Some Considerations Concerning In Terrorem Clauses in Wills
A condition surrounding a legacy in a will may be found to be void, and the gift therefore will be absolute. One category of conditional gift where this would apply is where the condition falls under the definition of in terrorem.
As mentioned by Lander LJSC in Kent v. McKay, there are three criteria necessary to invoke the doctrine of in terrorem and find the condition to be void:
- “The legacy must be of personal property or blended personal and real property.
- The condition must be either a restraint on marriage or one which forbids the donee to dispute the will.
- The ‘threat’ must be ‘idle’; that is the condition must be imposed solely to prevent the donee from undertaking that which the condition forbids. Therefore a provision which provides only for a bare forfeiture of the gift on breach of the condition is bad. However, if the donor indicates that he intended not only to threaten the donee but also to make a different disposition of the property to fix a benefit on another in the event of a breach of the condition, the ‘threat’ is not ‘idle’ and the condition is valid.”
If the condition falls within the criteria of the in terrorem doctrine, it will be considered void and the gift will be absolute, regardless of whether it was a condition precedent or subsequent.
As well, while not specifically included in the doctrine, Lander LJSC found, based on an Australian case, Re Gaynor, that a clause preventing an application for relief under the Wills Variation Act by the dependents for their legally mandated maintenance and support was void as against public policy. Thus, he invalidated the condition in Kent regardless of the fact that he found that the condition did not fall within the in terrorem doctrine, as the threat was not found to be idle. As well, although not mentioned in this case, beneficiaries must also be able to launch litigation forcing executors to pass accounts and the like.
There are a number of issues with the current in terrorem doctrine, which will be discussed below. Simply put, the doctrine is too restrictive, and should be expanded to invalidate a larger number of conditions.
The principle problem with the current interpretation of the in terrorem condition is that while it has been expanded due to public policy reasons, it has not been expanded sufficiently; it makes sense that there are certain types of litigation that the beneficiaries must be able to launch, but these do not go far enough. As it is now, conditions can be made in a will that preclude beneficiaries from disputing the will on grounds including undue influence or testamentary capacity, and so long as it does not fall within the other criteria of the doctrine, the condition would be considered valid. One could attempt to argue that, if the beneficiaries’ litigation were successful, the will would be dismissed regardless, and so beneficiaries should not have fear of losing out on their gifts if their concerns are not frivolous. However, even if the beneficiary has a valid and legitimate argument, this doesn’t mean that they will necessarily be successful in court. It is not simply the frivolous case that loses in court; a case with merit can still be defeated despite all indications to the contrary. To be able to lose out on one’s gift when one’s claim against the will has validity seems to be a serious problem with the current treatment of the issue.
It turns out that the approach suggested above is not a particularly uncommon one, at least in the United States. As of 1998, the “good faith, probable cause” exception was advocated by the National Conference of Commissioners on Uniform States Laws and the American Law Institute. In addition, “[t]he Uniform Probate Code states that an in terrorem provision may not be enforced if probable cause exists for initiating the will contest. The Restatement (Second) of Property similarly limits the enforceability of an in terrorem provision if ‘there was probable cause for making the contest or attack.’” It should be pointed out that these are referring to situations where in terrorem conditions would typically be allowed; all the more so that this exception makes sense for Ontario, where in terrorem conditions are void.
As well, the current restriction that the gift must involve personal property in some way, as opposed to only real property, is overly restrictive. This restriction is due to the doctrine having been derived by the ecclesiastical courts, which only had jurisdiction over personal property. However, this is not a necessary limit on the doctrine in the modern day, and it seemingly serves no purpose. There is no particular reason why civil courts of today, which have no such restriction on their jurisdiction, should continue to enforce this. One should not be able to threaten one’s beneficiaries concerning a gift of real property, just as one cannot threaten them concerning a gift of personalty.
Finally, there are issues with the condition that the threat must be “idle” for the doctrine of in terrorem to apply. If these sorts of conditions are meant to be avoided, the fact that the threat is idle should not be a determining factor. The problem of limiting the beneficiaries’ ability to challenge the will is a considerably larger issue, and should be the overriding determinative factor. A threat that carries consequences remains a threat, and whether there is a gift over or not would have no effect on the beneficiaries’ motivations. The beneficiary will still be discouraged from bringing litigation, whether they simply lose out on a gift or whether they lose it to someone else.
If this requirement is still considered necessary, at the very least, its interpretation in Re Kent is somewhat flawed. There, Lander LJSC found that the threat in the will was not idle. The testator directed that if the gifts were revoked due to the beneficiaries disputing the will, they would fall into the residue of the estate and thus go to the beneficiary of such. This was deemed to be a sufficient gift over such that the doctrine of in terrorem would not be invoked, and the condition would be considered valid. This reasoning seems flawed to me, as the result of a “bare forfeiture” of the gift would seem to be the same; the gift would not simply disappear into the ether, but rather would fall into the residue of the estate. This seems like an insufficient gift over to avoid the in terrorem doctrine. At the least, the testator should have to actually designate an alternative beneficiary.
With all of that said, there can be legitimate places where these sorts of conditions can be necessary, and as such, the doctrine should not be simplified so as to void every condition wherein the donee is forbidden from disputing the will. As mentioned by Beyer, Dickinson and Wake, these conditions can serve to prevent frivolous and vexatious claims against the estate, thereby helping to preserve the estate’s assets from having to be used to defend against such claims. As well, they can help serve to protect the interests of the testator, and help to ensure that their desires with regard to their property can be protected even following their deaths. However, these conditions should be limited much more than they currently are with an expansion of the in terrorem doctrine, both to avoid discouraging legitimate claims and to remove the unnecessary limits on the doctrine that are a result of a historical legacy that is no longer relevant.