One of the many goals of estate planning is to limit the amount of fighting that will occur once a person passes on, and there are many ways to achieve that goal. Often this involves making sure that all the proper requirements are observed when executing documents, careful drafting of trusts and keeping estate planning documents’ terms clear and concise. None of these tools however serve as a disincentive to a disgruntled family member who feel that they were unjustly treated as beneficiary. For that purpose, many New York estate planners may turn to the ‘No Contest’ or ‘In Terrorem’ clause.
Risk All, Lose All…
A ‘no contest’ clause in a New York will states that a beneficiary who unsuccessfully challenges the validity of the will is prevented from inheriting under the will. Testators include these clauses in their wills in order to dissuade beneficiaries from taking action against the estate, the idea being that no one will want to risk losing out on their inheritance by risking an unsuccessful challenge.
…Sometimes
While such clauses are allowed under New York law under the Estates, Powers and Trusts Law Section 3-3.5, there are certain statutory limits to their power. There is an exception for preliminary discovery pursuant to the Surrogate’s Court Procedure Act Section 1404. The Surrogate’s Court, which hears all of New York’s probate and estate proceedings, provides certain discovery powers to challengers in potential contested will case. The statute allows interested parties to obtain certain documents and to obtain pre-trial testimony of the attorney who drafted the will. It also allows the potential challenger to obtain pre-trial testimony from the attesting witnesses, and in certain cases the executor of the will and its proponents.
Section 3-3.5 also disallows disinheritance in cases where the challenger:
- is an infant or incompetent
- is asserting that the will is a forgery or that the will was revoked by a later will, provided that the contest is based on probable cause
- is merely asserting that the will is being offered in the wrong jurisdiction
Section 3-3.5 also disallows disinheritance in matters where disinheritance may lead to a form of coercion, such as if the will directs that a beneficiary be disinherited for coming forward with documents and evidence relevant to the probate proceeding or disinherited for refusing to join in a petition for the probate of a document as a last will.
Practical Considerations
Simply having a ‘no contest’ clause in your will may not be enough to dissuade potential challengers. Keep in mind that in order for a ‘no contest’ clause to have any weight at all, a beneficiary under a will must be left a substantial amount in order to incentivize their compliance with the will. A ‘no contest’ clause will have no effect on a person who was not left anything under a will as they risk losing nothing by challenging the will. Such a clause will also have little effect on a minor or someone who is incompetent, as explained above. While ‘no contest’ clauses may be effective in minimizing a will contest, for some it holds no power. Be sure when using a will contest that it will achieve the result that you are hoping for.