Mutual Wills

What is a Mutual Will?

Mutual wills are when two people enter into a contract where they agree not to revoke or vary their wills without first notifying the other party.

The effect of this is that when one party passes away the surviving party comes under a legal obligation not to vary or revoke their will. In addition, any property that the surviving party inherits is deemed to be held “on trust” and is subject to the terms of the mutual will agreement. 

Why do people make Mutual Will?

Mutual wills are usually made between a husband and a wife where there are children or step-children from a previous relationship. 

A mutual will assist in ensuring that certain property passes to a set of agreed beneficiaries after both parties have passed away.  The effect of a mutual will is usually designed to ensure that a surviving spouse does not disinherit any of their step-children. 

What happens when someone changes or revokes a Mutual Will without consent?

When a person who has made a mutual will decides that they are going to vary or change their will without first notifying the other party, the beneficiaries of the original will have a right to enforce the original agreement. 

When can someone choose to terminate a Mutual Will contract?

Most mutual will contracts allow for both parties to revoke their respective wills provided usually that that the other party has been given notice and still retains capacity. 

In the scenario where one party has passed away, the surviving party effectively becomes a trustee for the deceased partner in relation to in relation to any assets that have been gifted to them by their deceased partner. 

What are some of the Disadvantages of Mutual Wills?

Mutual Wills may be very limiting and can create significant restrictions on the testamentary freedom of a surviving person.  

It is often difficult to foresee how a person’s personal situation might change over the years. 

It is not uncommon for a widow or widower to remarry.  Some parents have children who develop a disability meaning that they require additional gifts or provision. Other parents often want to give a certain child an early inheritance – and want this to be reflected within their will. 

In short, there are many reasons people might need to change their wills after the death of their partner. While a mutual will contract does protect certain beneficiaries – it also has the effect of restricting the actions of a testator. 

In addition, another disadvantage is that a mutual will contract does not prevent a testator from disposing of certain assets during their life.  A person who has entered into a mutual will contract might attempt to defeat the provisions within a mutual will contract by gifting assets to certain individuals within their life in such a way that there are insufficient funds to distribute once the testator passes away. 

Finally, it should be noted that a mutual will contract does not prevent persons from making family provision claims.  For this reason, a badly drafted mutual will contract may result in beneficiaries being tied up in litigation. 

It is therefore very important to ensure that you seek appropriate legal advice before you choose to enter into a mutual will contract. In many situations it may be better for a testator to instead create a “life estate” or create a will with a testamentary trust. Contact us at O’Brien, Connors & Kennett

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