Before 2018, Indiana was one of two remaining states in the country that did not allow the enforcement of no-contest clauses on wills and trusts. However, on July 1, 2018, the state finally joined the majority as it passed the bill amendment providing that a no-contest provision is enforceable.
What is a no-contest clause?
A no-contest clause is a provision that the testator can include in their will or trust, which states that any beneficiary who challenges the contents of the document loses the property or asset they were going to inherit. The main purpose of the clause is to discourage beneficiaries from going through extensive litigation that could cost them greatly. With this clause, involved individuals will have to think twice before contesting the will.
The clause is not absolute
Including a no-contest clause in a will or trust does not guarantee it will be free from challenges. There are still exceptions to the provision. Under Indiana laws, the clause does not apply to the following circumstances:
- If the court finds good cause for the contest such as fraud or undue influence
- If the suit is brought by an executor or other fiduciary who is a nonbeneficiary
- If there is a settlement agreement to resolve disputes among all beneficiaries and involved parties
- If the action seeks a ruling on the interpretation or construction of the document
- If the action is to determine if the motion constitutes a contest
If any of the instances above exists, a beneficiary can challenge a will or trust without facing the risk of losing their inheritance.
Estate planning laws do not require individuals to include a no-contest clause in their trusts or wills. However, it is something to consider depending on each person’s circumstances. It is a good practice to study the potential benefits and risks of the same before making a decision.