What Will a Terror Clause Do for Your Trust?

Terror is not a word regularly associated with a trust but there are times when the two terms meet. A “terror clause,” “in terrorem clause,” or “no-contest clause” can be used in both wills and trusts to warn someone to think twice about contesting the terms of a will or trust. The clause usually states that if a person contests the terms of the will or trust then they will inherit nothing instead of what the will or trust stated they would get. On the surface, this might be an effective deterrent for a beneficiary who feels jilted by receiving a smaller percentage than the other beneficiaries. However, if the beneficiary investigated further they would find that Michigan law also doesn’t want to deter those who might have a valid complaint. MCL 700.7113 recognizes that a no-contest clause can be included in a trust but invalidates the penalty of taking away someone’s inheritance if probable cause exists to make the complaint.

So when can a beneficiary fight a will or trust without losing their inheritance? It all comes down to probable cause. Probable cause is a legal standard most commonly used in criminal law that requires enough evidence “to cause a person of ordinary prudence and caution to conscientiously entertain a reasonable belief in the defendant’s guilt.”* So if someone is suspicious that the deceased person was forced, pressured, or persuaded to leave them something other than a fair share and there are facts to support it – they likely have probable cause to contest the terms of the document without risking it all.

You should talk to your estate planning attorney about how an in terrorem clause might deter disputes over your will or trust and how enforceable such a clause would really be. If you have already included a terror clause in your estate plan – it is important to understand that it is not an absolute bar to stop disputes among those named to inherit.

*People v Green, 255 Mich App 426, 661 NW2d 616 (2003)

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