No Contest Clauses In Wills and Trusts

No-contest clauses in wills are fairly common. A no-contest clause (the fancy legal term is in terrorem clause) in a will is a provision that states that any beneficiary named in the will who contests the will or any portion of it forfeits any property to be received by that beneficiary under the will (hence, they are also sometimes referred to as forfeiture clauses).

The obvious purpose of these clauses is to prevent family disputes and challenges to the will after the testator dies.

No-contest clauses are valid in Virginia. Some states (not Virginia, so far at least) recognize a "probable cause" exception to enforcement of no-contest clauses, meaning that if a challenge to the will was made in good faith and with reasonable grounds, the beneficiary does not forfeit property left to him in the will.

Keep in mind that the will itself has to be valid for the no-contest clause to be valid. If the whole will itself is ruled to be invalid, on the basis of the mental incompetency of the testator, for example, then the no-contest clause is no good.

In a 2009 Virginia Supreme Court case, the Court held for the first time that no-contest clauses in trusts are valid as well. No real surprise there. The case is nevertheless interesting. It involved a daughter who attempted to qualify as the personal representative of her father's estate based on the position that Dad died without a will. In fact, Dad did have a will that directed his property be transferred to a trust he had set up prior to his death. The distribution of his property under the trust was very different than under the law of intestacy. By qualifying as personal representative of her father's estate as if he had no will, daughter would significantly alter her father's estate plan by essentially ignoring the trust. But, the Court held that trying to qualify as administrator did not violate the no-contest clause in the trust. The will itself did not have a no-contest clause.

While this is probably a correct ruling from a technical legal standpoint, it highlights that it is very hard to foresee every possible circumstance that may arise after you pass away.