noncontestability clause

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In trust and estate planning, a noncontestability clause (sometimes referred to as “no-contest clause” or “in terrorem clause”) requires that a beneficiary forfeit the right to contest a will in order to receive the devise. This mechanism is used to deter beneficiaries from contesting the validity of a will or trust, or more specifically, the actions of a executor or trustee. States differ in their treatment of no-contest clauses. South Carolina, for example, finds these clauses enforceable. See Russell v. Wachovia. Other states disfavor these clauses, allowing challenges to be made with probable cause: for example, in an instance of forgery of a will. See this link for further detail.

In the insurance context, a noncontestability clause limits the ability of the insurer to contest the insured parties representations in their policy application. This type of policy provision could be included in various types of policies, including health insurance and life insurance. The implication is that an insurer, after a stipulated period, cannot investigate and dispute false representations made by the insured party at the time of application.

[Last updated in June of 2020 by the Wex Definitions Team]