“Hi, I’m Kent Berk. I am an attorney at the Scottsdale, Arizona law firm of Berk Law Group, where we handle probate, trust, estate and other types of matters. I want to explain today what happened in the case of the Shaheen Trust. This is a case involving a no-contest clause.
A no-contest clause is a provision that’s included in a will or trust, and typically they provide that if any beneficiary challenges the validity of the will or the trust, then they’re disinherited and they get nothing under the will or trust.
By statute, in Arizona, no-contest clauses are not enforceable in a will, if the person had probable cause for filing the contest at the time that they filed it. A probable cause is, there is sufficient evidence that would cause a reasonable person to believe that they have a substantial likelihood of succeeding on the validity of the claims.
If there is a challenge to the validity of the will, by statute, even if the person loses, as long as they had probable cause, they had a substantial basis to believe that they would succeed, based on the evidence at the time, then they’re not disinherited. But if they file a contest in violation of the no-contest clause without probable cause, then they’re disinherited.
The question in the Shaheen Trust case was whether a no-contest clause in a trust is evaluated according to the same standards as a no-contest clause in a will. The court found that the same principles apply in a will or trust contest, so that if a person did not have probable cause, then they can be disinherited in a trust contest case, just like in a will.
The second question was, in that particular case, the beneficiaries filed nine separate claims, affecting the trust or involving the trust. The court found that the determination of probable cause must be met on each separate claim that was brought and that the determination of probable cause is based upon the evidence that the attacking party, the challenger or contestant, had at the time that they filed the challenge.
In that particular case, the challengers, the contestants filed nine separate claims, one of which they claimed that the trustee was supposed to make distributions on a different periodic basis than what she was, as a result of which the trustee had engaged in misconduct. The court found there was no basis for that challenge, the trust didn’t require the distributions on the basis that the contestants were claiming.
As a result, one out of nine claims violated the no-contest clause, they did not have probable cause for that claim, therefore, they were disinherited from any interest in the trust. Now, you might wonder, why have a no‑contest clause? Why do courts enforce them? A no-contest clause obviously is to avoid costly litigation and allow the will or trust to be administered according to the wishes of the person who adopted the governing instrument.
But, of course, the ultimate purpose of probate law is to ascertain and give full force and effect to the person’s wishes, so that if for example the person was unduly influenced or lacked testamentary capacity then the courts don’t want to enforce a will or trust that’s truly invalid, even if there is a no-contest clause.
Therefore to balance those interests, the court will allow a contest to go forward, even though it might violate a no‑contest clause. So as long as the person had probable cause, they won’t be disinherited.
If you have any questions regarding no-contest clauses or will or trust contests or other types of disputes here in Arizona, please don’t hesitate to give us a call. Thank you.” – Kent Berk