A no-contest clause is an interesting estate planning tool. Essentially, it’s just a clause you can put into the estate plan saying that, should one of the heirs challenge that plan, they won’t get any of the assets.
For example, this is sometimes done with unequal bequests. Maybe you have three children, and two of them will be getting half a million dollars. The other child will only be getting $10,000. You think that they will challenge the will, so you add a no-contact clause saying that if they challenge it, then they won’t even get the $10,000.
Stopping frivolous challenges
It’s important to note, however, that this doesn’t mean a contest or a challenge is impossible. The heir can certainly still contest the will, perhaps alleging that they think it was fraudulent or that their siblings engaged in undue influence. They can do this even if you have no contest clause in place. And, if they are successful – i.e., they show that the will actually was fraudulent – then there is no penalty.
What a no-contest clause does, then, is to stop frivolous challenges. If that person is just angry that they’re getting less money than their siblings, the no-contest clause will make them think twice about challenging it — assuming they would rather have something than nothing. But if they do have a valid reason to challenge the will, they can still do so.
It’s important to think about how complicated these types of situations can be while drafting an estate plan. This way, you can use all the necessary tools to achieve your intended results.