Your last will and testament is supposed to give effect to your wishes for what happens to your property after your death. Having a will typically promotes family harmony by making your wishes clear and preventing your family from fighting over what you would have wanted. But what happens if a family member disagrees with the distribution in your will, or believes the will submitted to the probate court is not valid? They might contest the will in court. A no-contest clause in your will, however, could shut down a will contest before it begins.
What is a “no-contest clause” in a will? Exactly what it sounds like: a provision in the will that is designed to prevent beneficiaries from challenging the will. In essence, a no-contest clause (also called an “in terrorem” clause provides that if a beneficiary challenges the will or any provision in it, they forfeit any interest they may have in the property of the estate.
An example of a no-contest clause would be: "If any beneficiary under this last will and testament attempts to have this will or any of its provisions adjudicated void in a court proceeding, or seeks otherwise to nullify this will or any of its provisions, then that person shall forfeit shall any interest to which he or she would have been entitled under this will, and the disposition of any such interest shall be determined as if that person had died without issue prior to the execution of this will."
In effect, a no-contest clause gives a beneficiary two choices: take what you were given under the will, or challenge the will and risk losing everything.
A no-contest clause can be a very effective way of reducing the risk of probate litigation to contest a will, especially if you suspect one of your beneficiaries will be dissatisfied with their inheritance. The prospect of losing what they have been given by seeking a greater share can be a powerful deterrent. Of course, if you have chosen to disinherit a beneficiary altogether or to leave them only a nominal bequest (such as one dollar), that beneficiary has little incentive not to challenge your will. After all, they are only risking a small amount for the potential of gaining much more.
It is important to consider what you hope to achieve by including a no-contest clause in your will. If it is simply to prevent a will contest over a less-than-hoped-for inheritance, a no-contest clause may achieve that goal. But if your goal is to prevent discord among your children or other heirs, you might need to consider other ways to bring that about.
That’s not to say you can’t, or shouldn’t, use a no-contest clause. But even if your beneficiary doesn’t challenge your will, he or she may still be resentful of beneficiaries who received more. Helping your beneficiaries understand your reasoning may reduce resentment and prevent a rift in their relationship after your death.
For instance, imagine that Carol has two daughters: Marcia and Jan. Jan is a successful businesswoman who is unmarried and well-to-do financially. Marcia is a stay-at-home wife and mother without income of her own. Carol may decide to leave Marcia 60% of her estate and Jan 40%. Carol’s reasoning is that Jan doesn’t need the money, and it will help Marcia to be more financially independent and to send her kids to college. Carol makes her will accordingly and includes a no-contest clause.
When Carol dies and the will is submitted to probate, Jan feels, as she has all her life, that her mother favored Marcia. Whether or not she challenges the will, there is a good chance that her relationship with her sister will suffer. Had Carol communicated her rationale to her daughters either in her will or prior to her death, that outcome might have been avoided.
The enforceability of no-contest clauses varies from state to state. Some states, like Michigan, recognize a “probable cause” or “good faith” exception to the enforcement of a no-contest clause. If a beneficiary takes an action prohibited by the clause, such as contesting the will, the probate court will consider whether there was “probable cause” to contest the will. If no probable cause is found, the beneficiary will forfeit whatever they would otherwise have been entitled to receive under the will.
However, if the court finds “probable cause” for a will contest, the beneficiary will be allowed to proceed with the challenge, without the risk of losing their inheritance if they are unsuccessful. What kinds of things constitute “probable cause” for a will contest? Michigan case law says probable cause exists when "at the time of instituting the proceeding, there was evidence that would lead a reasonable person, who is properly informed and advised, to conclude that there was a substantial likelihood that the challenge would be successful."
Such evidence might include facts suggesting that the will was a forgery, that there is a more recent valid will, or that the deceased made the will at issue because of undue influence. The beneficiary does not have to prove that the will is invalid at the outset of the proceedings, or even have all the evidence to do so—only to show that there is a substantial likelihood that a challenge to the validity of the will would succeed.
Even when a no-contest clause in Michigan is enforceable, it will be strictly construed in favor of the beneficiary. If it is not clear that the beneficiary’s action violated the clause, the beneficiary will not forfeit their rights. So if you want to include a no-contest clause in your will, it must be written so as to clearly explain what actions would cause a beneficiary to lose their inheritance. An experienced Michigan estate planning attorney can help.
If you have more questions about no-contest clauses, will contests, or probate litigation, please contact our law office to schedule a consultation.