Court Enforces “In Terrorem” Clause That Excluded Any Beneficiary From An Estate Share If They Contested The Decedent’s Will

Annie Rost died in 2018, leaving four surviving children. Her Last Will and Testament left her sizeable estate to her four children and to various charities. It also contained an “in terrorem” provision that excluded any beneficiary from a share of the estate if they contested the will:

Any beneficiary under this, my Will, who shall institute, prosecute or abet any action to contest or to set aside in whole or in part this, my Will, shall be excluded from any share or interest in my estate, and I hereby direct that the property or interest to which he or she might otherwise have become entitled shall be devised to Deborah Hospital Foundation…

Six days after Mrs. Rost died, her daughter Claudia filed a caveat against the will. Therefore, Mrs. Rost’s son Norman, who was named executor, was required under the Rules of Court to file an order to show cause in the Probate Part, seeking to dismiss the caveat and to admit the will to probate.

In response to that lawsuit, Claudia filed a counterclaim, which was rejected by the Surrogate because it was unverified. She then sought to file an amended answer and counterclaim. In the answer, she consented to the removal of the caveat, but in the counterclaim she continued to object to two paragraphs of the will. These pleadings were not verified, and she did not file any supporting certifications or affidavits.

On the return date of Norman’s order to show cause, Claudia’s attorney asked for time to conduct discovery to prove her allegations. The judge denied that request and ruled in Norman’s favor. The judge ruled that the record before him did not support Claudia’s allegations:

Matters in probate are to be tried in a summary fashion which means trial on the return date without the need for discovery…. There has been no evidence submitted to support the counterclaim. It is an unverified complaint without any underlying facts. Therefore, the court finds that … plaintiff is entitled to judgment.

A month after the court’s ruling, Claudia filed an order to show cause and verified complaint seeking an accounting of the estate, the appointment of a temporary executor, and legal fees. The following week, Deborah Hospital Foundation filed a verified complaint seeking to enforce the will’s in terrorem provision.

On the return date of these matters, the chancery court cited In re Stockdale for the proposition that a caveat constitutes a challenge to a will; the judge further found that it had already determined that Claudia’s caveat had been filed without probable cause. It therefore upheld the in terrorem clause, and entered judgment in favor of Deborah Hospital Foundation.

On appeal, the Appellate Division affirmed. It agreed that, under Stockdale, the caveat constituted a challenge to Mrs. Rost’s will. It rejected Claudia’s argument that her due process rights were deprived when the chancery court refused to conduct an evidentiary hearing. The Rules of Court dictate that, in a summary action, if a court is satisfied that the application is sufficient, it “shall order the defendant to show cause why final judgment should not be rendered for the relief sought…. The court shall try the action on the return day” and if “the affidavits show palpably that there is no genuine issue as to any material fact, the court may try the action on the pleadings and affidavits and render final judgment thereon.” The appeals court concluded that the chancery court had properly tried the case on the return date, and that Claudia bore the burden of producing evidence to establish why Norman’s requested relief should not be granted. She failed to do so.

Under New Jersey Statute, N.J.S.A. 3B:3-47,  an in terrorem clause is unenforceable “if probable cause exists for instituting proceedings.” Here, because Claudia did not present evidence to support her challenge to the will, there was no such probable cause. Thus, the Appellate Division concluded that “the absence of probable cause for the filing of the caveat requires the enforcement of the in terrorem clause as a matter of law.”

A copy of In re Estate of Rost is annexed here – [gview file=””]

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