Terrorized by a clause: The Texas no-contest clause should lead to caution

Who should be afraid of an in terrorem clause? You, that’s who.
An in terrorem clause is a no-contest, or forfeiture, clause often found in wills. Although the text may vary, the typical wording provides that a beneficiary who challenges or disputes the validity of the will is disinherited.
A quick example: Mom signs a will that leaves you her house and car, and your brother the remainder of her estate. The will contains an in terrorem clause. You think your brother is going to end up getting more than you, so you challenge Mom’s capacity to execute the will. You lose your challenge.
Your reward? You end up forfeiting both the house and car. Your brother takes all.
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In terrorem clauses, in the words of the Amarillo Court of Appeals, “allow the intent of the testatrix to be given full effect and seek to avoid vexatious litigation among family members.” Your mom clearly did not want the family members fighting each other over their inheritance. Including the clause in her will was her way of discouraging family discord. She was essentially urging you to take what you get gracefully. That’s your mom, still parenting from the grave.
You should have listened. While courts narrowly construe in terrorem clauses to avoid forfeiture, that doesn’t mean they ignore them.
A lawsuit challenging testamentary capacity of the testatrix is one type of contest that results in forfeiture.
So is challenging your mom’s choice of executor. Suppose she named your brother as her executor. You want more control, so you challenge your brother serving as executor. You lose your challenge.
Cue the in terrorem clause. Your attempt to set aside the part of her will naming an executor was a contest of her will. You just forfeited the house and car, again.
In terrorem clauses are enforceable unless the contestant shows that just cause existed for bringing the action, and the action was brought and maintained in good faith. That provision can be found in a statute in the Texas Estates Code.
Nothing is simple, however. The terms “just cause” and “good faith” are not defined in the statute. So we turn to case law, which is found in the opinions of the appellate courts.
Returning to the Amarillo Court of Appeals, we find that in a 2023 opinion the Amarillo court defined “good faith” as an action prompted by honesty of intention or a reasonable belief that the action was probably correct.
The court defined “just cause” as bringing actions that are based on reasonable grounds, with a fair and honest reason for the contestant’s actions.
The trial court decides on a case-by-case basis whether a contest was brought in good faith and with just cause. That is a fact question. If the trial court does not decide that question, then the appellate courts have no jurisdiction to do so.
Here is how it works mechanically: You file your contest of your mom’s will alleging she had no capacity when she executed the will, and further stating that you had just cause to bring the contest and did so in good faith. Your brother files an answer denying your contest, and further alleging that you violated the in terrorem clause. The court rules against you, and then you must prove the good faith and just cause elements just to avoid forfeiture.
The in terrorem clause is meant to terrify you into reasonableness. It does a pretty good job.
Attorney Virginia Hammerle is board certified in civil trial law by the Texas Board of Legal Specialization and an accredited estate planner. To receive her monthly newsletter, contact her at [email protected] or visit hammerle.com. This column does not constitute legal advice.