What is a Mutual Will?
A Mutual Will creates a contract between parties (most often between couples) whereby they promise to not revoke or amend the Will before the passing of one of the parties. This creates a trust which can be given effect to by the courts.
The most common circumstance where a Mutual Will is drawn is where a spouse wants to leave their estate to their surviving spouse. However, they want to ensure that on the death of the surviving spouse, their children receive the benefit of their estate. This is to avoid the possibility of the surviving spouse remarrying and/or having more children, and amending their Will in favour of their new spouse and/or children.
The decision to enter into a Mutual Will must not be made lightly and it must be carefully drafted to give appropriate effect to the contract. Long term provisions in Wills tend to become out of date and burdensome on those involved as time goes by and create complex and problematic circumstances.
What property can be the subject of a Mutual Will?
It is very important to consider and specify what property is to be the subject of the Mutual Will.
While it is often intended when drafting a Will with the phrase ‘leaving my estate’ or ‘whatever I leave at my death’ to mean property acquired by the deceased spouse within their lifetime, it can also be construed to include property that is acquired after the date of death of the first spouse and within the life of the surviving spouse. This can cause issues as no property that is obtained after the first spouse’s death but within the life of the surviving spouse can be disposed of in a manner that conflicts with the Mutual Will.
A marries B.
A and B own a property (it is owned as Tenants in Common for the purposes of this example) and $300,000 worth of other assets together.
A and B enter into a Mutual Will’s agreement that states ‘my estate’ to my spouse.
B inherits A’s share of the property and all other assets pursuant to the Mutual Will’s agreement.
B remarries C.
B and C acquire a property together (it is owned as Tenants in Common the purposes of this example).
Because of the Mutual Will’s agreement, B has not updated his will and can therefore not leave anything, including the property that he had acquired after the death of A, to C as it would conflict with the Mutual Will’s agreement.
Can Mutual Will clauses be overridden?
Although Mutual Wills create a contract between the parties to not amend their will and therefore not amend their testamentary gifts, it does not prevent the surviving spouse disposing of the property and assets that are subject to the Will in a non-testamentary manner. For example by gifting it to other people within their lifetime.
Mutual Wills are also still subject to a Family Provision Claim and can therefore be overridden if certain eligible persons are not adequately provided for.
In all the circumstances, because of the many uncertainties that can arise, we do not recommend mutual wills as a strategy. It can be done; however, we prefer the use of Trusts.
If you have further questions, please contact Andrew Frank at firstname.lastname@example.org.
This is not legal advice.