No contest clauses in wills: How they affect Inheritance Act claims

A no contest clause in a will is one that seeks to deter somebody from challenging a will or bringing a claim under the Inheritance Act 1975 by reducing or removing their legacy from a will if they do either of those things.

That creates a conundrum however. One of the factors a court must take into account when deciding whether a legacy under a will is “reasonable” for the purposes of an Inheritance Act claim is the size of the legacy. So if that legacy is reduced, or removed all together, by virtue of the operation of a no contest clause, that might create the exact opposite of the intended effect, and make the Inheritance Act claim stronger.

In this article, we use detailed case studies to illustrate how no contest clauses in wills can affect inheritance disputes and the enforcement of testamentary intentions. For a long time, the case of Nathan v Leonard was the only reported case that looked at the interplay between no contest clauses and Inheritance Act claims.

Nathan v Leonard: The facts

Mrs Diana Nathan died in November 1998. She had a half share in her home, which she shared with Sally and Paul Leonard. 

By her will and first Codicil, Mrs Nathan allowed her friends to occupy that property for as long as they wished. Her residuary estate (including her half share in the property, subject to the Leonard’s right to occupy) was to be divided into three parts; two thirds were to go to the Leonards, and the other third was to be held on a discretionary trust for her son, grandchildren and two charities 

However, Mrs Nathan subsequently had a change of mind and made a second Codicil. In this Codicil Mrs Nathan stated that if the family members of charities “wish to contest or disagree with my will” then she wanted her entire estate to pass to the Leonards. The wording she used to do this however would prove to be important and, ultimately, a problem. 

The clause read in full:

“As a safeguard to my wishes and to protect them from any parties be they family members or the charities, should they wish to contest or disagree with my will. Then, I want the following clause to over ride everything previously stated in my will. The following will become my will in its entirety.

"This I hope will prevent anyone from taking this case of action. I give devise and bequeath. My beneficial share in the property known as Oakwood farm, to my beneficiaries to Sally Leonard and Paul Leonard. Free of any taxes, which will be covered by my estate. I also give to the above named persons all my real and personal property. This clause cannot be superseded, and will only come into being if at anytime during the life of the Trust or up to 80 years has elapsed.”

The proceedings

Mrs Nathan’s son, Andrew, commenced court proceedings under the Inheritance Act after her death. It was of course in the interests of the Leonards to argue that the forfeiture clause had been triggered by the issue of proceedings, because then they would be entitled to the whole estate. 

Conversely, it was in the interests of the charities to argue that the dispositions in the will should stand.  

Andrew’s position was slightly different; regardless of whether or not the no contest clause was triggered, his case was that his mother had failed to make reasonable financial provision for him either way. 

What issues did the court need to decide in Nathan v Leonard?

Firstly the court had to decide whether this type of clause could be valid as a matter of law. There are 19th century precedents for such a position. However, the issue needed further thought; in those cases it was only the challenging party who would lose their right to their legacy. In Nathan, the beneficiaries of the discretionary trust would also be deprived of their legacy if the clause was upheld. That was a unique position that had not been addressed in any reported base in England and Wales.

Unsurprisingly the main charity beneficiary (MIND) argued that the clause could not be valid, on the basis it was “capricious” and should be void for reasons of “repugnancy”, i.e. that it was inconsistent with the gift itself. Those arguments were readily dismissed by the court; the mere fact there was a condition attached to the gift did not by itself create any inconsistency.

The court then had to consider whether the clause should fail as a matter of “public policy” with MIND arguing that a no contest clause could not be valid because its effect would be to deter a legitimate claimant from making a claim under the Inheritance Act, for fear of losing what little benefit had been given to them by the will in question.

The court however pointed out that a no contest clause does not actually prevent a claimant from making a claim (which may well have been contrary to public policy). Instead, if a claim is issued the interest under the will is lost.

The court will still then need to decide whether “reasonable financial provision” has been made, and in doing so one of the circumstances it would be compelled to take into account is that, as a result of the no contest clause, the claimant has received nothing at all from the Estate. Such a clause therefore does not defeat the purpose of the Inheritance Act, which is to ensure that certain people should not be left without reasonable provision.

The final basis on which it was argued the no contest clause was invalid was on the basis of “lack of certainty” – in other words, that the clause was incapable of being interpreted with sufficient precision and certainty.

There was interesting judicial consideration of the wording “should they wish to contest of disagree with my will” and what this meant in the context of the case. Would it be sufficient, the court wondered, that someone should simply wish to contest the will, without actually doing anything about it? What if the disagreement is taken to as far as a ‘letter of claim’ but no court proceedings were issued?  

