BLENDED FAMILY SOLUTIONS:MUTUAL WILLS

When a willmaker wishes to cater for the needs of the current partner and also those of the children of current and former relationships, another possible solution is to enter into a contract to make mutual wills.

This method involves both spouses executing wills which provide benefits for the children of each spouses’ previous relationships. The spouses then enter into a contract in which they agree not to revoke their will without the permission of the other spouse.

An example: “I leave everything to my wife but if she has already died then 50% of my estate will be divided between my children and 50% is to be divided between my wife’s children”. Correspondingly, the wife will might say in her will “I leave everything to my husband but if he has already died then 50% of my estate will be divided between my children and 50% is to be divided between my husband’s children”.

A mutual will agreement allows both parties to the relationship the ability to create wills with terms that are known to the other partner. This agreement gives rise to obligations on the part of the surviving partner, with the surviving partner becoming the trustee of the estate for the beneficiaries named in the wills. Remarriage automatically terminates the existing will but does not change the obligations under the agreement.

Mutual wills can give rise to problems: for example, If the survivor wishes to defeat the mutual wills contract, he or she may be able to do so by squandering the assets the subject of the agreement (although additional provisions can be included in the contract requiring the surviving spouse to not unduly dissipate their assets so as to reduce the size of their estate available for distribution on their death). 

If clients want to make mutual wills despite the potential problems, then their solicitor needs to draft a valid and enforceable agreement.

Flanagan Legal Newcastle can provide the appropriate advice (lynn@flanaganlegal.net.au )