Mutual Wills are an ideal solution for modern families, as they are becoming increasingly complex in their structure. In 2016, approximately 6.4% of families were “step-families” – that is, families composed of two adults and one or more children who are not the biological or adopted child of one of the adults. Almost 3.7% of families were “blended families,” which are families composed of two adults, one or both of whom may have children from a prior relationship, and who have then had a child together.
It is anticipated that the prevalence of “step-families” and “blended families” will increase. This poses a challenge to estate planning, but there is a possible solution: mutual Wills. Keep reading to learn more or speak to a Wills and estate lawyer if you have any questions.
- Estate planning challenges with blended families
- How mutual Wills can help with blended families
- What are mutual Wills?
- Why are mutual Will agreements important?
Estate Planning Challenges Created By Blended Families
During their lifetimes, the parents in a step or blended family will accumulate wealth and assets. Most often, the parents will prefer and expect that on the death of one them, the survivor will enjoy the fruits of their labour. Then, on the death of the surviving parent, their children collectively (biological, adopted and step-child) will enjoy an inheritance. Unfortunately, this does not always come to pass. The surviving parent may make a later Will that disinherits the children of their deceased partner, leaving a greater benefit to their biological children.
The question then is how do the parents in a step or blended family ensure that on the death of both of them, their estate passes to their intended beneficiaries? The answer could be mutual Wills.
Mutual Wills May Assist Blended Families With Estate Planning
Frequently, partners in a marriage, de facto relationship or close personal relationship, will make what are often referred to as “mirror Wills” – that is, a Will that is identical to that of their spouse/partner. However, in the absence of an express agreement not to revoke the terms of the Will, the corresponding or mirror Wills are unlikely to be found to be mutual Wills.
If you have any questions about mutual Wills, we highly recommend speaking to a Wills and probate lawyer.
What is a Mutual Will?
A mutual Will is created in a circumstance where the Will makers, prior to making their Wills, enter into a legally binding agreement to make Wills with certain terms and not to revoke or change those Wills. When one of the Will makers dies, the remaining Will maker is contractually bound not to change their Will. If the surviving Will maker were to change their Will, a Court would, if mutual Wills were found to have been created, enforce the agreement.
Why a Mutual Will Agreement is Important
Without a mutual Will, it is often very difficult for the aggrieved beneficiaries to establish that such an agreement existed. This is especially because the now deceased Will maker cannot give evidence as to their intention at the time of making the Will.
It has been found that a vaguely expressed intention to leave everything to the children is not sufficient evidence of a mutual Will (Pridham v Pridham  SASC 204). Whereas, a more formal meeting of the family members where the Wills and the intentions of the Will makers were expressly discussed may (when taken together with other evidence as to the Will making process) be sufficient evidence for a court to find a mutual Will (Hardy v Whitcome  NZHC 2382). The best evidence would be a formal contract to make Wills.
If a mutual Will is found to exist, then the surviving spouse will hold the estate that they inherit from the deceased spouse to a trust in favour of the ultimate beneficiaries. Whilst they are able to use all of the assets in their lifetime, perhaps even depleting them completely, a gift of the assets during their lifetime would arguably be an act in breach of the contract (Birmingham v Renfrew  HCA 52 and Legg v Burton  EWHC 2088).
Mutual Wills, however, will not prevent a Court from making orders for further provision from the estate of a deceased person on a successful claim brought pursuant to the Inheritance (Family Provision) Act (Barns v Barns  HCA 9).
Mutual Wills are an interesting and complex concept in estate planning. Whilst not foolproof, they are perhaps not without their place. If you have any questions about blended family Wills or need help with drafting a binding contract of agreement, please get in contact with our experienced deceased estate lawyers.
For further information on joint Wills and mutual Wills, please contact Michelle on 8362 6400 or email Michelle Crichton. Join our mailing list to receive updates and advice on current issues.