Interim Clauses in Estate Planning Explained

Oct 24, 2024

Understanding Interim Clauses in Estate Planning

Introduction

  • Speaker: Daryl Cartwright, Estate Planning Attorney
  • Location: Birmingham, Alabama
  • Focus: Explanation of an interim clause (also known as a no contest clause) in wills and estate planning.

What is an Interim Clause?

  • Purpose: Prevents a beneficiary from contesting the will.
  • Mechanism: Conditional on the beneficiary not challenging the will.
  • Common Names: No contest clause.

Legal Context

  • State Variations:
    • In some states, these clauses are not enforceable if there's probable cause to challenge the will.
    • In Alabama, such provisions are not favored and are narrowly construed.

Appropriate Use of Interim Clauses

  • Not for Disinheritance:
    • Ineffective if disinheriting someone since they have nothing to lose by contesting.
  • Ineffectiveness of Token Bequests:
    • Leaving a token amount (e.g., $1) may not deter contesting.
  • Substantial Bequests:
    • Must leave a beneficiary enough to make them reconsider challenging the will.
    • Example: In a million-dollar estate, a significant bequest might deter challenges.

Legal Case Example

  • Case: Supreme Court Case, 2007 (Alabama)
    • Provision: Dispute over a bequest's distribution among beneficiaries.
    • Outcome: The court ruled that contesting the disposition wasn’t the same as distribution, hence not disqualifying.
  • Lesson: Interim provisions need specific drafting to withstand legal scrutiny.

Recommendations

  • Drafting: Must clearly define the scope and intended protection.
  • Consultation: Discuss thoroughly with an attorney to tailor the interim clause to specific concerns.

Conclusion

  • Effectiveness: An interim clause can serve as a deterrent in the right circumstances.
  • Usage: Consult an attorney to ensure proper implementation in estate planning.

  • Note: The information provided is meant for understanding and consideration in estate planning and should be discussed with a legal professional.