One thing many people fear when they execute a last will and testament is that there will be a fight over the inheritance once they’ve departed. The last thing they want is for their beneficiaries (or anyone else) to become embroiled in a protracted court battle for the estate’s proceeds. Fortunately, there is an option to reduce the chances of such litigation – but it’s not foolproof.
A no contest clause, more formally known as an in terrorem clause, is intended to ‘terrify’ would-be challengers to a will. It is a provision which states that, should any beneficiary contest the will, they shall receive nothing from the estate. Taken at face value, a no contest clause sounds pretty straightforward and should deter potential challengers. But there’s a lot more to it.
Limitations of a no contest clause
First off, a no contest clause only applies to those named beneficiaries in the will. A person who is not named in the will has no fear of being disinherited and can bring a challenge without regard to the clause.
The clause itself can be challenged, as can any other part of the will. Known as a caveat, any interested party can legally contest a will, in whole or in part, due to undue influence, lack of testamentary capacity or other legitimate grounds.
While North Carolina courts will enforce a no contest clause, they will do so strictly. They will go no further than the express terms of the clause. And under certain circumstances, a court will not enforce the provision at all. Even if a named beneficiary introduces a challenge, in contravention of the no contest clause, if the court finds that the challenge was brought in good faith and with probable cause, the no contest clause will be ignored.