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.

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