Legal Blog

The Weekly Scenario from Steve Shane – 7.29.13

Question:  Can a “no-contest” or “in terrorem” clause in a Will or Trust be enforced?  Under what conditions, if any, will a contesting party lose everything?   Answer:  As an initial matter, an ‘in terrorem’ clause written into a Will or Trust says that a beneficiary who engages in the conduct prohibited by the clause, namely challenging the instrument, will invalidate the Will or Trust with respect to that beneficiary.  Accordingly, the beneficiary will only receive a bequest under the Will or Trust if he or she does not act contrary to the clause.  In other words, if you contest the Will and lose, you risk not getting whatever the Will says you are giving up.  If you win, then the no contest clause is not valid (and you will presumably inherit more than you would have otherwise received). Generally, such a clause is enforceable.  However, Maryland law tries to strike a medium between respecting the testator’s intent and protecting the rights of beneficiaries (many other states have similar statutes).  Courts will not enforce an in terrorem clause when the contesting party had ‘probable cause’ for instituting proceedings (some credible evidence).  In interpreting whether probable cause exists, courts will look at the known facts at the time of the contest to evaluate whether the contest was a justifiable proceeding and not simply a way for a slighted heir to stir up trouble.  Of course, generally speaking, a beneficiary who simply seeks to interpret or enforce the terms of the Will, will not trigger the in terrorem clause. And a mere unsubstantiated suspicion of undue influence will not likely result in a favorable outcome for any claimant as such a claim will not likely pass the probable cause test. It will ultimately be the unique circumstances of the case which determines if the clause will be enforced. Steven E. Shane Principal Offit│Kurman 301.575.0313 Washington 443.738.1513 Baltimore 410.218.9339 Mobile 301.575.0335 Facsimile Please note the above material discussed is intended to provide only general information. Do not, under any circumstances, solely rely on this information as legal advice. Legal matters are often complicated. For assistance with your specific legal problem or inquiry please contact me directly. Attorneys At Law