Most states have a well-developed rule governing in terrorem clauses, or “no contest” clauses, wherein a beneficiary who attempts to challenge the terms of a will or trust forfeits the inheritance he or she would otherwise receive. Some states, such as Florida, prohibit such clauses altogether, while other states uphold such clauses unless there was sufficient grounds for the challenge. ACTEC put out a chart in 2012 listing the law regarding no contest clauses in every state, as well as the Uniform Probate Code, Uniform Trust Code, and Restatement of Property.
Connecticut has a well-developed body of law on no contest clauses, in that they are enforceable, unless the contest is begun in good faith and there is probable cause and reasonable justification for the contest. In Salce v. Cardello, SC 20701 (Conn. Sep 26, 2023), the Connecticut Supreme Court addressed a situation where the estate documents caused a forfeiture of an inheritance for a challenge to how the fiduciary was administering the estate. The clauses read as follows:
“Both the trust agreement and the will contain an in terrorem clause providing that, if a beneficiary takes certain actions, he or she forfeits his or her rights as a beneficiary under the instruments. The in terrorem clause in the trust agreement provides in relevant part: ‘If [a] beneficiary under this [t]rust [a]greement . . . directly or indirectly . . . (iv) objects in any manner to any action taken or proposed to be taken in good faith by any [t]rustee . . . [and/or] (vii) files any creditor’s claim against [the] [t]rustee (without regard to its validity) . . . then that person’s right as a beneficiary of this [t]rust [a]greement and to take any interest given to him or her by terms of this [t]rust [a]greement . . . shall be determined as it would have been determined if the person and the person’s descendants had predeceased [the] [s]ettlor without surviving issue. . . .’The in terrorem clause in the will likewise provides in relevant part: ‘If [a] beneficiary hereunder . . . directly or indirectly . . . (iv) objects in any manner to any action taken or proposed to be taken in good faith by any [e]xecutor or trustee . . . [and/or] (vii) files any creditor’s claim against my [e]xecutor (without regard to its validity) or trustee . . . then that person’s right as a beneficiary of this [w]ill and any [c]odicil thereto or trust . . . shall be determined as it would have been determined if the person and the person’s descendants had predeceased me without surviving issue. . . .’…
Connecticut apparently had no established law addressing a no-contest clause in the context of a dispute over estate administration, so the Connecticut Supreme Court stepped in to create new law in Connecticut. In striking the no-contest clause, the Court explained as follows:
We conclude, therefore, that an in terrorem clause violates public policy when its application would interfere with the Probate Court’s exercise of its statutorily mandated supervisory responsibilities over the administration of an estate and its superintendence of the fiduciary’s statutory obligations. As the defendant argues, the in terrorem clauses in this case implicate the Probate Court’s supervision over the fiduciary via the accounting process under § 45a-175, which may be invoked at the request of a beneficiary. In connection with that accounting, the Probate Court was called on to consider whether Goldstein had properly discharged his responsibilities to minimize the estate’s tax burden under § 45a-233 (d) and his broader obligation under § 45a-242 (a) not to mismanage estate assets or to commit waste.
We acknowledge the plaintiffs argument that this public policy exception interferes with a different public policy, namely, “enforcing] the clear terms of a testator’s or settlor’s documents.” See, e.g., Derblom v. Archdiocese of Hartford, 346 Conn. 333, 347, 289 A.3d 1187 (2023) (“[the] primary objective in construing … [a] will is to ascertain and effectuate [the testator’s] intent” (internal quotation marks omitted)). Although we acknowledge that clauses barring review of the fiduciary’s actions are different in kind from contests that attack the underlying validity of the will or trust document, consistent with discussion at oral argument before this court, we nevertheless conclude that the testator’s prerogative to dispose of his or her property as he or she sees fit must yield to the Probate Court’s exercise of its power to protect the assets of the estate, which would be impinged if a beneficiary risks disinheritance by bringing, in good faith, potential tax return errors to the attention of the Probate Court. Indeed, as the plaintiffs counsel acknowledged before this court at oral argument, the defendant permissibly could have avoided these potential disinheritance issues by waiting for a hearing on the accounting, rather than raising the issue more proactively. This amounts to a matter of form that would scarcely justify disinheritance as a matter of public policy, especially because the good faith participation of the beneficiary is an important aspect of facilitating the responsibility of the court under § 45a-175. See In re Estate of Ferber, supra, 66 Cal.App.4th 253-54 (The court acknowledged that it “may have the primary responsibility to monitor an executor’s actions” but observed that, “as a practical matter, the courts lack the resources to scrutinize every matter for executor malfeasance. They must rely on beneficiaries to be aware of the facts and raise cogent points.”). Put differently, the “power of the court is invoked in probate matters, at least in substantial measure, to protect the estate and [to] ensure its assets are properly protected for the beneficiaries. No contest clauses that purport to insulate executors completely from vigilant beneficiaries violate the public policy behind court supervision.” (Emphasis added.) Id., 253.
