Understanding In Terrorem Clauses and How to Avoid Costly Mistakes

When planning for the future, many individuals—particularly business owners and high-net-worth professionals—choose to include an in terrorem clause in their will or estate plan. These clauses, sometimes called “no-contest clauses,” are designed to discourage disputes and protect the testator’s wishes by imposing a harsh penalty: if a beneficiary challenges the will or trust in violation of the clause, he or she forfeits his or her inheritance.

But while in terrorem clauses are enforceable under New York law, they are not always straightforward and they can carry serious consequences for beneficiaries who misstep, even unintentionally. Here's what you need to know.

What Is an In Terrorem Clause?

An in terrorem clause is a provision in a will or trust stating that if a beneficiary challenges the document, or engages in certain types of legal action, they will be treated as if they predeceased the testator, forfeiting any gifts or interests they were otherwise entitled to receive. These clauses are meant to deter costly and drawn-out litigation among family members or other heirs.

What Triggers a Forfeiture?

This is where things get nuanced. New York courts strictly construe in terrorem clauses, and certain actions are explicitly allowed under the law—such as requesting a formal accounting from an executor or seeking removal of a fiduciary for misconduct.

However, what might seem like reasonable legal action can still trigger a forfeiture if it’s perceived as a challenge to the testator’s intent. For example:

Overstepping in discovery: If a beneficiary engages in aggressive discovery tactics during the probate process—like deposing individuals or pursuing records that go beyond the standard scope allowed by statute—they may violate the clause.
Challenging a fiduciary's appointment: Asking a court to suspend or limit the authority of an executor or trustee, especially when there is no clear evidence of misconduct, can be interpreted as a challenge to the testator’s choice of fiduciary—a common trigger for forfeiture.
Investigations that overlap with estate issues: Even efforts to investigate suspected wrongdoing—like financial misconduct that occurred before the testator’s death—can raise red flags if the beneficiary attempts to supplant or bypass the named executor in the process.

What’s Protected Conduct?

On the other hand, New York law provides a “safe harbor” for certain actions:

Petitioning for an accounting
Objecting to an executor’s accounting
Seeking removal of an executor who fails to follow a court order or engages in misconduct
Investigating whether estate assets are in someone else’s possession—so long as it doesn’t challenge the estate plan itself or the named fiduciary without cause

Practical Advice for Beneficiaries and Families

If you are a beneficiary concerned about estate administration or a trustee or executor facing challenges from a co-beneficiary, it is essential to seek legal advice before taking action. Even well-intentioned moves can have unintended consequences.

And if you’re planning your estate and considering an in terrorem clause, careful drafting is critical. These clauses should be specific, clearly defining what constitutes a challenge and what actions are permitted. While we don’t draft wills and estate plans, we only litigate them; but we can recommend transactional trust and estate attorneys to you.

Why This Matters for High-Asset Estates

In estates involving business equity, significant real estate, or sophisticated investment portfolios, the risk of conflict—and the potential financial fallout—is especially high. In terrorem clauses are powerful tools, but they require a strategic and informed approach, both in planning and in litigation.

At our firm, we litigate these issues regularly, especially in estates involving complex assets like business interests, executive compensation packages, and family-held property. Whether you are seeking to enforce an estate plan or challenge misconduct, we bring clarity, strategy, and precision to the table.

Have questions about in terrorem clauses or estate litigation? Contact us today to schedule a confidential consultation. You may learn more about us and how we operate by visiting these pages: About Us and What Sets Us Apart.

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This blog post is for informational purposes only and does not constitute legal advice. For specific legal counsel, please contact our office directly.