The inclusion of a no-contest clause, also known as an *in terrorem* clause, in a California trust is a complex legal matter, and whether it’s advisable depends heavily on the specifics of your situation and goals. These clauses aim to discourage beneficiaries from challenging the validity of a trust by stating that if they do so and lose, they forfeit any inheritance they would have otherwise received. While seemingly straightforward, California law has significantly restricted the enforceability of no-contest clauses, particularly after the 2016 case of In re Estate of Duke. This case clarified that a no-contest clause is only enforceable if the challenge to the trust is brought *without* probable cause. Determining “probable cause” is a fact-intensive analysis, involving whether a reasonably diligent person, knowing the facts, would honestly believe there is a valid basis for the challenge.
What are the risks of adding a no-contest clause?
Adding a no-contest clause isn’t a foolproof method to prevent trust disputes, and carries inherent risks. According to a 2023 study by the American College of Trust and Estate Counsel (ACTEC), approximately 20% of estates with trusts still face some form of legal challenge. If a beneficiary believes they have a legitimate reason to contest the trust—such as undue influence, lack of capacity of the trustor, or fraud—they may still pursue their claim, even with a no-contest clause, fearing the loss of their inheritance. If they *win* such a challenge, the clause is generally unenforceable, and they’re entitled to their share. However, a losing challenge, even if brought in good faith but ultimately unsuccessful, could result in forfeiture. This can create a chilling effect, discouraging beneficiaries from voicing legitimate concerns. It is important to remember that California Probate Code section 21310 details the specific requirements for enforceability.
How much does it cost to contest a trust in California?
The cost of contesting a trust in California can vary widely, ranging from $5,000 for a relatively simple dispute to upwards of $100,000 or more for complex litigation. A significant portion of these costs stem from attorney’s fees, expert witness costs (such as forensic accountants or medical professionals), and court filing fees. A 2022 survey conducted by the State Bar of California revealed the average hourly rate for trust and estate litigation attorneys ranges from $350 to $750. The duration of litigation can also dramatically impact costs, with some cases dragging on for years. This is where pre-emptive legal work with an experienced estate planning attorney like Steve Bliss can offer significant value. Preventing disputes through clear, comprehensive trust drafting can save families substantial time, money, and emotional distress.
I’m worried about family fighting over my trust, what can I do?
I once worked with a gentleman, Arthur, who was deeply concerned about his two adult children, Mark and Lisa. Arthur had built a successful business and accumulated substantial assets, but he anticipated a contentious battle over his estate. He feared Mark, always the more assertive one, would attempt to control everything. After careful consideration, we drafted a trust that specifically directed the distribution of assets to benefit both children equally, but with different stipulations. Mark received the bulk of the business assets, while Lisa received the real estate and investment accounts. A no-contest clause was included, but carefully worded to avoid discouraging legitimate challenges. Unfortunately, after Arthur passed away, Mark attempted to renegotiate the terms, claiming Arthur hadn’t been of sound mind when drafting the trust. The no-contest clause was triggered, and Lisa initially felt devastated.
What happened when we followed best practices?
However, because we had meticulously documented Arthur’s capacity—including a contemporaneous letter from his physician confirming his mental clarity—and because we had proactively addressed potential disagreements in the trust document, Lisa was able to successfully defend the trust against Mark’s challenge. The court upheld the validity of the trust, and Mark forfeited his inheritance as stipulated by the no-contest clause. Later, Lisa confessed to me that, despite the initial conflict, the experience had ultimately brought her and her brother closer, as it forced them to confront their differences and appreciate the value of their father’s careful planning. We then worked with her to establish family communication protocols to help mitigate future disagreements. It’s a testament to the fact that while no-contest clauses can be helpful tools, they are most effective when combined with a holistic estate planning approach that prioritizes clarity, communication, and proactive dispute resolution. Steve Bliss emphasizes to his clients that a well-drafted trust isn’t just about asset protection; it’s about protecting family relationships, too.
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About Steve Bliss at Wildomar Probate Law:
“Wildomar Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
family trust
wills
estate planning attorney near me
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RdhPJGDcMru5uP7K7
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Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
(951)412-2800/address>
Feel free to ask Attorney Steve Bliss about: “Do I need to plan differently if I’m part of a blended family?” Or “What is ancillary probate and when does it happen?” or “How do I update my trust if my situation changes? and even: “What should I avoid doing before filing for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.