In Terrorem Clauses

July 2, 2015 Natalia R. Angelini Public Policy, Wills Tags: , , 0 Comments

The objective of an in terrorem clause is to restrict a bequest made in a will, by prohibiting litigating issues relating to the will.  If a lawsuit is pursued, the testator’s wish is that the gift not be made.  While some types of in terrorem clauses will be upheld, others will be struck down on public policy grounds as improper restrictions on gifts in a will.

Such clauses will be struck down when:

  1. The gift is of personal property or blended personal and real property;
  2. The condition is either a restraint on marriage or forbids the beneficiary to dispute the will; and
  3. The threat must be “idle”, in that the condition is imposed solely to prevent certain behaviour.

In contrast, such clauses will be upheld when:

  1. They provide for a gift over in the event that the condition is breached; and
  2. Are not contrary to a public policy objective  – a no contest clause cannot preclude all forms of litigation that would entirely remove a court’s jurisdiction e.g. it can restrict a will challenge, but not an action for the interpretation or enforcement of a will; it also cannot restrict a person from seeking dependant support).

For a more fulsome discussion on this topic, which includes consideration of some recent decisions on the issue, I suggest you read Eric Hoffstein and Lisa Filgiano’s paper presented at the Six Minute Estates Lawyer on May 6, 2015.

Thanks for reading,

Natalia Angelini

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