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Protecting Your Estate Plan from Challenges: No-Contest Clause Explained

Different people grieve in different ways, and sometimes people handle the death of someone they love in ways that are confusing or frustrating, such as fighting over small things like who gets a furniture set.

I’ll write today about no-contest clauses. A no-contest clause is a provision in your will or trust or estate plan imposing a penalty if someone were to challenge it. Common challenges to an estate plan include claims such as lack of capacity, not understanding the estate plan they signed, being influenced by another beneficiary to give them more, or not having the documents witnessed appropriately or notarized.

As an example, say I had one son and one daughter and wanted to leave one of them more of my estate. If I wanted to leave my son 60% and leave my daughter 40% of my estate, I could institute a clause stating that if my daughter challenges the fact that it’s an unequal division, she would get nothing. With this clause as part of the estate plan, she might be encouraged to simply accept her 40% instead of filing a lawsuit to say that the document wasn’t valid or that I was influenced by my son. However, if I were planning to leave nothing for my daughter at all, a no-contest clause isn’t going to help as there is no part of the estate she will potentially lose if she files a lawsuit.

Also, if I am concerned that my heirs are going to fight about how things are divided and name one of them as executor or trustee, a no-contest cause would not work in this case as the actions of the trustee would more likely be challenged than the document itself. In those kinds of situations, it’s often better to consider naming an independent trustee as opposed to putting in a no contest clause.

Depending on your situation, a no-contest clause may be something to consider and to speak with your estate planning attorney about. You may also want to try to explore ways to constructively work through arguments and potentially prevent loved ones from fighting over the items you leave behind for them, but keep in mind that the stress and grief that comes from losing a loved one can manifest in difficult and challenging ways. Your estate planning attorney can help you create a plan that serves you and your loved ones best.

For help creating or updating your estate plan, contact us at Wilson and Wilson Estate Planning and Elder Law, LLC at 708 482 7090 for our main office in LaGrange, Illinois or at 847 656 8958 for our Northbrook, Illinois office.

https://www.jdsupra.com/legalnews/protecting-your-estate-plan-from-challen-32042/