In Terrorem Clauses

In Terrorem is a term derived from Latin which translates to “in fear.” An In Terrorem provision in a decedent’s Last Will and Testament “threatens” that if a beneficiary challenges the Will then the challenging beneficiary will be disinherited (or given a specified dollar amount) instead of inheriting the full gift provided for in the Will. An in terrorem clause is intended to discourage beneficiaries from contesting the Will after the testator’s death. New York law recognizes in terrorem clauses, however, they are strictly construed.

An example of an in terrorem clause might read as follows:

“If any person shall at any time commence a proceedings to have this Will set aside or declared invalid or to contest any part or all of the provisions included in this Will they shall forfeit any interest in my estate.”

There are however some limits on in terrorem clauses in the interest of preventing fraud, undue influence, or gross injustice.  These statutory “safe harbor provisions” allow a beneficiary to inquire into the circumstances surrounding the drafting of a Will without risking forfeiture of any bequest.  Since, as discussed above, New York courts strictly construe in terrorem clauses, these safe harbor challenges are a means by which a beneficiary can evaluate the risk of contesting the Will.

In relevant part, the statute provides for the preliminary examination of (i) the testator’s witnesses; (ii) the person who prepared the Will; (iii) the nominated executors; and (iv) the proponents in a probate proceeding.  These persons “may be examined as to all relevant matters which may be the basis of objections to the probate of the propounded instrument.”

If the beneficiary challenges the Will and the Will is found to be invalid due to lack of mental capacity, undue influence or failure to have the Will properly executed, then the in terrorem clause also fails.

It is important to note that, a beneficiary may present a petition to the court, prior to the Will being admitted to probate and before formal objections have been filed, seeking a determination as to the construction or effect of the in terrorem clause of the Will.  The basic principle of construction is that the decedent’s intent, as expressed from a reading of the relevant provision of the Will under the circumstances under which it was drawn, is to be given effect by the courts.

Keep in mind that simply having an in terrorem clause in your Will may not be enough to dissuade beneficiaries from potentially challenging your Will.  Theoretically, however, for an in terrorem clause to have any weight at all, a beneficiary under a Will must be left a substantial amount to incentivize their compliance with the Will.  An in terrorem clause may have no effect on a beneficiary who was not left anything under a Will as they risk losing nothing by challenging the Will.  While in terrorem clauses may be effective in minimizing a Will contest, for some it holds no power.

It is important to discuss your estate plan and your wishes regarding the ultimate disposition of your assets with an experienced estate attorney to determine the proper provisions to include in your Will.

– Nancy Burner, Esq. and Maria Johnson, Esq.