In this episode of Wills of the Rich and Famous, Attorney Thomas B. Burton looks at the Last Will and Testament of Bing Crosby which included an "In Terrorem" clause otherwise known as a "no contest clause" designed to dissuade beneficiaries from challenging his Will.
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Welcome back to Wills of the Rich and Famous!
I'm your host Attorney Thomas Burton and today we're going to be looking at another example of an estate plan from a Celebrity and we're using these examples here on the channel to discuss their estate plan and provide educational takeaways that you can use when doing your own estate planning.
So again, the book is Wills of the Rich and Famous that I found on amazon and today we're going to talk about Bing Crosby.
Many people remember Bing Crosby as the famous singer but I'm going to read you a few excerpts from the piece about Bing and then we're going to talk about an 'In Terrorem Clause' being included in his will.
So Bing Crosby, they say had a melodious singing voice in easy-going manner that made him one of America's most beloved entertainers for over five decades. He was named Harry Lillis Crosby at his birth in Tacoma, Washington. Married a couple of times and then in June 1977, he formed a will which describes his family as follows, I am married to Kathryn Grant Crosby who in this will is referred to my wife. I have the following children and it goes on to list seven children. In the will, he made several cash requests and three charities in Spokane, Washington where Crosby had studied law at Gonzaga University before dropping out to pursue his interest in music.
Interesting! I didn't know he studied law but I would say based on his career success, he made a good decision to pursue music. So he made some cash gifts to his wife, $150,000, Kathryn Grant Crosby, my niece Carolyn Miller, $15,000. and then to St. Aloysius Church, $5,000, Spokane, Washington, Gonzaga University $50,000, Gonzaga High School, $50,000. In addition, he gave all of his personal property to his wife, if she survived. If she did not survive him to his residuary estate and again, the residuary estate is what we refer to as the part of your estate, whatever is left over is included in the residual. According to his will, Crosby's residuary estate is given to the Harry L Crosby Trust which he established on the same day he signed his will and again, Harry is Bing Crosby's birth name - Harry Lillis Crosby and this is very smart, he set up a trust plan to, for private administration of his estate because one thing you often see with celebrities, as soon as they die, the newspaper will run down to the courthouse and get a copy of the will and immediately publish the content. So if you're planning to leave your assets through a will, be aware it becomes immediately public following your death and if you're a well-known individual like in this book, the rich and famous, it's almost guaranteed the newspapers are going to get a copy that will and publish it and it will provide endless tabloid fodder after a celebrity's death. That's why, many of the celebrities use a trust to keep all that information private after death including how much they were actually worth and things like that because creditors also come out of the woodwork as soon as that will with, if they used a will, those large amounts are published.
So he left the residuary estate to the harry L. Crosby Trust which he established on the same day he signed his will which is very common, when I'm doing a revocable trust plan, we will establish the trust and sign a 'Pour Over Will' which is what it sounds like he had here, on the same date. The provisions of that trust are private but the author of this book says, "but it is very telling that the publicly easy going Bing included a very comprehensive In Terrorem Clause in his will that refers to Crosby's children as follows:
Provision against contest - Except as otherwise provided in this will, in the trust referred to in clause 8, I have intentionally and with full knowledge, omitted to provide for my heirs and I have specifically failed to provide for any child of mine whether mentioned in this will, in said trust or otherwise. Finally, so that's what I wanted to bring out of Bing's will today, is this concept of an In Terrorem Clause, you may have heard that term, you may have not. It's Latin and it means 'fear' in Latin and you can use them in different things, you can use In Terrorem in a demand letter and it's basically a threat of legal action but this is the way Law.com defines it, I've thought sort of a user-friendly definition: In Terrorem from Latin for in fear, a provision in a will which threatens that if anyone challenges the legality of the will or any part of it, then that person will be cut off or given only a dollar, instead of getting the full gift provided in the will. The clause is intended to discourage beneficiaries from causing a legal ruckus after the will writer, the person who made the will is gone.
However, if the will is challenged and found to be invalid due to lack of mental capacity, undue influence or failure to have it properly executed, then such a clause also fails. So a prospective challenger of a will takes his or her chances. The courts have ruled that merely putting in a claim for money's due from the estate, is not a legal challenge to the will itself and is permissible without losing the get.
So the In Terrorem Clause is designed to discourage someone from disrupting your carefully laid out legal wishes and I have included them in estate plans, I draft wills and trust and if the person I'm working with wants it, I think it's a good idea. Now as this points out, it works with Bing, let's say with his children, what it is designed to do would be discourage them from feuding let's say, with the other children. I don't know what his trust said because it was private but let's assume he left equally among the children. Well if there were seven children or partial to the wife and the children but let's say, the children were going to get 10% each. I'm not sure but if they challenge the will, they could get nothing at all. So they have something to lose, the In Terrorem Clause, if they challenge the will, they could potentially lose their entire inheritance which I'm guessing and I know Bing Crosby did very well, so it was likely millions of dollars.
So the goal of an in terrorem clause is to say that if anyone challenges my will, they will receive nothing or like law.com said, maybe one dollar instead of the full share which depending on the size of your estate, is likely a lot more than that amount.
So that's how you can use an in terrorem clause in your will or your trust to say, these are my wishes that I've laid out. I want my heirs and my personal representative to follow those wishes and if anyone seeks to cause a problem by suing in a court of law, this is what can happen. So for that reason, they are popularly used in wills and trusts and it is a good way, psychologically, to make a possibly disgruntled heir beneficiary think twice before they would rush to the courthouse to challenge your will or trust and again, from this example, we learned that Bing used a trust and essentially this book is just discussing what we know from his will which was likely a short will with a few of those gifts we discussed and laying out the children and then the bulk of the estate passed non-probate, through the trust at Bing Crosby's death.
So thanks for tuning in for this episode of 'Wills of the Rich and Famous' and we'll see you next time when the next episode is released on the channel!
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