What a No-Contest Clause Does
A no-contest clause (sometimes called an in terrorem clause) is a provision in a trust that says: if a beneficiary challenges the trust, that person forfeits their share. The idea is to discourage frivolous disputes by making the stakes high enough to think twice before filing.
Many trust creators include these clauses to protect their wishes from being overturned after they are gone. They can be effective at preventing baseless challenges. But Arizona draws a clear line.
A provision in a trust instrument that purports to penalize an interested person for contesting the trust instrument or instituting other proceedings or actions relating to the trust property is unenforceable if probable cause exists for the contest, proceedings or actions.
A.R.S. § 14-10113The Probable Cause Standard
Arizona does not allow no-contest clauses to silence legitimate concerns. If a beneficiary has probable cause to believe something is wrong, the penalty clause cannot be used against them. Probable cause means the person had a reasonable basis for bringing the challenge, not that they ultimately won.
This protects beneficiaries who suspect undue influence, fraud, or a trustee who is not following the trust terms. A beneficiary should not have to choose between raising a genuine concern and losing their inheritance. Arizona law ensures they do not have to make that choice, as long as their challenge is grounded in a reasonable belief.
For trust creators, this means a no-contest clause still carries weight against meritless challenges. But it will not shield a trust from scrutiny when real problems exist. Working with experienced counsel to draft clear, unambiguous trust language remains the best way to minimize disputes in the first place.
