No-Contest Clauses in Wills

No-Contest Clauses in Wills: Navigating the benefits, pitfalls and their role in wills

What is a no-contest clause and why are they included in wills?

A no-contest clause, also known as an in terrorem clause (meaning by way of threat or intimidation), is a provision inserted into a will to discourage beneficiaries from challenging a will’s validity or its provisions. They are included to maintain the testator’s intentions and to prevent disputes among beneficiaries after a testator’s passing.

How do no-contest clauses work?

No-contest clauses typically stipulate that if a beneficiary contests their inheritance under the terms of a will, they risk forfeiting their inheritance. The idea is to dissuade beneficiaries from pursuing litigation that could disrupt the administration of the estate and potentially deplete its assets for other beneficiaries.

Are no-contest clauses enforceable?

The enforceability of no-contest clauses varies depending on the circumstances of each individual case.

What are the potential benefits of including a no-contest clause?

For testators, including a no-contest clause can provide peace of mind, knowing that their wishes are less likely to be contested and their estate administered according to plan. Additionally, these clauses may deter beneficiaries from pursuing frivolous challenges, in turn streamlining the probate process.

Are there any drawbacks to including a no-contest clause?

Yes, there are potential drawbacks. No-contest clauses may discourage beneficiaries from raising legitimate concerns about the will’s validity or fairness, stifling open dialogue. Additionally, they do not guarantee immunity from challenges, as beneficiaries may still pursue litigation if they believe they have valid grounds.

What should individuals consider when considering including a no-contest clause in their will?

Individuals should weigh the potential benefits and drawbacks of including a no-contest clause while consulting with legal professionals experienced in estate planning. They should also ensure that the clause is drafted clearly and accurately reflects their intentions to minimise confusion or misinterpretation.

What should beneficiaries know about no-contest clauses?

Beneficiaries should understand the potential consequences of challenging a will with a no-contest clause, including the risk of forfeiture if the challenge is unsuccessful. Before initiating a challenge, beneficiaries should carefully assess the strength of their case and the likelihood of success.

No-contest clauses in practice: the recent case of Sim v Pimlott

Dr Sim, passed away on 19^th March 2019, with a will executed on 19^th December 2018 that included the following provisions in relation to his wife, who he was in the process of divorcing when he passed away:

1. A pecuniary legacy of £250,000 with the condition that she execute a deed of release, giving up her right to bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975;
2. A pecuniary legacy of £125,000 with the condition that she released her interest in a property they jointly owned in Dubai; and
3. A life interest trust in the deceased’s residuary estate.

Dr Sim’s wife was pursuing an action under the 1975 Act, claiming that the deceased’s 2018 will had not made reasonable financial provision for her. Among other questions as to the reasonableness of the provisions of the will, the court was asked to consider whether the conditions (no-contest clauses) attached to the above testamentary payments were reasonable.

Judge Hodge KC found that the financial provision was reasonable and that ultimately “where the actual provision made by the will is objectively reasonable…it was also reasonable to include a provision intended to discourage the relevant beneficiary from embarking upon… an unwarranted claim under the 1975 Act, with all the consequent delay to the administration of the estate, and accompanying delay in the distribution of assets to beneficiaries, and, in addition, with all the costs associated with defending such a claim”. 

The decision in this case suggests that had the financial provision of the above gifts not been considered reasonable, the conditions attached to them would also not have been reasonable.

The outcome for Dr Sim’s widow was that she forfeited the £250,000 in the first gift, lost access to the cash buy out of the property they owned jointly (she retained her share in the property) and maintained her life interest trust in the estate. She retained this gift as the court found that the deceased’s will had not made reasonable financial provision with regards to the widow’s accommodation. If she had forfeited this gift, she would have been left homeless.

Do you want to know more?

No-contest clauses play a significant role in estate planning and deter unwarranted challenges. Please contact our specialist in the Life Planning Department to find out more.

Sophie Winter, Trainee Solicitor (2024)