Testators who want to ensure that their beneficiaries do not challenge the provisions in their will often include what are known as in terrorem or ‘no contest’ clauses. An in terrorem clause is designed to frighten a beneficiary into doing or not doing something, for example, by revocation of a bequest or devise if the beneficiary contests the will. Thus, under such clauses, the beneficiary risks forfeiting some or all of his interest if he or she contests the will or participates in the contestation of a will.
In Harrison v. Harrison (1904), 7 O.L.R. 297, the law of Ontario was confirmed to be such that no contest clauses are valid and enforceable, but must be limited to law suits that seek to challenge a will and not for actions that attempt to enforce the provisions of a will, for interpretation or to examine the will`s construction. In this case, the will instructed that the income of the estate was to accumulate until the testator’s son would be 50 years of age. The son challenged the will as being too lengthy, against accumulations legislation and, therefore, against public policy. He sought to receive his inheritance earlier than age 50 as stipulated under the will using for his argument the rule of law established in Saunders v. Vautier (1841) 4 B. 115. The court concluded that the son had not forfeited his gift because the scope of the action was to determine construction of the will and a declaration of his rights to a present payment. The court further concluded that the action was not to modify or change the will, but to ascertain its proper and correct meaning and effect.
Although generally valid and enforceable, no contest clauses will not be upheld where they are determined to undermine a particular public policy objective. Furthermore, they have no effect where the challenge is successful in striking down the will in its entirety (i.e. the will is rendered invalid and along with it the no contest clause), and they cannot take away the court’s jurisdiction to interpret a will, enforce its terms and enforce those rights that have been conferred by law.
No contest clauses must also stipulate what is to be done with the particular beneficiary`s gift in the event they do challenge the will to the effect that they are disinherited by the no contest clause. If this substitute provision, also known as a ‘gift over’ is not included, the court will make a finding that the no contest clause is “idle” or void and therefore ineffective.
Where there is a successful challenge to a particular provision in the will or a challenge to the administration of the estate, the no contest clause will not be permitted to void the interest of the challenger. On the other hand, if such a challenge were to fail, then generally, the no contest clause will be effective to forfeit the interest of the claimant, unless the court is prepared to rule that the no contest clause only applies to unjustifiable (or frivolous) contests and at the same that the contest of the present case is justifiable.
The testator should consider other provisions to go along with a no contest clause. Should a no contest clause apply to all beneficiaries or just certain one(s)? What specific actions will trigger the operation of the clause? Who should get the gift if the clause is triggered? What assets should be covered by the clause? These are just a few of the questions that a testator should answer when considering including a no contest clause.
Testators are also encouraged to consider the family circumstances that are leading them to consider including a no contest clause. In other words, is there another way to deal with the family dynamics that are leading to these testamentary scare tactics?
For example, increasingly, testators are opting to have family conferences during the estate planning exercise to discuss their wishes and intentions with intended beneficiaries or even expectant beneficiaries. The discussion includes the testator’s reasons for their estate plan and will instructions, and solicits input from the intended and/or expectant beneficiaries. This type of exercise, often completed with the assistance of a lawyer(s), helps maintain family harmony before and after the testator’s death. Here, we are reminded that a will is often the last words that a testator speaks to those he or she leaves behind. A well-documented estate plan and will, supported by detailed notes in the drafting lawyer`s file and a family conference can avoid misunderstandings and hurt feelings after death that are all too often channeled toward litigation that is costly in terms of time, emotions and estate assets.
If you would like to discuss the issues related to no contest clauses or to have assistance in conducting a family conference, please contact Andrea Kelly.
Andrea Kelly, Lawyer, has extensive experience in wills, trusts, powers of attorney and estate administration matters. She provides clients with a high standard of timely professionalism and expertise, incorporating a very thorough fact finding process. This is quite often enlightening for her clients and facilitates individually tailored services. If you would like to know more, feel free to use the easy contact form or read Andrea’s bio.