Things To Consider When Preparing A Mutual Will

What is a mutual Will?

The doctrine of mutual Wills dates back centuries, originating with the English case of Dufour v Pereira (1769). A mutual Will is a contractual agreement between two people (evidenced by them signing one another’s Wills) acknowledging that they have entered into an agreement with one another to make their Wills in a certain way and that they will not change their Wills without the other party’s written consent, or, if one person has already died, with the consent of the legal personal representative of the deceased person.

Mutual Wills are commonly entered into by spouses with children from previous relationships, to prevent the surviving spouse from disinheriting a stepchild after their biological parent passes away.

While this may seem like an effective strategy for blended families, Will makers should carefully consider whether they are prepared to bind themselves to such an agreement because they may find themselves in a position in the future where they wish to change their Will because their circumstances have changed, but are unable to obtain the consent they require to do so. This is particularly relevant when one person dies much earlier than the other, causing hardship to the survivor where the survivor is left with too little freedom through having too few assets that he or she can dispose of freely.

What happens if one person wants to change their Will?

Where a person changes their Will without the consent of the other (or each other’s legal personal representative, where applicable), they will be in breach of the agreement and equitable obligations. A failure to comply with these obligations may result in a claim against their Estate upon their death to enforce the terms of the original Will via a declaration of a constructive trust (ie, a declaration that despite the terms of any new Will you have made, your personal representatives are holding your assets on constructive trust for the beneficiaries under your mutual Will). The costs incurred by the Estate in defending such a claim would be immense.

Other factors need to be considered by a Will maker before entering into a mutual Will include:

• Generally, after one person passes away, the survivor cannot deliberately diminish the assets of his/her estate. For example, buying a property jointly with a new partner or a child, or gifting assets to their children for below market value.
• a mutual Will can still be the subject of a family provision application; and
• even where Wills are prepared on a mutual basis, the assets inherited by the survivor will not be protected from third-party claims against the surviving spouse. For example, if the surviving spouse re-partners and is subject to a family law claim.

If you believe your circumstances necessitate preparing a mutual Will, speak to a lawyer in Townsville today. It is vitally important that your mutual Will is drafted properly and in a way which mitigates risk and unexpected hardship down the line.