We’ve addressed the issue of Trust and Will no-contest clauses several times in our blog posts and videos in the past, but we think it’s an important issue to keep people aware of what the legislation is in California pertaining to no-contest clauses.
A no-contest clause is generally included in a Trust, Will, or both, and many people are familiar with them. They say that if you contest your parents’ wishes under the Trust or Will, that you are to be treated as if you were disinherited. The parent doesn’t want you contesting their wishes – what they intend to happen to their estate after they die.
When Do No-Contest Clauses Apply in California?
Generally speaking, no-contest clauses do not apply to California Trust and Wills except in one of three circumstances. The first circumstance is, if you challenge the terms of the Trust based on undue influence, lack of capacity, duress, fraud, any of those type of doctrines, and you do so without probable cause. Chances are you will be disinherited if you challenge the validity of a Trust or Will on one of those bases.
This is the first way that the legislation allows the no-contest clause to be used against you, but it does have a special caveat and that’s the probable cause exception. If you brought your Trust and/or Will contest, and you had probable cause to bring that lawsuit, then you will not be disinherited. Probable cause means that you reasonably believed that you had sufficient grounds to succeed in your lawsuit.
But you’ve got to keep in mind, judges are people. Some judges may hold the no-contest clause against you, where another judge, under the same set of facts, same set of circumstances, would not hold the no-contest clause against you. That means you can never be certain if the no-contest clause will apply or not. If you intend to file a Trust or Will contest, you should assume that you will trigger the no-contest clause.
There’s also two other ways that the no-contest clauses can be used against you. The second way is if you file a creditor’s claim against your parents’ Trust or estate, and the no-contest clause says that filing a creditor’s claim is a triggering event. That means you must have special language in the Trust terms, in the no-contest clause, before that would be used against you. You want to make sure you pay attention to that. If you think you’re going to file a creditor’s claim against a Trust or a Will because you believe your mom or dad owed you money, you better take a close look at the no-contest clause. Please note that under this prong of the no-contest clause, there is no probable cause exception. In other words, if you file a creditor’s claim, you’re done! It doesn’t matter how reasonable you were in bringing that creditor’s claim.
The third way the no-contest clause may disinherit you – and we’re seeing this one more and more – is where you allege, in some pleading with the court, that your mom or dad didn’t have ownership of property transferred to the Trust. For example, let’s say that there’s a husband and wife and the wife is completely demented, she has Alzheimer’s disease, she’s still alive, but she no longer has decision-making authority or testamentary capacity. And dad decides to revoke their old Trust, which has all community property in it, and create a new Trust. Your dad then transfers all the property from the old Trust into the new Trust. If you want to challenge dad’s actions by arguing that he did not have ownership of mom’s half of the community property, and therefore, could not transfer it into the new Trust, you may be disinherited. As with creditor’s claims, there is no probable cause exception here. That means as soon as you file a lawsuit that challenges dad’s ownership of property, you’re done. You have triggered the Trust’s no-contest clause.
These no-contest clauses are real. They don’t apply under most circumstances, but they do under the three circumstances described above. You want to take a careful look at them and make sure they don’t turn around and bite you in the rear.