24th February, 2025
Estate planning is essential for ensuring that your wishes are respected after your death. One common feature that some people include in their Wills is a no-contest clause. However, it’s important to understand the implications of such clauses in Australia, and whether they are enforceable or effective.
What is a No-Contest Clause?
A no-contest clause, also known as an “in terrorem” clause, is a provision in a Will designed to discourage beneficiaries from contesting or challenging the Will. The clause typically states that if a beneficiary contests the Will, they will lose their inheritance, or their share of the estate will be reduced. The intention behind this provision is to deter individuals from questioning the validity of the Will after the Will maker’s death.
For example, a no-contest clause might state, “If any beneficiary challenges the provisions of this Will, they forfeit their inheritance.” For many, this clause is seen as an effective deterrent, offering reassurance that potential disputes over the Will may be avoided.
Why Do People Use No-Contest Clauses?
Many testators include no-contest clauses to safeguard their estate from challenges. This is often the case when the testator is concerned about potential disagreements among family members or when they suspect that someone may contest their wishes. The idea is that the fear of losing their inheritance would discourage beneficiaries from contesting the Will, thereby preventing lengthy legal battles and family conflicts.
Such clauses are especially popular in DIY Wills, where people draft their own Wills without legal advice. In these cases, the testator may mistakenly believe that the no-contest clause will effectively protect their estate from any future challenges.
Are No-Contest Clauses Enforceable in NSW?
Despite their perceived deterrent effect, no-contest clauses are largely unenforceable in New South Wales. The right to challenge a Will is governed by the Succession Act 2006 (NSW). This right allows beneficiaries to file a Family Provision Claim.
This statutory right cannot be overridden by a no-contest clause. To forfeit their right to contest a Will, beneficiaries must sign a release agreement under section 95 of the Succession Act. This release can be made before or after the testator’s death and must be voluntarily signed by the beneficiary, not imposed by the Will itself.
The Importance of Legal Guidance
While a no-contest clause may seem like a simple solution, it often offers false security. Such clauses cannot prevent a valid Family Provision Claim, making it essential to seek legal advice when drafting your Will.
At Castrikum Adams Legal, a qualified lawyer specialising in Wills and estate planning can help you create a more effective strategy for protecting your estate. We can provide tailored advice and ensure your Will is structured to minimise the risk of disputes. Our team can offer you expert guidance to ensure your wishes are followed and your estate is properly protected.
If you would like to dive deeper into related topics, we invite you to check out our other blog posts.