A no-contest or in terrorem clause in a will or a trust typically makes the gifts in the instrument conditional on the beneficiary not challenging or disputing the validity of the instrument. The term in terrorem, as applied to wills, refers to a gift given on the condition that the beneficiary will not dispute the validity or disposition of the will.

In terrorem clauses are designed to dissuade beneficiaries from filing vexatious litigation that might thwart the intent of the testator (person who made the will) or the grantor or settlor (person who created the trust).

In terrorem clauses allow the intent of the testator to be given full effect and avoid vexatious litigation—often among members of the same family. If the intention of a suit is to thwart the settlor's intention, the in terrorem clause should be enforced. Laws vary from state to state but a violation of the in terrorem clause will usually be found only when the acts of the parties clearly fall within its express terms. Thus, many courts narrowly construe in terrorem clauses to avoid forfeiture, while also fulfilling the settlor's intent.

And some courts have held that filing suit to determine a testator's intent, or to ascertain a beneficiary's interest under a will, is not a suit intended to dispute the validity of the will. A suit brought in good faith and upon probable cause, to ascertain the real purpose and intention of the testator and to then enforce such purpose and intention, is not an effort to vary the purpose and intention of the will.

These courts reason that a motion to contest a will is, like any other motion, merely a pleading that is the necessary vehicle by which the movant raises issues for resolution. A motion is not self-proving. If the mere filing of a motion to contest a will is a contest of the will, this would be inconsistent with the legal significance of a motion.

In states whose courts follow this reasoning, unless some further action is taken to thwart the intention of the testator, the mere filing of a contest motion is insufficient to cause a forfeiture under an in terrorem clause.

In Colorado, an in terrorem or no-contest clause in a will or trust is generally enforceable. These clauses are intended to prevent beneficiaries from challenging the validity of the document, thereby upholding the wishes of the testator or grantor. Colorado law recognizes the validity of such clauses to discourage frivolous or vexatious litigation that could undermine the testator's or grantor's intentions. However, Colorado courts may also consider the good faith and probable cause of the beneficiary's actions. If a beneficiary challenges the will or trust with a legitimate concern and in good faith, believing there is a valid reason to question the testator's intent, the challenge may not necessarily trigger the in terrorem clause. This nuanced approach aims to balance the enforcement of the testator's or grantor's intent with the rights of beneficiaries to seek clarification or assert legitimate concerns without the fear of automatic forfeiture of their inheritance.