Iowa Supreme Court Update: No-Contest Clauses in Wills Get Sharper Teeth

When families fight over inheritances, emotions run high and so do the legal risks. A recent Iowa Supreme Court decision, Matter of Estate of Felten, sheds light on one of estate planning’s most powerful tools: the no‑contest clause (also called an ‘in terrorem’ clause). For families, beneficiaries, and anyone considering an estate plan, this case is a guide to how Iowa courts will treat no‑contest clauses going forward.

What Happened?

The case involved the estate of Rex Felten, age 89, who signed a final will nineteen days before his death. That will contained a no-contest clause and materially favored one daughter over the other two children. The drafting attorney proactively obtained a cognitive evaluation and a contemporaneous physician’s letter confirming the testator’s competency. The physician reported a perfect cognitive test score and mental competence around the time of execution. Two siblings challenged the will for lack of capacity and undue influence, but a jury rejected all claims.

After trial, the daughter who challenged the will invoked Iowa’s ‘safe harbor’ rule: if a contest is filed in good faith and with probable cause, the challenger may still inherit despite losing and despite a no‑contest clause. The Iowa Supreme Court affirmed enforcement of the clause and clarified the legal standard in the process.

The Lion Roars: What the Court Decided

“No-contest clauses, by their very nature, are a roaring lion, prowling before the courthouse doors, warding away potential challengers.”

The Court reaffirmed Iowa’s middle-ground rule: no-contest clauses are enforceable, but a losing challenger can keep their inheritance if they prove (1) they acted in good faith and (2) had probable cause to file the case. The Court clarified that the challenger bears the burden to prove both elements under the totality of the circumstances.

In Felten, the Court affirmed that the daughter forfeited her inheritance. Why? Because she failed to prove:

1. Good Faith – a subjective standard, the question is whether the challenger honestly believed they were doing the right thing for the right reasons, not whether that belief was objectively reasonable. That objective lens belongs to the probable-cause inquiry.

2. Probable Cause – an objective standard, the Court adopts a modern definition under the Restatement (Third) of Property: At the time of filing, was there evidence that would lead a reasonable person to believe the challenge had a substantial likelihood of success?

The Court held that the challenger failed to carry her burden. Although Rex’s health issues raised questions, his attorney documented competence, and the challenger offered little evidence of any pre‑suit investigation or legal advice supporting her claims.

Separate opinions underscore the stakes:

• The concurrence signaled openness to abolishing the exception and enforcing no-contest clauses categorically to better honor testamentary intent and to avoid potential litigation about good faith and probable cause.

• The dissent argued that the challenger showed good faith and probable cause based on timing, health, family dynamics, and changed dispositions, warning that the plurality opinion’s approach could chill valid contests.

For now, the clarified exception remains Iowa law, and it is demanding in practice.

Taming the Lion: Why This Matters

For testators and their advisors, no-contest clauses remain a powerful tool to discourage litigation and protect testamentary intent. The opinion demonstrates the value of careful documentation when revisions are made to an estate plan and how competency evaluations can be useful in warding off potential contests.

For potential challengers, the message is clear: before you file, you must build a record. Courts will look closely at what you knew and did at the time of filing. You must be able to show that, at filing, a reasonable, well‑advised person would see a substantial likelihood of success. Otherwise, if you lose, you risk forfeiting your inheritance under a no‑contest clause.

“Our approach keeps the lion on a leash—maintaining the menace of the no-contest clause, while simultaneously permitting good faith challengers with probable cause to litigate the validity of the will without disinheritance.”

Potential Downsides of No-Contest (in terrorem) Clauses

No-contest clauses can deter costly litigation and protect testamentary intent, but they carry tradeoffs. These clauses may not deter those who are disinherited and thus have nothing to lose by filing a challenge. They can also pressure beneficiaries to stay silent and chill legitimate contests, even where there is probable cause based on undue influence, lack of capacity or execution errors.

In practice, as reflected in Felten, a no‑contest clause can spur threshold litigation over whether the challenger acted in subjective good faith and had objective probable cause, which turns on what the challenger knew and did at the time of filing—a fact‑intensive inquiry that can be costly to pursue. Because the exception is demanding, a failed challenge can lead to forfeiture, raising the stakes for everyone involved and potentially hardening positions rather than promoting resolution.

Bottom Line: Keep the Lion on a Leash

Iowa courts will enforce no-contest clauses. But they are not a ‘set-it-and-forget-it’ solution. Challengers must come forward with contemporaneous evidence of both subjective good faith and objective probable cause to avoid forfeiture if their challenge fails. Felten strengthens no-contest clauses as a deterrent while preserving a narrow path for well-founded, well-documented challenges.

Have questions about no-contest clauses or updating your estate plan? Our team can help you design a plan that minimizes conflict and honors your intentions. Contact us today to start the conversation.