Caution is Warranted in Attempting to Disinherit Beneficiaries

02/10/2011- Robinson Donovan Case Digest

It has long been held in Massachusetts that an individual executing a will or trust may provide that any beneficiary who challenges the document would forfeit his or her beneficial interest. These so-called "in terrorem" clauses contained in estate planning documents are construed narrowly, but absent unusual circumstances courts will honor them. Such clauses are often inserted where family conflict is likely, or where one or more of the "natural objects of a testator's bounty" receives, for whatever reason, more or less than would ordinarily be anticipated.

At issue in the recent case of Savage v. Oliszczak, decided by the Massachusetts Appeals Court last summer, was whether an in terrorem clause contained in a trust applied to a beneficiary's challenge to a related will but not to the trust itself. The challenged will, which did not contain an in terrorem clause, devised all of the decedent's property to the trust. The defendant/beneficiaries challenged the validity of the will. They later withdrew their challenge. The trustee sought a determination that the defendant/beneficiaries had forfeited their beneficial interest in the trust because of their challenge to the will. The trust was established during the decedent's life but had been only nominally funded. As such, the trust's main purpose was to receive the decedent's probate estate at her death. Notwithstanding this connection, the appellate court upheld the Probate Court's judgment that the trust's in terrorem clause did not apply to the will. Noting that in terrorem clauses are to be construed narrowly, the appellate court held that it would be "draconian to invoke a forfeiture clause . . . [contained] in a separate but undisclosed instrument." This case serves to guide clients seeking to prevent challenges to their estate planning documents where both wills and trusts are involved in the estate plan.

This article is a general summary only and does not constitute legal advice.

Michael J. Simolo is an attorney at Robinson Donovan, P.C. If you would like further information about estate planning, please contact your RD attorney or Attorney Simolo at (413) 732-2301.