When Denver Broncos owner Pat Bowlen died in June 2019, he left behind a professional football franchise valued at more than $2.5 billion. The validity of his trust, wherein he named one of his seven children as chief executive after he passed, is being fought over in court by his children.
After Bowlen’s death, his two oldest daughters, Amie Bowlen Klemmer and Beth Bowlen Wallace, filed a lawsuit challenging the validity of the trust. They argue that Bowlen was subject to undue influence when he executed the trust in 2009 and that he lacked the requisite mental capacity to create the trust. Bowlen lived with Alzheimer’s Disease for several years before his death, and the trustees of his trust have run the NFL team since 2014 when Bowlen stepped down for health reasons.
Amie’s and Beth’s challenge is not without risk because of what is known as a “no-contest clause” contained within the terms of the trust document. The “no-contest clause” could cause them to receive nothing from their father’s trust.
Simply put, a “no-contest clause” – also known as an “in terrorem clause” – in a will or trust seeks to punish a beneficiary who challenges the decedent’s estate plan. Generally, the “punishment” for the beneficiary who challenges the will or trust is disinheritance. The threat of losing out on all or part of an inheritance is often enough to keep a beneficiary from challenging a will or trust with a “no-contest clause” in it.
Laws concerning “no-contest clauses” vary by state. Wisconsin has a statute that addresses the use of “no-contest clauses,” explicitly permitting them but limiting their enforcement “if the court determines that the interested person had probable cause of instituting the proceedings.” That is, in Wisconsin, the court may decide not to enforce the provision if the court finds that the contestant had sufficient facts to justify why he or she made the contest, even if the contestant’s challenge was ultimately unsuccessful. Of course, this means that a court could enforce a “no-contest clause” if the court finds that the challenger had no “probable cause” for bringing the challenge in the first place if the court upholds the will or trust as valid. Accordingly, under Wisconsin law, there is considerable risk involved in bringing a challenge to an estate planning document with a “no-contest clause” in it.
Bowlen’s case is in Colorado, which explicitly allows “no-contest clauses” in wills but has no corresponding provision in statutes concerning trusts. Case law on the issue is also sparse, so in this situation, if Amie and Beth are found to be in violation of the “no-contest clause” and the trust is held to be valid, it is quite possible that they would forfeit their shares of the trust. On the other hand, if a court finds they had probable cause to challenge the trust, it’s also possible that a court would decline to enforce the “no-contest clause.”
