In your estate plan, you make arrangements for passing on your assets to your family members and deciding who gets what. You want to be assured that your hard-earned assets will ultimately be conveyed to the people you care about and who have cared about you. The reward, or "carrot."
The troublesome part is trying to avoid family conflicts that may arise after you're gone. A death in the family brings out the best--and sometimes worst--in people. You don't want your children to be fighting over the estate assets or for anyone to feel as if they should have received a better share. Disappointed heirs and other interested persons may contest a Will, and it happens more often than you may think.
To help ensure that
your beneficiaries think twice before challenging the validity of your Will, you
sometimes need to have a stick to go with the carrot.
That "stick" is what's called a no-contest clause, also known as an in terrorem clause. The no-contest clause is a brief paragraph added to your Will, stating that any beneficiary who contests or attempts to contest a Will automatically forfeits any inheritance that beneficiary might have otherwise received. The probate court then treats the beneficiary as if he or she had predeceased you, and the beneficiary's share will be distributed to your other beneficiaries, per the succession terms of your Will.
A big advantage of the
clause is simply to discourage a family member from using the threat of a Will
contest to force others to acquiesce and give up something they otherwise had a right to receive. The threat of automatic disinheritance can be very motivating against someone looking to cause trouble.
Keep in mind that a no-contest clause does not actually prevent a beneficiary from contesting the Will. Any person with an interest in the estate has standing to sue in probate court. The clause simply provides consequences for any person who does so, or even threatens to do so.
But no-contest clauses are not always enforceable by the courts and there's a catch: Under Minnesota law, the clause will be deemed unenforceable if there was probable cause for the litigation. What that means is if the beneficiary has sufficient evidence that the Will (or a portion thereof) is invalid, the court will set aside the no-contest clause and hear the case. An example might be if the beneficiary can produce evidence of coercion or fraud.
Although there is never any guarantee that a no-contest clause will be enforceable, it is still an important tool in your estate plan to discourage any of your heirs from challenging your intent, and to provide consequences if they do.
* * *
A qualified estate planning attorney can work with you to craft a Will that helps protect your assets for your family.