Effective January 1, 2010, the rules in California regarding no-contest clauses have dramatically changed, severely limiting their enforceability in wills and trusts, and doing away with the old declaratory relief procedure (commonly known as a "safe harbor petition") available under prior law to prospective litigants contemplating certain contests to a will or trust. As under prior law, the new law applies notwithstanding any contrary provision in the contested instrument.
Under the new law, a no-contest provision in a testamentary instrument will be enforceable only against direct contests lacking probable cause. For this purpose: (1) a "direct contest" refers to any court pleading alleging that the will or trust instrument was procured by forgery, fraud, menace, duress or undue influence, or that the person making the instrument lacked sufficient mental capacity to sign the instrument, or that he or she did not properly execute the instrument or subsequently revoked the instrument, in whole or in part; and (2) "probable cause" exists if, at the time of the filing of a contest, the facts known to the contestant would cause a reasonable person to believe that there is a reasonable likelihood that the requested relief will be granted after an opportunity for further investigation or discovery.
An "indirect contest" refers to any court pleading other than a direct contest.
Under the new law, a no-contest provision in a testamentary instrument will be enforceable only against the following two types of indirect contests, and only if the instrument's no-contest clause expressly provides for such application: (1) a pleading to challenge a transfer of property on the grounds that it was not the transferor's property at the time of transfer; or (2) the filing of a creditor's claim or prosecution of an action based on a creditor's claim.
Although this leglislation is brand new, its application is retroactive to any will or trust instrument, regardless of when signed, which became irrevocable on or after January 1, 2001. Thus, for example, a will or revocable trust declaration signed in 1975, which became irrevocable 27 years later, in 2002, by reason of the signer's death in 2002, is subject to the new law.
For further information about the new no-contest clause statutes in California, contact Keith Codron, toll-free, at (800) 497-0864, or online at [email protected]