Nobody wants their estate to cause family conflict after they die. However, wealth can make some people do things they wouldn’t normally do.
To discourage disputes, some people add a no-contest clause (also known as an “in terrorem clause”) to their will. If it’s something you’re considering, it’s essential to understand the pros and cons.
What is a no-contest clause?
A no-contest clause is a provision designed to prevent challenges to the will. If a beneficiary goes to court to contest the will and loses, then they risk losing their inheritance. It’s meant to discourage heirs from pursuing legal action just because they feel slighted.
In Texas, no-contest clauses are typically enforceable, but there is an exception. If the person contesting the will can show just cause for the challenge and that they are acting in good faith, the clause may be unenforceable.
There are several good reasons for adding a no-contest clause to your will, including:
- Deterring frivolous lawsuits
- Ensuring your wishes are upheld
- Less delay in settling the estate
Still, a no-contest clause comes with risks. The clause could be set aside if a challenger can show just cause and good faith. It can also make family members feel coerced, especially if they believe there’s a good reason to contest, such as undue influence or lack of capacity.
It could also backfire if you’ve completely disinherited someone. They may think a long shot is better than not taking a shot at all.
If you are concerned about protecting your estate, there are other tools available to you. Trusts offer flexibility. And as long as they’re not irrevocable, you can change the terms as often as you’d like.
You can also talk openly with your heirs about some decisions that may be controversial, so no one will be surprised or resentful. Document your decision-making to make it harder for anyone to claim undue influence or lack of capacity.
Speak with a legal representative about your concerns. They can discuss your options. If you decide to add a no-contest clause, they will help ensure that it’s tailored to your situation and carefully worded to be effective and enforceable.