A no-contest or in terrorem clause in a will or a trust typically makes the gifts in the instrument conditional on the beneficiary not challenging or disputing the validity of the instrument. The term in terrorem, as applied to wills, refers to a gift given on the condition that the beneficiary will not dispute the validity or disposition of the will.
In terrorem clauses are designed to dissuade beneficiaries from filing vexatious litigation that might thwart the intent of the testator (person who made the will) or the grantor or settlor (person who created the trust).
In terrorem clauses allow the intent of the testator to be given full effect and avoid vexatious litigation—often among members of the same family. If the intention of a suit is to thwart the settlor's intention, the in terrorem clause should be enforced. Laws vary from state to state but a violation of the in terrorem clause will usually be found only when the acts of the parties clearly fall within its express terms. Thus, many courts narrowly construe in terrorem clauses to avoid forfeiture, while also fulfilling the settlor's intent.
And some courts have held that filing suit to determine a testator's intent, or to ascertain a beneficiary's interest under a will, is not a suit intended to dispute the validity of the will. A suit brought in good faith and upon probable cause, to ascertain the real purpose and intention of the testator and to then enforce such purpose and intention, is not an effort to vary the purpose and intention of the will.
These courts reason that a motion to contest a will is, like any other motion, merely a pleading that is the necessary vehicle by which the movant raises issues for resolution. A motion is not self-proving. If the mere filing of a motion to contest a will is a contest of the will, this would be inconsistent with the legal significance of a motion.
In states whose courts follow this reasoning, unless some further action is taken to thwart the intention of the testator, the mere filing of a contest motion is insufficient to cause a forfeiture under an in terrorem clause.
In New Jersey, an in terrorem clause, also known as a no-contest clause, is a provision in a will or trust that is intended to discourage beneficiaries from challenging the document. If a beneficiary contests the will or trust in violation of this clause, they risk losing their inheritance or gift under the document. New Jersey courts generally enforce in terrorem clauses, but they do so with caution to avoid unjust forfeitures. The courts may not enforce the clause if the challenge is made in good faith and with probable cause, meaning there is a legitimate reason to believe that the will or trust does not reflect the true intentions of the testator or settlor. This approach allows for the possibility of contesting a will or trust if there is evidence to suggest that the document is invalid or does not truly represent the wishes of the person who created it. However, if a challenge is deemed to be without merit and merely vexatious, the in terrorem clause may be enforced, resulting in the forfeiture of the challenging beneficiary's interest.