The court held that it was unrealistic to suggest that Mrs Nathan wished to exclude somebody who, in private, simply disagreed with what she had done, but took no steps to try and stop her will from taking effect. Similarly the court found, in the facts of this case, that objecting to the will without issuing proceedings to challenge the will, or issuing an Inheritance Act claim, would be insufficient to trigger the clause.  

However, the final ground of uncertainty concerned the concluding words of the relevant part of the clause, namely:

“This clause cannot be superseded, and will only come into being if at anytime during the life of the trust or up to 80 years has elapsed.”

It was fairly obvious to the court that there were some words missing from this clause, but it was “very difficult to guess what they might have been”. There was added confusion because “the trust” was not defined, and could have easily referred to any one of four different trusts.  

The court found the wording was such that it was “equally capable of merely explaining something that is anyway obvious... and of indicating that the clause will only operate if something else happens.”  In those circumstances, and where the sitting judge felt unable to tell which was intended, the only logical conclusion was that it was simply “impossible to know whether or not Mrs Nathan intended by these words to impose a new requirement, and if so what it was.” 

For that reason, the clause had to fail. As the judge noted, this decision was reached  “with great reluctance, since Mrs Nathan took such trouble to make her wishes known; but I am afraid that in the end she has failed to do so with sufficient certainty.”

Sim v Pimlott: The facts

The late Dr Sim, a former GP, died in January 2018, at the age of 79. He had made his last will on 19th December 2017. He left an estate worth in excess of £1.2m.

Dr Sim had been married three times. Each of his first two marriages produced children. His third marriage was to Valerie, who he married in July 1998, and with whom he had a son. By the time of Dr Sim’s death however, the couple were in the process of a particularly acrimonious divorce.

As is common in situations like this with blended families, Dr Sim wanted to ensure he provided for not only his surviving spouse, but also some of his children and his grandchildren. With some foresight therefore, his will contained a “no contest” clause.

Dr Sim gave Valerie a legacy of £250,000, but strictly subject to the proviso that (amongst other things) she signed a deed formally releasing any claims she may have against his estate, whether under the Inheritance Act or otherwise. He also gave her a further £125,000 provided that within six months of his death, she released her interest in a jointly owned property in Dubai to his Estate. Finally Valerie was to receive the income from the trust created for Dr Sim’s residuary Estate.

However, Valerie decided not to comply with those conditions, and instead issued a claim for reasonable financial provision under the Inheritance Act 1975. As a result, the only legacy she would receive under Dr Sim’s will was the income from the residuary trust.

The decision in Sim v Pimlott

In all of those circumstances the first question for the court to consider was whether it was “reasonable” for Dr Sim to include the conditions he attached to the two legacies of £250,000 and £125,000. The court had little hesitation in deciding they were reasonable, and that the amounts he was seeking to leave for Valerie were also reasonable, given all of the circumstances.

As a consequence of this, the judgment records;

“it is not unreasonable to hold the claimant to her strict entitlement under the will; in other words, to a life interest in the residue of the estate. In my judgment, it would be wrong in principle for a claimant to pursue a 1975 Act claim in the knowledge that in doing so, they will forego a certain benefit; and then to say that, because they have foregone that benefit, the will fails to make reasonable financial provision for that beneficiary. In my judgment, there is good reason for the court to uphold the validity of such a condition.”

However, things then became more complicated.

The court recognised, as it had to, that the effect of this was that the claimant would be homeless, and left without sufficient assets to meet the costs of purchasing a new home.

The judgment then continues;

“In those circumstances, it seems to me that reasonable financial provision does require that I should exercise the court's power... to vary, for the claimant's benefit, the trusts on which the late Dr Sim's estate is held, so as to include provision that the claimant is entitled to require the trustees of the estate to set aside a sum of up to £400,000 – which will, of course, have to cover stamp duty, as well as purchase costs – in order to provide a property for the claimant to occupy rent-free as part of her entitlement as life tenant, but on the basis that she pays all the council tax, utilities and other outgoings for the remainder of her life, or such time as she remains capable of living outside some form of care accommodation.” 

The sting in the tail for Valerie came on the issue of costs; not only was she required to pay the defendants’ costs, but she had to do so on the indemnity basis, meaning she would pay a greater proportion of their costs than would be standard.  

That was in large part because she had rejected what the court deemed a very favourable offer at an early stage in the proceedings; indeed, the outcome at trial was far less favourable to Valerie than the terms of the offer (which was made at a very early stage, and before proceedings had been issued).

Conclusion

These two cases show why potential claimants against wills containing no-contest clauses of estates should reflect very carefully about the merits of their case before embarking on a challenge.  

Such clauses are perfectly permissible, and the courts do not hesitate to uphold them. Failing to make a proper assessment on merits at an early stage could prove to be very costly indeed.