Nassau County Surrogate Edward W. McCarty III has ruled in the Matter of The Estate of Walsh (2013 NY Slip Op 51060(U)) that an in terrorem clause in the decedent’s Will was not violated when a beneficiary of the estate opposed the executor’s turnover petition seeking to recover the proceeds of a joint account which was in the name of her sister and the decedent and which the executor claimed was merely an account of convenience for the decedent. Upon her sister, Joan Tipping responding to claim the proceeds of the account as her own, the executor, Patricia Walsh attempted to invoke the Will’s in terrorem clause which provided that a legacy would be forfeited if the beneficiary filed a claim against the estate later determined to be invalid.
The Surrogate ruled that the claim was in fact a valid one and that Ms. Tipping was entitled to the proceeds of the bank account in addition to any amount passing to her by the Will. The court went on to explain that although in terrorem clauses are enforceable in New York, they must be strictly construed in order to be enforced. Surrogate McCarty points out that an New York public policy rejects the concept of forfeitures and that in order to determine if such a clause is valid, it is necessary to examine both the construction of the Will as well as the triggering conduct of the beneficiary alleged to have violated the clause. The purpose of an in terrorem clause is to provide for the smooth settlement of the estate without "fractious haggling and litigation and without wasting the estate assets"
A word of caution is that although the in terrorem clause is out of favor in many states, New York will absolutely enforce one under proper conditions. It is necessary to proceed with care and with the advice of competent and knowledgeable counsel in the event that you are confronted with one .