Many Californians who establish wills and trusts simply want their assets to be distributed in accordance with their wishes while avoiding conflict. This is especially true when loved ones are written out of an estate plan or assets are distributed in a lopsided fashion. In these instances, an estate planning document may be legally challenged. Sometimes beneficiaries, or those who thought they should have been a beneficiary, claim that a will or trust was created under coercion, duress, or undue influence. In other cases, a will is challenged on other grounds, such as failing to adhere to statutory requirements.
To avoid these disputes, Californians may be tempted to create no-contest clauses in their estate planning documents. These clauses essentially penalize a beneficiary in the event that they choose to take legal action to challenge the validity or accuracy of an estate planning document. California generally disfavors these types of clauses, but there are certain circumstances when they will be deemed enforceable. Knowing how to craft an enforceable no-contest clause can be crucial to successfully developing one’s estate plan.
Under California law, there are three ways that a no-contest clause can be deemed enforceable. First, a clause can be valid when a direct contest, that is a legal filing that seeks to invalidate an estate planning document or one or more of its terms due to forgery, incapacity, duress, or fraud, is brought without probable cause. The second application of the no-contest clause arises when someone claims that the transferor of property didn’t have the legal ownership to do so. The third way that a no-contest claim can be deemed enforceable is when a creditor’s claim is filed.
No-contest clauses highlight the intricacies of estate planning. While estate plans can be customizable and tailored to fit one’s needs, they are also subject to state law, which can impose some limitations. Therefore, those who want to create the best estate plan for them in light of their circumstances and the law should consider whether the assistance of a legal professional would prove beneficial to them.