You can use a no-contest clause as part of your estate plan if you are worried about estate challenges from certain beneficiaries. This clause acts as a way to prevent those challenges.
For instance, maybe you have three children. You are leaving one of them significantly fewer assets than their siblings, and you also know that the three have not always had the best personal relationship. You are worried that the child who is receiving less is going to challenge the estate plan, but you want to keep everything out of litigation in court.
In this situation, a no-contest clause could stipulate that, should the child who is receiving less decide to challenge the estate plan, they will lose even the smaller inheritance that they were set to receive. They need to simply accept the provisions in the estate plan without taking it to court.
Is a no-contest clause always enforceable?
No, a no-contest clause is not always enforceable. In some cases, there is just cause for legal action. For instance, if someone challenges an estate plan on the grounds of undue influence, and it is then proven that undue influence did exist, the court may not enforce the no-contest clause.
In other cases, the person may be able to demonstrate that it was a good-faith action. Even if they lost the case, they genuinely believed that there were issues with the estate plan that warranted the legal challenge. The court may decide not to enforce the no-contest clause because it was not a frivolous lawsuit.
When setting up an estate plan, no-contest clauses are just one component to keep in mind. It can help to work with an experienced attorney while you navigate this process.