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Court Discusses Whether a No-Contest Clause Only Applies to Heirs

A woman executed a will two weeks before she died in September 1992. She left an estate worth $2,000,000. Her will was offered for probate by the executors. During the proceedings, it was discovered that the woman filed with the Surrogate’s Court a prior will dated July 1992. The provisions of the 1992 did not provide for cash gifts to the attorney who drafted the will or to his wife who testified as to the due execution of the will, unlike the September 1992 will.

The charitable foundation contends that if the September 1992 will is found to have not been duly executed or if fraud or undue influence were brought to bear on the testator in the September 1992 will so as to also make bequests to the lawyer and his wife in her will, the residual estate which will be put in trust for the foundation would have been bigger.

The charitable foundation wishes to object to the probate of the September 1992 will but the will also contains a provision that if any of the beneficiaries of the will shall object to the probate of the will, the legacy made for them shall be revoked. A New York Probate Lawyer said this kind of provision is called an “in terrorem” or non-contest clause. It is meant to put the fear of disinheritance in the heart of those who were named beneficiaries in the will so that the estate will not be reduced by having to spend on legal costs.

The will has named the charitable foundation as a beneficiary of the residuary estate. The foundation appeared in court not to object to the probate of the will yet but to ask the Surrogate’s Court a question. The foundation would like to know if the “in terrorem” or no-contest clause applies only to the heirs or if it also applies to the beneficiaries of the residual estate. The charitable beneficiary wants an answer to this question because it intends to object to the probate of the September 1992 will but does not want to risk losing its share in the estate of the woman should the September 1992 will be found to have been duly executed.

The will gives away cash amounts and properties of the woman to individuals and to charitable institutions. The remaining estate will be placed in trust with a trust company and the income from the trust will be given to the charitable foundation. The trust shall be named after the woman and her late husband and it shall be a perpetual charitable trust.

The only question before the Surrogate Court and also before the Supreme Court is whether or not the courts have the power to interpret the provisions of a will before the will is even admitted into probate. The Surrogate Court refused to inquire into the specific provisions of the will before the will has been admitted into probate. Suffolk County Probate Lawyers said the surrogate court held that the general rule is that a will has to be proven to exist as a will (this is the reason for having probate proceedings) before the provisions of the will can be scrutinized so that the intent of the testator as to how her estate shall be distributed can be determined. Because the surrogate’s court refused to interpret the will before admitting it into probate, the charitable foundation appealed the order denying its motion for interpretation of the application of the “in terrorem” or non-contest clause.

The Court ruled that the general rule is that a will has to be admitted first into probate before its specific provisions are interpreted. However, the Court also ruled that this general rule cannot be applied to wills which have an “in terrorem” clause.

The Court pointed out that a no-contest clause may serve a good purpose: that of preserving the estate and freeing it from paying legal costs and fees; but it also has the unintended effect of scaring potential objectors to the probate for fear that they will be disinherited, even if their objection is on valid legal grounds.

In this case, there are legitimate factual and legal questions as to the due execution and undue influence over the testator which may have been exerted by the lawyer and his wife over the woman to make them distributees in her will. If the no-contest clause should be made to apply to the charitable foundation here when it is only a beneficiary of the trust created from the residual estate, then the valid legal and factual objections to the due execution of the will cannot be passed upon by the courts. The danger is that a will which may not have been duly executed may pass into probate: a will which has not been duly executed by the testator may not express her wishes at all.

The Court then finds that there are good and persuasive reasons to veer away from applying the general rule. What the charitable foundation asks is not an interpretation of the provisions of the will that disposes of the assets; instead, they ask an interpretation of a no contest clause. Also, the charitable foundation here seeks the interpretation of the application of the no-contest clause because it wants to question the due execution of the will, the testamentary capacity and the existence of undue influence which may or may not have attended the execution of the will.

The Court also noted that in this case, the testatrix was sickly and advanced in age. She was hospitalized for the most part at the time that the changes to her will were made. Two months before she died, the woman abruptly changed lawyers. And the new lawyer was not only given a gift in the will, he was also named executor of the estate. It also appears that the testatrix executed six wills at the time of her last sickness before she died.

The provisions of the last will she ever executed departed so radically from the former expressed wishes and goals of the testatrix. A Staten Island Probate Lawyer said the lawyer who assisted her estate planning for two years provided evidence that the testatrix wanted to preserve most of her estate from fees and taxes so that she would have more to give to her charitable interests. In the last will she made, the same which is now subject of the probate proceeding, the testatrix increased her bequests to individuals which will mean that the estate will have to pay bigger amounts of estate taxes, thereby reducing the residual estate which will pass in trust to her pet charitable foundations. There is also the question of unnecessary commission payments which the estate will have to make to two executors instead of one. This will also substantially reduce the estate and very little will pass on to the charitable foundations. In fact, with all the payments of commissions, legal fees and taxes, there may not be enough properties in the estate left for the charitable foundations.

For all these reasons, the Court held that there is a public interest to inquire into all the facts so that the genuineness and due execution of the will can be determined. It can only be determined if the objection of the charitable foundation were allowed and only if the Surrogate Court settles first the question put forth by the charitable foundation, if the no-contest clause applies to it as well.

The Court held that the no-contest clause applies only to the primary beneficiaries (those individuals and charitable organizations who were given individual cash or property bequests in the will. The no-contest clause does not apply to the beneficiaries of the residuary estate of the testatrix.

Are you named as a beneficiary in a will that contains a no-contest clause? Are you afraid to begin a will contest because the bequest to you may be revoked if you file an objection to the probate of the will? Call Stephen Bilkis and Associates, confer with any of their New York Will Contest attorneys who can advice you as to what you can do. The legal team from Stephen Bilkis and Associates can help you point out the facts that show why an objection may be necessary and keeping with public policy.

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