Non-Contest Provision Enforced in an Arizona Estate Planning Family Trust
It is common for individuals to include a “no contest” (i.e., in terrorem) clause in their Living Will and/or Family Trust in Arizona. The provision typically provides that an heir to the estate forfeits their inheritance if they attack the validity of the estate planning documents in Court.
The law has been clear that such no contest provisions in an Arizona last will and testament is valid and enforceable if a person contests the will without probable cause to do so as a result of Arizona Revised Statute Section 14-2517. However, that statute specifically only applied to wills and not to an Arizona family trust. The Arizona Court of Appeals, therefore, had to decide the issue whether such no contest provisions in an Arizona family trust would receive the same treatment under the law.
The Arizona Court of Appeals in the In re the Shaheen Trust case decided on January 16, 2015 found that, although there were no statutes in Arizona concerning no contest provisions contained within a family trust document, Arizona court’s would nonetheless enforce no contest provisions in a family trust document by applying the same standard outlined by the legislature applicable to such provisions in wills.
No Contest Provision Enforced in Arizona | The Ruling
Neither the statute pertaining to wills nor the decision in Shaheen case require automatic forfeiture of an heirs inheritance by virtue of that heir contesting a will or trust containing a no contest provision. It is only if the trial court determines that the heir’s contest to the will or trust was filed without their being probable cause to do that causes the no contest provision to be enforceable and the heir disinherited.
In fact, the Court of Appeals indicated that the person contesting a will or trust in such a circumstance must establish probable cause for each and every claim made against the estate to avoid enforcement of the no contest provision in the will or trust. Probable cause is, likewise, defined as “the existence, at the time of the initiation of the proceedings, of evidence which would lead a reasonable person, properly informed and advised, to conclude that there is a substantial likelihood that the contest or attack will be successful”.