Enforce Your Will With a Terrorem Clause
One of the worst things that can happen after passing away is for your family and friends to fight over your assets. Even now, you may already see the signs that your family and friends will start to argue after you’re gone. Believe it or not, there is something you can add to your estate plan called a no-contest clause. As a leading wills and trusts law firm, we believe in educating our clients about various legal aspects.
Let’s explore how no-contest clauses work in estate planning documents and how they can help you encourage your family and friends not to fight over your assets after you’re gone. If you need help planning your estate and adding a no-contest clause to your will or trust, contact our will and probate attorneys today.
What are No-Contest Clauses?
Also known as a terrorem clause or in-terrorem provision, a no-contest clause is a legal provision that can be included in a will or trust document, stating that if a beneficiary challenges the validity of the will or trust, they will forfeit their inheritance.
In other words, if a beneficiary contests the will or trust and is unsuccessful, they will lose their share of the inheritance. This clause serves as a deterrent for beneficiaries to challenge the document, as they risk losing their inheritance if they do so. They should only contest the will if they truly believe that there is something invalid within the will that will impact them.
How Do You Enforce No-Contest Clauses?
No-contest clauses are typically included in wills and trusts to protect the testator’s wishes. The testator would be the person making the will or trust. You can add the no-contest clause when the will or trust is created. Competent wills and trusts attorneys like those at Pike Law can help you with it.
However, it is important to note that these clauses are not always enforceable in Pennsylvania. While no-contest clauses serve as a deterrent, they are not foolproof. If a beneficiary has valid grounds to challenge the document, such as undue influence or lack of mental capacity, the clause may not be enforced.
For example, if a person provides enough evidence to doubt the trustworthiness of the will or trust, but not necessarily that anything was done incorrectly, the no-contest clause will not apply. At the same time, this is an incredibly difficult task to meet. It is always important to consult with a skilled wills and trusts attorney while drafting legal documents that include a no-contest clause.
When Should Someone Use a No-Contest Clause?
No-contest clauses are beneficial in certain situations. For example, if you have a blended family, disagreements among beneficiaries may occur due to different relationships. In these cases, the different children may fight over who deserves which asset or percentage of assets.
In this instance, you would want to ensure that your children don’t fight over their share and that the estate distribution proceeds smoothly.
Another common instance is if you had to disinherit someone. If a beneficiary has been disinherited or left with a smaller share of the inheritance than expected, they may be more inclined to challenge the document. In such cases, a no-contest clause can discourage them from doing so.
Make sure to discuss your situation at length with our wills and trusts lawyer. We can help you understand if you can benefit by adding this clause. We will also add the clause in a way that helps your unique estate planning goals.
When Should Someone Not Use a No-Contest Clause?
While no-contest clauses may seem like an effective way to avoid disputes over the will or trust, there are situations where they should be avoided. For instance, if the testator is leaving unequal shares of inheritance to their children, including a no-contest clause may lead to resentment and legal challenges among the beneficiaries.
Additionally, if there is a possibility of someone challenging the document for valid reasons, including a no-contest clause may not be wise. Instead, it could result in an unnecessary legal battle that can drain the estate’s resources so that the inheritance is non-existent. In this case, it may be better to leave your inheritors to their own devices.
At Pike Law, we always encourage our clients to be open and honest about their estate planning goals. This helps you address any tricky situations well in advance. After all, the no-contest clause is just a legal tool. The way you wield it will define your legacy and the future of your family.
What Estate Planning Documents Can Use No-Contest Clauses?
No-contest clauses can be included in several types of estate planning documents, including:
1. Wills
A no-contest clause in a will can disinherit any beneficiary who challenges the validity of the will or any of its provisions. This is perhaps the most common type of document where no-contest clauses are used.
2. Trusts
These clauses can also be included in trusts, such as revocable living trusts or irrevocable trusts. They serve to deter beneficiaries from contesting the trust’s terms or the trustee’s actions.
3. Powers of Attorney
Although less common, no-contest clauses can be included in documents like a power of attorney to prevent disputes over the actions of the appointed agent.
4. Beneficiary Designations
In some cases, no-contest clauses may be applied to beneficiary designations on accounts like life insurance policies, retirement plans, or payable-on-death accounts, though this is less typical and depends on the policies of the institutions managing these accounts.
Contact the Estate Planning Attorney at Pike Law for Help
No-contest clauses are provisions that can be included in wills and trusts to discourage beneficiaries from disputing the document. They can serve as a deterrent, but their enforceability can be questioned.
To ensure you’re not wasting your time trying to add one or wasting your inheritors’ time by not having one, you should consult with a knowledgeable wills and trusts attorney while drafting your estate planning documents.
Our team is available to discuss any concerns or questions regarding this matter and help our clients make informed decisions for their future and their loved ones. Contact us today for more information or to schedule a consultation.
