Undue Influence and No-Contest Clauses: A Bad Combination?

Weighing the probable cause exception against conduct in procuring an invalid will

I have written extensively in the past about no-contest clauses, especially as relates to their scope when multiple trust amendments or instruments are involved. Generally, courts presume that a testator of a will (or settlor of a revocable trust) who includes a no-contest clause does not intend to have the no-contest clause apply to codicils, or trust amendments, that are the product of undue influence. This presumption can be overcome, but doing so requires an express statement to the contrary. And, if you think about it, you would be hard-pressed to find any client or attorney willing to expressly state that they want the no-contest clause to be used to defend a future instrument that is the product of fraud or undue influence.

What happens, however, in situations where there are two wills, and only the older will (which is not destroyed) contains a no-contest clause? Can the act of presenting the newer will violate the no-contest clause of the older will if the newer will is later invalidated? What if the beneficiary presenting the will knows, or should have known, that the newer will may be invalid?

…a no-contest clause cannot be presumed to apply to a document that is the product of undue influence. Given this lack of presumption, perhaps we should question the advice to destroy old [superseded] wills or trusts that actually contain a no-contest clause…

The Probable Cause/Good Faith Exception

Many states approach no-contest clauses with caution. At the top of the bell curve, you will find statutory laws and/or judicial holdings in which a state’s courts refuse to enforce a no-contest clause if a beneficiary had probable cause to take an action that is forbidden under the no-contest clause (such as contesting a will, or questioning the discretion of a fiduciary).

In a situation where a subsequent will is presented for probate and then invalidated, the interaction of probable cause can be tricky because it is largely based on the intent of the individual presenting the will. In situations such as undue influence, how often does the perpetrator specifically intend to unduly influence a testator? This can be difficult to prove or disprove from a good faith/bad faith perspective, so more often than not this question of intent becomes a question of facts, circumstances, and outcome. But, where a no-contest clause is involved, this inquiry shifts back to a good faith/bad faith model.

For this reason, a good faith requirement is often expressly or impliedly included in the question of whether an individual has probable cause to take any action that contests or invalidates a will containing a no-contest clause. But, it is usually a defense that is separate and independent from any factual inquiry relating to undue influence, or lack of testamentary capacity. To brighten the lines around this inquiry, I will take a look at both a new and an old opinion.

In re Estate of Peppler, 971 P.2d 694 (Colo. Ct. App. 1998)

One of the oldest cases in Colorado governing no-contest clauses confronted this issue head-on. Briefly, this case involved a son and daughter who were the sole beneficiaries of their father’s estate. The father had a 1984 will which left $40,000 to daughter, and the balance of the residuary estate to son and which contained a no-contest clause. Later, a 1992 will was executed which left more to daughter.

After the 1984 will was presented for probate, the daughter presented the 1992 will. However, the trial court found that the 1992 will was invalid as the product of undue influence. The personal representative petitioned for instructions on the enforcement of the no-contest clause under the 1984 will, alleging that the daughter’s act of procuring the 1992 will by undue influence and then presenting it for probate constituted an attack on the 1984 will. However, the trial court did not order enforcement of the no-contest clause.

On appeal, the Court determined that while the act of presenting the 1992 will was technically an “attack” on the 1984 will, Colorado law had a statutory exception recognizing probable cause in commencing a proceeding that has the effect of “attacking” a will. In defining probable cause, the Court noted that sufficient evidence must exist at the time of commencing such proceeding that would lead a reasonable person, properly informed and advised, to conclude that there was a substantial likelihood that the attack on the will would be successful. In attempting to become properly informed and advised, the Court noted that the opinion of disinterested counsel, sought in good faith with full disclosure of the facts, would be a factor.

This means that the burden is on the individual contesting a will to establish such evidence of probable cause and good faith.

What the personal representative tried to argue, however, was that the daughter in this case should not even have the opportunity to establish probable cause. Instead, the personal representative argued that a finding of probable cause and good faith was impossible in a situation where the trial court find that there was undue influence.

Ironically, if this was the accepted principle of law, it would mean that the daughter would not only forfeit her inheritance under the 1984 will, but also forfeit the opportunity to establish good faith and/or probable cause for presenting the 1992 will.

