In Arkansas, in terrorem clauses, also known as “no-contest clauses,” are provisions in Wills and Trusts that generally seek to prevent a beneficiary or any other party from contesting the validity of the Will or the Trust by disinheriting the beneficiary or party if they contest the Will or the Trust. Basically, the general principle is that if a beneficiary “contests” a Will or a Trust, then they get disinherited and receive nothing. The key word here is “contest” and the primary question becomes, has that beneficiary done something that constitutes a “contest” of the Will or Trust or otherwise violated and invoked the in terrorem clause? Although it may sound like a simple question on its face, the legal analyses and involved become very complex with a lot at stake. These clauses are generally enforceable under Arkansas law, but they are strictly construed by courts to avoid forfeitures unless the beneficiary's actions clearly fall within the scope of the clause.
What Is a “No Contest” Clause: Generally, an “in terrorem clause” or “no-contest clause” is a rule in a will or trust that says a beneficiary will lose their inheritance if they try to challenge the validity of the document.
A Simple No Contest Clause - For example, the Will might read that “any beneficiary that contests the validity of my Will shall be disinherited and receive nothing under this Will or from my estate.” This is a very simple “no contest” clause.
A More Complex No Contest Clause - However, Arkansas attorneys have recently expanded the language applicability of these no contest clauses by having a clause that reads more like the following: “If any beneficiary or any party shall contest or challenge the validity of my Will, or if any beneficiary shall become an adverse party to my Will or otherwise initiate any adverse proceedings against my Will, whether judicial or otherwise, then that beneficiary or party shall be disinherited and receive nothing under this Will or from my estate.”
This more complex no contest clause also includes the concept of anyone becoming an “adverse party” to the Will or initiating any “adverse proceedings” against the Will. This broad applicability has recently been expanded by Arkansas courts whereby certain acts, filings, pleadings, and actions done by a beneficiary will now invoke these broader no contest clauses which has had significant implications on the rights of beneficiaries. Simply, it is now much easier to trigger these complex and broader no contest clauses unbeknownst to beneficiaries and many attorneys alike.
Enforceability: In Arkansas, these no contest clauses are generally valid, so long as they don’t go against public policy. Courts will be strict about enforcing them and will need clear proof that the beneficiary’s actions actually triggered the clause before they lose anything.
What Triggers a No Contest Clause: The actions that will trigger a no contest clause depend upon the language of the no contest clause, but generally a simple no contest clause will be triggered if a beneficiary (a) tries to challenge or invalidate the document or any of its terms, (b) attempts to remove the trustee, (c) sues the trustee or another beneficiary over how the document is interpreted or handled, or (d) helps someone else do these things.
The actions that will trigger a more complex and broader no contest clause can include (a) a request to remove the trustee, (b) an action against the trust or trustee, (c) request to strip rights and duties from the trustee, (c) a challenge or contest of the trust terms, (d) the bringing of any judicial proceedings, (e) and generally the questioning of the trustee’s decisions and actions.
What Happens If You Trigger It: If a beneficiary violates the no contest clause, they could lose all their rights to the assets, and their share could go to the other beneficiaries or whoever is next in line.
If Part of the No Contest Clause is Invalid: If any part of this no contest clause is invalid, the remainder of the clause still applies and will be enforced under Arkansas law.
Optional additions could include things like resolving disputes outside of court, specifying the location for legal challenges, allowing partial forfeiture, or giving the trustee/executor discretion to waive violations.
Located in Batesville, Melbourne, and Heber Springs, Arkansas, and serving all of Arkansas, Reeves Law Firm stands ready to handle any estate, probate, or litigation matters that may arise.
Reeves Law Firm primarily serves Independence County (Batesville), Jackson County (Newport), Sharp County (Ash Flat, Highland, Cherokee Village), Lawrence County (Walnut Ridge), Cleburne County (Heber Springs, Greers Ferry, Fairfield Bay), Izard County (Melbourne). Stone County (Mountain View), White County (Searcy), and Baxter County (Mountain Home).