27/07/2016

Often couples believe that their testamentary intentions are protected after they die if they have a mirror Will with their spouse. But a mirror Will is not necessarily going to give this protection. For more certainty, mutual Wills may just be the fairest of them all.

Often couples enlist the ‘security’ of a mirror Will to try to ensure that the mutual assets of a couple are properly dealt with when one predeceases the other and the survivor has a life beyond their first spouse. However, in some circumstances a mutual Will may be the better option.

A set of mirror Wills are, just as they sound, mirrors of each other. They are drafted in the same, or substantially similar, terms, and show the couple’s decisions as to how property and assets are dealt with regardless of who passes away first. They are not, however, binding on one another and are certainly not irrevocable.

A mutual Will on the other hand utilises the law of contracts to ensure that each party upholds ‘their end of the deal’ so to speak. The couples are considered to have entered into a contract with one another as to the content of their respective Wills. This contract extends beyond the death of the first of them. This means that the assets of each testator, as they are at the earliest death, are bound by this agreement.

A mutual Will needs to satisfy the basic criteria of a contract; similarity is simply not enough. It must show an intention to create legal relations and should be in writing. There must be an express intention to be bound by the agreement and the extent of the mutuality must be clear from the terms. The agreement must not be ambiguous.

The cases support the notion that the Will – in order to be deemed mutual – must expressly indicate the intention of mutuality and irrevocability. There is no requirement that the Wills be exactly the same but only that each party agreed that if they drafted their Will in a certain way, their spouse would draft their Will in the agreed manner also. A mutual Will, drafted correctly, will be unable to be changed or revoked once one party dies or loses capacity.

A mirror Will may be more appropriate for young couples, or people who are newly married, with no children, as they do not need to contract in order to maintain a particular status quo.  It may also suit long-married couples who genuinely believe that there is no likelihood of them ever having another relationship after the death of their current spouse, and will therefore ensure that the couple’s assets are passed on in the manner that the couple originally agreed.

A mutual Will is particularly advantageous for people who are not entering into their first marriage and as such bring with them significant assets, and perhaps children from earlier relationship(s). Where parties to a relationship are bringing substantial wealth/assets they may wish to ensure that, when the time comes, those assets/their wealth are/is distributed only to their bloodline beneficiaries or, more to the point, as they wish it to.  

Often it is not the intention of the couple to prevent their spouse from ever changing their will; it is more that they are protecting the assets of the marriage at the time of the first spouse’s death. The survivor is free to update their will to deal with future assets.

Couples need to consider the likelihood of one of them passing and the other re-marrying and whether that could affect the passing of the couple’s estate to their children or as they have agreed.  If there is a chance of that happening then perhaps a mutual will is desirable; effectively to ensure that a later spouse doesn’t upset the estate applecart.  If the couple decides there is really no chance of that happening then a mirror Will would probably suffice.

For further information, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222.