No-contest clause
Whether the clause is enforced depends on state law, and the processes for contesting a will vary by state. Owners of businesses, real estate and private investments meet the clause in wills and trusts that hold those assets.
How it works
In California, a no-contest clause is enforceable against a direct contest brought without probable cause. A direct contest alleges invalidity of the instrument on specified grounds.
Georgia treats a trust in terrorem condition as void unless the instrument directs where the property goes if the condition is violated. When the instrument gives that direction, Georgia carries it out.
Where it shows up for owners of businesses, real estate and private investments
Florida has statutorily invalidated no-contest clauses in wills and trusts. Many other states allow and enforce in terrorem clauses.
A will or trust that holds a business interest or real estate is subject to this variation from state to state. Florida, Georgia and California each address the clause differently.
Points that are easy to confuse
The clause and a direct contest are separate things in California. The clause is the provision that takes the gift away, while a direct contest is a challenge alleging invalidity on specified grounds.
A relative who receives no bequest has nothing to forfeit by contesting. In that situation, a no-contest clause may have little deterrent value.
The rules on a clause and the processes for contesting a will are different subjects. The processes for contesting a will vary by state.
Common questions
Does every state enforce a no-contest clause?
No. Florida has statutorily invalidated no-contest clauses in wills and trusts, while many other states allow and enforce them. California enforces a clause against a direct contest brought without probable cause.
Why can a no-contest clause have little deterrent value?
A relative who is left nothing has no bequest to forfeit, so contesting adds no loss for that person. In that situation, the clause has little deterrent value.