NO CONTEST: CAN AN “AIRTIGHT” & “UNCHALLENGEABLE” DOCUMENT BE DRAFTED?

We are often asked by clients to place specific wording in their estate planning documents in order to create “no-contest” (or In Terrorem) clauses.  Simply put, many people would like to ensure that nothing they have decided upon in their Will or Trust can be challenged. No-contest clauses are typically added in order to create legal barriers for anyone who could attempt to receive a more favorable outcome than specified in the original intent of the Will or Trust, along with the added threat that the persons disputing the Will or Trust receive no inheritance as a result of their challenges.  In a nutshell, such a clause might state that if John Doe challenges the Will and its validity, he loses whatever inheritance would have been his had he not raised his objection.

In truth, clauses like this are not always enforced. In Arizona, the challenger is disinherited or penalized only if the challenger’s claim lacks “probable cause” or a valid legal reason to dispute the Will or Trust.  This means that one who challenges the contents of a Will or Trust will not be disinherited if a court decides that there really was a probable cause, or validity, for that challenge.

Two statutory provisions in Arizona deal specifically with these “no-contest” clauses.  According to A.R.S. § 14-2517,

A provision in a Will purporting to penalize an interested person for contesting the Will or instituting other proceedings or actions relating to the estate is unenforceable if probable cause exists for the contest, proceedings, or actions,

and A.R.S. § 14-10113 adds,

A provision in a Trust instrument that purports to penalize an interested person for contesting the Trust instrument or instituting other proceedings or actions relating to the Trust property is unenforceable if probable cause exists for the contest, proceeding, or actions.

Obviously, an important element in this situation is the definition of probable cause.  The Arizona State Supreme Court has essentially defined probable cause as involving the existence of evidence—at the time the challenge is made—"which would lead a reasonable person” to conclude that a dispute of the Trust or Will in question would likely be successful.  The person raising the challenge should have evidence, not simply hurt feelings, anger, or a personal story—to lead them to that conclusion.

A person who challenges a Will or Trust on multiple grounds puts him- or herself on even “shakier ground,” so to speak.  In such a scenario, each and every claim when contesting must be determined to show probable cause.  For example, if a challenger states, while trying to make a stronger case, “five good reasons” why the directives of the Will should be changed, and the court finds that only four of these reasons demonstrate probable cause, the “no-contest” clause would then be triggered and enforced.

When using a “no-contest” clause to bolster the intent of a Will or Trust, one must consider whether or not probable cause might exist for an inheritor or disinherited person to raise a challenge.  Considerations must be given to medical diagnoses, medications being taken, exactly who initiated the estate planning, who has influence (and could that influence be considered undue), along with many other facts and potential scenarios. This discussion is vital to your estate planning and ensures that if such a challenge is raised, it has been considered and addressed in advance.  This can be achieved through careful preparation with a professional attorney who stands behind her work.

One consideration we often discuss with clients is that if a person is not actually a beneficiary, then he or she has nothing to lose by challenging and triggering a “no-contest” clause.  Sometimes consideration should be given to not completely disinheriting someone, but instead providing a nominal distribution sufficient to make the beneficiary seriously consider whether or not a challenge is worth giving up that distribution.

Working with a qualified estate planning attorney adds one more “arrow to your quiver” to ensure that your plan will be followed.  As a neutral party, your estate planning attorney will know how properly craft a professional document and make sure any of the concerning facts are addressed and probable causes for challenges are eliminated.