A Brief History of No-Contest Clauses
No-contest, or in terrorem, clauses have been used in Wills for centuries. These clauses usually state that if a beneficiary under the document contests the validity of the document and loses, that beneficiary receives nothing. Of course, if the beneficiary wins, the document is invalid and so is the clause. These clauses were almost always upheld because, under the common law (non-statutory law created by custom and courts), there was no legal right to inherit anything. A bequest was a gift made by the deceased person, who had complete discretion as to how and when to leave that gift. So any action taken by a beneficiary that was detrimental to the probate of a Will violated the no-contest clause and the beneficiary’s bequest was forfeited.
But things changed over time and U.S. courts, including those in Florida, began to construe those clauses very strictly. For example, in 1959 in Kolb v. Levy, a Florida appeals court ruled that a contractual claim filed by one beneficiary against her mother’s estate – a claim so large that if she succeeded in a lawsuit it would have consumed most of her mother’s estate – did not violate the non-contest clause because it didn’t directly challenge the validity of the Will.
That’s where Florida law stood until the 1990s, as ideas about an individual’s right to have access to the courts to redress grievances changed. The Florida state legislature declared that no-contest clauses violated such public policies and passed two statutes prohibiting the enforcement of no-contest clauses in Will and Trusts.
Florida’s No-Contest Statutes
Florida Statute §732.517 states that a “provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable.” Its sister statute, Florida Statute §736.1108, applies to Trusts created on or after October 1, 1993, and states that a “provision in a trust instrument purporting to penalize any interested person for contesting the trust instrument or instituting other proceedings relating to a trust estate or trust assets is unenforceable.”
Currently, Florida and Indiana are the only two states that absolutely prohibit the enforcement of no-contest clauses in Wills and Trusts. A couple of states still enforce them most of the time, but the majority of states consider them on a case-by-case basis.
Why Are No-Contest Clauses Sometimes Still Used in Florida?
So why do some Florida attorneys still put no-contest clauses in Wills and Trusts if they know they’re not enforceable? Mainly to try to prevent frivolous litigation. Many clients want these clauses in their documents – even though they understand that a Florida court won’t enforce them – because they hope that it shows their beneficiaries, and potentially a judge, their intent as to how they wanted their assets distributed. Does it work? I don’t know. Maybe sometimes it does, but a truly litigious person certainly won’t be stopped by it.
Many Floridians now use a Trust as their primary estate-planning tool. With a Trust-based estate plan, there’s virtually no risk of a Will contest since a Pour-Over Will essentially says nothing. But Trust litigation is always a possibility. Occasionally, the contest relates to the validity of the trust, but, more often, trust litigation involves disputes between a beneficiary and the trustee regarding trust interpretation and asset distributions.
Alternatives to No-Contest Clauses
Depending on the client’s specific situation, there may be other ways – other than using unenforceable no-contest clauses – to prevent or minimize potential litigation risks when a Trust is involved. Creating and funding separate Trusts for problem beneficiaries, adding Trust Protector provisions, or adding a mediation clause may help keep a disgruntled beneficiary from depleting trust assets in a drawn-out court battle.
So, while Florida courts won’t enforce a no-contest clause in a Will or trust, there may be other ways to minimize – although not completely eliminate – the possibility of litigation. Greed, jealously, family dynamics, and money problems are great motivators for litigation, and a few words on a piece of paper are unlikely to stop all .
If you’re worried about preventing potential litigation, or if you think you may have a legitimate reason to contest a Will or Trust, give Cindy Clark a call at 941-444-5958.