When drafting a Will, it is important to consider your options and the different types of Wills that may be suitable for you depending on your life circumstances. In this article, we look at what a Mutual Will is, how it differs from a Mirror Will, along with the advantages and disadvantages of a Mutual Will.
What is a Mutual Will?
Mutual Wills are Wills usually made between two persons – often spouses or partners. Mutual Wills are done simultaneously and are usually accompanied with a binding contract which both parties execute, agreeing to not change or revoke their Wills, without the express permission of the other party. This remains the case even in the event of one of the parties’ death or incapacitation.
The Courts have identified the following distinct characteristics that make up a Mutual Will [1]:
- Mutual Wills are between two persons (contracting parties), usually spouses or partners, who agree to make Wills on particular terms and agree that those terms are irrevocable and will remain unchanged;
- It is not enough for the Wills (Mutual Wills) to be substantially similar or identical, there must also be an agreement between the contracting parties that the Wills cannot be revoked;
- The Wills may seek to provide a benefit to one of the other contracting parties, for instance, the benefit of a real property held (either as joint tenants or tenants in common) by both of them for the duration of their lifetime, more commonly known as a life estate or life interest;
- Often includes promises by both contracting parties relating to the terms of their Wills and, mainly about the manner in which their specific property is to be dealt with upon both of their deaths, including to whom the property will eventually pass.
Mutual Will vs Mirror Will
Mutual Wills differ from the more commonly used Mirror Wills in that Mirror Wills are made by two persons – usually spouses or partners – at the same time and the Wills are virtually identical. Unlike Mutual Wills, changes can be made to Mirror Wills by either testator (person or persons who made the Will) at any time, without needing to notify or obtain consent to do so from the other testator.
Mirror Wills are not contractual in nature, as there is no agreement between the persons making Mirror Wills that they will not revoke or change those Wills.
In contrast, Mutual Wills constitute a binding contract between the persons making the Mutual Wills, which means that the Wills cannot be changes or revoked without the other parties’ consent.
Advantages of a Mutual Will
A Mutual Will may be more commonly used by parents of blended families or step-families where the contracting parties might have the intention of protecting their respective children’s entitlements by ensuring that neither contracting party changes or revokes the terms of the Mutual Wills that they have agreed upon.
Some other advantages of Mutual Wills include:
- Greater security for the contracting parties with a blended family. For example, in the event that one of the spouses passes away and the surviving spouse decides to remarry, it provides greater protection of the assets that they accumulated together (and to the exclusion of the new partner and their family).
- The contracting parties have a say in who ultimately becomes entitled to their assets, including assets which may not pass into their individual estates, for example, jointly held assets and assets held by one party only.
- May allow the surviving contracting party greater freedom to use the assets in a way that would benefit them during their lifetime, for example using the property as security for a future mortgage.
- The ultimate beneficiaries receive notification of their equitable interest under the Mutual Wills, giving them an opportunity before receiving such an interest to prepare for an anticipated (irrevocable) inheritance.
Disadvantages of a Mutual Will
Given the enforceable and inflexible nature of the Mutual Will, it may not be a suitable option for young families or young married couples just starting out.
Some of the disadvantages of a Mutual Will include:
- The surviving contracting party may have ownership constraints (relating to any property that may pass to them) due to the lack of flexibility in the Mutual Will.
- The arrangement needs to have a high level of detail, otherwise it is of little value. For example, circumstances in which the surviving contracting party attempts to ‘defeat’ the terms of the Mutual Will by deliberately dissipating the assets in the Will or changing how they are owned (if the terms of the Will so allow it). [2]
- The Mutual Will needs to be properly drafted and clearly state and identify the specific assets that will form part of the contract of the Mutual Will so that they cannot later be revoked or changed.
Family Provision Claims and Mutual Wills
Another important consideration when it comes to Mutual Wills is that making Mutual Wills does not prevent people from challenging the Will or bringing a Family Provision Claim against the estate after the will maker has died. This is evident in the 2003 High Court of Australia decision in the case of Barnes v Barnes [3].
The High Court in this case formed the view that the deceased’s adopted daughter was allowed to make a family provision claim against the deceased’s estate, despite the existence of an effective agreement (Mutual Will) between the deceased and his second wife, which included an express term that the property of the estate is to pass to their son.
Although the validity of the Mutual Will was not in question in this case, the Court considered whether the subject property was available for a Court to make a family provision order, which ultimately would have a different outcome from the outcome that was intended in the (Mutual) Will made by the deceased. The High Court ultimately ruled in favour of the adopted daughter to make a family provision claim against the deceased’s estate, despite the existence of a valid Mutual Will.
Need to make a Will? Speak to an experienced Wills & Estate Lawyer
If you are looking to make a Will but are unsure as to what type of Will would best suit your circumstances, our experienced team of Wills & Estate Lawyers are here to help.
Get in touch with us on 02 9262 4003 for a confidential discussion or submit an online enquiry.
The content of this article is intended as a general guide to the subject matter. For specific legal advice about your individual circumstances, please contact our experienced lawyers.
Geeti is an integral member of the Ivy Law Commercial and Estate Planning team, acting on a broad range of matters including business sales and company acquisitions, capital raising, contract law, family provisions and estate planning.
Geeti is passionate about helping her clients achieve optimal outcomes and is highly regarded for both her empathetic nature and strong commercial acumen.