December 1, 2014
Authored by: Kathy Sherby and Stephanie Moll
When a will contains a so-called no contest clause or in terrorem clause that would cause a beneficiary to lose his or her interest in the deceased’s estate in the event the beneficiary contests the validity of the will, the court is often called upon to determine whether to enforce the forfeiture against the beneficiary if he or she loses the will contest. Just such an issue faced the Mississippi Supreme Court in Parker v. Benoist.
In this case, Bronwyn Benoist Parker (“Parker”) filed a will contest, contesting the validity of her father’s 2010 will. The 2010 will changed the disposition of the father’s estate from an equal division between Parker and her brother, William Benoist (“Benoist”), to a disposition where Benoist received a significantly greater portion of their father’s estate and Parker received a significantly lesser portion of the estate.
Parker alleged that (1) Benoist had unduly influenced their father to change his will shortly before death, and (2) at that time their father was suffering from dementia and drug abuse, with diminished capacity or lacking in capacity.
The 2010 will contained a no-contest clause. Evidence at trial included the following:
• Benoist, who was on disability due to his physical condition, had extra time and visited his father daily.
• Benoist had received several thousand dollars in gifts from his father during his life.
• The medical testimony indicated that their father was suffering from dementia, but not to the degree of incapacity.
After a jury trial, the jury determined that the will was valid.
Benoist then asserted the no-contest clause, which specifically stated that a beneficiary would forfeit his or her interest in the estate upon a challenge, “regardless of whether or not such proceedings are instituted in good faith or probable cause”. The trial court held that the forfeiture clause was enforceable, because “testators have the right to do as they wish” with their property.
The Mississippi Supreme Court, however, held that the forfeiture provision violated the state’s constitution, was against public policy, and inequitable.
The Court determined that, while forfeiture clauses may generally be enforceable in Mississippi, the better rule was to except from the enforceability of such clauses any contest brought in good faith and with probable cause. The Court noted the case law in 12 other states adopting that exception to the enforcement of forfeiture clauses, and decided that it was time for Mississippi to join the ranks of those other states.
In addition to the states noted in the Parker decision that, by case law, have refused to enforce a no contest clause, 9 states have adopted the UPC, Article II, Part 5, Section 2-517, which provides that forfeiture clauses are unenforceable “if probable cause exists for instituting proceedings.”
Care should always be taken to review applicable state law and the circumstances of the testator and his family prior to inserting such a forfeiture clause in a will or trust. It is best to determine the extent to which and the circumstances under which such a provision would be enforced.