You’re Doing it Wrong…Let’s All Stop Using California No-Contest Clauses!

Decline Of California No-Contest Clause

Why is anyone still using no-contest clauses in California Trusts and Wills?  This has to be one of the most abused, misused, and misunderstood Trust provisions ever.  And yet, I bet you anything that if you look in your Trust or Will right now you will find a no-contest clause.

No-contest clauses are well intentioned—to prevent Will and Trust contests.  The problem is that they utterly fail at this goal.  In fact, more litigation is undertaken because of confusion surrounding no-contest clauses than ay other type of clause (just my opinion based on personal experience—nothing scientific to prove this).

First, no-contest clause are largely unenforceable now.  Under California law, no contest clauses do NOT apply except for some very narrow exceptions.  And even then, the court can let a beneficiary “off-the-hook” if there is “probable cause” in bringing the Trust or Will contest in the first place.  The bottom line: no-contest clauses are dead in California, and yet you still see them walking around (a bit like zombies).

Second, many people completely disinherit a child and then think the no-contest clause will prevent them from suing to overturn the Trust or Will.  That’s false.  A no-contest clause (even if it applies) would just treat someone as though they have been disinherited and gives then NO assets under the Trust or Will.  If someone is already getting nothing, then they have nothing to lose so why not contest?

Third, many Trustees, especially private Trustees, believe the no-contest clause prevents a beneficiary from questioning their management of the Trust assets.  Not so.  Yet, that threat is made time and again—“if you challenge my accounting you will be disinherited.”

If we really wanted to create an incentive to filing bogus Will and Trust lawsuit how about having some shifting of attorneys’ fees.  In other words, the losing party has to pay the winning party’s attorneys’ fees and costs.  Now that would be a real incentive.  Under our system of justice, each party pays their own attorneys’ fees regardless of who wins or who loses.  But in Britain, the prevailing party is entitled to reimbursement of fees and costs from the losing party.  If you have to pay fees and costs, there would be a far more careful consideration before filing suit.

Let’s quit fooling ourselves and just drop the no-contest clauses.  They may give the Trust Settlors comfort when they are signing the Trust documents, but they are utterly meaningless in practice and just cause more unneeded litigation.