A will can provide that if someone challenges the will, they are disinherited. This is referred to as a “no-contest” or “in terrorem” clause.
Texas law allows for the enforcement of no-contest clauses in wills. No-contest clauses in wills are enforceable in Texas. However, Texas courts have enforced these clauses narrowly to avoid unwarranted forfeitures. This raises the question of whether disputing a will can trigger a no-contest clause.
While a no-contest or in terrorem clause aims to dissuade would-be beneficiaries from challenging the will, there is a question as to what counts as a “contest.” The recent Roach v. Roach, No. 05-22-00194-CV (Tex. App.–Dallas [5th Dist.] 2023) case addresses this.
Facts & Background
This case involves a dispute between family members regarding the decedent’s will and codicils (written additions to a will).
The decedent’s 2007 will included a no-contest clause, stating that any beneficiary who contests the will forfeits their inheritance:
No Contest. If any beneficiary (other than my wife) under this will, under any trust created in this will, or under any trust receiving property from this will, in any manner, directly or indirectly, contests or joins in (except as a party defendant) any proceeding the effect of which is to nullify this will or any of its provisions, or a trust created in this will or any of its provisions, or a trust receiving property from this will or any of its provisions (“contesting beneficiary”), regardless of the good faith or just cause of the contesting beneficiary, any share or interest in my estate or in any trust created in this will given to that contesting beneficiary is revoked and shall be disposed of in the same manner provided herein as if that contesting beneficiary and all of his issue had predeceased me. Each benefit conferred herein is made on the condition precedent that the beneficiary shall accept and agree to all the provisions of this will, and the provisions of this Paragraph 15.13 are an essential part of each and every benefit.
In 2011, the decedent executed a codicil removing his son as successor co-executor. In 2012, another codicil removed the son as successor co-trustee. It also strongly affirmed the no-contest clause.
The son sued, alleging the attorney improperly assisted with the codicils, making the will void. The wife and daughter counterclaimed this violated the no-contest clause.
No-Contest Clauses in Texas
No-contest clauses aim to deter challenges to wills and trusts by causing forfeiture of rights. They are designed to discourage disputes and litigation. However, Texas law enforces them narrowly to avoid unwarranted forfeitures.
Many situations can be seen as attempting to thwart a testator’s intentions with their will.
The courts in Texas will use a no-contest clause to strip individuals of their inheritance if they’re deemed to have intentionally acted against the spirit of the document. The judge’s determination in each case will depend on the unique circumstances, specifics of the case and the terms of the will itself.
Ultimately, the question is whether the legal proceeding counts as a “contest.” Not all lawsuits or disputes do.
The Good Faith Exception
There is also an exception in the Texas Estates Code. Section 254.005 provides that even a direct contest will not trigger a forfeiture under a no-contest clause if the challenger can established by a preponderance of the evidence that just cause existed for bringing the action and the action was brought and maintained in good faith. The appeals court did not have to get to the good faith exception in this case.
The appeals court held the son’s lawsuit seeking executor and trustee removal did not violate the no-contest clause, as it did not challenge the will itself. A “contest” challenges provisions disposing of property. The challenge in this case was to remove the executor and trustee–which does not rise to the level of a “contest.”
Approaches in Other States
Texas is not alone in grappling with how to enforce no-contest clauses. Different states take varying approaches.
Some states, like Florida and Indiana, enforce no-contest clauses broadly and without exception. Any challenge to a will, however legitimate, triggers forfeiture. This strict stance values testamentary freedom and deterring litigation above other considerations.
Other states follow California in using a “probable cause” standard. Forfeiture occurs only if a contest is brought without probable cause. This balances testator intent with allowing meritorious disputes. It puts the focus on the contestant’s objective basis for a challenge.
A few states, like Arizona and Montana, prohibit no-contest clauses altogether. They view the clauses as against public policy for limiting access to the courts. These states prioritize the ability to freely bring disputes.
Compared to absolutist states, Texas falls somewhere in the middle. Its approach is more nuanced, aiming to curb abusive contests while permitting good faith challenges. The “just cause” exception underscores this balanced policy.
Texas courts narrowly interpret no-contest clauses and avoid unwarranted forfeitures. Though aiming to prevent litigation, no-contest clauses can have the opposite effect. Generally, a challenger’s actions must fall within the clause’s express terms and challenge the property dispositions to warrant enforcement.
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