Our partner Holly LeValliant gave a talk on in terrorem clauses at the Six Minute Estate Lawyer event held by the Law Society on April 29th.
In plain English, in terrorem clauses are stipulations in Wills that make bequests conditional upon the recipient not taking certain actions. They are most often used to prevent beneficiaries from challenging the Will in court and squandering the estate’s value in legal fees. They can be a very effective means of preventing frivolous estate litigation – what beneficiary would want to risk losing their entire entitlement in an estate by filing a claim that has little chance of succeeding?
In many cases, however, these clauses are found to be invalid at law. In terrorem provisions are generally ruled invalid if the Will does not direct what is to be done with the property in the event that the condition is breached. They also do not apply to certain types of Will challenges, such as dependant’s support applications.
Holly’s talk focused on Mawhinney v. Scobie, a recent Court of Appeal case where the testator made a Will leaving his fiancée a property in Alberta, with a no-contest clause applying to any beneficiary challenging the validity of the Will. The fiancée brought an application alleging suspicious circumstances related to the execution of the Will. The Court of Appeal of Alberta ultimately found that her challenge would trigger the no contest clause, as it amounted to a challenge of the validity itself, the very scenario the clause was intended to prevent. The majority found that “the effect of the no-contest clause is to test the fortitude of a potential challenger to the validity of the will and how strongly they believe they can successfully challenge the will. The clause is designed to discourage litigation, not prohibit it.”
At Eisen Law, we focus exclusively on estate and trust litigation issues like these. We provide our clients with clear guidance on their issues and help them make fully-informed decisions with the aim of reaching a resolution to even the most complex estate and trust disputes. Please call us at 416-591-9997 or reach us online to see how we can help you today.