Validity of In Terrorem Conditions

October 12, 2016 Suzana Popovic-Montag Estate & Trust, Estate Planning, Executors and Trustees, General Interest, In the News, Litigation, News & Events, Public Policy, Wills Tags: , , , , , , , , , 0 Comments

An in terrorem condition attached to a testamentary gift keeps a beneficiary “in fear” of losing entitlement to the gift, if they partake in certain actions that are noted by the testator.

We have previously blogged about the use of in terrorem conditions, and specifically when the conditions will be upheld, or struck down. Kent v McKay (1982 Carswell BC 187) is authority for the test of striking down an in terrorem condition.

In terrorem conditions keep beneficiaries “in fear” of losing entitlement to the gift for partake in certain actions.
“A partial restraint on marriage may act to limit a person from marrying a particular individual, or members of a particular class.”

There are two general types of in terrorem conditions.

The first type of condition, and the most common, forbids the beneficiary from contesting the validity of the will. We have previously blogged on this type of in terrorem condition.

The second condition is partial restraint on marriage, which is usually a condition that requires the beneficiary to obtain consent to marry. This condition may only apply if it is clear from the outset that the condition in the will is not a total restraint on marriage. Total restraints on marriage will be void from the outset. A partial restraint on marriage may act to limit a person from marrying a particular individual, or members of a particular class. It is likely, however, that any restraint on marriage will be found void for public policy reasons. The recent Court of Appeal decision in Spence v BMO Trust Company, 2015 ONSC 615, is relevant to the issue of restraint on marriage and public policy. A previous blog on this case can be found here.

Pursuant to the decision of Re Dickson’s Trust (1850) 61 ER 909, in order to validate an in terrorem condition, the testator must show that the condition would be given effect if the testator demonstrated their intention by way of a gift over.

As explained in The Law Relating to Wills: “a condition in restraint o[n] marriage or a condition not to dispute a will, may be annexed to a testamentary gift, but where the subject of gift is personalty, such a condition… must, as a general rule, be accompanied by a gift over, otherwise the condition will be treated as merely in terrorem and therefore, void.” The case of Ketchum v Walton, 2012 BCSC 175, suggests that in terrorem conditions in general have been held to be void, if not accompanied by a gift over.

Thank you for reading,

Suzana Popovic Montag

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