No contest or in terrorem clauses have been used in Wills for decades. These clauses usually state that if a beneficiary contests the validity of the said Will and loses, that beneficiary receives nothing. Alternatively, if the beneficiary wins, the subject Will is invalid and, therefore, the clause as well. These clauses were routinely upheld since, under the common law (non-statutory law created by custom and courts), there was no legal right to inherit. A bequest was a gift made by the deceased person, who had complete discretion as to how and when to leave that gift. Accordingly, any action taken by a beneficiary that was detrimental to the probate of a Will violated the no contest clause and the losing beneficiary’s bequest was forfeited.
However, changes occurred over time, and U.S. courts, including those in Florida, began to construe those clauses very strictly. Kolb v. Levy(in 1959), one beneficiary filed a contractual claim against her mother’s estate a claim, which was so substantial that if she succeeded in a lawsuit, it would have consumed most of her mother’s estate. The Florida appellate court ruled that said action did not violate the no contest clause, because it did not directly challenge the validity of the Will.
Florida law evolved further in the 1990s, when concepts regarding an individual’s right to have access to the courts to redress grievances changed. The Florida state legislature declared that no contest clauses violated public policy and passed two statutes prohibiting the enforcement of no contest clauses in both Wills and Trusts. Florida is one of the few states that does not recognize no contest clauses in will contests and trust challenges. Ultimately, in 2013, Dinkins v. Dinkins, the Fifth District Court of Appeals cited well-established law in its decision taking notice that no contest clauses are invalid. In fact, only Florida and Indiana make these no contest clauses completely unenforceable in will and trust proceedings.
For will contests, Section 732.517 of the Florida Statutes provides as follows:
“Penalty clause for contest.—A provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable.”
For trust challenges, Section 736.1108 of the Florida Statutes provides as follows:
“Penalty clause for contest.—(1) A provision in a trust instrument purporting to penalize any interested person for contesting the trust instrument or instituting other proceedings relating to a trust estate or trust assets is unenforceable. (2) This section applies to trusts created on or after October 1, 1993.”
The Uniform Probate Code, which was adopted in approximately 22 states, provides that no contest clauses are enforceable, unless the contest is based on probable cause.
Approximately 14 states enforce no contest clauses without regard to probable cause or good faith, including New York, Ohio, Rhode Island and Virginia. Arkansas and Illinois enforce no contest clauses unless the contest is based on good faith. Connecticut, Iowa, Nevada, North Carolina, Oklahoma, Tennessee, and West Virginia enforce these clauses unless the contest is based on both good faith and probable cause. Texas enforces these clauses unless the contest is based on both just cause and good faith. One must check the particular state outside of Florida for its position on this provision.
Florida has some of the most developed case law and legislation regarding will and trust contests in the U.S., probably due to the sizeable older population residing in the state.
Florida is currently the only state that absolutely prohibits the enforcement of no contest clauses in Wills and Trusts. A few other states still enforce them most of the time, but the majority of states consider the above-mentioned factors. If a will or trust was drafted in another state and includes a no contest clause, said provision will not be enforced in a Florida probate court, even though the remainder of the said Last Will & Testament may enforceable.
HOWEVER, it does appear that, even though it is known that they are unenforceable, a number of Florida attorneys still put no contest clauses in Wills and Trusts. This may be done in an attempt to prevent or discourage frivolous litigation. Further, many clients want these clauses in their documents, even though they understand that a Florida court won’t enforce such provisions, since it is their great desire to show to their beneficiaries and potentially a probate judge, their sincere intent regarding the disposition or distribution of their assets. Such a ruse may occasionally work but does not really deter a truly litigious person.
Some Floridians use a Trust as their primary estate planning tool, which avoids the risk of a Will contest since a Pour Over Will essentially does very little except transfer title of a few, usually forgotten, assets from the name of the decedent to that of an existing trust. In the alternative, trust litigation may occur. The contest may relate to the validity of the trust, but, quite often, trust litigation or challenge involves disputes between the trustee and a beneficiary concerning interpretation of the terms and/or distributions of the assets of the trust.
Depending on specific circumstances, there may be alternatives to using unenforceable no contest clauses in order to prevent or minimize potential litigation risks when a trust is involved. Creating and funding separate trusts for potentially problematic beneficiaries, adding Trust Protector provisions or adding a mediation provision may prevent a disgruntled beneficiary from depleting trust assets in a protracted expensive litigation.
Consequently, Florida statutory and decisional or case law clearly prohibit the enforcement of no contest clauses in either wills or trusts. Regardless, properly prepared estate planning documents can ensure your loved ones and assets are protected.