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Interim Clauses in Estate Planning Explained
Oct 24, 2024
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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.
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