Inheritance (Provision for Family and Dependants) Act 1975 - Contesting wills with non-contestation clauses
The case of Sim v Pimlott considers the fairness and effectiveness of non-contestation clauses in wills for the purpose of discouraging beneficiaries from making challenges under the Inheritance (Provision for Family and Dependants) Act 1975 (the “1975 Act”).
Background
Dr Sim, a former GP, lived what Judge Hodge KC described to be a “complicated life”. His will provided mainly for his children and grandchildren, from his three marriages and one extra-marital relationship. The will was executed on 19 December 2017 when he was in the last stages of his life. He died little over a month later at the age of 79.
The will contained the following provisions:
- Mrs Sim execute a deed of release of all rights she may have against Dr Sim’s Estate under the 1975 Act and any interest she had in relation to any asset owned by Dr Sim.
- Mrs Sim to vacate the matrimonial home upon Dr Sim’s death, and provided she releases her right to claim, Mrs Sim would receive:
£250,000 absolutely
£125,000 on the condition that Mrs Sim had done all that was required of her to release her joint interest in the couple’s Dubai property.
A life interest in the Residuary Estate, with the income being appointed to her.
At the time of Dr Sim’s death, the relationship between the couple was fraught with turmoil. Divorce proceedings were pending, and Mrs Sim had sought non-molestation and occupation orders against Dr Sim. Mrs Sim had also made criminal accusations of sexual violence and domestic abuse demonstrating the deterioration of their relationship.
What is a non-contestation clause?
Dr Sim’s attempt to prevent his wife from benefitting under his will unless she agreed to release her rights to make a claim under the 1975 Act, is a classic example of a non-contestation, or forfeiture clause. These clauses commonly make the provision that a beneficiary will lose their entitlement if the decide to challenge the will under the 1975 Act.
The purpose of these clauses is to deter the beneficiary from bringing challenges under the Act and potentially halting distribution from the deceased’s estate.
The Inheritance (Provision for Family and Dependants) Act 1975
Under the 1975 Act, the Court has the power to vary the terms or distributions from the deceased’s estate where it is found that the will fails to make reasonable financial provision for a dependant of the deceased. The Court is only able to extend this power to certain family members and dependants that qualify under the 1975 Act, and it must specifically be found that the will does not provide reasonable financial provision. The bar for what counts as reasonable financial provision is hotly contested but is generally agreed to be enough to maintain the dependent’s lifestyle.
In considering the case, Judge Hodge KC identified that that the questions to consider in Mrs Sim’s claim were:
- Did the will make reasonable financial provision for Mrs Sim; and
- If not, what reasonable financial provision ought now to be made.
The Court considered the factors listed in section 3 of the 1975 Act, such as the financial needs and resources of the claimant, the size and nature of the estate of the deceased, and any other matters. Where a spouse brings such a claim, the Court also considers the age of the claimant, the length of the marriage/civil partnership, any contributions made to the welfare of the family of the deceased and lastly, the provision the claimant reasonably expected to receive if, on the day the deceased died, the marriage were terminated by divorce rather than death.
Judgment
The Court found that it would be wrong in principle to allow a claimant to bring a 1975 Act claim knowing that in doing so, the beneficiary would forego receiving a certain benefit and then say that because they have given up their benefit under the will, the will had failed to make reasonable financial provision.
Essentially, Dr Sim’s will was deemed reasonable in including this non-contestation clause aimed at discouraging 1975 Act claims. Mrs Sim was already due to benefit from the will and was viewed as unreasonable in choosing to give up her gifts by ignoring this non-contestation clause, in favour of claiming that Dr Sim’s will failed to provide for her.
The only part of the will that the Court found to be unreasonable was the failure to include a provision allowing Mrs Sim, in the event that she refused to fulfil the condition relating to the Dubai property, to use part of the capital to purchase a home for herself. This would in effect leave her homeless as the matrimonial home would need to be sold to fund future legacies under the will. For this reason, Judge Hodge KC varied the trusts allowing for a capital sum to be reserved for Mrs Sim providing her with a property which she could live in rent-free as a life tenant.
Comment
This case has been helpful in confirming the enforceability of non-contestation clauses within wills. Such clauses prove useful to a testator looking to prevent potential claims from eating away at the estate via the 1975 Act or generally. The only caveat to this is that the clauses must not be so stringent and unreasonable so as to give rise to a claim under the 1975 Act, which would lead to a result that the testator initially wanted to avoid.
Furthermore, the case has provided useful insight into setting out the approach the Court takes to 1975 Act claims. It is important to note that the Court advises prospective claimants to ensure that they have strength tested their cases prior to bringing their claim. Judge Hodge KC commented on this and Mrs Sim’s behaviour and found that had Mrs Sim carefully considered her evidence and the merits of her claim, the outcome may have been different. Also had she approached the claim with a more reasonable perspective perhaps she would not have rejected the Part 36 offers she was given, an action for which she was penalised at a subsequent costs hearing.
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