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The “In Terrorem Clause” - Striking Fear Into Hearts of Beneficiaries

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Joseph had two daughters. To put it mildly, his daughters did not get along.  In reality, they couldn’t stand each other.  One daughter, Kathy, lived close to Joseph and helped him with his errands and medical appointments.  The other daughter, Barb, lived far away and seldom visited Joseph.  

When drafting his last will and testament, Joseph named both daughters as beneficiaries.  However, he structured his will to grant 60% of his assets to Kathy and 40% to Barb.  He thought this was fair since Kathy helped him so much day-to-day. 

But, Joseph knew Barb would be furious.  Anticipating a fight between his daughters, he included the following language in his will:  "If any person shall at any time commence proceedings in any court to have this will set aside or declared invalid or to contest any part or all of the provisions included in this will, they shall forfeit any interest in my estate."

Is this provision legal in State of Ohio?  If Barb challenges her father’s will, does she risk losing her inheritance entirely?  The answer to both questions is yes.

This provision is known as an “in terrorem clause.”  It originated centuries ago in England and continues now in many states in this country, including Ohio. The term means “in fear” in Latin and is used to prevent a bitter dispute over a will.  It is also known as a “no contest clause.”  The Ohio Supreme Court addressed the issue as far back as 1869.  It stated that a condition in a will which excludes any heir who “goes to law to break (the) will” is reasonable and serves the good policy of preventing litigation.

In fact, the holding in 1869 was so clear and strict, that very few cases have challenged the doctrine since.  Ohio courts have long held that a person has an unquestioned right to attach any condition to his gift which does not otherwise violate law or public policy. The beneficiary may choose to take the gift with the conditions attached, or reject it.

In recent years, there has been a push to establish good faith exceptions to these clauses which would allow a beneficiary to challenge a will in good faith if there are actual grounds to do so.  For instance, a beneficiary could challenge a will on the basis of the testator’s incompetency without risking loss of their inheritance.  However, to date, that effort in Ohio has not been successful.  Courts have decided that exceptions, even if made in good faith, would destroy the rule itself.  The first duty of a court is to guard the intention of the testator.

However, courts will not forfeit a beneficiaries’ inheritance if they merely seek court interpretation of a will or object to actions taken by the executor.  To invoke the in terrorem clause, they must challenge the legitimacy of a will.
 
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