The wind howled and the trees lashed the windows and shutters. Everyone held their breath as they waited. Slowly and deliberately, the ancient lawyer adjusted his spectacles and began to read the in terrorem clause in the Will. Just as he finished, there was a loud clap of thunder! The family members who had gathered to hear the old man's will collectively jumped.
In terrorem clauses sound scary, don't they? And for good reason; they are intended to serve as a dire warning to those who would challenge a decedent's final, last wishes with regard to his or her property.
What is an interrorem clause?
In terrorem clauses, also known as "no contest" clauses are used in wills and trusts to prevent a disgruntled beneficiary from challenging an estate plan. These clauses usually provide that any person who challenges a will or trust will be considered to have predeceased the decedent. If you are treated as having died before the decedent, you can't inherit under the will or trust. Additionally, in terrorem clauses frequently provide that your living descendants also can't inherit. So your children and grandchildren will also be punished if you challenged the will or trust. This is further incentive not to challenge an estate plan even if you disagree with it because you will be risking not only your own inheritance, but that of everyone descended from you.
Are in terrorem clauses enforceable? Can you challenge a will or trust with an in terrorem clause?
Unfortunately, there is no absolute yes or no answer to the above questions. The answer will depend on the circumstances and the state. Courts may look to the reason behind the challenge to determine whether to enforce the in terrorem clause and whether the challenger should lose the right to inherit. Many times a beneficiary wants to challenge a will because he or she doesn't think an estate plan is "fair." This is usually not a good reason for a challenge because wills and trusts don't have to be fair. A decedent can leave property to whomever he or she chooses - with the possible exception of completely disinheriting a spouse or minor child.
But sometimes, a beneficiary challenges an estate plan because there was a last-minute change to the plan and the beneficiary has reason to believe the decedent lacked capacity at the time he or she executed the document in question. The decedent may also have been unduly influenced by a third party and the will or trust could be the direct result of that undue influence. If the beneficiary is able to prove the case, the court may decline to enforce the clause. When there is a valid legal basis for a challenge, courts are less likely to enforce an in terrorem clause.
If you are considering challenging a will or trust with an in terrorem clause, you should consult with an attorney about the risks versus the chances of success in your case. If you would like more information about incorporating an in terrorem clause into your estate planning documents and how you can reduce the likelihood of a challenge to your estate plan, give us a call at 704.887.5242 or fill out the contact form below.