Suzanne SAVAGE & another,1 trustees,2 v. Cheryl OLISZCZAK & others.3
Does commencement of a will contest trigger an in terrorem clause contained in a pour-over trust designated as the sole beneficiary under the will? The plaintiffs commenced an action in the Probate and Family Court seeking an answer to that question, and now appeal from a decree answering the question in the negative. We affirm.
Background. The parties are the children of Georgenia M. Hatch, who died on March 14, 2006. Several years before her death, on January 29, 2002, Georgenia4 executed various estate planning documents, including a last will and testament (will) and the Georgenia M. Hatch Living Trust (trust). The will designated the trust as the sole devisee of Georgenia's estate.5 The trust contained a variety of provisions directing the distribution of assets transferred into it. The trust also contained (in Article Fifteen, section 5) the following provision, commonly known as an in terrorem clause:
“If any person, including a beneficiary, other than me, shall in any manner, directly or indirectly, attempt to contest or oppose the validity of this agreement, including any amendments thereto, or commences or prosecutes any legal proceedings to set this agreement aside, then in such event such person shall forfeit his or her share, cease to have any right or interest in the trust property, and shall be deemed to have predeceased me.”
The trust stated an initial funding of ten dollars, made concurrently with its execution. The trust was not otherwise funded during Georgenia's life.
On May 3, 2006, Suzanne Savage and David Hatch, the executors named in Georgenia's will, filed a petition to probate the will. On July 14, 2006, the defendants Cheryl Oliszczak, James Morgan, and Cathie A. DeRochers each filed an affidavit of objections to the allowance of the will, asserting that Georgenia lacked testamentary capacity to execute the will and that the will was the product of duress or undue influence. Eventually, on July 11, 2007, the defendants withdrew their challenge to the will.
In February, 2008, the plaintiffs brought the present action, seeking instruction on whether the challenge by Cheryl, James, and Cathie to the will triggered the in terrorem clause contained in the trust, resulting in a forfeiture by them of any interest they otherwise would hold under the trust. The defendants moved to dismiss the complaint, and the plaintiffs responded with a motion for summary judgment. When the parties appeared for argument on the summary judgment motion, the judge, sua sponte, entered an order appointing a special master to review the motion for summary judgment and to determine whether, in his judgment, Cheryl, James, and Cathie had forfeited their interests in the trust. The special master thereafter prepared and filed a draft report, expressing his conclusion that no forfeiture had occurred, and the judge entered an order on the plaintiffs' motion for summary judgment, adopting the master's conclusions. This appeal followed.6
Discussion. The determination that the defendants' challenge to the will did not trigger the trust's in terrorem clause “is a legal conclusion that we review de novo.” Ritter v. Massachusetts Cas. Ins. Co., 439 Mass. 214, 215, 786 N.E.2d 817 (2003).
“A provision forfeiting the interest of a beneficiary who contests a will is valid.” Old Colony Trust Co. v. Wolfman, 311 Mass. 614, 616, 42 N.E.2d 574 (1942). See Rudd v. Searles, 262 Mass. 490, 499, 160 N.E. 882 (1928). However, the will in the present case contains no such provision. The trust is a separate instrument from the will, with independent legal significance. See Second Bank-State St. Trust Co. v. Pinion, 341 Mass. 366, 369-370, 170 N.E.2d 350 (1960). See also G.L. c. 203, § 3B. The trust was not a testamentary trust created by the will, and the will did not incorporate the terms of the trust by reference. Second Bank-State St. Trust Co. v. Pinion, supra at 367, 170 N.E.2d 350. The defendants' challenge was directed to the will, rather than the trust, and accordingly did not implicate the in terrorem clause by the terms either of the will or the in terrorem clause itself.
The plaintiffs contend nonetheless that the will and trust should be read together as inextricably intertwined elements of Georgenia's estate plan, suggesting that, had the defendants' challenge to the will been successful, it would have defeated the trust as a practical matter, since the trust would have received no assets under the will. To be sure, we generally will review the separate components of a decedent's estate plan as parts of an interrelated whole. See Clymer v. Mayo, 393 Mass. 754, 766, 473 N.E.2d 1084 (1985). However, we are not persuaded that reviewing the instruments together as interrelated components of Georgenia's estate plan supports a conclusion that a challenge to the will operates to trigger the in terrorem clause contained in the trust.7
As a threshold matter, the plaintiffs overstate the interrelationship between the will and the trust. Though it appears that the trust was in fact only nominally funded during Georgenia's life, there is nothing in the terms of either the will or the trust that prevented more significant funding during her life. The trust could have been funded by any number of sources wholly independently of the will. For example, the trust could have been designated as the beneficiary under a life insurance policy. Article Three of the trust explicitly expresses Georgenia's “intent that, from time to time and when necessary, specific items of property will be individually transferred and titled either directly in the name of my trust or in a nominee for the benefit of my trust.” Similarly, Article Five describes the trustees' duties regarding various types of property (in addition to insurance policies) that might be held by the trust during Georgenia's life, including retirement plans and annuity contracts.
We also note that the purpose of an in terrorem clause is to deter challenges to a will. See Rudd v. Searles, 262 Mass. at 500-501, 160 N.E. 882. See also Bogert, Trusts and Trustees § 181 (rev.2d. ed.2007). In the present case, the defendants filed their challenge to the will in response to the filing of the will for probate; the trust was not required to be submitted with the will, and was in fact not so filed. As the defendants observe, there can be no deterrent value to a clause contained in an instrument that is not made public incident to the proceeding in which the challenge arises (and thus not thereby disclosed to all beneficiaries); indeed it would be draconian to invoke a forfeiture clause against beneficiaries who challenge a will that does not contain an in terrorem clause, based on the inclusion of such a provision in a separate but undisclosed instrument.8 We likewise observe that, “because equity does not favor forfeitures, [in terrorem] clauses have been construed narrowly.” Bogert, Trusts and Trustees, supra. Cf. Trustees of Dartmouth College v. Quincy, 357 Mass. 521, 531, 258 N.E.2d 745 (1970).
The plaintiffs separately raise various procedural challenges to the judgment, based on their claim that the special master failed to follow the requirements of Mass.R.Civ.P. 53. In particular, the plaintiffs cite the master's failure to conduct a hearing, as contemplated by Mass.R.Civ.P. 53(f), and the motion judge's failure to entertain objections to the master's report, as contemplated by Mass.R.Civ.P. 53(h)(2). We discern no cause to disturb the judgment based on the cited irregularities, which all concern procedures regulating the activities of a special master in making findings of fact; in the present case the order of reference framed no questions of fact and instead requested guidance solely on a pure question of law framed in a motion for summary judgment.9 Based on our de novo review of the undisputed facts, the summary judgment entered by the motion judge correctly resolved the legal question presented by this case.