Preventing squabbles over a will with no-contest clause
By Jay MacDonald • Bankrate.com

When Frank Sinatra drafted his will, he made sure that his heirs would accept their inheritance his way. Before Jerry Garcia died, the Grateful Dead guitarist took steps to promote peace among his survivors once his truckin' days were over.

How? Both entertainers included "in terrorem" provisions in their wills.

The in terrorem provision, known less formally as a "no-contest" clause, is a paragraph or more of legal boilerplate aimed, as its Latin name implies, to scare off legal challenges by heirs who don't feel they've been given their fair shares of the enchilada.

In essence, the provision states that if you contest this will or trust, you forfeit your inheritance. In fact, to continue with the spooky theme, typical language instructs the court to consider contentious heirs as having died childless before the deceased.

If a challenge is successful, however, the entire will, including the in terrorem clause, would be revoked and the estate would be divided according to the state's rules of "intestacy" (as if a will had never been made) or according to a prior valid will.

Think of it as a "deal or no deal" proposition from beyond the crypt: Do you want to accept the inheritance you've been given, or go for more and risk losing it all?

"Where you stand to gain is if you don't get as much under the will as you would if there were no will," says Mary Randolph, author of "The Executor's Guide."

"So the only people who are going to sue are people who stand to inherit if there is no will," she says. "Often it's the closest surviving relative. If someone dies without a spouse or surviving children, it could be a niece or nephew who is next in line."

Gerry Beyer, professor of law at Texas Tech University School of Law, says it takes equal parts psychology, mathematics and measured generosity to use an in terrorem provision effectively.

"You've got to give the person you're trying to 'disinherit' a nice chunk; you've got to give them enough so that they'll be too afraid to risk losing it," he says. "You can't leave them $100 if they could get $5,000 or $50,000 in intestacy. You've got to scare them or it won't work."

Let's step into the laboratory and see how a skilled estate planner might instill terror in the hearts of unworthy heirs, shall we?

Heir maneuvers
State probate courts have taken an inconsistent approach to in terrorem provisions in wills. Beyer says that a few states (notably Florida) do not recognize the clause at all. While most states do honor and enforce in terrorem provisions, they do so with varying degrees of rigidity based on case law and/or state statutes. Some states, for instance, will allow an unsuccessful legal challenge without disinheriting the plaintiff if the suit was brought in good faith and with probable cause.