With a "no contest"clause in a revocable trust can it be specified that if a beneficiary is going to have an issue or a problem with the trust that they (beneficiary) can't bring up certain things, and if they do they can be cut from receiving any benefits from the trust? On the cover letter from attorney he states that if we have any questions that they should be directed to the trustees. When asking the trustee, he said that we have to contact the attorney. So much bullshit involved!! Are we limited to what we can ask in fear of the "no contest" clause?
A no contest clause refers to if a beneficiary (or other interested party) challenges the VALIDITY of the trust. It is common to misunderstand that it means you can't ask anything of anyone, including the trustee - that is usually not the case. A trustee still has to act properly as a fiduciary (carry out the terms of the trust). Usually, a no contest clause is used in a context where someone gets less than might be expected or is to receive funds in a manner that is not typical and might lead the beneficiary to say that the creator of the document did not have mental capacity or did not understand what they were doing. Best example is where there are 3 kids who might "typically" take equally but one kids gets a lot less than the others - that kid might try to argue the trust is not valid and mom/dad must have been crazy when they signed it. The no contest clause would operate to allow the trustee to give that challenger nothing for speaking up. Regarding the questions to the trustee: the trustee should answer your questions directly, but if they are representing by counsel, the attorney for the trustee might answer those questions. You need your own attorney and clarity about if the trustee is in fact represented.
This is not legal advice nor intended to create an attorney-client relationship. The information provided here is informational in nature only. This attorney may not be licensed in the jurisdiction which you have a question about so the answer could be only general in nature.
A "no contest" provision is very common in a will or trust. The purpose is to discourage a beneficiary from challenging the validity of the document in court. If you have questions, ask them. Asking a question is very different then going to court and saying that the trust is not valid.
A "no contest" clause means that the beneficiaries cannot contest the validity of the trust without losing their interest as a beneficiary in the trust. It does not mean that the beneficiaries cannot ask questions about the trust.
My answer does not constitute legal advice and may not be relied upon by anyone for any purpose and does not constitute an attorney/client relationship or an offer to form such a relationship. This disclaimer is intended to be fully compliant with the requirements of Treasury Department Circular 230 and the terms thereof are fully incorporated by reference.
No-contest clauses are used to discourage will contests by providing that any beneficiary who contests the will forfeits what he or she would have received under the will. New rules limiting the enforceability of no-contest clauses in Prob C §§21310–21313 became effective January 1, 2010. With limited exceptions, a no-contest clause in an instrument that became irrevocable on or after January 1, 2001, may be enforced only against “direct contests” brought without probable cause. A no-contest clause also may provide that the contesting beneficiary’s issue forfeit any right to take in place of the contestant. This prevents the contestant’s issue from taking when the contestant, by virtue of the no-contest clause, is treated as having predeceased the testator.
Thus, if are concerned that someone might challenge the validity of your will or trust after your death, you may wish to add a “no-contest clause” to your document.
These clauses are designed to discourage disgruntled relatives whom you want to disinherit or punish if they challenge your estate plan, from contesting your will, trust or other estate disposition documents. In theory, and many times, in practice, these types of clauses work by providing for the result that anyone who does assert a legal challenge to your estate—and loses—does not inherit a anything from you. However, if they have nothing to lose, they may mount an attack any way. As a result, it is often a good strategy to leave them a substantial enough amount that they have something to lose, if they challenge your estate, and do not prevail.
The following is a sample of the type of ‘no contest’ language you might see in a living trust or will:
“If any beneficiary under this will seeks to obtain in any proceeding in any court an adjudication that this will or any of its provisions is void, or seeks otherwise to void, nullify, or set aside this will or any of its provisions, then the right of that person to take any interest given to him or her by this will shall be determined as it would have been determined had such person predeceased the execution of this will, without issue.”
The way a No Contest Clause works
Generally, a no-contest clause will discourage a potential estate contestant, only if that person has something to lose by challenging the will in court. For example, say you have three adult children, one of whom has been a constant thorn in your side and possibly to whom you have already given substantial funds. You get the feeling that all they want is for you to die, so they can get your estate. If you leave that person $25,000, (as opposed to nothing, as you may be tempted to do) they might think hard about it, and also about challenging your will or living trust, or any other disposition (such as an IRA designation), because if they bring an action against your estate and they and lose, the no-contest clause, assuming its enforced by the court, would mean they wouldn’t get the $25,000.
Alternatively, if you entirely (or almost entirely) disinherit someone, a no-contest clause probably will not have any effect on their motivation to challenge your estate. If you leave your vulturous (is that real word?) son, daughter, nephew or niece nothing at all, and he or she was somehow in line to otherwise inherit, or thought he or she was going to, they have nothing to lose by trying to overturn your will in court. If they do nothing, they won’t inherit anything from you anyway, and if they win (by getting your will or living trust declared invalid), they may inherit part of your estate under state law, depending on who else among your living relatives survived you. (Though of course, it does cost money to go to court and contest a will or trust, and they have to be able to pay a lawyer to represent him or find one to take it on a contingent fee basis; unless he represents himself.)
The insertion of a no-contest clause in your will can give you a false sense of security. This is because the
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