A will or trust typically contains a no contest clause, which is a provision that penalizes a beneficiary if he “contests” the will or trust.  We have extensiveexperience drafting effective no contest clauses and litigating issuespertaining to the applicability of a no contest clause.

On January 1, 2010, new statutes governing the enforcement of no contest clauses became operative, with respect to truststhat became irrevocable on or after January 1, 2001.  Prob. Code, §§21310-21315.

The applicability of the new statutes is significant because the standard to bring a direct contest, without triggering the enforcement of a no contest clause, has changed from “reasonable cause” to
“probable cause.”

Under the former standard, Probate Code section 21306(a), a no contest clause was enforceable against a contest brought without “reasonable cause.”  Reasonable cause is defined as follows:
“the party filing…the contest has possession of facts that would cause a reasonable person to believe that the allegations and other factual contentions in the matter filed with the court may be proven…or are likely to be proven after a reasonable opportunity for further investigation or discovery.”

 

Under the new standard, Probate Code section 21311(a)(1), a no contest clause is enforceable against a direct contest that is brought without “probable cause.”  Probable cause is defined as whether “if, at the time of filing a contest, the facts known to the contestant would cause a reasonable person to believe there is a reasonable likelihood the requested relief will be granted after an opportunity for
further investigation or discovery.”

Although the Legislature intended to simplify the law pertaining to no contest clauses, we anticipate the new “probable cause” standard will be the subject of future litigation.

CategoryTrust Litigation

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