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California’s no-contest clauses for trusts

On Behalf of | Mar 12, 2024 | Trust & Estate Litigation

In California, trusts are a popular estate planning tool used to manage and distribute assets after someone’s passing. Sometimes, these trusts include no-contest clauses.

These clauses are designed to discourage beneficiaries from challenging the trust’s validity in court. What happens if you believe the trust is flawed and are considering litigation? What are the potential consequences of violating a no-contest clause in a California trust?

Understanding no-contest clauses

A no-contest clause essentially states that if a beneficiary contests the trust in court and loses, they forfeit their inheritance under the trust. This can be a powerful tool for grantors (the person who created the trust) to help ensure their wishes are respected. However, it can also create a difficult situation for beneficiaries who have legitimate concerns about the trust’s administration or validity.

California’s specifics on no-contest clauses

It’s important to note that California law has specific limitations on when no-contest clauses can be enforced. No-contest clauses can only be enforced in three situations:

  • During direct contests without probable cause (meaning the beneficiary lacked a legitimate reason to challenge the trust)
  • When challenging the ownership of trust property (not the trust itself)
  • When filing creditor claims against the trust

Even if a beneficiary loses their challenge, the no-contest clause cannot be enforced if they had one of the above-mentioned probable causes for initiating the contest. This protects beneficiaries with genuine concerns about the trust.

Suppose you’re considering contesting a California trust with a no-contest clause. In that case, it’s crucial to understand the potential risks. If you lose the case and the court finds you didn’t have probable cause, you could forfeit your entire inheritance under the trust.

No-contest clauses in California trusts can be a significant hurdle for beneficiaries who believe that a trust is flawed. Understanding the limitations of these clauses and the potential consequences of violating them is crucial before embarking on litigation. Seeking legal help as you begin this process can help you make informed decisions about protecting your rights and potential inheritance.