Discouraging Family Fights From The Grave

If you are a beneficiary in a will that contains a no-contest clause, and you don't like what the will directs, be careful before you question its validity. You just might lose everything.

A no-contest clause is intended to discourage costly court proceedings raised by people who might be disappointed by a will, especially where they stand to gain more from a previous will. On February 27, 2019, the Alberta Court of Appeal released its decision in Mawhinney v Scobie, 2019 ABCA 76 [Scobie], a seminal decision in the drafting and interpretation of no-contest clauses. The Alberta Court of Appeal allowed the appeal argued by Barbara Stratton, Q.C., and Sarah Huot of Bennett Jones LLP. The Court ruled that if the disappointed beneficiary gave evidence of "suspicious circumstances" relating to the will, with a view to asking the Court to direct a full hearing regarding its validity, this would constitute challenging the will itself. This would activate the no-contest clause resulting in her loss of inheritance, unless she ultimately succeeded in proving the testator lacked capacity.

A No-Contest Clause: What is it?

Simply put, a no-contest clause in a will causes a beneficiary to lose his or her entitlement under the will if he or she challenges the validity of the will and ultimately is unsuccessful in that challenge. They are famously referred to as "Frank Sinatra" clauses because Sinatra included a no-contest clause in his will. In other words, he did it his way.

Canadian law allows these clauses to be used in wills, but they require careful drafting, as the Scobie decision shows. (The will in question, including the no-contest clause, was drafted by Bennett Jones LLP.) Also, there are limits to how broadly these clauses can be applied. For example, a no-contest clause is not allowed to deprive a person of rights which arise from statute, such as maintenance and support obligations.

What did the Court of Appeal decide?

In Scobie, the will stated that if any beneficiary challenged its validity, or questioned the will in court, that...