In today’s video blog, Petaluma trust attorney Bridget Mackay talks more about what a no contest clause is and how the clauses power has changed over the last several years.
Hi there. My name is Bridget Mackay, I’m an estate planning and elder law attorney in Petaluma, California. This is my video blog, and today I want to talk about “no contest clauses.
So, these are clauses that are in wills or trusts more commonly that kind of say, “Hey beneficiary, if you choose to challenge this trust then you’re not going to get a dime.” These are pretty standard clauses and trusts and I often have clients ask me to put them in, even though they’re already in our trust. But, there’s something you should know as a person who’s going to make a trust. And that is, you know, we assume this is going to prevent fighting on the other end, once we pass away and our trust is administered. We’re hoping that this clause would make it, so our beneficiaries don’t fight. Although this clause has changed in its power, I guess, over the last several years.
So, there’s been laws passed that are narrowing when you can claim it’s a contest. So, in other words if I were a trustee and I was administering a trust and a beneficiary was upset about the content of the trust. So, the trustor said this beneficiary is getting less than another beneficiary or left them out altogether. Then, that beneficiary could sue the trust and I would have to defend it and say, “Hey this person can’t sue this trust because there’s a clause in this trust that says If anybody decides to sue they lose everything. And so, usually these were built into trusts as a deterrent to those future beneficiaries that feel like they want to get litigious about the trust.
Here’s three things you need to know about these clauses.
Number one. Over the last five 10 years or more, the definition of what a contest is has narrowed.
Number two. Along those same lines, attorneys can now, attorneys for the beneficiaries, can now petition the court and ask, “Hey we’re about to file this lawsuit. Would you consider that to be a contest?” So, they get the sort of pre-ruling about whether it can be a contest or not.
And the third thing is just a practical thing. If you’re building a trust and you want one of these clauses in it. Is that, always give, if there’s someone you want to exclude from your trust, you should really give them something that would make it not worth it for them to lose if they were to sue the trust. It’s probably the best part of, advice I can give on these types of clauses.
If you want to know more contact an experienced estate planning attorney in your area and ask them.