in terrorem clause

in terrorem clause

(in tehr-roar-em) n. from Latin for "in fear," a provision in a will which threatens that if anyone challenges the legality of the will or any part of it, then that person will be cut off or given only a dollar, instead of getting the full gift provided in the will. The clause is intended to discourage beneficiaries from causing a legal ruckus after the will writer is gone. However, if the will is challenged and found to be invalid (due to lack of mental capacity, undue influence or failure to have it properly executed), then such a clause also fails. So a prospective challenger takes his/her chances. The courts have ruled that merely putting in a claim for moneys due from the estate is not a legal challenge to the will itself, and is permissible without losing the gift. (See: will, will contest)

References in periodicals archive ?
Although the term "in terrorem clause" also applies to no-contest clauses, this type of clause had a slightly different function historically.
(76.) Beyer et al., supra note 5, at 228-29 ("Where a will pours over into an established trust, at least one court has refused to apply the in terrorem clause in the will to a contest directed at the trust.
at *72-73 (rejecting petitioners' contention that the "litigation concerns breaches of fiduciary duty by the investment directors" and thus "afford[s] a free pass from the in terrorem clause's bite" because "[a]s early as August 2007, petitioners planned to bring litigation concerning the trust, prior to most or all of the breaches alleged in the petition and even prior to introducing the new trustee to the investment directors or the former trustee").
Beyer et al., The Fine Art of Intimidating Disgruntled Beneficiaries with In Terrorem Clauses, 51 SMU L.
2007) ("We need not determine whether in terrorem clauses are unenforceable in Alabama when their enforceability is specifically challenged, because we conclude that the will contest did not fall within the proscriptions of the in terrorem provision in this case.").
However, the IRS further contended that a beneficiary would be extremely reluctant to go to court because, under the in terrorem clause in Article XXVI, the beneficiary would forfeit all of his or her rights under the trust by going to court.
On the surface, in terrorem clauses seem especially troubling, because they represent an attempt by the legislature to prevent the judiciary from exercising a power that rightly belongs to it (whereas poison-pill clauses invite the judiciary to exercise that power).