Arizona’s intestate laws of succession determine who your heirs are if you do not create a will. Your intestate heirs may be disappointed if their inheritance through your will or trust is less than what their intestate share would have been. An heir in a case like this could be motivated to contest the validity of your will or trust so they receive their intestate share. A “no-contest” clause could help disincentivize your beneficiaries from seeking to invalidate your estate plan.
What is a No-Contest Clause?
A no-contest clause typically states that any beneficiary under a will or trust who contests your will or trust will be treated as having predeceased you. This means they will not receive the gift you intended to leave them. “Contest” is typically defined broadly to include even indirect support of an action seeking to invalidate just part of your will or trust. No-contest clauses are generally permissible in Arizona for wills (A.R.S. §14-2517) and trusts (A.R.S. §14-10113). However, in Arizona, any beneficiary with “probable cause” for a contest will not have a no-contest clause enforced against them.
The Arizona Supreme Court defined “probable cause” as “the existence, at the time of the initiation of the proceeding, of evidence which would lead a reasonable person, properly informed and advised, to conclude that there is a substantial likelihood that the contest or attack will be successful.” In re Estate of Stewart, 230 Ariz. 480, 484 (App. 2012). In at least one Arizona case (In re the Shaheen Trust, 236 Ariz. 498 (App. 2015)), the appellate court enforced a no-contest clause because the petitioner, though partially successful, was unsuccessful on at least one of nine separate causes of action against the trustee. It should be noted that another division of the Arizona Court of Appeals declined to extend the Shaheen holding in a similar trust interpretation matter in Matter of Wulf, 244 Ariz. 133 (App. 2017).
What is a No-Contest Clause not?
A no-contest clause is not an outright ban on actions invalidating all or part of your will or trust. Any interested person can still contest your will or trust. If the interested person is not a beneficiary of your will or trust, the no-contest clause will not apply to them.
For example, a no-contest clause might make sense where you have multiple children and at least one child receives a lesser gift. The child receiving the lesser gift risks receiving no gift if they contest your will or trust. If that child would receive no gift under your will or trust, they still risk losing time, litigation expenses and relationships with their family.
In a contest, an interested person might argue that you lacked capacity to execute a valid estate plan. Clearly stating in your documents that you are making an intentional omission can help refute that claim. Some attorneys used to recommend leaving someone a nominal gift, like one dollar, if you expect them to contest. That is a bad idea. Any gift makes that person a beneficiary of your estate and gives them additional rights, such as notice of proceedings.
What can a No-Contest Clause do?
A no-contest clause can discourage your beneficiaries from trying to go against your wishes. But it cannot prevent them from doing so. It does not affect anyone who is not a beneficiary of your estate. And it definitely cannot guarantee that your family will get along. A no-contest clause can be helpful if you are making unequal gifts that your beneficiaries may deem unfair.
For more on no-contest clauses, check out our Elder Law Issues podcast episode 161 on Apple Podcasts, Spotify, Google Podcasts, Amazon Music or listen directly on our website.
