The Wrong Way to Challenge a Will

While there may be several good ways to go about challenging a decedent’s last will and testament, in In the Matter of the Estate of Annie Rost, Superior Court of New Jersey, Appellate Division (Docket No. A-1807-19) decided April 8, 2021, the challenge brought by the decedent’s daughter failed with the result being that she lost her inheritance.

“Annie Rost died in September 2018, leaving behind a sizeable estate. Her will, executed in 2002, devised the estate among her four children and to various charities. It also contained an in terrorem provision that excluded any beneficiary from the estate if they contested the will. One of the beneficiaries […] filed a caveat with the Mercer County Surrogate’s Court six days after her mother’s death, protesting the grant of letters of administration or admitting the will to probate.”

An in terrorem provision, also known as a no contest provision, is a statement in the will that seeks to disinherit any beneficiary who challenges the validity of the will.

One example of such a provision may be: “Any beneficiary named in my will who contests the probate or validity of my Will or any of its provisions shall receive no benefit under my will and shall be treated as if that beneficiary predeceased me”.

While the pros and cons of including such a provision are debatable and should be specifically considered by the testator and not simply included as boilerplate, the effect of a valid in terrorem clause is severe — the total loss of one’s inheritance.

While New Jersey law recognizes the validity and importance of in terrorem provisions, the New Jersey Supreme Court has ruled that such provisions are unenforceable when the challenger has probable cause to contest the will. Haynes v. First Nat. State Bank of New Jersey, 432 A.2d 890, 904 (N.J. 1981). This ruling has been codified in N.J.S.A. 3B:3-47, which 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 if probable cause exists for instituting proceedings”.

This makes sense. If the testator lacked capacity to make a will, or was acting under duress at the behest of a dangerous family member, then we would want an aggrieved party to be able to challenge that will and bring those facts to light. And if the aggrieved party turns out to be wrong, we don’t want them to lose an inheritance if there was good reason to bring the challenge in the first place. Remember that challenges must be brought quickly before all facts are known.

But just because all facts may not be known at the outset does not mean that a challenger can defeat the teeth of an in terrorem provision with mere speculation. In short, that was the problem the decedent’s daughter faced in Rost. She acted without any supporting evidence, and she continued to press several claims after she was informed that the will contained an in terrorem provision. The court found the decedent’s daughter did not present any evidence to support her challenge to the will at the March 27 hearing on the order to show cause.

Litigating in New Jersey Chancery Courts must be done with care and careful planning. And any litigant must pay close attention to language in a governing document that seeks to disinherit them just for bringing the challenge.

Are Promises to Make a Will Enforceable?

Can a person give up his or her right to make a will? Or can a person be forced to include (or not include) certain beneficiaries and certain provisions in a will? In New Jersey, the answer to both questions is YES. Under New Jersey law, a person can enter into a legally binding contract controlling the dispositive provisions of that person’s will.

Legal Authority

“A contract to make a will or devise, or not to revoke a will or devise, or to die intestate, if executed after September 1, 1978, can be established only by (1) provisions of a will stating a material provision of the contract; (2) an express reference in a will to a contract and extrinsic evidence proving the terms of the contract; or (3) a writing signed by the decedent evidencing the contract. The execution of a joint will or mutual wills does not create a presumption of a contract not to revoke the will or wills.” N.J.S.A. 3B:1-4.

Dad promised to leave me the house — Is that promise enforceable?

Oral agreements to make a will are generally not enforceable.

In Matter of Estate of Cosman, 193 N.J. Super. 664 (App. Div. 1984), the court ruled that an oral agreement to make reciprocal wills was not enforceable where the wills were each silent as to the existence of the agreement. The court held the statute was clear on its face and refused to find the existence of an implicit agreement to create unrevocable reciprocal wills.

However, in accordance with traditional contract principles, it may be possible to enforce an oral agreement in a court of equity where there has been part performance. For example, in a situation where testator promises to leave caretaker $50,000 in exchange for services, and where those services are rendered, caretaker would have a claim against testator’s estate. Obviously, the better practice would have been for caretaker to reduce the agreement to writing.

Marriage Separation Agreements

Marriage Separation Agreements (MSAs) commonly include provisions relating to a party’s will and overall estate plan. As part of a divorce, it is common for one party to agree to leave $X to the other at that party’s death if death occurs within a certain timeframe. This agreement is often backed by life insurance or a retirement account naming the ex-spouse as beneficiary. If that party either fails to make a will which includes the required bequest, or if that party fails to maintain the life insurance or IRA, the aggrieved party can bring a claim against the estate for breach of contract.

Enforcement

If the testator breaches the contract and fails to include you as a beneficiary, you can bring a claim against the testator’s estate and either seek damages or specific performance. Generally, you would not be able to invalidate the testator’s will, but you could seek a judgment from the court entitling you to what is owed. Timing is crucial and if you wait too long to bring a claim, that claim may be lost.

What Happens When an Estate has Insufficient Cash to Pay the Gifts the Decedent Wanted to Make?

Under New Jersey law, a testamentary gift of specific property will lapse (i.e. adeem) when that specific property is no longer available, and where the testator intended the gift to be specific in nature.

On March 10, 2021, the Superior Court of New Jersey, Appellate Division (Docket No. A-3455-19) held that gifts of cash directed to be paid from named bank accounts were “specific gifts” and subject to ademption when the funds in those accounts were used to pay for the Decedent’s care prior to his death. In the Matter of the Estate of Hoffman, Docket No. A-3455-19 (Unpublished Opinion, Decided March 10, 2021).

“There are three types of testamentary gifts: general, specific, and demonstrative. Busch v. Plews, 19 N.J. Super. 195, 204 (Ch. Div. 1952), aff’d 21 N.J. Super. 588 (App. Div. 1952), aff’d 12 N.J. 352 (1953). A general legacy is “a bequest of personal property payable out of the general assets of the testator’s estate rather than from specific property included therein.” Plews, 12 N.J. at 356 (citing In re Low, 103 N.J. Eq. 435, 437 (Prerog. Ct. 1928)).”

“A specific legacy is “a bequest of personal property in specie and not payable from other assets of the estate.” Ibid. (citing Camden Trust Co. v. Cramer, 136 N.J. Eq. 261, 270 (E. & A. 1945)). A demonstrative legacy is a “bequest payable primarily out of specified property but chargeable against other assets of the estate if that property is insufficient . . . .” Ibid. (citing Cramer, 136 N.J. Eq. at 270).”

“In deciding whether a legacy is specific or general, the intention of the testator must control, as it must [control] the decision of every other question involving the construction of wills.” Zorner v. Foth, 124 N.J. Eq. 508, 509 (Ch. Div. 1938). “There is no technical arbitrary rule requiring the use of particular words or expressions to make a bequest specific.” Ibid. “The words of exclusion must” furnish “an almost infallible test of the meaning of the testator.” Ibid.”

On the facts presented, while the Decedent may have wanted certain bank accounts to pass to certain beneficiaries when he drafted his will, by spending that money on his own care later on clearly indicated that the gifts were specific in nature and subject to ademption. The court found the funds were exhausted and there was no evidence of undue influence or other wrongdoing.