'No contest' clause may not be your answer
“And another thing,” says the client across from me, tapping his finger on the desk for emphasis, “I don’t want Junior to get anything. He’s an ingrate who broke his mama’s heart, and didn’t even call when I had my heart attack.”
“No problem,” I reply, “we can leave him nothing.” It’s not the first time I’ve heard something like that.
But that isn’t enough. “What’s more,” he continues, “I want one of those No Contest clauses I’ve heard about, so he can’t challenge the will.”
“Alright, that’s certainly doable,” I respond. “How much do you want to leave him?”
“Weren’t you listening?” sputters my client. “I don’t want to give him anything! Not one stinking penny!”
Therein lies the problem. As I must now explain to my angry client, a No Contest clause only works if you leave the disfavored heir something. Otherwise it is meaningless.
A No Contest clause is a provision in a will or trust which says that if anyone challenges the document, or any part of it, they get nothing. These used to be called “in terrorem” clauses, and yes, the root word is terror. The purpose is to give someone a disincentive to challenge the estate plan. If they challenge it, and lose the contest, they also lose what they otherwise would have received.
But if you don’t leave that person something, they have nothing to lose. It is no disincentive to tell Junior that if he challenges the will, he gets nothing, when he isn’t getting anything anyway. Sometimes the client’s response is to leave him some minuscule amount, such as a few hundred dollars. But that is hardly likely to work as a disincentive. So in order to make a No Contest provision work, you have to leave that potential challenger enough to make it worthwhile.
How much that needs to be depends in part on how large the estate is – a $10,000 bequest with a No Contest clause might be enough to stop a challenger who might only get $100,000 if he wins, but it is not going to be enough disincentive if the potential cash prize runs into the millions.
So in order to make this disincentive work, you have to grit your teeth and leave something to a person who you, presumably, have good reason to want to completely write out of your estate plan. And that is hard for people to do.
A few caveats
First, No Contest clauses don’t always succeed in deterring litigation, because the desire to challenge may be based as much on emotional issues as financial ones.
Also, this does not generally work if it is your spouse you are trying to disinherit. The laws have specific provisions protecting spouses from disinheritance. You can partially disinherit your spouse, but not completely.
If you are trying to disinherit someone, you should probably consider a living trust instead of just a will. Under our state’s laws regarding wills, a No Contest clause is not effective if the judge finds that there was “probable cause” for the challenge. The law on trusts, on the other hand, says that a No Contest clause is enforceable, even if there was probable cause.
On top of that, procedurally it is much more difficult to challenge a trust than a will. With a trust, there typically is no probate case so it is more difficult for the challenger to put up roadblocks.
This is general advice only; for specific advice in a particular situation, you should always consult a competent attorney.
Kenneth Kirk is an attorney and estate planner in Anchorage.