Legal Definitions - no-contest clause

A no-contest clause (NCC), sometimes referred to as an in terrorem clause, is a specific provision written into a will or trust. Its primary purpose is to discourage beneficiaries from challenging the validity of the will or trust after the person who created it (the "testator" for a will, or "settlor" for a trust) has passed away.

If a beneficiary attempts to challenge the document in court and their challenge is unsuccessful, this clause states that they will forfeit their inheritance or receive a significantly reduced share. The idea is to deter frivolous lawsuits and ensure the testator's wishes are carried out without prolonged legal battles.

The enforceability of no-contest clauses can vary significantly depending on state law. Many states will uphold such a clause if a beneficiary's challenge clearly violates its terms. However, most states also recognize an important exception: if a beneficiary has "probable cause"—meaning a reasonable, good-faith belief that the will or trust is invalid due to issues like fraud, undue influence, or improper execution—they might be able to challenge it without losing their inheritance. Beneficiaries can also sometimes ask a court for guidance on whether a potential challenge would trigger the clause before proceeding.

Here are some examples to illustrate how a no-contest clause might apply:

• Example 1: Disgruntled Sibling

  Mr. Henderson's will leaves the majority of his substantial estate to his daughter, who was his primary caregiver during his final years, and a smaller, fixed sum to his son, with whom he had a strained relationship. The will includes a no-contest clause. After Mr. Henderson's death, the son feels unfairly treated and considers challenging the will, claiming his sister exerted undue influence over their father. However, he is aware of the no-contest clause. If he proceeds with the challenge and cannot prove undue influence with "probable cause," he risks losing even the smaller inheritance his father had intended for him.

• Example 2: Conditional Inheritance

  A wealthy grandmother establishes a trust for her grandchildren, stipulating that each grandchild will receive a significant inheritance upon turning 30, provided they have completed a bachelor's degree from an accredited university. The trust document contains a no-contest clause. One grandchild, who chose to pursue a career in the arts without completing a degree, decides to challenge the trust's validity, arguing that the educational requirement is discriminatory or against public policy. This challenge would likely trigger the no-contest clause, potentially disinheriting them from the trust if the clause is upheld and they cannot demonstrate "probable cause" for their claim.

• Example 3: Seeking Pre-Challenge Clarification

  Ms. Chen's will leaves a large portion of her estate to a newly formed charitable foundation, with a modest bequest to a distant cousin. The will includes a no-contest clause. The cousin later discovers compelling evidence suggesting that Ms. Chen may have been suffering from severe cognitive decline when she signed the will, and that the foundation's director was heavily involved in its drafting. Before filing a formal challenge, the cousin's attorney advises them to seek a court's preliminary opinion. They want to determine if their specific evidence would constitute "probable cause" to challenge the will without triggering the no-contest clause, thereby protecting their modest inheritance while still pursuing a potentially valid claim regarding Ms. Chen's mental capacity.