In Terrorem Clauses in Wills: A Practical Guide for Hong Kong

You are named as a beneficiary in a will. But there is a catch. The will says that if you challenge its validity, you will lose everything. You are left with a difficult choice: accept what you have been given, or risk losing it all by questioning the will.

This is an in terrorem clause — a provision designed to discourage a beneficiary from taking legal action against a will. The term comes from Latin, meaning "into fear" or "by way of threat". These clauses are also known as "no-contest" clauses or forfeiture clauses.

What is an in terrorem clause?

An in terrorem clause is a legal mechanism that imposes a penalty — usually the forfeiture of a gift — on a beneficiary who challenges a will or trust. The purpose is to discourage litigation and ensure that the wishes of the person who made the will (the testator) are carried out without the threat of legal disputes.

In the context of wills, the clause typically provides that if a beneficiary contests the will or takes steps to challenge it, their interest is forfeited and passes to other non-contesting beneficiaries or to the residuary estate.

How Hong Kong courts approach in terrorem clauses

Under common law, courts will interpret the will to ascertain the testator's intention from the language used. In relation to in terrorem clauses, the court will determine, on a strict construction of the clause, whether it is valid and whether the beneficiary's conduct falls within its scope. A challenge to a will may proceed notwithstanding an in terrorem clause if, on a proper construction of the clause, the beneficiary's conduct does not fall within its scope, or if enforcement of the clause would be contrary to established probate principles or public policy.

Key considerations for drafting in terrorem clauses in Hong Kong

For an in terrorem clause to be effective, it must be carefully drafted. Here are the key factors to keep in mind.

Certainty is paramount. The clause needs to clarify what counts as a challenge. Vague or doubtful wording may render the clause unenforceable. For example, the clause should specify whether a challenge includes questioning the validity of the will, taking legal action against the estate, or simply expressing disagreement. Clarity is essential to ensure that beneficiaries understand the consequences of their actions.

The clause must also avoid issues of repugnancy, ouster, and public policy. A no-contest clause may be void if it is repugnant — that is, inconsistent with the terms of any gift to a beneficiary. It may also be void if it ousts the jurisdiction of the court, meaning it attempts to prevent the court from hearing a dispute. Additionally, a clause that is contrary to public policy — for example, one that attempts to oust a beneficiary's statutory benefits, such as what is entitled under the Inheritance (Provision for Family and Dependants) Ordinance (Cap. 481) — may be unenforceable.

A well-drafted no-contest clause should also provide for a gift over. This means indicating what happens to the forfeited interest. Usually, the forfeited interest passes to other non-contesting beneficiaries or to the residuary estate. In the absence of one, the clause may not operate as anticipated.

The case of Wu Wai Sun v Wu Siu Ling Linda

The case of Wu Wai Sun v Wu Siu Ling Linda & Ors [2024] HKCFI 2382 involved a family dispute over the estate of a deceased father. The father had executed three wills, with the last one dated 10 October 2014. That will contained, among other things, a no-contest clause.

The clause provided that if any of the five children beneficiaries commenced litigation over any arrangements made by the father during his lifetime or after his death, and eventually failed in that litigation, they would not be entitled to any part of his estate.

What the courts have decided

The Court in Wu Wai Sun v Wu Siu Ling Linda & Ors held that the plaintiff's commencement of proceedings did not breach the no-contest clause. Even though the clause used the words "法律诉讼" (legal action), the court found that an administration action seeking a determination of issues for the proper administration of the estate should not generally be treated as a challenge that would trigger forfeiture. The plaintiff was merely asking the court to interpret the will and provide guidance on how the estate should be administered.

What this means in practice

Taken together, these cases confirm that a no-contest clause is not an absolute barrier to legal action. If you have a genuine concern about how an estate is being administered, you should not assume that the clause will prevent you from seeking the court's guidance. The courts recognise that beneficiaries may need clarity before they act and seeking an advance declaration on whether a claim falls within the clause can be a sensible and justifiable step. The key point is that a legitimate claim — particularly one seeking proper administration of the estate — may not trigger forfeiture, even if the will contains a no-contest clause.

Practical considerations for testators

If you are considering including an in terrorem clause in your will, you should be clear and specific about what actions will trigger the forfeiture. You should include a gift over provision specifying what happens to the forfeited interest. You should also avoid provisions that could be seen as ousting the court's jurisdiction or being contrary to public policy. Most importantly, you should seek professional legal advice to ensure the clause is properly drafted and enforceable.

If you are a beneficiary facing a no-contest clause, you should seek legal advice before taking any steps that might trigger forfeiture. This is particularly important if you are considering challenging the will or taking legal action in relation to the estate.

Our qualified lawyers at Jal N. Karbhari have extensive experience in wills, probate, and estate planning. We understand the complexities of drafting effective testamentary instruments and the importance of protecting your wishes. Our team is on standby to assist you with drafting and reviewing wills, including in terrorem clauses, estate planning and succession advice, probate and estate administration, and will disputes and contested probate matters.

If you are considering including a no-contest clause in your will, or if you are a beneficiary facing such a clause, do not hesitate to seek professional legal advice.

Need help with drafting a will?

Jal N. Karbhari, Solicitors & Notary — we'll connect you with the right specialist.

Email: inquiries@karbharilaw.com
Phone: +(852) 2367 7577 | Fax: +(852) 2367 7897

#JalNKarbhari #EthnicMinorityLawFirm #HongKongLaw #WillsAndProbate #EstatePlanning