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The answer is surprising to many. A no-contest clause can only be enforced in limited situations in California.
You may be reading this as a person who has just been served a notification by trustee informing you that you have been disinherited entirely out of a recently deceased loved one's estate or trust. You may be informed that your share of what you were to get under a prior existing trust or will has been reduced. You may have been informed by the person (likely an attorney) sending you the notice with attached trust or will (or both) that there is a "no-contest clause" and that should you file a contest in a California court that you will be disinherited. This blog will help dispel some myths and misconceptions in California inheritance law.
Most drafting attorneys for estate planning documents in California really like to put in no-contest clauses in estate planning instruments, such as wills, trusts, and other documents. The idea is to scare people off from filing a contest in a California court as to the validity of a legal document.
However, what is often not stated by estate planners in the documents is that enforcement of such no-contest clauses or "in terrorem" (from the latin to cause terror or fear) are disfavored. In other words, California courts strictly construe such no-contest clauses and do not just allow anyone to be disinherited for filing a contest in any situation. California Probate Code section 21311 states that a no-contest clause can only be enforced in limited situations. Basically only in three situations. They are as follows:
1) a direct contest and only if it is brought without probable cause;
2) a pleading to challenge a transfer of property on the grounds that it was not the transferor’s property at the time of the transfer and only where the contest clause expressly states such restriction;
3) the filing of a creditor’s claim or prosecution of an action based on it and only if the contest clause expressly states such restriction.
So in other words, a no-contest clause does not automatically disinherit a person and in fact, the clause could be invalid depending on how it is drafted. Also, in many instances if you do not file a "direct contest" then you have nothing to worry about unless the other two situations stated apply. Even if you file a direct contest, if you have probable cause you can be safe (again if the other two situations do not apply).
So before you call it quits and run off feeling like you cannot contest an improper trust, will, or other legal instrument, think twice and consult an experienced lawyer who handles such matters and who will review the instrument(s) carefully for you. Otherwise you could be leaving money on the table.