NO-CONTEST CLAUSE: Countering Potential for Will Disputes
Will - Updating Will - Invalid or No Will - Power of Attorney - Personal Directive
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No contest clauses ("in terrorem" clauses) impose serious consequences upon a beneficiary that challenges the will in court and loses, as any such beneficiary would forfeit any inheritance that they were originally designated to receive. The principal objective of a non-contest clause is to deter litigation after the testator's death, ensuring that the wishes of the testator (the person making the will) are carried out without delay or costly legal disputes.
The no-contest clause in the will typically states that if a beneficiary contests the will and is unsuccessful in their challenge, they will forfeit any inheritance or bequest they were set to receive, often reducing it to a nominal amount or nothing at all. This in turn presents a dilemma for the beneficiary that is contemplating challenging the will (or a provision therein), as they might either look to accept their stated inheritance as is, or risk losing it entirely by challenging the will.
From a strategic standpoint, to be an effective deterrent, the testator must leave the potential challenger an inheritance large enough that they would be unwilling to risk forfeiting it [more on no-contest clauses]. And whereas the courts in particular jurisdictions have determined that no-contest clauses are not enforceable; and where they are enforceable, there are particular considerations, including significant limitations, that may be imposed, with much being dictated by the particular facts and circumstances of the situation. And, as the Alberta Court of Appeals decision in Mawhinney v Scobie, 2019 ABCA 76 (CanLII) reveals, the drafting and application of no-contest clauses (in terrorem clauses) needs to be carefully undertaken.
Our law firm can help you plan for the future, including the preparation of a well-drafted will and other estate planning documents, as well as dealing with the legal demands associated with the passing of a loved one. We welcome you to contact our law firm today at 403-400-4092 or via email at Chris@NeufeldLegal.com to schedule a confidential initial consultation.
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