In terrorem clause - sustany/dvg GitHub Wiki

In terrorem clauses, also known as a no-contest clauses (NCC), are clauses in a will that impose a condition upon a devisee or legatee that they will not dispute the provisions of a will. Such clauses are used to discourage challenges to a will by revoking a beneficiary's interest or inheritance if the beneficiary violates the clause. These clauses are generally enforceable but are also subject to strict construction, such that they do not grant or hold absolute authority over the distribution of the testator's interests.�

For example, New York courts (In re Estate of Prevratil) have held that in terrorem clauses that attempt to preclude a beneficiary from questioning the eligibility or conduct of a fiduciary will not be enforced because it goes against public policy. Michigan courts (In re Miller Osborne Perry Trust) have similarly limited the power that in terrorem clauses hold, stating that such clauses �purport[ing] to penalize an interested person for contesting the trust or instituting another proceeding relating to the trust shall not be given effect if probable cause exists for instituting a proceeding contesting the trust or another proceeding relating to the trust."�

Moreover, some jurisdictions have established a probable cause exception to in terrorem clauses. For example, California courts have held that they may decline to enforce in terrorem clauses where "the beneficiary challenging the will acted in good faith and had probable cause for the challenge." Under this exemption, "probable cause" is defined as "the existence . . . of evidence which would lead a reasonable person . . . to conclude that there is a substantial likelihood that the contest or attack will be successful." The probable cause exemption is used to protect legitimate challenges to wills, and probable cause can be found in evidence indicating that a will may be legally invalid, such as undue influence on the testator or forgery of the will.�

While not all jurisdictions have adopted a probable cause exemption, other exemptions have been recognized. Georgia is an example of such a jurisdiction, and its courts (Duncan v. Rawls) have instead held that in terrorem clauses are void unless the will contains directions to how property will be allocated if the in terrorem clauses are violated. Therefore, under Georgia law, in terrorem clauses do not only have to contain the condition that the challenger of the will shall lose their interest, but where that interest will be reallocated as well.�

In Florida and Indiana, in terrorem clauses are specifically unenforceable.

In deciding the enforceability of in terrorem clauses, courts will interpret the will as a whole to ascertain the intent of the testator. As a result, a challenge to a will, even in the face of an in terrorem clause, will succeed if the challenge is consistent with the intent of the testator in drafting their will.