A lot of clients have approached me after emotional battles in the various Probate Courts of Tennessee and asked how can they prevent their beneficiaries being subject to such Probate Court proceedings? As with most legal questions, there is no simple answer. My first recommendation is to always consider an “in terrorem” clause in their estate planning documents. An “in terrorem” clause in its simplest form is a “no-contest” provision—if a beneficiary files any contest to your estate planning document (either Will or Trust), this clause automatically reduces their bequest to a nominal sum or eliminates them as a beneficiary altogether (treating them as if they predeceased you), just for contesting your estate plan (absent good faith and probable cause as described below).
But all states do not allow enforcement of these no-contest provisions so be sure to review your estate plan thoroughly if you leave the state of Tennessee or if you are new to the state. Tennessee Courts have held no-contest provisions in Wills to be enforceable, unless the Will contest is pursued “in good faith and upon probable cause.” Tate v. Camp, 147 Tenn. 137, 149 (1922); Winningham v. Winningham, 966 S.W. 2d 48 (Tenn., 1998).
But what if your estate plan is based on a trust document, which have become popular estate planning documents of late; many clients think their revocable trusts will avoid the Probate Court process and that is generally correct (as long as all assets are properly transferred into the trust). But for added assurance, you should consider a no-contest provision in your revocable trust as well, to prevent beneficiaries from contesting any portion of your Trust document. As part of its adoption of the Uniform Trust code, Tennessee allows dispositive provisions of a Trust to be interpreted the same as the dispositive provisions of a Will (see Tenn. Code Ann. §35-15-112), which would permit enforcement of a no-contest provision in a trust unless the contest is pursued “in good faith and upon probable cause” as Tennessee Courts have outlined in the Will contest decisions in Tate and Winningham cited above. Id.
As with all decisions involved in your estate planning, the decision to include or not include a no-contest provision should be considered carefully and with the guidance of legal counsel. But if avoiding litigation is one of your goals, please give us a call to discuss the benefits of a no-contest provision in your estate planning document(s).
Kevin Dean practices in the areas of Probate, Estate Planning, Bankruptcy, Business Litigation, Real Estate Litigation, Media Law, General Civil Litigation and Tax Law, including preparation of tax returns. As a licensed CPA, his combined background in accountancy and law ensure clients extensive, knowledgeable representation that is customized for each individual case. Kevin has appeared in numerous levels of state court and is licensed to practice in the U.S. Federal District Court for the Eastern District of Tennessee and the U.S. Tax Court. He enjoys using his merged backgrounds to help businesses and individuals analyze their situations. Kevin brings a highly beneficial skill set to the table for all his clients.