Trial Lawyer Austin Texas
*fn1 An in terrorem or "no contest" clause in a will is a clause that provides that a beneficiary who contests the will forfeits his interest thereunder. See Ferguson v. Ferguson, 111 S.W.3d 589, 599 (Tex. App.-Fort Worth 2003, pet. denied).
An in terrorem clause in a will or a trust typically makes the gifts in the instrument conditional on the beneficiary not challenging or disputing the validity of the instrument. See, e.g., In re Estate of Hamill, 866 S.W.2d 339, 341 n.1 (Tex. App.-Amarillo 1993, no writ) ("The term, in terrorem, as applied to wills refers to a legacy given upon condition that the beneficiary will not dispute the validity or disposition of the will."). In terrorem clauses are designed to dissuade beneficiaries from filing vexatious litigation, particularly as among family members, that might thwart the intent of the grantor. See Lesikar v. Moon, 237 S.W.3d 361, 369--70 (Tex. App.-Houston [14th Dist.] 2007, pet. denied).
In terrorem clauses allow the intent of the testator to be given full effect and avoid vexatious litigation, often among members of the same family. Gunter v. Pogue, 672 S.W.2d 840, 842--43 (Tex. App.-Corpus Christi 1984, writ ref'd n.r.e.); see also Ferguson v. Ferguson, 111 S.W.3d 589, 599 (Tex. App.-Fort Worth 2003, pet. denied) (stating the purpose of the in terrorem clause is to dissuade beneficiaries from challenging gifts made in the will). If the intention of a suit is to thwart the settlor's intention, the in terrorem clause should be enforced. Ferguson, 111 S.W.3d at 599. A violation of the in terrorem clause will be found only when the acts of the parties clearly fall within its express terms. Hamill, 866 S.W.2d at 342--43. Thus, we narrowly construe in terrorem clauses to avoid forfeiture, while also fulfilling the settlor's intent. McLendon v. McLendon, 862 S.W.2d 662, 678 (Tex. App.-Dallas 1993, writ denied).
Does this Suit filed pursuant to Section 112.054 of the Property Code Trigger a Forfeiture under the In Terrorem Clauses?
The first issue this Court must decide is whether this suit, which was filed pursuant to Section 112.054 Property Code, thwarts the testator's intent, thus triggering a forfeiture.
Section 112.054 of the Property Code provides trustees and beneficiaries the statutory right to seek judicial modification of trust provisions under certain circumstances, and provides in pertinent part:
(a) On the petition of a trustee or a beneficiary, a court may order that the trustee be changed, that the terms of the trust be modified, that the trustee be directed or permitted to do acts that are not authorized or that are forbidden by the terms of the trust, that the trustee be prohibited from performing acts required by the terms of the trust, or that the trust be terminated in whole or in part, if:
(2) because of circumstances not known to or anticipated by the settlor, the order will further the purposes of the trust; [or]
(3) modification of administrative, nondispositive terms of the trust is necessary or appropriate to prevent waste or avoid impairment of the trust's administration[.]
(b) The court shall exercise its discretion to order a modification or termination under Subsection (a) in the manner that conforms as nearly as possible to the probable intention of the settlor. . . . .
Di Portanova v. Monroe, (Tex. App. - Houston [1st Dist.], 2012)