Petition for Accounting Does Not Trigger In Terrorem Clause

In In re Estate of Burkhalter, 354 Ga. App. 231 (2020), William Burkhalter was executor of the estate of Louise Ray Burkhalter. George Burkhalter and Nancy Ward, beneficiaries of Louise’s estate, filed a petition for declaratory judgment seeking an accounting. William took the position that George and Nancy had violated the Will’s in terrorem clause which, if true, would result in them being disinherited. Specifically, William argued that:

the probate court erred by declaring that (1) the in terrorem clause is invalid as to an attack by an heir or beneficiary on the administration of the estate; (2) the in terrorem clause is invalid as to an attack by an heir or beneficiary on the management or expenditures of the Burkhalter Family Trust; (3) William must provide, within 60 days of the court’s order, a complete accounting of the calculation of the loss sustained as referenced in a certain provision in the will; and (4) the appellees may proceed with a petition for an accounting or for removal of the executor without violating the in terrorem clause.

The Court of Appeals disagreed with William and affirmed the probate court. Specifically, Item IX of the Will provided as follows:

In order to assure there will be no dispute between my children concerning some of the expenditures made out of the Burkhalter Family Trust and other financial transactions with the assets in my estate, I want to declare that I have personally authorized these transactions…. I absolutely do not wish for my children to engage in legal disputes over this estate after my death. Therefore:

Any person whether named as a beneficiary under my Last Will and Testament or becoming an heir of my estate by operation of law or any other means who attacks in any court of law any provision of my Last Will and Testament, or the administration of my estate, or the management or expenditures of the Burkhalter [F]amily [T]rust shall be specifically disinherited from any portion of my estate that would go to them either from provisions in my will or through operation[ ] of law. If this provision becomes operative, I direct that any portion of my estate that is involved be added to the residue and be distributed to the remaining beneficiaries, according to this, my Last Will and Testament.

George and Nancy, following a prior decision holding that you cannot file one Petition for Declaratory Judgment seeking permission to file a second future petitition, amended their Petition, asking the Court to declare that they are permitted to file a “Petition for Enforcement of Last Will and Testament of [Louise] and For an Accounting or, in the alternative, for Removal of Executor without being in violation of the in terrorem clause in IX of the Will. Following a hearing, the Probate Court entered an order on the appellees’ petition and made the following findings: (1) the in terrorem clause in Item IX of testator’s will is valid as to an attack by an heir or beneficiary on any provision in the will; (2) the in terrorem clause is invalid as to an attack on an heir or beneficiary on the administration of the estate, or the management of expenditures of the Burkhalter Family Trust; (3) William, as the executor, must provide—within 60 days of the court’s order—a complete accounting of the calculation of loss sustained as referenced in Item IX of the will and provide same to the court and the appellees; and (4) the appellees may file a petition for an accounting, or in the alternative, removal of the executor without violating the in terrorem clause.

William appealed on various grounds, most of which were dismissed for failing to provide relavent authority supporting his argument. His primary argument was that filing a petition for accounting or for removal of the executor violated the in terrorem clause. The Court of Appeals disagreed.

In Georgia, any person interested as a legatee, heir, or beneficiary of the estate of a decedent, by statute, “may have a declaration of rights or legal relations in respect thereto and a declaratory judgment to determine any question arising in the administration of the estate, including questions of construction of wills and other writings.” And this statute is to be construed “[unstintingly] and administered so as to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations. Thus, under OCGA § 9-4-4(a)(3), “an interested party may seek a declaration concerning the validity of an in terrorem clause.” And an interested party filing such an action is “not itself a violation of the in terrorem clause at issue” because “[t]he search for the true meaning of a will is not an attack upon it.” Furthermore, the Supreme Court of Georgia “sanctions the use of a declaratory judgment action to determine whether a proposed future action by the petitioner would violate an in terrorem clause.” And as we have explained, “[t]ypically these proposed actions involve questions of whether and how an interested party may challenge actions by an executor, trustee or other fiduciary in the face of an in terrorem clause.

In Sinclair v. Sinclair,

the Supreme Court of Georgia expressly held that “an action for accounting and removal of [e]xecutor clearly would not amount to a contest of the will by objecting to its probate; and such proceeding was clearly not an effort to break the will.” The Sinclair Court further explained that the relevant will would not be broken if a beneficiary “succeeds in obtaining an accounting and removal of [e]xecutor. The effect of [her] success would leave the will in full force and effect.” Moreover, our Supreme Court concluded that it “would violate public policy to construe the condition in terrorem so as to require the forfeiture of a beneficiary’s interest for bringing an action for accounting and removal of the executor.” Ultimately, the Court held that “the trial court should have granted summary judgment in favor of [the beneficiary] because the in terrorem clause in [the decedent’s] will does not and cannot require forfeiture of his interest if he files the proposed action for accounting and removal of [e]xecutor.”

Given the binding precedents in Sinclair and Burkhalter I, discussed supra, the probate court did not err in declaring that the appellees could file a future petition for an accounting, or in the alternative, removal of the executor without violating the in terrorem clause in the decedent’s will.