What is the effect of a no-contest clause upon a trust or will?

On Behalf of | Jul 29, 2022 | Estate Planning And Administration |

When an individual executes a trust instrument or a will, their intent is to have their assets distributed according to their desires. They may fear that their directions will be challenged later in court, leading to infighting among beneficiaries. To prevent this, they may include a no-contest clause—but will it work?

What is a no-contest clause?

No-contest clauses have become popular additions to estate plans. The provisions seek to dissuade potential challenges from beneficiaries by disinheriting any beneficiary who brings a challenge to the trust or will. If the beneficiary does so, the provision is automatically triggered, placing them at risk of voiding anything they stood to gain.

New York has codified the enforcement of no-contest clauses in EPTL 3-3.5 and will uphold the intent of a testator in many cases. But the provisions are not foolproof.

They have limitations

First of all, a no-contest clause only operates against named beneficiaries. It will not dissuade a challenge by someone who has already been disinherited. It must also be as unambiguous as possible—a vague provision runs the risk of the court choosing to ignore the no-contest clause as being unenforceable on its face.

Furthermore, New York law provides a number of safe harbor provisions, at least in the case of no-contest provisions within a will. For instance, the clause does not prevent a good faith challenge that the will was forged or subsequently revoked, in addition to other exceptions.

If you are considering including a no-contest clause, seek the assistance of an estate planning professional to ensure it is drafted properly. Do the same if you wish to challenge an instrument that includes such a provision—so that you know what risk you run by bringing the challenge.