In Savage v. Oliszczak, Case No. 09-P-513 (June 29, 2010), the Appeals Courts again addressed the enforceability of an in terrorem clause.
The decedent executed a will and trust, with the will designating the trust as the sole devisee of the decedent's estate. The will did not include an in terrorem clause, but the trust did include such a clause, reading as follows: "If any person, including a beneficiary, other than me, shall in any manner, directly or indirectly, attempt to contest or oppose the validity of this agreement, including any amendments thereto, or commences or prosecutes any legal proceedings to set this instruments aside, then in such event such person shall forfeit his or her share, cease to have any right or interest in the trust property, and shall be deemed to have predeceased me."The named executors filed a petition to probate the will. The defendants objected to the allowance of the will on capacity and undue influence grounds, and then withdrew their objection. The plaintiff trustees subsequently brought the present action, seeking instruction on whether the defendants' challenge to the will triggered the in terrorem clause of the trust. The probate court held that it did not, and the Appeals Court affirmed. While the Appeals Court acknowledged that in terrorem clauses in wills are valid, it reasoned that the in terrorem clause of the trust was not triggered by the challenge to the decedent's will. The Court rejected the plaintiffs' argument that the will and trust should be read together as inextricably intertwined elements of the decedent's estate plan. Although the Court acknowledged that it will generally review separate components of an estate plan as parts of an interrelated whole, it was not persuaded to conclude that the challenge to the will operated to implicate the trust's in terrorem clause. The Court pointed out that the trust could have been funded during the decedent's lifetime from any number of sources wholly independent of the will. The Court also pointed out that the purpose of an in terrorem clause is to deter challenges to a will, with potential challengers being put on notice of the in terrorem clause upon the filing of the will for probate, whereas there can be no similar deterrent value to an in terrorem clause in a trust that is not made public. On this point the Court explained that "it would be draconian to invoke a forfeiture clause against beneficiaries who challenge a will that does not contain an in terrorem clause, based on the inclusion of such a provision in a separate but undisclosed instrument." In this context the Court also observed that in terrorem clauses have been construed narrowly because equity does not favor forfeitures.
Day Pitney Newsletter
Clifford Nichols wrote an article, "When Addressing Cybersecurity and Data Breach, Don't Forget eDiscovery," for New Jersey Law Journal. The article is about how companies should consider eDiscovery and litigation response issues when making policy or infrastructure changes to address cybersecurity and data breach risks.
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Rick Sanders is quoted in an article, "Business Groups Encouraged by Legislators," in NJBIZ, which addresses political activity behind a bill to phase out New Jersey's estate tax. Under the bipartisan bill, the estate tax, which currently applies to inheritances valued at $675,000 or more, would be eliminated gradually over a five-year period. "It affects such a small part of the population," Sanders said. "It just strikes me as unusual that all of a sudden, this bill came. I think it's not coincidental that the governor was campaigning for president at the time he called for the repeal. For years and years, there's been proposals to increase the exemption to $1 million and it never got any traction in New Jersey."
Boston, Mass., January 20, 2016 – Day Pitney is pleased to announce Jillian Hirsch, a partner in Day Pitney’s Litigation Practice, has been selected as one of Massachusetts Lawyers Weekly’s 2015 Lawyers of the Year. Honorees were nominated by their colleagues, clients and other legal professionals for their outstanding professional accomplishments.
Boston, Mass. November 11, 2015 – Day Pitney is pleased to announce Leiha Macauley, a partner in Day Pitney’s Individual Clients Practice, has been selected as a 2015 Boston Rising Star by The National Law Journal.
Jillian Hirsch was quoted in an article, "Trust divisible in divorce despite possible new beneficiaries," in Massachusetts Lawyers Weekly. In the article, Hirsch, who represented the wife in the matter, explains why the Appeals Court's decision of Pfannenstiehl v. Pfannenstiehl is significant.
"It confirmed that an interest in a trust with an ascertainable standard--specifically one with a history of distributions woven into the fabric of the marriage--is a vested, presently enforceable interest and therefore properly included in a marital estate for purposes of equitable division of property in a divorce," she said.