No Contest Clauses In Georgia Wills and Trusts

A no contest (in terrorem) clause is designed to discourage litigation by disgruntled beneficiaries, but can often generate litigation, as occurred in In re Estate of Johnson, a 2019 case from the Georgia Court of Appeals.

What Exactly Is a No Contest (In Terrorem Clause?)

A no contest (in terrorem clause) in a Georgia will or trust is a provision that provides that a beneficiary forfeits their inheritance if they challenge the validity of the will, or any provision thereof.  No contest clauses are enforceable in some states (Illinois, Oklahoma, Pennsylvania, California) and not enforceable in others (Florida).

No Contest Clause In a Georgia Will and Trust

In In re Estate of Johnson, Robert Johnson executed a Will that left his property either in trust or through a life estate to benefit Wendy Gerrity, his fiancée at the time he executed the Will.  The will identified his fiancée but called her his wife when designating her as the fiduciary of the estate and as a beneficiary, even though they were not married.

The will contained a no contest or in terrorem clause that stated:

Should any beneficiary of this Will contest the validity of this Will or any provision thereof or institute any proceedings to contest the validity of this Will, any trust created by this Will or by me during my life, or any other provision thereof or to prevent any provision thereof from being carried out in accordance with its terms (whether or not in good faith and with probable cause), then all benefits provided for such beneficiary in this Will … are revoked and annulled.

Robert’s Trust also contained language referring to his wife and containing an in terrorem clause. Robert died in October 2018.  At the time of his death, Robert and Gerrity had not married.

Robert’s sons filed a petition for declaratory judgment seeking an opinion from the Georgia probate court that they could file a second declaratory action to construe the terms of the will and trust without running afoul of the no contest in terrorem clauses.  The gist of their proposed declaratory action was that because Gerrity was not Robert’s wife, she was not entitled to be a beneficiary or to serve as the executor of the will or a trustee of the trust.

Gerrity argued that the proposed action would violate the no contest in terrorem clause.  The Georgia probate court denied the petition for declaratory judgment because the proposed action would remove Gerrity as a beneficiary and therefore was barred by the in terrorem clauses.

The sons appealed the decision.  They argued that they were only trying to determine the “true meaning of the Will and Trust” and that the probate court was confused because they only wanted to determine if they could bring the proposed declaratory judgment action without violating the in terrorem clauses.

Declaration of Rights In a Georgia Probate Action

Under OCGA § 9-4-4(a)(4) any person interested as a legatee, heir, or beneficiary of an estate “may have a declaration of rights or legal relations in respect thereto and a declaratory judgment… To determine any question arising in the administration of the estate or trust, including questions of construction of wills, trust instruments, and other writings.”

Filing a declaratory action does not itself violate the no contest in terrorem clause.  The Georgia Supreme Court has sanctioned the sue of a declaratory judgment action to determine whether a proposed future declaratory action by the petitioner would violate a no contest in terrorem clause.  See Sinclair v. Sinclair

Does the True Relief Being Sought Seek To Invalidate the Will?

The Georgia appeals court looked at the true relief being sought to determine whether the Johnsons were seeking to invalidate the will or any provision thereof, thus triggering the no contest clause.

Here, the Johnsons filed a declaratory action seeking to determine whether they could file a proposed action to “interpret” Robert’s will and trust, specifically whether the documents were valid and whether Gerrity was entitled to be a beneficiary, executor, or trustee.  The Court agreed with the Georgia probate court and looked at what the Johnsons were truly seeking – to remove Gerrity as a beneficiary, executor, and trustee, stating: “Thus, as the probate court correctly found, the proposed declaratory judgment action would trigger the in terrorem clause.”

Proposed Claims Cannot Seek To Destroy the Testator’s Will

The Court distinguished cases cited by the Johnsons in support of their argument that they were permitted to bring their proposed declaratory judgment action to interpret the will and trust.

Distinguishing Sinclair, the Georgia Court stated:

In Sinclair, the Supreme Court of Georgia held that a party could bring an action for accounting or removal of an executor without triggering the in terrorem clause because those claims did not seek to destroy the will. Sinclair, 284 Ga. at 501 (1). But that is not what the Johnsons have done here. As they clearly set out in the proposed declaratory judgment action, the purpose of that action is to remove Gerrity as a beneficiary, executor, and trustee. In other words, although they couch their claims as if they were not trying to break the father’s will and trust, the outcome they seek is precisely that. Accordingly, Sinclair does not support their ability to bring the proposed declaratory judgment action.

Distinguishing Burkhalter, the Georgia Court stated:

Finally, in Burkhalter, this Court confirmed that a declaratory judgment was a permissible mechanism to determine if a future declaratory judgment action would be barred, but we explained that there was “no authority supporting a procedure by which an interested party may file one declaratory judgment action to determine whether it may file a second declaratory judgment action to determine the validity of an in terrorem clause.” 343 Ga. App. at 421 (1). Instead, any question about the validity of the in terrorem clause “should be resolved in the first declaratory judgment action raising that issue.” Id. Applying this holding to the instant case, it is clear that the probate court properly considered whether the in terrorem clause would bar the subsequent, proposed declaratory judgment action.

In closing, the Georgia appeals court noted that the proposed declaratory action seeking to void any bequest to Gerrity or involvement by Gerrity in Robert’s estate was exactly what the no contest in terrorem clause was designed to prevent, and affirmed the probate court’s decision.

The takeaway is that a litigant should not play games with a no contest in terrorem clause, in Georgia or any other state that permits such clauses.  If what you are really seeking is to void a bequest, even if you frame it as something else, the no contest in terrorem clause might be triggered.  The purpose behind no contest in terrorem clauses is to deter litigation,  and litigants need to consider whether the potential of losing their inheritance is worth the potential of receiving more.

 

General Probate Issues