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In Savage v. Oliszczak, Case No. 09-P-513 (June 29,
2010), the Appeals Courts again addressed the enforceability of an
in terrorem clause.
The decedent executed a will and trust, with the will
designating the trust as the sole devisee of the decedent's
estate. The will did not include an in terrorem clause, but the
trust did include such a clause, reading as follows: "If any
person, including a beneficiary, other than me, shall in any
manner, directly or indirectly, attempt to contest or oppose the
validity of this agreement, including any amendments thereto, or
commences or prosecutes any legal proceedings to set this
instruments aside, then in such event such person shall forfeit his
or her share, cease to have any right or interest in the trust
property, and shall be deemed to have predeceased me."
The named executors filed a petition to probate the will. The
defendants objected to the allowance of the will on capacity and
undue influence grounds, and then withdrew their objection. The
plaintiff trustees subsequently brought the present action, seeking
instruction on whether the defendants' challenge to the will
triggered the in terrorem clause of the trust. The probate court
held that it did not, and the Appeals Court affirmed.
While the Appeals Court acknowledged that in terrorem clauses in
wills are valid, it reasoned that the in terrorem clause of the
trust was not triggered by the challenge to the decedent's
will. The Court rejected the plaintiffs' argument that the will
and trust should be read together as inextricably intertwined
elements of the decedent's estate plan. Although the Court
acknowledged that it will generally review separate components of
an estate plan as parts of an interrelated whole, it was not
persuaded to conclude that the challenge to the will operated to
implicate the trust's in terrorem clause.
The Court pointed out that the trust could have been funded
during the decedent's lifetime from any number of sources
wholly independent of the will. The Court also pointed out that the
purpose of an in terrorem clause is to deter challenges to a will,
with potential challengers being put on notice of the in terrorem
clause upon the filing of the will for probate, whereas there can
be no similar deterrent value to an in terrorem clause in a trust
that is not made public. On this point the Court explained that
"it would be draconian to invoke a forfeiture clause against
beneficiaries who challenge a will that does not contain an in
terrorem clause, based on the inclusion of such a provision in a
separate but undisclosed instrument." In this context the
Court also observed that in terrorem clauses have been construed
narrowly because equity does not favor forfeitures.
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Executive summary:
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