For as long as any California estate planning practitioner alive today can remember, a critical estate planning tool has been the “no contest” clause. A “no contest” clause is designed to protect a will or trust from future attack by those dissatisfied with the bequest provided them by the testamentary instrument. A “no contest” clause puts the challenger to a choice: he is free to contest the validity of the will or trust – for example, by claiming the decedent was of unsound mind when he or she executed the instrument in question, or asserting that the instrument was procured by someone’s wrongful influence on the decedent – but if he loses he forfeits whatever bequest he may have been entitled to under the will or trust.
“No contest” clauses have been a feature of estate planning documents – and trusts and estates litigation – for over a hundred years. The California Supreme Court has stated on more than one occasion that “no contest” clauses are valid in California and are favored by the public policies of discouraging litigation and giving effect to the purposes expressed by the decedent.
The California Legislature in recent years has come to the view that the choice a “no contest” clause presents to the would-be challenger potentially does more harm than good. The concern is that too many legitimate challenges have been discouraged by the draconian threat that the challenger’s inheritance would be forfeited if the challenge were unsuccessful. As a result,the Legislature passed a law, signed by Governor Schwarzenegger and effective January 1, 2010, that in most cases will penalize the challenger of a trust or will only if the contest is deemed truly baseless, that is, brought without probable cause to believe it may succeed. If the challenger presents a credible claim but happens to lose the case, the challenger will not be stripped of his
bequest under the challenged trust or will.
As a result of this change in the law relating to the enforceability of “no contest” clauses, challenges to trusts and wills are likely to increase. The attorneys in Carr, McClellan’s Trusts and Estates Litigation Group have handled hundreds of cases involving challenges to trusts, wills and other dispositive documents, both on the side of the challenger and of the proponent of the testamentary instrument. We stand ready to help our clients navigate the impacts of the new law in 2010 and beyond.