No-contest clauses in Texas will contests

I often get questions from clients regarding the enforceability of no-contest clauses. Some believe they are broadly enforceable in almost every estate dispute. Some believe they are never enforceable.

The truth is somewhere in between. Texas courts will enforce no-contest clauses, also known as in terrorem clauses. But they are disfavored by Texas courts and narrowly construed. In my years of practicing probate litigation, I have never turned down a will contest because of a no-contest clause.

In the recent case Estate of Frances Vogelsang Walzel, the Amarillo Court of Appeals considered the enforceability of a no-contest clause. This case provides a good summary of how Texas courts handle challenges to such clauses and what constitutes "just cause" and "good faith" in contesting a will.

Background

Frances Vogelsang Walzel's will included a no-contest clause that would disinherit any beneficiary who directly or indirectly contested the will or any of its provisions. After Frances passed away, her daughter Amy Walzel challenged the will, alleging that Frances lacked testamentary capacity and that the will was the result of undue influence. In response, the co-independent executors, Franci Denio and Kyle Walzel, sought a declaratory judgment to enforce the no-contest clause, effectively disinheriting Amy.

The Court's Ruling on the No-Contest Clause

The trial court court found that Amy's contest of the will triggered the no-contest clause, which is enforceable under Texas law unless the contestant can demonstrate "just cause" and that the action was brought in "good faith." These terms are crucial in probate litigation, particularly in cases where a beneficiary's inheritance is at risk due to a contest. The court of appeals agreed with the trial grant’s dismissal of Amy’s contest to the will based on a lack of testamentary capacity. However, the court of appeals disagreed with the summary judgment finding that Amy had violated the no-contest clause.

Amy argued that her actions were based on a reasonable belief that her mother lacked testamentary capacity and that she was acting in good faith. The court acknowledged that "just cause" and "good faith" are typically fact-based inquiries, which should be decided by a factfinder (jury or judge) rather than through summary judgment.

The court ultimately concluded that Amy presented enough evidence to raise a genuine issue of material fact regarding whether she had just cause and acted in good faith. As a result, the court reversed the summary judgment on this issue and remanded it for further proceedings, allowing Amy the opportunity to prove her case at trial.

Implications for Probate Litigation

This ruling highlights the importance of understanding the specific terms and conditions of a no-contest clause in Texas wills. Beneficiaries considering contesting a will with such a clause must be prepared to demonstrate that their challenge is not only justified but also pursued with honest intent. The court's decision also reinforces that these issues often cannot be resolved at the summary judgment stage and require a thorough examination of the facts.

For those involved in probate litigation, particularly in Texas, this case serves as a reminder to carefully evaluate the risks of triggering a no-contest clause and to ensure that any contest is based on solid legal grounds and conducted in good faith.