The law generally disfavors in terrorem clauses, also known as no contest provisions, because they result in forfeitures. Nevertheless, some people and practitioners like sticking them in governing instruments – sometimes out of habit, sometimes for good reason, and sometimes for not very good reasons at all. Courts in numerous jurisdictions have chipped away at the enforceability of these clauses by, among other things, strictly construing them and creating a probable cause exception. In In re Shaheen Trust, in a matter of first impression, an Arizona appellate court considered what happens when there is a no contest provision and a beneficiary brings a multi-count petition. Must each count be successful or at least have probable cause to survive the in terrorem clause?
According to the Arizona appellate court, yes. When a single petition alleges multipleRead More