Can a No-contest Clause in a California Trust affect a separate Will, Power of Attorney, or group of contracts and deeds? The answer may shock you - YES it can.

 

                Many people believe that a “no contest clause” is limited to the legal instrument that it is written into.  For example, if there is a trust and that trust has a “no contest clause,” then a person may believe that only the trust is affected by the “no contest clause.”  In reality other instruments, such as a will, powers of attorney, or even contracts may be affected by the “no contest clause” in the trust – and vice versa, depending on the language of the "no contest clause" and the other instrument or classes of instruments identified.

                Under California Trust Law a “no contest clause” is defined as a provision in an otherwise valid legal instrument that, if enforced, would penalize a beneficiary for filing a pleading in any court.  California Law in this instance defines a “pleading” as a petition, complaint, cross-complaint, objection, answer, response, or claim.  A “protected instrument” is defined in CA Trust Law as either 1) an instrument that contains the “no contest clause” or 2) an instrument that is in existence on the date that the instrument containing the “no contest clause” is executed and is expressly identified in the “no contest clause,” either individually or as part of an identifiable class of instruments, as being governed by the “no contest clause.”  In other words, a “no contest clause” contained in a trust, could just affect the trust, but if it identifies a separate instrument (will, power of attorney, contract) in existence on the date the trust is created, then it could affect the other instrument(s).  If the “no contest clause” refers to an “identifiable class of instruments” such as “estate planning documents” or “contracts” or “deeds” then it could likely also affect those identifiable classes of legal instruments.