter and expensive legal disputes in other families over estates, concerned about their own family engaging in such disputes after their death, or both, often seek to avoid that by requesting their attorney insert “In terrorem” (Latin– “about fear”) or “non-contest” provisions in their wills or trusts. Simple in concept, these clauses rarely serve the intended purpose and, as a recent decision of the Arkansas Court of Appeals demonstrates, can cause, as well as resolve, probate litigation.

Such a clause in a will or trust may read, “any beneficiary challenging the validity or distribution of this will or trust shall be disinherited and take nothing.” Clients do not realize the various ways that estate litigation can, and sometimes should, arise: Has the executor or trustee who controls the estate after the death of the client actually stolen from or been negligent with the assets of the estate? Was grandma competent, or because of age, senility, poor judgment and ungrounded fears, actually incompetent or under substantial improper influence when she signed such a will or trust giving her entire estate to Hari Krishna? Is the language of the will or trust truly so ambiguous that how it should be distributed is completely uncertain? Families and next of kin feel strongly and morally justified to set such wrongs right, but barring the door is a “no-contest” clause!

In a recent decision, the Arkansas Court of Appeals refused the request of one son to enforce an in terrorem clause against his brother because neither son abided by their mother’s wishes or the terms of the trust. Scott v. Scott, 2016 Ark. App. 390. Our courts have also generally ruled that when a challenger of a will prevails on whatever claim they have, the no-contest clause is deemed inapplicable. So, has it really accomplished anything? One must also realize that the sanction of taking nothing from the will or trust has no validity if the purported beneficiary is given nothing in the first place: a prodigal child is given one dollar in the will, but faces the sanction of losing “everything” if he challenges the will– really what does he have to lose? To make this work against a beneficiary to whom the client may want to leave little, the client will have to leave that beneficiary enough that he risks a significant forfeit if he does challenge the will.

In summary, most if not all of the claims against a will or its administration that a “no-contest” clause may stop can nevertheless be asserted, may prevail, and perhaps should prevail. That is not to say in very carefully considered circumstances, a properly and carefully conceived and drawn no-contest clause could effectively and substantially diminish the possibility of spurious estate litigation, but such a clause is almost never the simple, “cut out the bad apple” result that clients would presume when using one.

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