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Burden of Proof in Will and Trust Forfeiture Cases

Under former law, a provision in a will or trust that would cause a forfeiture of or void a devise or provision in favor of a person for bringing a court action, including a will or trust contest, was “unenforceable if” just cause existed for bringing the action and the action was brought and maintained in good faith.  (Tex. Prob. Code Sec. 64; Tex. Trust Code Sec. 112.038).  It seemed clear from the Texas Pattern Jury Charges and general practice that, under former law, the party wishing to avoid application of a forfeiture provision had the burden of proof on the just cause and good faith issues.  See, for example, PJC 235.8B (2012).  However, the proponents of HB 2380 used the burden of proof issue, among others, to advocate for changes to the current statute.  As changed, the statutes now read that a forfeiture provision “is enforceable unless in a court action determining whether the forfeiture clause should be enforced, the person who brought the action contrary to the forfeiture clause establishes [just cause and good faith] by a preponderance of the evidence.”  Tex. Est. Code Sec. 254.005; Tex. Trust Code Sec. 112.038).

Whether or not it was necessary, this clearly places the burden of proof on the just cause/good faith issues on the party seeking to avoid enforcement of the forfeiture provision.  It also means that the party seeking to avoid enforcement probably needs to plead just cause and good faith in the underlying lawsuit to assure that these issues are submitted to the jury in the underlying action.  Otherwise, a second trial on the forfeiture issue alone may be necessary.  It may seem odd that a party contesting an instrument would affirmatively seek a determination that the party’s action does not result in forfeiture, but failure to do so could cause a huge waste of time and energy if a separate later trial was necessary on the forfeiture issue alone.

Just cause and good faith are not the only reason courts have refused to enforce forfeiture provisions.  A recent Texas opinion found 12 types of lawsuits where Texas courts have concluded that an in terrorem clause did not trigger forfeiture:  (1) to recover an interest in devised property; (2) to compel an executor to perform duties; (3) to ascertain a beneficiary's interest under a will; (4) to compel the probate of a will; (5) to recover damages for conversion of estate assets; (6) to construe a will's provisions; (7) to request an estate accounting or distribution; (8) to contest a deed conveying a beneficiary's interest; (9) to determine the effect of a settlement; (10) to challenge an executor appointment; (11) to seek redress from executors who breach fiduciary duties; and (12) presenting testimony in a will contest brought by other beneficiaries. DiPortanova v. Monroe, 2012 WL 5986448 (Tex. App. – Houston [1st Dist.] 2012).  For a while it appeared that, by changing “unenforceable if” to “enforceable unless,” HB 2380 unintentionally might have thrown out these other reasons for finding that a forfeiture provision did not result in forfeiture.  This flaw was discovered too late in the legislative process for an amendment to HB 2380, so the following was read into the Senate Journal when HB 2380 passed:

House Bill 2380 seeks to clear up the law on forfeiture clauses, which are frequently used provisions in wills and trusts. Legislation that passed in 2009 sought to clear up the inconsistent application of forfeiture clauses by recognizing that a forfeiture clause is invalid if the challenge to a will or trust is brought in good faith and with probable cause. However, questions remain in which party has this burden of proof. House Bill 2380 continues to recognize the good faith and just cause exceptions to the enforcement of forfeiture clauses but clarifies that the burden of proof is on the party seeking to avoid enforcement of the forfeiture clause. House Bill 2380 is not intended to and does not repeal Texas law, recognizing that forfeiture clauses generally will not be construed to prevent a beneficiary from seeking to compel a fiduciary to perform his duties, to seek redress against a fiduciary for breaches of his duties, or to seek a judicial construction of a will or trust.

Senate Journal, 83rd Legislature – Regular Session, 61st day (5/17/13), pp. 1962-1963 (emphasis added).  With this legislative history, HB 2380 should be construed to have no effect on the other bases for finding that an in terrorem provision does not result in forfeiture.