The following article was written by Callagy Law’s Legal Team, and will focus on many common questions and concerns surrounding new developments, legal matters, the court system, and other procedures within business and commercial litigation. Our mission is to answer any questions and give knowledge to many different aspects of these matters.
“No-Contest” clauses in wills are, in an ideal world, used by testators with the thought that they will limit post death litigation between the beneficiaries in their wills. These clauses, also called “in terrorem” clauses, provide that if one party or beneficiary in a will “contests” or challenges the will in some way that party will lose their inheritance. While some states do not enforce these clauses, New Jersey still does.
Occasionally, a situation will arise where the intentions of the testator are not clear, and one or more of the parties and beneficiaries will disagree as to how the will should be interpreted. For instance, a will may provide that all of the costs associated with funeral expenses be paid out of the estate before any distribution is made to the beneficiaries. The beneficiaries end up in a situation where one party claims that certain expenses are “funeral costs” under the will, and the other party disagrees. The will has a no –contest clause, which provides that if a party contests any part of the will in court, that party will lose their inheritance. Are both parties now stuck, unable to get the Court’s direction and help in interpreting this provision and risk losing their inheritance? The answer is no.
Obviously, one answer would be for the parties to work it out between themselves, but sometimes it is not possible to come to an agreement. Under New Jersey law, if a term in the will is unclear, a beneficiary who asked court to construe provisions of will which they and trustees interpreted differently does not forfeit their rights to benefit under a no contest clause. Morrison v. Reed, 6 N.J. Super. 598, 604 (Ch. Div. 1950). Fortunately for beneficiaries in New Jersey, no – contest clauses are to be construed strictly against a forfeiture and reasonably in favor of a beneficiary. Girard Trust Co. v. Schmitz, 129 N.J.Eq. 444, 20 A.2d 21 (1941). That beneficiary is not filing a caveat or otherwise challenging the will itself, but merely, as New Jersey Court have held, asking for guidance and interpretation while attempting to get what that beneficiary believes the testator, by their will, intended for them.
However, each Will is unique, and each “no-contest” clause must be carefully reviewed before any litigation is filed to insure that it does not otherwise run afoul of other potential pitfalls contained in the language of the will. Any beneficiary who is seeking to have the Court interpret a provision should have an attorney review the will prior to instituting any action.
See our blog post on CONTESTING A WILL IN NEW JERSEY.
We hope you found the information provided in this article helpful to your everyday life and business. Please free to reach out to Sean Callagy or the Callagy Law team at any time for questions you may have concerning personal and business matters. Callagy Law’s headquarters is located conveniently in Paramus, NJ. Beyond the scope of information, Sean Callagy has developed multiple areas of business legal practice and business coaching, if you need help with anything, please reach out to us by calling 201-261-1700 or by emailing us here. Feel free to connect with us on Facebook, Twitter or LinkedIn! Additionally you can subscribe to our daily videos on YouTube by clicking here.
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When Do Questions become Contests: Navigating Non – Contestation Clauses in Wills and other Testamentary Documents
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