2010 No Contest Clauses
In California, a “no contest” clause, in a Will or Trust, generally prevented any beneficiary from challenging that document. If a beneficiary filed a petition in the probate court, in an attempt to have the court void or change the Will or Trust, then the “no contest” clause could automatically disinherit that beneficiary – simply because s/he tried to challenge the validity one of the document’s terms.
Previously, the Probate Code provided a way for beneficiaries to ask the court, before they filed a challenge, whether their proposed petition would be considered a violation of the document’s “no contest” clause. The request to the court was to obtain a determination of “safe harbor”; that is, that the proposed challenge would not be considered a violation of the “no contest” clause.
If the court ruled against the safe harbor petition, then the disgruntled beneficiary would simply back away because the court would have said that the filing of a challenge would result in the beneficiary’s disinheritance.
However, if the court ruled in favor of the beneficiary, then it would have granted a “safe harbor” and the disgruntled beneficiary could file his or her petition to challenge the terms of the document.
On January 1, 2010, the law was changed.
The “safe harbor” rights have now been repealed, and Probate Code 21310, et seq., have been added. The new laws define many phrases used in Wills and Trusts, including the definitions of a “contest” and “direct contest”.
Again there is no longer a “safe harbor” provision. Instead, the new laws state that a “no contest” clause shall only be enforced against the following types of contests:
(1) A direct contest that is brought without probable cause. A “direct contest” is one that challenges the terms of a Will or Trust based upon numerous grounds, including lack of capacity, menace, duress, fraud, or undue influence.
(2) A pleading to challenge a transfer of property on the grounds that it was not the transferor’s property at the time of the transfer.
The biggest change in the law is that an upset beneficiary can now file a direct contest to challenge the terms of a Will or Trust. If they win, then the court will have expressly determined that the beneficiary met his or her burden of proof by showing that the challenged Will or Trust provision was void – based upon either lack of capacity, menace, duress, fraud, or undue influence, etc.
However, if the beneficiary loses at trial, then s/he must prove that their burden of proof was almost met; that is, that they demonstrated that enough “probable cause” existed to warrant their belief that the Will or Trust provisions would have led a reasonable person to believe that lack of capacity – or one or more of the other elements (above-mentioned) – existed. If the court determines otherwise, then the beneficiary will be determined to have violated the “no contest” clause and thus be disinherited.
Most certainly, cases will be appealed and the appellate courts will interpret these new laws and provide clarity on their application to specific facts.