October 31, 2022


It is the scariest clause around; more frightening to beneficiaries than a killer Santa “clause”.

Also called a no-contest clause, an in terrorem clause translates literally to “in fear” in Latin. In the estate planning context, it is a clause which forces or prohibits beneficiaries from doing something, using the fear of a loss of inheritance as a threat.

Most commonly, it is used by testators to prevent a will challenge by beneficiaries or to put a partial restraint on marriage of a beneficiary (e.g., restraining a surviving spouse from marrying a specific person, not prohibiting them from marriage absolutely).

What is an In Terrorem Clause?

A valid in terrorem clause has two criteria.

First, the asset referred to within this clause must be of personal property, or a mix of personal and real property. It cannot refer to real property alone.

Secondly, the threat must be made “idle” by the imposition of a gift-over. This means that the clause must name an alternate beneficiary in case the beneficiary at first instance breaches the clause. A clause which only provides for the forfeiture of the gift is a provision of “bare forfeiture” and makes the clause void.

Where such a clause is defectively drafted, i.e., where it breaches any of the two criteria above, the clause is void and inactive.

However, even where the in terrorem clause is valid in form, it can still be rejected in at least six circumstances:

  1. on the basis of public policy. A recent example of this is found in Budai v. Milton, 2014 ONSC 5530 (ON SC), where a condition that causes a beneficiary to forfeit their gift if they were ever investigated for inappropriate care of testator, was struck down. The court held that this type of clause encouraged false accusations and should be prohibited;
  2. if it attempts to oust a statutory benefit such as maintenance and support under dependant’s relief legislation;
  3. under the court’s inherent jurisdiction;
  4. where it absolutely prohibits freedom of marriage (a legal right);
  5. on the basis of impossibility of performance;
  6. on the basis of uncertainty of condition.


An Idle Threat

One reason why the common law contains so many ways to override even a valid in terrorem clause may have to do with the nature of the type of clause itself.

Despite its name, an in terrorem clause should not be an actual threat. Canadian common law does not encourage threats and fear as a basis in developing or enforcing legal principles. To the extent that these clauses can be seen as a threat, many ways of overriding them are provided so that they cannot be used as an actual threat.

This is also the justification for why a gift-over or alternate beneficiary is required. By incorporating a gift-over, this type of condition becomes yet another way to distribute assets. Instead of a threat, it can be logically expressed as, gift X goes to A, unless condition 1 occurs, in which case gift X goes to B.

However, despite our courts’ disapproval of threats, it may be argued that a gift-over does not actually make a threat idle. A sophisticated beneficiary may find a well drafted in terrorem condition even more terrifying than an invalid one without a gift-over, due to its greater likelihood to stand up in court in case of litigation. If a public policy goal of Canadian common law is to not allow the clause to be used as an instrument of terror, then it may be argued that this type of clause should not exist.

However, testamentary freedom belongs to the testator. It is a testator’s right to decide which beneficiaries to leave assets to. An in terrorem clause is one of the few ways available to a testator to ensure their wishes are respected.

The Take-away

On the one hand, when used effectively, an in terrorem clause can be an effective tool to implement testamentary freedom. On the other hand, our courts retain a residual jurisdiction to oversee testators and ensure that their actions are not immoral or unethical. For example, in the case of Re Estate of Charles Millar, our Supreme Court found that a testator’s provisions which gave a house to three friends who hated each other, and which left a trust to the mother who gave birth to the most children within 10 years, were unethical and encouraged unnecessary conflict and births.

Due to the unique function of in terrorem clauses in helping ensure testamentary freedom is respect, they continue to be used. However, courts continue to keep a careful eye on situations where such a clause may be found to be unethical or against the public interest.

For drafting solicitors looking to take advantage of this unique clause, ensure your “margin-of-terror” is low by always including a gift over.

de VRIES LITIGATION LLP witches you a spooky Halloween.