October 17, 2013. As complement to the previous post on disinheritances; I’d like to add a brief exploration of the no-contest clause. Also known as an in-terrorem clause, its purpose it to prevent a beneficiary from contesting a will or trust by stipulating that they will receive less than what they are devised if they initiate a contest. Though it may go without saying, these are impotent where there has been no devise to the beneficiary or there has only been a nominal gift.
To be effective, they have to be “baited” with at least a modest device as the clause ultimately a tool of deterrence, not necessarily enforcement. The devise has to weighted enough that it overcomes the risk-reward calculus employed by the beneficiary; nudging them away from bringing suit.
In the instance they do bring suit, the clauses are generally enforced. In Iowa, the plaintiff has to prove both good faith and probable cause to nix it. In Nebraska and South Dakota, probable cause. I find this link to The American College of Trust and Estate Counsel’s survey of this matter to be both interesting and useful. For more information on helping to plan for your future contact Goosmann Law at info@goosmannlaw.com or by calling 712.226.4000.