Alabama, Ohio, and 13 Other States Need to Follow Florida’s Lead
Many decedents in a variety of jurisdictions place no-contest provisions in their wills in order to prevent their family members from fighting over the inheritance following death. These clauses, sometimes referred to as in terrorem clauses are defined by Black’s Law Dictionary as ‘[a] provision designed to threaten one into action or inaction; esp., a testamentary provision that threatens to dispossess any beneficiary who challenges the terms of the will.’
For example, I have seen the clauses similar to this in many wills in an effort to avoid will contests:
“If any beneficiary under this will in any manner, directly or indirectly, contests or challenges this will or any of its provisions, any share or interest in my estate given to that contesting beneficiary under this will is revoked and shall be disposed of in the same manner provided herein as if that contesting beneficiary has predeceased me without issue.”
The Florida Probate Code provides that a provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable. Fla. Stat. §732.517.
At least thirteen states have adopted the Restatement of Property’s and section 2-517 of the Uniform Probate Code which provides that an otherwise effective provision in a will or other donative transfer, which is designed to prevent the acquisition or retention of an interest in the property in the event there is a contest of the validity of the document transferring the interest or an attack on a particular provision of the document, is valid, unless there was probable cause for making the contest or attack. Other states, like Ohio, do not follow the Uniform Probate Code and do not contain a “good faith” exception to the no-contest clause penalties.
I’m always curious to see how long it will take some states to follow Florida’s lead in this area of the law. Some states, like Ohio and Alabama, have appellate courts juggling public policy, modern probate jurisprudence, good faith, and a variety of other measures when determining whether to and to what extent they wish to abrogate their rules allowing no-contest clauses to remain viable instruments in estate planning. I believe those states that are still holding on to the no-contest clauses are beginning to recognize that inflexible application of the rule is questionable given the potential of undue influence in will execution and distribution of inheritable property.
An example of this struggle was recently exposed in Harrison v. Morrow, 977 So.2d 457 where the Supreme Court of Alabama was faced with a will which provided:
“E. Beneficiary Disputes. If any bequest requires that the bequest be distributed between or among two or more beneficiaries, the specific items of property comprising the respective shares shall be determined by such beneficiaries if they can agree, and if not, by my Executor. Any further dispute between or among the beneficiaries regarding distribution percentages or procedures shall permanently disqualify that person from any distribution. If a bequest has contested this share shall be distributed proportionately to the other distributee(s) listed as beneficiaries.”
The facts of Harrison v. Morrow are fairly straightforward: Alton Anderson with his will naming Morrow, Anderson, and Harrison as beneficiaries, and nominating Ben J. Schillaci as the executor. Shortly after Anderson’s death, Morrow and Anderson filed a will contest. Based on expert handwriting analysis, they alleged that the testator’s signature was a forgery. The probate court then entered a judgment denying the contest, admitting the will to probate, and issuing letters testamentary to Schillaci.
Subsequently, Schillaci filed in the probate court a “petition for the construction of will and instruction as to the proper distribution of the estate.” The petition sought a construction of the in terrorem provision in the context of Morrow and Anderson’s contest of the will. Specifically, it sought a determination as to “whether said contest of the will … caused [the] bequests to Brenda Morrow and Samuel R. Anderson to be forfeited and distributed to [Harrison].” Harrison then intervened, alleging that the will contest operated as a forfeiture of Morrow’s and Anderson’s shares of the estate pursuant to the in terrorem provision. The probate court ruled against Harrison and his appeal reached the Alabama Supreme Court.
Morrow and Anderson contended that the Court should follow the lead of a number of other jurisdictions and hold that in terrorem clauses are per se unenforceable. The Alabama Supreme Court, however, ruled that the will contest did not fall within the proscriptions of the in terrorem provision in this case. The Court found no violation of the clause and noted that “disposition” is not the same as “distribution” and that a challenge to the will is a challenge to the disposition of the testator’s estate not to its distribution under the will. Importantly, the Court also noted that no-contest clauses are to be narrowly construed to avoid their enforcement.
While the Alabama court reached the right result, I suggest they may have done so for the wrong reason. At some point, Alabama, Ohio, and other states will hopefully acknowledge that by recognizing the enforceability of no-contest clauses, they are allowing wills that may have been procured by undue influence to be protected through the threat of economic elimination. Certainly, this should arguably be against the public policy of any state.
A tougher question to answer is what happens if a Florida resident dies with a “Florida Last Will and Testament” which contains a statement that the laws of Ohio control and that Last Will contains an in terrorem provision?
