As a general rule, a devise, a bequest, a legacy, or a trust in a will may benefit any person or legal entity. One major limitation is that is that a devise, a bequest, a legacy, or a trust in a will may not benefit a person or legal entity if it does not meet a condition imposed by the testator. Most conditions are routine, such as rewarding a child with more money if he or she attends college. Some conditions are more unusual, and so, special.
In Terrorem Clauses
A will provision may specifically disinherit any person or persons, including those persons who would technically be the natural objects of the testator’s bounty. The only limitation on such disinheritance is that a surviving spouse usually has a right to elect a statutory share of the estate against what, if anything, is left for the surviving spouse in the will. In other words, a surviving spouse can only be disinherited to the extent he or she can elect against the will.
The concepts of condition and disinheritance can be combined. In what is known as an in terrorem clause, a will may make a gift on the condition that the beneficiary of the gift not contest the validity of the will. A Latin phrase, in terrorem means “In fright or terror; by way of threat.” The threat is disinheritance. The idea is that although the beneficiary may feel that he or she is entitled to more of the testator’s estate, he or she will not risk losing what he or she has received by contesting the validity of the will.
An in terrorem clauses is always as effective as it may first appear, because if a court rules that the beneficiary had good cause for contesting the will, the court may also rule that the in terrorem clause is invalid due to public policy.
Powers of Appointment
Instead of putting conditions on a gift in an effort to control who inherits, a testator may give a trusted person the power to transfer particular property of the testator as the trusted person deems appropriate, after the testator’s death. Giving such a power is known as giving a power of appointment. In essence, a power of appointment allows the trust person to put conditions on a gift.
A general power of appointment gives the trusted person the power to transfer to anyone. A special power of appointment gives the trusted person the power to transfer to particular persons or within other limits. Again, a power of appointment given in will is not effective until after the testator’s death.
Nominating an Executor or Executrix
The next step beyond giving a trusted person the power to transfer particular property of the testator is the testator giving a trusted person the power to transfer property to a group (e.g., “my children”) divided as the trusted person deems appropriate. In essence, that is what happens when a testator leaves property in his or her estate to a group and nominates the person he or she wants to take charge of and administer his or her estate. Traditionally, if that trusted person is a man, he is known as an executor, and if that trusted person is a woman, she is known as an executrix. Under his or her power to administer the estate, the executor or executrix decides who gets what within the group.
Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.