State law changes enacted in 2010 have restricted the enforceability of no-contest clauses. Under Prob C §§21310–21311, a typical no-contest clause providing that an unsuccessful contestant gets nothing from an estate or trust is enforceable only against a “direct contest” brought without probable cause on specified grounds. And even if it is enforceable, a no-contest clause may not be an effective deterrent if the beneficiary thinks the amount at stake is outweighed by the benefit of a successful contest.
If the trustee of a revocable trust lets the trust’s settlor make an extravagant purchase or risky investment can he or she get into trouble with the trust beneficiaries later? This issue was explored in a recent California case and the court’s answer would allow trustees to approve the settlor’s luxury beach getaway with impunity.
Family lawyers and estate planning attorneys operate quite independently of one another. Each discipline is complex, and its practitioners are specialized to the point that it may be unreasonable to expect attorneys to be fully versed in both areas. But it is important for attorneys to recognize that their advice and actions in one context for one purpose may well have significant implications for the other. It is important for attorneys in both specialties to educate themselves about Automatic Temporary Restraining Orders (ATROs), which are integral to family law, but may also have a significant impact on estate planning.