Sim v Pimlott: can a no-contest clause protect your testamentary freedom?

Testamentary freedom is the keystone of succession law in England and Wales. Unlike many civil law jurisdictions where the law dictates the passage of the testator’s assets through forced heirship rules, in England and Wales the testator is free to choose to whom their estate should be distributed.

However, the rising number of Will challenges in recent years has called the inviolability of testamentary freedom into question. There has been a marked increase in the number of claims brought under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act) by disappointed beneficiaries who feel that the deceased’s Will does not leave them reasonable financial provision. Broadly, the 1975 Act provides for reasonable provision to be made from an estate for those who were financially dependent on the deceased during their lifetime.

Against this backdrop, it is unsurprising that testators are increasingly looking to No-Contest clauses as a means of protecting their estates against unwanted challenges after they have gone. The recent case of Sim v Pimlott confirmed the effectiveness of these clauses and could signal a more robust defence for testamentary freedom against claims beyond the grave.

Are No-Contest clauses effective?

A No-Contest clause is a provision included in a Will that means a beneficiary will lose their entitlement if they decide to challenge the Will. They act as a deterrent to claims against the estate, including under the 1975 Act, by threatening to reduce or remove the stated inheritance of anyone who challenges the Will.

In Sim v Pimlott, a No-Contest clause was included in Dr Sim’s Will, stipulating that his wife Valerie would receive (i) £250,000 if she executed a deed releasing all the rights she may have a claim to under the 1975 Act, and (ii) a further £125,000 if she released her interest in their jointly-owned Dubai property. Dr Sim and Valerie’s relationship was fraught with difficulties. Valerie had made numerous criminal allegations against him and divorce proceedings were underway when Dr Sim died. The No-Contest clause had therefore likely been included to discourage Valerie from challenging the Will.

Nonetheless, Valerie brought a claim under the 1975 Act on the basis that the Will failed to make adequate provision for her. In doing so, she breached the No-Contest clause and forfeited her entitlement to the £375,000.

The court held that the No-Contest clause was effective. More broadly, it confirmed that where a Will is objectively reasonable, then it is also reasonable to include a No-Contest clause. Where provision is reasonable and a claim is brought that ultimately results in the claimant losing their entitlement, they cannot subsequently assert that the Will does not make reasonable provision for them as a result of such a clause being enforced.

Although the court found that Dr Sim’s Will was objectively reasonable in most aspects, it failed to make reasonable provision in respect of Valerie’s housing needs. Accordingly, the court varied the Will to require the purchase of a property for her rent-free occupation.

However, by bringing the claim, Valerie ended up worse off. Not only did she forfeit the cash legacies, but her failed challenge to the No-Contest clause led to an adverse costs order against her.

A defence for testamentary freedom

Arguably, the rising tide of 1975 Act claims has been eroding the complete freedom of testamentary disposition. Where the court finds in favour of a 1975 Act claimant, the court often varies the Will to provide reasonable financial provision to that claimant, departing from the testator’s wishes and often eating into their estate with legal fees in the process.

It could be argued in this context that succession law in civil law jurisdictions is preferable. If the testator’s testamentary freedom is going to be encroached upon anyway, at least the forced heirship rules make it clear in the testator’s lifetime who must benefit, rather than opening the back door to claims from disgruntled beneficiaries after the testator’s death. It provides certainty to both testator and beneficiaries.

The finding in Sim v Pimlott helps to redress the balance by allowing testators the opportunity to pre-empt these claims and protect against them by including reasonable provision for those entitled to claim under the 1975 Act.

What does this mean for testators?

No-Contest clauses can be a valuable defence mechanism in the testator’s arsenal, helping them to safeguard their freedom of testamentary disposition and protect their estate beyond the grave, provided that they are used reasonably.

Deciding whether to use a No-Contest clause requires a careful weighing up exercise and ample thought must be given to the level of legacies for potential claimants in order to dissuade them from risking their inheritance. It is an exercise that should be conducted with the benefit of legal advice to assess the reasonableness of the proposed financial provision.

From the perspective of potential 1975 Act claimants, the case is a warning of the risks involved in challenging a No-Contest clause in an objectively reasonable Will. It highlights the need to reflect seriously on whether gambling the Will provision and risking an adverse costs order is likely to pay off and is likely to have the positive effect of discouraging vexatious claims. Beneficiaries thinking about bringing a 1975 Act claim should proceed with caution, particularly where a No-Contest clause exists, and seek legal advice to assess the merits of their claim.

The facts in Sim v Pimlott are unusual, but the case is a warning to all parties to consider the purpose of the 1975 Act whilst respecting the UK’s long history of testamentary freedom.

With thanks to Henrietta Horsler for contributing to this article.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2024