|An “in terrorem” or “no-contest” clause is one of a few tricks in an estate planner’s arsenal to ward off a possible contest in the Surrogate’s Court. But does the inclusion of such a clause in a will necessarily have the desired deterrent effect? Yes and no. It largely depends on a thoughtful and well-informed attorney draftsperson.|
|The enforceability of no-contest clauses is set forth in Section 3-3.5(b) of the Estates, Powers and Trusts Law (“EPTL”) and provides, in pertinent part:
A condition, designed to prevent a disposition from taking effect in case the will is contested by the beneficiary, is operative, despite the presence or absence of probable cause for such contest… . A properly included no-contest clause should cause a would-be contestant to stop in his tracks and conduct a serious cost-benefit analysis as to whether undertaking a contest is really in his best interest. To that end, the testator must give the potential contestant something that is valuable enough that the contestant would not want to risk losing it vis-à-vis an unsuccessful will contest.
|Oftentimes, however, the testator is so disenchanted with the potential contestant that the notion of leaving that person something of value proves far too unsavory. Thus, wills that include a no-contest clause are invariably drawn despite the fact that the anticipated contestant receives nothing under the instrument. Perhaps worse is the will that includes a no-contest clause that is so antagonistic it practically invites litigation. Take, for example, a will that couples a no-contest clause with a caustic “one dollar” bequest given for “reasons best known to that person.”|
|While the dramatic tone of such a clause might be pleasing to a particularly disgruntled testator at the time of the execution, practitioners should not forget that when it comes to discord among family members, emotions run high. There is nothing like adding insult to injury to fuel litigation and an overly caustic no-contest clause can easily accomplish just that, running afoul of its intended purpose. Indeed, the Latin term “in terrorem” means “to frighten,” not to incite.|
|In fact, by including an ineffectual no-contest clause in a will, the attorney-draftsperson has unwittingly given the potential contestant an advantage. Because no-contest clauses are permissible, but generally disfavored, Section 1404(4) of the Surrogate’s Court Procedure Act (“SCPA”) provides as follows (emphasis added):
Any party to the proceeding, before or after filing objections to the probate of the will, may examine any or all of the attesting witnesses, the person who prepared the will, and if the will contains a provision designed to prevent a disposition or distribution from taking effect in the will, or any part thereof, is contested, the nominated executors in the will and the proponents. As a result of the simple inclusion of the no-contest clause in the will, the contestant who is already permitted to depose the attorney draftsperson and the attesting witnesses to the will without risking forfeiture (see EPTL § 3-3.5(b)(3) for more permissible conduct that will not result in forfeiture), gets the added bonus of examining the nominated executors and the proponents to the will prior to filing objections. Keep in mind that the statute only requires that the will “contain” the clause in order to warrant this additional discovery. That the clause has no practical effect is irrelevant.
|Thus, from an estate litigator’s point of view, the inclusion of an ineffectual no-contest clause is a win-win situation. First, there is no real risk of forfeiture. Second, the contestant can avail himself of additional pre-objection discovery that he would not have otherwise been entitled to prior to the filing of objections. Third, and perhaps most painful from a collegiality point of view, the attorney-draftsperson has to somehow come up with a plausible explanation at the SCPA § 1404 examination for including a useless no-contest clause in the will.|
|A seasoned estate litigator will not hesitate to explore this drafting blunder at length, asking, among other things, why an ineffectual clause was included, and how the attorney draftsperson explained its function – or lack thereof – to the testator. The end result is that the attorney-draftsperson can appear incompetent and questions can arise as to whether the testator really considered and understood the terms of his will, thereby casting doubt on the validity of the instrument.|
|Given the recent decisional law in this area, careful drafting of a no-contest clause cannot be emphasized enough. In Matter of Singer, the Surrogate’s Court of Kings County was asked to determine whether the testator’s son had violated the in terrorem clauses contained in his father’s will. 17 Misc.3d 365 (2007). One of the clauses was a general no-contest clause, directed to “any beneficiary” under the will and prohibiting an extremely broad array of conduct that “directly or indirectly” amounted to an attack on the decedent’s estate plan.1 The second clause specifically named the son and directed that he “not contest, object, or oppose” the will or “any part of” the testator’s estate plan.”|
|When the testator’s son deposed a prior attorney of the decedent, Surrogate López Torres determined that in going beyond the limits of discovery established by the Legislature, both of the clauses had been violated and the son’s bequest under the will was revoked. The Second Department came to the same conclusion. In re Singer, 852 A.D.3d 612 (2d Dept. 2008). Thoughtful drafting aside, the Court of Appeals, in its now infamous opinion In re Singer, 13 N.Y.3d 447 (2009), reversed the Second Department. While paradoxically acknowledging that the paramount consideration in construction proceedings is the testator’s intent, the Court of Appeals held that the permissible discovery set forth in SCPA § 1404(4) and EPTL § 3-3.5 are not exclusive and the son’s examination of the testator’s prior attorney, in this particular instance, did not trigger either of the no-contest clauses set forth in the decedent’s will.|
|Given the obvious thought and care that that attorney-draftsperson put into drafting the no-contest clauses in the Singer will, to no avail, how does the estate planner go about drafting a no-contest clause that will prevent carte blanche pre-objection discovery? Fortunately, Justice Graffeo in his concurring opinion provides some much-needed clarification in this regard:
|I believe, however, that an in terrorem clause can be properly drafted to explicitly prohibit this type of inquiry. A testator could, for example, draft an in terrorem clause that incorporates the statutorily-authorized preliminary examinations by explicitly stating that a beneficiary who makes or attempts to make any inquiry about the will other than those permitted by EPTL 3-3.5 and SCPA 1404 shall forfeit his or her bequest and extinguish any interest that the beneficiary’s issue may have in the estate.
Singer, 13 N.Y.3d at 454 (Graffeo, J., concurring).
|In short, practitioners considering the inclusion of a no-contest clause in a will should take care to explain the post-death procedural ramifications to the client, and further, must ensure that if a no-contest clause is utilized, the will provides the potential contestant with something substantial to achieve its intended deterrent effect. What qualifies as substantial will vary based not only on the wealth of the client, but also on the financial status and the personality of the potential contestant. The attorney-draftsman’s notes, subject to disclosure under SCPA § 1404, are essential here, and care should be taken to record the testator’s intent and his objectives in including such a clause.|
|Finally, practitioners who determine that a no-contest clause is warranted must heed the explicit drafting advice of the Court of Appeals to avoid the outcome in the Singer case. The clause should specifically prohibit any pre-objection discovery that goes beyond the parameters provided for in SCPA § 1404(4) and EPTL § 3-3.5. Under no circumstances should a no-contest clause in a will be included as an afterthought, nor should a no-contest clause ever be a “standard” or “boilerplate” paragraph in a draftsperson’s will template. Since the courts view these clauses on a case-by-case basis, it is only fitting that the draftsperson devote the same time and attention to detail in tailoring the clause to the client.|
|Lisa M. Sconzo is a partner at Laurino & Laurino, a law firm that specializes in contested Surrogates Court matters.|
|1. This particular clause was modeled after the clause that was at issue in Matter of Ellis, 252 A.D.2d 118 (2d Dept. 1998). In Ellis, the court looked at the totality of the conduct and determined that the respondents, in seeking disclosure from persons other than those provided for by SCPA § 1404(4) and in coyly serving objections to probate – but not formally filing them with the court – had embarked on a course of “meritless, destructive” litigation, warranting the triggering of the clause.|
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