Luckily, the Court declined to adopt such a position. Citing cases such as in re Estate of Westfahl, 674 P.2d 21 (Okla. 1984), the Court noted that other states have declined to hold that undue influence precluded a finding of probable cause for a will contest. In fact, the Court noted that in many cases, an individual in possession of an original will of a deceased testator has a statutory duty to present such will for probate - a duty that from a public policy perspective would be frustrated by a finding that the individual’s role in procuring such will was nefarious.

Ultimately, the Court remanded to the trial court for a determination of probable cause. The Court found that the trial court record was sufficient to establish good faith (which usually requires that the individual presenting the will believes it to be genuine, even if the will is spurious in fact), but that the daughter would need to present additional evidence to establish probable cause. (Notably, the daughter had sought the advice of counsel, although disinterested, which aided the Court’s finding of good faith.)

The significance here was that the individual presenting a subsequent will for probate actually has the opportunity to establish probable cause, even if the will itself was the product of the individual’s undue influence. But, are good faith and probable cause separate and independent defenses which must be established?

This inquiry leads to our next, and more recent, case.

In re Marley, opinion unpublished (Iowa App. 2023).

This opinion, published by the Iowa Court of Appeals on May 24, 2023, involved a similar fact pattern. The testator’s sister, as executor, presented a 2016 will for probate. However, a cousin of the testator successfully contested the 2016 will due to the testator’s lack of testamentary capacity and undue influence by the testator’s sister. The sister later presented a 2012 will for probate, which contained a no-contest clause, and the cousin sought to enforce the no-contest clause against the sister.

As in Peppler, the trial court declined to enforce the no-contest clause, and the cousin appealed. On appeal, the Court’s opinion did not cite Peppler but refined some of its principles.

For one, the Court noted that Iowa also judicially recognizes a good faith/probable cause exception, but also clarified that good faith and probable cause are not separate and independent standards but instead overlap and apply interchangeably (which will have significance in the ultimate holding below).

However, contrary to Peppler, the Court declined to find that the sister’s attempt to probate the 2016 will constituted either a direct, or indirect, contest of the 2012 will. Of note was the fact that the sister was the named executor under both wills, thus creating the duty to present the 2016 will for probate (even if it was the product of undue influence). Contrast this with Peppler, where the daughter presenting a newer will was not the appointed executor and thus had a reduced duty to present the will.

Again, the cousin in this case argued that the sister’s undue influence and knowledge of the testator’s incapacity precluded a finding of good faith or probable cause. But, while the court in Peppler refused to adopt this position as a matter of law, the Court in this case actually examined the trial court findings of facts and circumstances with regard to the sister’s intent. Since the trial court found that the undue influence stemmed from the sister’s role as caretaker, and not from nefarious motives, the Court on appeal refused to assume that the sister’s motives would preclude a finding of good faith and probable cause. Unlike Peppler, the Court determined that there was probable cause and did not require a remand for establishment of probable cause based on a “reasonable person” standard.

Takeaways and Action Items

Both of these cases refused to deny the opportunity to establish probable cause in situations where the will was, or could have been, presumed to be genuine by the party presenting it for probate. These cases also reflected a policy of separating intent from facts and circumstances, by recognizing that undue influence itself is not always the outcome of bad behavior but instead could arise in situations where the influencer believes they are doing the right thing. Is there, however, a circumstance where an individual’s conduct in unduly influencing a testator is so egregious as to create a presumption of bad faith and/or no probable cause?

One case out of California, Key v. Tyler, 34 Cal. App. 5th 505 (2019), established that a trustee/beneficiary’s individual conduct in procuring a trust amendment by undue influence was sufficient to establish a lack of probable cause. But, contrary to the cases above, the burden of proof in California is actually on the individual seeking to enforce a no-contest clause to establish a lack of probable cause. So, this case may be an outlier.

It is also important to note that, when a new will is executed, attorneys often advise clients to destroy the originals (and photocopies/digital copies) of their old wills. Would these cases have been decided if the old will had been properly destroyed?

As an argument against this, however, I circle back to the original premise of this article - that a no-contest clause cannot be presumed to apply to a document that is the product of undue influence. Given this lack of presumption, perhaps we should question the advice to destroy old wills or trusts that actually contain a no-contest clause, especially where undue influence or lack of testamentary capacity might be suspected. While I may be giving more credit than is due, perhaps the attorneys in these cases made a prudent decision to forego the usual advice on destruction of “superseded” documents.