In Terrorem Clauses are Strictly Construed

In In Re Estate of Penland, 357 Ga. App. 369 (2020), the probate court found that James Ray and Eloise Hadaway violated an in terrorem clause in their mother’s Will when they failed to make certain specific distributions required under the Will and ruled they were disinherited under the Will. The Court of Appeals found that an in terrorem clause is strictly construed, that they objected in their capacity as executor, not as beneficiary, and therefore did not violate the terms of the clause.

Jewel Penland executed a Will in 2005 and a codicil in 2006. The Will, at Item XI, provided that any beneficiary contesting the Will is idisnherited. Item VI(d) of the Will included an equalization clause allowing the exeutors to take non-probate assets into account equalizing distribitions among Penland’s children.

The parties were unable to agree to the payment of the bequests to Clarence’s children. On April 22, 2008, Hadaway, in her capacity as co-executor, sought an order from the probate court to compel payment of the specific pecuniary bequests set forth in Items III, IV, and V of the will. According to Hadaway, Ray, as co-executor, refused to permit the bequests to be paid. In her motion, Hadaway acknowledged the pending caveat pertaining to the codicil, but she maintained that the codicil would not change any of the specific bequests. She further argued that the equalization provision is inapplicable to the bequests.

In 2018, Ray filed a motion to disinherit Hadaway and Hadaway filed a similar motion to disinherit Ray as a result of their objections to the specific distributions. The probate court granted both motions to disinherit and the appeal followed. Relying on Preuss v. Stokes-Preuss, 275 Ga. 437, 569 S.E.2d 857 (2002), the Court of Appeals reversed, finding Hadaway argued that Ray, as co-executor, refused to permit the bequests to be paid. Ray responded to the motion to compel as “one of the named and qualified Co-Executors” under Penland’s will. “In light of the foregoing, it is clear that Ray was acting in his capacity as co-executor when he challenged the distribution of the specific bequests to Clarence’s children in the manner that he did.” The language of the in terrorem clause at issue in this case (which by its terms applied to beneficiaries, not executors) does not govern actions by executors, at least while acting in their capacities as executors.