A mutual Will agreement is a binding contract between two people that neither will revoke their Will without the other’s consent. The Wills themselves are usually made at the same time as the agreement, though they don’t have to be.
We do not prepare mutual Will agreements and this blog post explains why.
How is it different from mirror Wills?
Mirror Wills are two Wills in matching terms and nothing more. Either Will maker can change theirs at any time, before or after the other dies, without telling them. A mutual Will agreement adds a separate contract on top and that contract is what binds them.
See What are mirror Wills? for the full comparison.
Why do people ask for one?
Most people who ask for a mutual Will are in a blended family. Where one or both partners have children from an earlier relationship, the couple want to leave everything to each other, but with some assurance that the survivor will eventually leave the estate, or part of it, to the first partner’s children.
It is a reasonable thing to want, but a mutual Will agreement is not always a reliable way to get it.
Why we don’t prepare them
They don’t prevent anything. The survivor can still make a new Will. All the agreement does is give the disappointed beneficiaries a claim against the estate afterwards. The mechanism is litigation between family members, not prevention.
The beneficiaries have to know it exists. Beneficiaries can’t enforce an agreement they have never heard of, so the whole arrangement can fail because nobody told the children.
It becomes irrevocable on death or incapacity. The survivor can be locked in while the first partner is still alive but no longer able to agree to a change.
It says nothing about spending. Unless the agreement deals with it, the survivor can spend the money, sell the house or make gifts during their lifetime, and there may be nothing left to argue about.
It cannot anticipate thirty years of change. A beneficiary who develops a disability, a child who dies first, a grandchild nobody planned for, the cost of aged care. The survivor stays bound to a document written for a family that no longer exists.
They are also complex and costly to draft and they have to be drafted very carefully to reduce the risk of the dispute they exist to prevent.
What we suggest instead
A life interest. The survivor has the right to live in the home or receive the income for their lifetime but the capital passes to your named beneficiaries on the survivor’s death. The survivor has security and no power to redirect the estate.
A testamentary trust. The inheritance is held on trust rather than paid out, which adds tax flexibility and protects it from a beneficiary’s divorce or bankruptcy. See Testamentary trust Wills.
Both take effect through your own Will, so neither depends on the survivor keeping a promise.
Frequently asked questions
Is a mutual Will the same as a mirror Will?
No. Mirror Wills are two Wills in matching terms and bind nobody. A mutual Will agreement is a separate contract not to change those Wills, and it is the contract that binds.
Can a mutual Will agreement be undone?
While both parties are alive and have capacity, they can agree to change or end it. Once one has died or lost capacity, it becomes irrevocable.
What happens if the survivor breaks the agreement?
The beneficiaries who should have benefited can bring a claim to enforce the contract against the estate. That is litigation, with the cost and delay that carries, and the first argument is often about whether a binding agreement existed at all.
Talk to us about your Wills
If you are in a blended family and want certainty about where your estate ends up, we will tell you which option suits your situation.
Book an appointment or call the Wills team on (08) 9220 4433.
This article is general information and not legal advice.
