A no-contest clause, also known as the “in terrorem clause” or “terror clause,” is a provision that you can include in a will or trust stating that if a beneficiary takes legal action contesting the will, that person will lose out on his portion of the inheritance. The clause can be included in the will if you anticipate that one of the beneficiaries of the will contest the will. The clause is intended to discourage beneficiaries from contesting a will or trust.

The Advantage of Using a No-Contest Clause in a Will or Trust

A no-contest clause may be useful in a will or trust when you suddenly change the will at the last minute. New information may emerge in later years that may require a person to change the will. Although last-minute changes to a will may be made for valid reasons, such changes are more likely to be contested in court compared to changes that have been part of the will for some time. A disgruntled beneficiary is more likely to contest the will in court if the will lacks a no-contest clause.

For example, imagine a 50-year-old parent who made a will directing that, after his death, his estate should be divided equally between his two daughters, Anne and Mary. In later years, the parent realizes that Anne has fallen on hard times, so he changes the will to give Anne 80 percent compared to Mary's 20 percent. Before his death, the parent may realize that Mary is disgruntled and could contest the will after his death. A no-contest clause may deter Mary from contesting the will.

The Danger of Using a No-Contest Clause in a Will or Trust

Including a no-contest clause in a will can have some unexpected negative effects. You should carefully consider the implications of including the clause in your will.

The clause may deter beneficiaries from raising valid concerns about a will. A person who is advanced in years or who is suffering from a serious illness may fall prey to manipulation and change the will at the expense of valid beneficiaries. Some people have modified their wills to give big portions of their estate to complete strangers. A no-contest clause in such a will may discourage legitimate heirs from fighting for what rightfully belongs to them.

Limitation of the No-Contest Clause

Before you use a no-contest clause in your will, you should understand certain limitations to the usage of the clause:

  • Wills are governed by the laws the state in which you live.
  • No-contest clauses only apply to beneficiaries.

First, state governments have different approaches toward the no-contest clause. About half of all U.S. states enforce the no-contest clause. States usually create an exception to allow for beneficiaries to contest a will if there is probable cause. In such a case, the person contesting the will does not lose his assigned portion even if he ends up losing the lawsuit. Some states like Florida and Indiana do not recognize and will not enforce the no-contest clause at all. Check with a local estate planning lawyer to find out if a no-contest clause is enforced in your state.

Second, although a no-contest clause can deter beneficiaries of a will or a trust from contesting it, the clause does not deter people who are not beneficiaries from contesting the will. The fear of losing out on the inheritance can be a major deterrent to beneficiaries from contesting a will. Non-beneficiaries, on the other hand, have nothing to lose in a will with a no-contest clause.

For example, imagine a will in which a parent leaves his estate to his sons, John and Paul. The parent includes a no-contest clause to try to deter the boys from fighting over the will. The clause will not prevent the parent's sister Jane from contesting the will.

Other steps you can take to protect your will from being contested include using a revocable trust, keeping will beneficiaries informed of any changes to the will, and reviewing your estate plan annually with your estate planning lawyer.

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