In most every last will and testament that I have drafted, I draft a clause into the Will that essentially says, “If a beneficiary of my estate challenges my Will, that beneficiary shall forfeit his/her inheritance.” This clause is commonly known as an in terrorem clause because it is supposed to cause terror/fright in a beneficiary who is contemplating challenging my client’s Will. If I challenge mom’s Will—the beneficiary may think—I lose the inheritance I would have received.
If a client notices this clause in his Will, then tend to like it. The client believes that his wishes will be carried out because any beneficiary who challenges the Will forfeits his inheritance so no beneficiary will challenge the Will.
While I do draft in terrorem clauses into Wills, there are several limitations to the effectiveness of these clauses. One major limitation is the fact that the clause, by its terms, only causes a forfeiture of the inheritance the individual would receive.
Assume that Mr. Smith has four children. One of his children, Joseph, has been estranged from Mr. Smith for ten years. Joseph didn’t even come to his mother’s funeral.
Mr. Smith comes to me and wants to draft a Will leaving everything to three of his children and disinheriting Joseph. Mr. Smith notices the in terrorem clause in his Will and tells me that he really liked the clause because it will prevent Joseph from challenging the terms of his Will in court after his death. But would it?
No. Joseph isn’t receiving anything from Mr. Smith’s estate, so challenging the Will and risking a forfeiture of what he otherwise would have received from Mr. Smith’s estate had he refrained from challenging Mr. Smith’s Will isn’t a deterrent.
Now you may be thinking, Isn’t this why it’s a good idea for Mr. Smith to leave Joseph a nominal amount, such as $1 or $1,000? If Mr. Smith’s estate is worth $600,000, then each of his four children stands to inherit $150,000. If Mr. Smith left Joseph $1 or $1,000 simply to prevent Joseph from challenging his Will, then Joseph would have to be afraid (in terror) of losing $1 or $1,000.
You can’t buy much with $1 and $1,000 isn’t going to change anyone’s life. On the other hand, $150,000 might change someone’s life. At the very least, $150,000 is 150 times more money than $1,000. In my opinion, the thought of losing either of these sums is not going to prevent Joseph from challenging Mr. Smith’s Will.
The second major issue with in terrorem clause is a provision written into the law that creates these clauses. The statute says that if the beneficiary has probable cause to challenge the Will, then the clause is unenforceable.
Having probable cause is a very low standard, so low, in fact, that I know of no case that held the beneficiary lacked probably cause to challenge the Will and the in terrorem clause was enforceable. If Joseph were to challenge Mr. Smith’s Will, he’d probably make that challenge based upon one of two theories—either that Mr. Smith lacked the requisite mental capacity to execute a Will at the time he signed his Will or that Mr. Smith was being unduly influenced to make the Will he made, which disinherited Joseph.
If Mr. Smith lacked mental capacity or was being unduly influenced, then the Will is not truly his “will”—a reflection of his free will—and is invalid. To have probable cause—a phrase that most people are accustomed to hearing in the context of a criminal case—Joseph would have to plead some facts that would lead the court to believe that Mr. Smith lacked mental capacity or was being unduly influenced but not a sufficient number of facts to win his case. Joseph simply has to plead the basic facts of the case.
Since probable cause is a very low standard, it is highly likely that Joseph could meet this standard. While an in terrorem clause can be somewhat beneficiary—I do believe that it may deter some people from challenging the Will—it’s not all it seems.