Most people know someone who has had to endure conflict surrounding the distribution of a deceased loved one’s estate. Unfortunately, whether its relatives laying claim to family heirlooms or siblings feuding over real estate, things can get nasty even in the most amicable families. One way to prevent this kind of fighting is to include what is referred to as a “No Contest Clause” in your will or trust. While this clause can provide peace-of-mind about the future and discourage beneficiaries from fighting, it is important to know how they operate.
What Is a No-Contest Clause?
A no-contest clause or “in terrorem clause” or “terror clause” is a clause you can include in your will or trust which says that any beneficiary who tries to challenge the will or trust provisions be disinherited or excluded. They are put in place to discourage beneficiaries from bringing a legal suit or “contest” to invalidate a will or trust.
How Does the No Contest Clause Work?
The no-contest language specifically states that a person bringing suit to invalidate a provision of the will or trust is subject to being disinherited or excluded from their benefits. The bottom line is that bringing this kind of legal challenge can result in the beneficiary receiving nothing from the estate. This kind of clause acts as a good deterrent for beneficiaries who are to receive a substantial inheritance or amount. However, although this clause is meant to prevent litigation, this will do little to dissuade a person who is not receiving a large portion of the estate from challenging the will or trust. In that case, if they feel the will or trust is unfair they have little to lose in contesting it and this clause will not necessarily stop them.
Are No-Contest Clauses Accepted Under Michigan Law?
Michigan law permits the inclusion of no-contest clauses in wills and trusts. However, such clauses can be determined by a court to be unenforceable if “probable cause exists for instituting a proceeding contesting the will or another proceeding relating to the estate.” What that means is that the clause is not going to be upheld if there is a good reason in the eyes of the court to challenge the provision of the will or will itself (for example, if the person making the will lacked capacity or was subjected to “undue influence” in making the will).
Planning for your estate will ensure that your assets are divided according to your wishes and will help your family avoid stress and conflict. When faced with estate planning and administration, our office has experienced attorneys who can help you examine your options and plan for a future. Please contact us if we may be of assistance.