Can't Touch This: In Terrorem Clauses in Wills

Family squabbles over the estate of a decedent are the stuff of tragedy and of farce.  For this reason, testators often include in terrorem clauses that penalize with forfeiture of their testamentary gift any beneficiary of the Will who unsuccessfully contests its provisions in any court.  In terrorem clauses are also designed to safeguard carefully crafted estate plans from disruption.

New York law, however, provides for some limits on in terrorem clauses in order to prevent fraud, undue influence, or gross injustice.  These safe harbor provisions are found in Surrogate's Court Procedure Act (SCPA) § 1404 and Estates, Powers and Trusts Law (EPTL) § 3-3.5.  The purpose of these safe harbor provisions is to allow a beneficiary to inquire into the circumstances surrounding the drafting of a Will without risking forfeiture of the bequest.  Because courts must strictly construe in terrorem clauses, such safe harbor challenges are the only means a beneficiary has of evaluating the risk of contesting the Will.

EPTL § 3-3.5 provides for "[t]he preliminary examination, under SCPA 1404, of a proponent's witnesses, the person who prepared the will, the nominated executors and the proponents in a probate proceeding" (EPTL 3-3.5 [b] [3] [D]).   SCPA 1404 [4] states that these persons "may be examined as to all relevant matters which may be the basis of objections to the probate of the propounded instrument."  Did the Legislature intend that the safe harbor provisions apply only to those persons expressly mentioned in the companion statutes, or did the Legislature merely provide examples of the types of persons who could be examined and not an exhaustive list?

The New York Court of Appeals addressed the issue of safe harbor provisions as they relate to in terrorem clauses in Matter of Singer, 2009 NY Slip Op 09265 [13 NY3d 447].  On 15 April 2003 Rabbi Joseph Singer executed a Will leaving his Brooklyn home, much of his personal property, and $200,000 to his daughter Vivian who had given up her life to take care of her father's needs.  To his son Alexander he left half of the remaining estate (to be shared with Vivian who was also her father's executor), less the outright gifts of $15,000 to each of Alexander's two sons.

The Will contained an in terrorem clause addressed specifically at Alexander.  "I specifically direct that my son, Alexander I. Singer, not contest, object to or oppose this Will or The Joseph Singer Revocable Trust Agreement, or any part of my estate plan or any gifts made by me, and I specifically direct that my son not take my daughter, Vivian S. Singer, to a Bet Din (religious court) or to any other court for any reason whatsoever; and I specifically direct that if my son takes any such action or brings on any such proceeding, neither my son nor any of his issue shall receive any share of my estate, whether passing under this Will, under The Joseph Singer Revocable Trust Agreement or otherwise."

On 5 March 2004 Rabbi Singer died and Vivian submitted the Will for probate shortly thereafter.  Alexander then served a notice of discovery seeking, among other things, to depose Joseph Katz, Rabbi Singer's previous attorney who had drafted seven Wills for the Rabbi but not the one in question.  Mr. Katz was subsequently deposed by Alexander's attorney.  Thereupon, it was revealed that Rabbi Singer had inserted an in terrorem clause in a prior 2002 Will drafted by Katz.  Alexander did not challenge the Will.

Was the deposition of Mr. Katz sufficient clause to trigger the in terrorem clause?  After all, Katz did not belong the the class of persons expressly mentioned in the safe harbor statutes.  The safe harbor provisions do not include a former attorney.  Or was the testator's intent, that Alexander not challenge the Will in any way, satisfied because Alexander never challenged the Will?

The Court of Appeals balanced the testator's intent with the public policy concern that Wills be valid and authentic before being admitted to probate.  The court reasoned that only by examining Katz could Alexander properly conclude that he lacked a basis for a successful Wills contest.  "A broader construction of these clauses as manifesting testator's intent to preclude the examination of this witness would essentially cut off all other persons from being asked for information, no matter the potential value or relevance of that information—even as to the medical or psychological condition of the testator at the time the will was executed. Interpreting these clauses narrowly will allow surrogates to address on a case-by-case basis whether the conduct undertaken is in keeping with the testator's intent."  

With Matter of Singer,  the Court of Appeals set a standard for the case-by-case construction of in terrorem clauses:  whether the conduct undertaken is in keeping with the testator's intent.   Had the court ruled in Vivian's favor, then Alexander and his sons would have been stripped of their bequests.  Clearly, that was not Rabbi Singer's intent with the in terrorem clause.  He merely wished to protect Vivian's bulk share from a challenge.  He did not wish to disinherit his son or his grandsons.

Matter of Singer is an object lesson about the use (and possible misuse) of in terrorem clauses.  As Judge Graffeo noted in his concurrence, "in terrorem clauses are not favored since they may result in a total forfeiture of a bequest and—because of this serious consequence—they must be strictly construed to conform to the testator's expressed intent."   An in terrorem clause must be drafted very carefully to reflect the testator's intent.  Your attorney can advise you as to whether an in terrorem clause is the best strategy based upon your unique circumstances.

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