What is a Mutual Will?
A mutual will is a legally binding contract between two parties, containing a promise that they will not revoke their wills which are subject of the contract upon the passing of one of them, without the consent of the other party or their personal legal representative. They provide protection for property that is brought into a relationship for the benefit of the individuals outlined in the parties’ wills. A contract to make mutual wills can be useful to provide protection for children of spouses from prior relationships.
How are Mutual Wills enforced?
- If a party dies their estate may pass entirely to the surviving party. The law recognises that the surviving party is holding the assets which are the subject of the contract to make mutual wills as a trustee for the ultimate beneficiaries named in the mutual wills. This ensures that the surviving party cannot deal with the assets in a way that is inconsistent with the terms outlined in the contract for mutual wills.
- If the surviving party made a new will or remarries after the death of the other party, the old will is revoked. However, the trust arising from the contract to make mutual wills explained above remains in effect and the beneficiaries disadvantaged by the surviving party’s new will can enforce the trust by commencement of Court proceedings.
Advantages of Mutual Wills
A mutual will encourages collaboration as both parties have a say in who will ultimately be entitled to assets. This provides greater security for blended families, as in the event of one party passing away and the other spouse re-partnering, the accumulated assets from the first marriage can be excluded from the new family and distributed in accordance with the mutual will agreement. Upon the death of one of the contracting parties, a mutual will cannot be altered or revoked without the consent of the other party’s legal representative. This ensures that the intended beneficiaries of the mutual will agreement receive their entitlements.
Depending on the terms of the contract, the surviving party may be given the freedom to use the assets in such a way that would benefit them during their lifetime. This can include using the assets for living expenses, security for a future mortgage or purchasing alternate accommodation.
Disadvantages of Mutual Wills
The inflexible and enforceable nature of mutual wills may not make them suitable for young families. A mutual will may include ownership constraints relating to the property, which prevents the surviving party from dealing with the property.
When creating a mutual will, the arrangement needs to have a high level of detail otherwise its value will be limited and also to ensure that there are no unintended consequences for the surviving party.
Mutual wills need to be drafted properly and clearly state the specific assets that will make up the contract. At WMD law we have a team of experienced lawyers who can assist with all your estate planning needs.
WMD Law has a team of experienced and dedicated Lawyers who can assist with writing your will or updating an existing will. Please do not hesitate to contact our Will and Estate Lawyers on 9525 8688 or email firstname.lastname@example.org. We also invite you to download our free Estate Planning eGuide.