Enforceability of Mutual Wills and Necessity of a Contractual Agreement
In the recent case of Ian Paul McLean and Ors v Brett McLean H10CL283 (unreported) (“McLean”), the Court has shed light on the binding nature of mutual wills, and, the absence of an accompanying contractual agreement making the wills inoperative.
What are Mutual Wills?
Mutual wills are made contemporaneous with one another. Each testator makes a will, which cannot be changed without the consent of the other testator, even after death. They mirror the intentions of both testators and normally leave all of the testator’s (A’s) estate to the other party making the counterpart mutual will (B).
If A predeceases B then all of A’s assets pass to B and vice versa.
When the surviving testator dies the mutual wills dictate how the remaining estate is distributed - in the manner so agreed when A and B signed their mutual wills.
Mutual Wills in Practice
By way of example, imagine A and B sign wills which leave all of their assets to their spouse (provided they are survived by them) and upon the surviving spouse’s death, the assets pass to C and D in equal shares.
The below diagram illustrates how this would work in practice:
Why Use a Mutual Will?
Mutual wills are often used when two testators want to agree, irrevocably, on what is to happen to their joint assets. A key example of this may be where each testator has children from different marriages (C and D) and they want to protect their biological child’s interest.
There are mechanisms in place which protect C and D’s interests under the mutual wills. The doctrine of proprietary estoppel operates to create an implied trust over the assets, which means that the interests in the estate acquired by C and D would be held on an implied trust, irrespective of any changes made to the surviving testator’s will.
This implied trust will come into effect on the death of the surviving spouse and even if the surviving testator changes their will to benefit another party (E), then E must hold C/D’s interest for them and provide them with the benefit of it.
Necessity of a Supplemental Contractual Agreement
Mutual wills must be entered into with a contractual agreement in place - as illustrated in the recent case law in McLean.
In McLean Maureen (“M”) and Reginald (“R”) had a child together, and, R had three children from a previous marriage. R wanted to ensure that all children got an equal share of the estate. Wills were made to provide for all children, upon the death of the second spouse.
R died before M and she inherited all of R’s estate. Upon doing so, M changed her will so that her step-children would not inherit under the wills.
The three step-children brought a claim, purporting that the wills were mutual and that their interest was held on trust for them as per the legal provisions mentioned above. The court held that there was no contractual agreement in place. M was only morally obliged to honour the informal agreement which the spouses had reached and in the absence of this: the change to her will was valid. The three step-children were disinherited and the marital child of M and R inherited the entirety of the estate.
Impact of McLean
A lack of a contractually binding agreement would mean the wills that are created are not mutual wills.
The surviving spouse can amend their will however they wish, by ousting the original beneficiaries’ interest as the doctrine of proprietary estoppel will not be triggered.
A separate agreement should be prepared and signed by the parties which outlines the intentions of the parties in making mutual wills, it also ought to specify those assets which are subject to the mutual wills.
It should be noted that mutual wills are not the most effective way of ensuring assets are protected on death and the express trusts are less likely to be challenged. Most firms prefer not to draft mutual wills and instead will advise on alternative options which are more suitable and protective.