Dealing with No Contest Clauses in California Wills, Trusts

A “no contest” clause is an item inserted into many wills and/or trusts to reduce the likelihood that a beneficiary will mount a court challenge to the document. The California legislature modified the statute governing no contest clauses in recent years, attempting to simply the law regarding these provisions. In the process, however, the state’s new statute creates some potential traps for the unwary beneficiary.

Under California law in effect before 2010, will or trust contests were a high-stakes, all-or-nothing proposition. For example, if a woman had a will that left her estate equally to her son and daughter but, shortly before her death and during a visit from her daughter, she created a new will, with a no contest provision, leaving 75% of her assets to the daughter, and 25% to the son, then the son would face a risky dilemma if he contested the new will. If he won, the first will would govern, and he would receive one-half of his mother’s estate; lose, and the no contest clause from the second will would take effect and he would receive nothing.

Finding the penalty of total forfeiture excessively punitive, the legislature changed the law, effective 2010. The new law states that forfeiture clauses are generally not enforceable against challengers if they had probable cause for bringing the action.

Beneficiaries should remain mindful, though, that there are indirect ways to trigger a forfeiture clause, some of which are not necessarily intuitive. In a 2002 case, Estate of Gonzalez, a group of siblings offered their father’s 1992 will for probate, which contained a no contest provision. A fourth sibling, Jorge Gonzalez, submitted for probate a 1998 will. The court concluded that the 1998 will was the result of Jorge’s undue influence, that Jorge knew the will was not valid and, by offering it for probate, he effectively challenged his father’s first will, and did so without probable cause. As a result, the no contest clause within the 1992 will was enforceable and Jorge received nothing from his father’s estate.

A very recent case demonstrates another method for indirectly creating a trust contest. In 1988, Rodney and Many Donkin created a trust with a no contest provision. In 2009, two Donkin daughters filed a declaratory judgment action, asking a court to decide if their petition to demand an accounting, remove the trust’s successor trustee and compel distribution of certain trust assets constituted a trust contest. The trial court ruled it did not, but the Court of Appeal in Donkin v. Donkin disagreed. The court determined that, because the daughters’ action sought immediate distribution of certain assets, it constituted an “attack [on] the distributive scheme of the trust.” As a result, it would trigger the no contest clause. The daughters appealed this decision and, this past June, the California Supreme Court agreed to hear their case.

While the legislature’s efforts to simplify the law of will and trust contests provide some clarity, this area of the law remains tricky in some cases. If you are trying to decide whether to create a no contest provision in your estate plan, or to contest someone else’s will or trust, you should first consult a knowledgeable California estate and trust litigation attorney. The experienced Los Angeles estate and trust litigation attorneys at Ginzburg & Bronshteyn are here to help clients in Beverly Hills, West Hollywood and throughout Southern California determine the best way to deal with a no contest clause. To contact our skilled attorneys, please contact Ginzburg & Bronshteyn through our website or call us at (310) 914-3222.

Related blog posts:

A California Will May Not Prevent an Inheritance Battle, Los Angeles Probate Litigation Attorney Blog, July 31, 2012
California Appeals Court Holds Trust Modifications Invalid Unless they Comply With Method Stated in Trust Instrument, Los Angeles Probate Litigation Attorney Blog, July 8, 2012