People spend their lives accumulating property, wealth and items of sentimental value, hoping to one day leave them behind to their family and loved ones. However, many estates struggle through years of probate or litigation because a valid estate plan was not in place. Without a properly executed estate plan, wills and trusts are vulnerable to challenges of their enforceability.
These challenges, however, are very important to potential beneficiaries: if a will or trust does not represent a person's true intentions, then people have the ability to rectify the mistake and ensure a person's real wishes are acknowledged.
Contesting Wills and Trusts
If someone feels that a will or trust does not accurately represent the deceased's wishes, then they have the option to contest the document's validity. The process to do so is very complicated and many steps are involved. Therefore, anyone wishing to make such a challenge should speak with an experienced estate planning attorney to discuss their eligibility and potential legal options.
A person must have legal standing to contest the validity of an estate document. Legal standing exists when:
- The contesting person is a named beneficiary or heir in the document.
- The contesting person stands to inherit from the estate if the document is ruled invalid.
- The contesting person is a named devisee - receiver of real property - in the document.
The contesting person must then establish the grounds upon which they are challenging the document's validity. This can be done in many ways, including:
- Asserting the deceased lacked the mental capacity to understand what he or she was committing to by signing the document.
- Alleging the deceased was a victim of undue influence or fraud - that certain parties manipulated changes to the document's terms.
- Contest the document's enforceability on the grounds that it was not created pursuant to the law (not signed, lacked witnesses, etc.).
Of course, a contester must have evidence to substantiate their claim that a will or trust is unenforceable. Speaking with an experienced probate and trust litigation attorney can give you an idea of your legal standing, whether your grounds are valid, and whether your evidence is likely to sway a court.
Many wills and trusts contain a "no contest" clause. The general purpose of a no-contest clause in a will, trust or other instrument is to prevent claims against the estate that are adverse to the intent of the decedent. However, the law enabling enforcement of no-contest clauses that was in effect prior to January 1, 2010, was broad and lead to uncertainty as to whether a challenge of an instrument would violate a no-contest clause.
A "contest" in California was previously defined as "any action identified in a 'no contest clause' as a violation of the clause" and included any pleading challenging "the validity of an instrument or one or more of its terms". Former Probate Code Section 21300(a)-(c). The one-ended definition of "contest", the complexity of the prior law, and the perceived failure of the Courts to construe no contest clauses strictly lead to uncertainty with respect to whether a no contest clause would apply to a proposed action. Revision of the No Contest Clause Statute, 37 Cal. Law Revision Com. Rep. (2007) 359. This uncertainty led to increased requests for declaratory relief by cautious heirs and beneficiaries who sought to avoid filing a "contest" prohibited by a broadly defined no contest provision. Declaratory relief requests delay administration and increase the cost of administration.
To remove the constructive barriers to a valid challenge and to eliminate the requirement for costly and time-consuming declaratory relief, the California Legislature repealed former Probate Code sections 12300 - 21322 and replaced them with Sections 21310-21315. The new law went into effect on January 1, 2010 and applies only to instruments that became irrevocable after January 1, 2001. The old law remains in effect with respect to instruments that because irrevocable prior to January 1, 2001.
The new law provides that a no contest clause shall only be enforced against the following types of contests:
- A direct contest that is brought without probable cause;.
- 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 filing of a creditor's claim or prosecution of an action based on it..
(see Probate Code Section 21311(a).)
Direct Contest Without Probable Cause.
- Direct Contest. A direct contest is defined as a contest that alleges the invalidity of a protected instrument or one or more of its terms, based on one or more of the following grounds:
- Lack of due execution;.
- Lack of capacity;.
- Menace, duress, fraud, or undue influence;.
- Revocation of a will pursuant to Section 6120, revocation of a trust pursuant to Section 15401, or revocation of an instrument other than a will or trust pursuant to the procedure for revocation that is provided by statute or by the instrument;.
- Disqualification of a beneficiary under Section 6112 or 21350.
- Probable Cause. The new law provides that probable cause exists if, at the time of filing a contest, the facts known to the contestant would cause a reasonable person to believe that there is a reasonable likelihood that the requested relief will be granted after an opportunity for further investigation or discovery. Probate Code Section 21311(b). Under the old law, no contest clauses were enforceable against beneficiaries who file direct contests without regard to whether they have probable cause for the contest.
- Challenge of Property Ownership. The new law provides that 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" is a contest "if the no contest clause expressly provides for that application." Probate Code Section 21311(a) (2).
- Creditor's Claims. The new law provides that a no contest clause may apply to the filing of a creditor's claim or a prosecution of an action based on a creditor's claim as long as the no contest clause expressly provides for such application.
The new law removes the risk of violation of a no contest clause by a challenging party as long as it is not a direct contest without probable cause, is not a challenge to the decedent's property ownership and the no contest clause expressly provides for that challenge, and is not a creditor's claim or action with respect to a creditor's claim and the no contest clause expressly provides for the claim. Declaratory relief should no longer be required to determine whether a challenge will violate a no contest clause.
Once again, an experienced probate and trust litigation attorney can advise you on the impact that a "no contest" clause may have before you file a contest. Don't delay in asserting your rights and speak with a qualified lawyer today.