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 Michigan, 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 testator's or settlor's intentions and reducing the likelihood of costly and time-consuming litigation. Michigan law, specifically MCL 700.2518, provides that a provision in a will that would penalize an interested person for contesting the will or instituting other proceedings relating to the estate is enforceable unless the interested person establishes probable cause for instituting proceedings. This means that in Michigan, if a beneficiary challenges the will or trust in court without probable cause, they risk losing their inheritance or benefits under the document as specified by the in terrorem clause. However, if the challenge is made in good faith and with probable cause, meaning there is a legitimate and reasonable basis for the challenge, the clause may not be enforced, and the beneficiary may not be penalized. It is important for beneficiaries to consider the risks of challenging a will or trust that contains an in terrorem clause and to seek the advice of an attorney before taking any action that could be construed as a contest.