The Limits of In Terrorem
May 21, 2019 § 1 Comment
Back in 2014, the MSSC tacked on a good faith exception to in terrorem clauses in wills and trusts. The case was Parker v. Benoist, and you can read a post about it at this link.
Fast forward to 2019, and the in terrorem issue was once again before the appellate courts, this time the COA, and this time with a peculiar set of facts.
Joan Roosa, widow of Colonel Stuart Roosa, an astronaut on the Apollo 14 moon mission, executed her will in 2002. She followed with two codicils in 2004 and 2007. The 2002 will bequeathed her estate among all of her children and grand children. The 2007 codicil left everything to her daughter Rosemary. The 2002 will included an in terrorem clause.
The original will was admitted to probate, and shortly after Rosemary submitted the two codicils. The other children and grandchildren (led by Joan’s son Christopher) contested the validity of the second codicil charging that Rosemary had exercised undue influence. They also contended that Rosemary had triggered the forfeiture provision of the in terrorem clause.
A jury was empaneled to consider the issue of devisavit vel non as to the second codicil. It returned a verdict finding it not to be valid.
On the issue of forfeiture, the chancellor ruled that Rosemary had acted in good faith and denied the request that she be deemed to have forfeited her bequest under the will.
Christopher appealed on several issues, but for our purposes we will focus on the chancellor’s ruling on the forfeiture.
The COA affirmed in Estate of Roosa: Roosa v. Roosa, decided April 23, 2019. Judge McCarty wrote the opinion for the court:
¶8. The chancery court found that Rosemary should not forfeit her share of her mother’s estate due to attempting to probate the second codicil. Christopher argues that the forfeiture provision should be enforced against Rosemary because she did not act in good faith when submitting the second codicil for probate. In response, Rosemary argues that submitting a codicil for probate is not contesting the will, so the forfeiture provision is not triggered at all. Alternatively, Rosemary contends that the forfeiture provision is not applicable since she submitted the second codicil in good faith.
¶9. An in terrorem clause in a will acts to frighten a beneficiary that any benefit they might receive will be forfeited if they contest or otherwise dispute the validity of the will. See Taylor v. Rapp, 124 S.E.2d 271, 272 (Ga. 1962). Joan’s will contained just such a forfeiture provision. It read in relevant part:
If any beneficiary hereunder shall contest the probate or validity of this Will or any provision thereof, or shall institute or join in (except as a party defendant) any proceeding to contest the validity of this Will or to prevent any provision thereof from being carried out in accordance with its terms (regardless of whether or not such proceedings are instituted in good faith and with probable cause), than all benefits provided for such beneficiary are revoked and such benefits shall pass to the residuary beneficiaries of this Will (other than such beneficiary) in the proportion that the share of each such residuary beneficiary bears to the aggregate of the effective shares of the residuary.
¶10. The forfeiture clause explicitly states that “regardless” of whether a beneficiary starts proceedings “in good faith and with probable cause” that they will be forfeited from benefitting under the estate. During the life of the litigation, the Mississippi Supreme Court declared forfeiture provisions like this unenforceable as a matter of law. See Parker v. Benoist, 160 So. 3d 198, 205 (¶15) (Miss. 2015). The Court held that “[a] strict interpretation of no-contest provisions in wills would hamper courts’ goal of determining what is, once and for all, the will of the testator,” and that “[a] bona fide inquiry into the validity of the will should not be defeated by language contained in the will itself.” Id. at 206. As a result, if a will contained a forfeiture provision, it also had to have a requirement that it would only be enforced if it had a good faith exception. Id.
¶11. Rosemary’s will contained the exact same forfeiture provision that the Supreme Court held unenforceable in Parker. Id. at 203 (¶9). As a result, the chancery court found that “as a matter of law the [forfeiture] clause in this case is unenforceable because it fails to contain a good faith exception.” This does not delete the forfeiture provision but instead reforms it to include an exception for good faith actions by beneficiaries. Id. at 205-06 (¶¶12-15).
¶12. The first question we must resolve is whether the forfeiture clause even applies to Rosemary. Her argument on appeal is that it cannot be applied since she did not contest the will per se but instead only submitted the second codicil for probate. However, the plain language of Joan’s will captures more conduct than simply contesting the will. The forfeiture clause applies when any beneficiary tries to “prevent any provision [of the will] from being carried out in accordance with its terms . . . .” The second codicil Rosemary submitted to probate dramatically changed the amounts her siblings would take under their mother’s will (among other significant changes). Under the express language of the forfeiture provision in Joan’s will and the specific nature of the second codicil, we find that the forfeiture provision is applicable to Rosemary.
¶13. This does not end the inquiry, as we must determine whether Rosemary acted in good faith in submitting the second codicil for probate. In Parker, our Supreme Court noted that the evidence was sufficient for it to determine good faith and probable cause, rather than remand for the chancery court to conduct an inquiry. Id. at 206-07 (¶16). Likewise, we will determine if sufficient evidence supports Rosemary’s claim that she submitted the second codicil in good faith and based on probable cause. In the context of a will contest, “[p]robable cause exists when, at the time of instituting the proceeding, there was evidence that would lead a reasonable person, properly informed and advised, to conclude that there was a substantial likelihood that the challenge would be successful.” Id. at 206 (¶15) (quoting Restatement (Third) of Property: Wills and Other Donative Transfers § 8.5 cmt. c. (2003)). “The determination of good faith and probable cause should be inferred from the totality of the circumstances.” Id.
The court went on to analyze the facts and concluded that Rosemary had acted in good faith, affirming the chancellor.
This case is a reminder of two points: (1) that an in terrorem clause is enforceable if it includes a good faith provision; and (2) that if an in terrorem clause does not include good faith language the court will reform it to include a good-faith exception.