Non-Contestability Clause

(redirected from No-contest clause)
Also found in: Legal, Wikipedia.

Non-Contestability Clause

1. A clause in an insurance contract giving the insurance company a certain, limited period of time during which it may contest a claim on the grounds of fraud or something similar. A non-contestability clause protects a policyholder from the risk of non-payment of a claim.

2. In a will, a clause forbidding beneficiaries from contesting the will. A non-contestability clause states that any contest of the will results in the contester's inheritance to other beneficiaries.
References in periodicals archive ?
(42.) Moore, supra note 13, at 118; see also Browder, supra note 4, at 1067 ("It is extremely important to bear in mind that the legality of a condition can be determined only with reference to its application, i.e., with reference to the particular facts and the grounds of contest."); Leavitt, supra note 6, at 46 ("Since forfeitures are disfavored by the courts, the no-contest clause is strictly construed to prevent this result whenever possible.
at 2211 ("[I]f a testator leaves potential contestants nothing under a will, a no-contest clause becomes toothless because would-be contestants have nothing to lose by bringing the contest.").
The Mississippi Supreme Court recently held that the probable cause standard applies even though the no-contest clause itself states that forfeiture will occur regardless of whether the beneficiary acts in good faith and with probable cause.
1968) (interpreting a provision providing that the no-contest clause "shall not be construed to limit the appearance by any beneficiary as a witness in any proceeding for the probate of this will, nor limit his appearance in any capacity in a proceeding for its construction"); Va.
The unconscionability rule could also prove helpful in the misty arena of the no-contest clause. No-contest clauses, also known as in terrorem clauses, impose forfeitures on beneficiaries who seek specific forms of legal redress.
An additional complexity is that the scope of prohibited conduct under a no-contest clause is often unclear, For example, a common no-contest clause forbids not just frontal challenges to the trust's validity under the doctrines of incapacity and undue influence, but also attempts to "'otherwise ...
For example, a no-contest clause in a mill trust would likely pass muster under the public policy doctrine, but likely would not reflect the settlor's informed ex ante preferences.
ANTS, III, THE LIVING TRUST 116--17, 152 (2003) (calling a no-contest clause a "necessary provision[] for a good living trust" and an arbitration clause "an added protection").
(21.) Prevailing American law enforces the no-contest clause unless the contestant can prove probabl cause for bringing the contest.
No-contest clauses will prevent most frivolous attempts to overturn a trust, but there is one key exception: The Uniform Probate Code ensures that a no-contest clause is unenforceable if probable cause exists for contesting the will.
Thus, a prudent beneficiary would want to be certain that probable cause exists before contesting a trust that includes a no-contest clause. A new article by Joseph Viviano in the Trust & Estate Law Journal argues that the best way for a prudent beneficiary to ascertain that he or she truly has probable cause is to seek a declaratory judgment from a court asserting that cause, prior to contesting the trust itself.
* A no-contest clause might be a good idea if the client expects heirs to be disappointed or outraged by how much of the estate they're receiving.