Mutual Wills are created by a second document or a Binding Mutual Wills Contract (BMWC), which contains directions about the testator’s current Wills. A mutual will can solidify what is to be done with any and all of your assets, or your interest in any and all assets, once you are deceased.
In making a mutual Will, it will follow an agreement when both parties are alive that is legally binding. This means that following the death of the first party, both Wills are from that point cannot be amended.
Moreover, party to a BMWC is bound not to revoke his or her Will in their lifetime without notifying the other party and thereby giving the other party the opportunity to revoke their own Will. Hence, once one party to the mutual Wills contract dies, leaving his or her Will unrevoked, equity intervenes and treats the agreement as irrevocable.
In addition, a verbal agreement does not flow smoothly in court. Moreover, not having clear instructions with your own estate can leave the surviving family with a possible dilemma on how to dispense with your assets. This can end up in court with the court deciding what is to be done with your estate.
Having a discussion with your current partner our spouse as to what you would like done once you die can help formulate an agreement that your surviving spouse or partner will adhere to. Like any Will, a BMWC will eliminate the potential of your estate from being dispensed against your wishes.
There will be a number of circumstances when testators will be particularly concerned to ensure that their property is dealt with in the manner they intended. The most category is people who enter into a new partnership or marriage with children from their previous marriage or partnership.
In these circumstances, they may wish to make a provision for their new spouse or partner, but also intend that their property ultimately flow to the children of the first marriage. They might therefore decide that they wish for their new spouse or partner to enjoy their property or his or her interest in joint property during the new spouse’s lifetime. This may be seen through a life tenancy.
Once their new spouse or partner dies, the property will be dealt with according to the testator’s wishes and be passed onto their children. Subject to the surviving spouse or partner not breaching the binding Wills contract, mutual Wills can be used to ensure that the testator’s children from the previous marriage are the ultimate beneficiaries of any property written into the Will.
Some courts have stated that if the surviving party revokes their mutual will following the death of the first party, they would be committing fraud as they have accepted the benefit under the first party’s Will without accepting the burden attached to it. If a party changes their Will in breach of the contract formed between the parties, it is the beneficiaries under the original Will (usually the stepchildren of the survivor) who would be entitled to bring an action against the surviving party to enforce the original mutual Will.
A testator may wish to consider building a Testamentary Discretionary Trust mechanism into their Will to place controls around the use of the funds in the surviving spouse’s lifetime, or making a substantial direct gift to the testator’s children upon the testator’s death if they consider this to be a risk.
*Prima facie is either at first glance without investigation or can be obvious and self-evident.
**Inter Vivos is taking effect during their lifetimes, while they are both still alive.
AussieLegal offers a range of estate planning products, including a Binding Mutual Wills Plus service, to help you create your mutual Wills contract. Our experienced estate planning lawyers will provide with you with sufficient legal advice, so you can make more informed decisions about your estate.
Call us on 1300 728 200 to discuss your situation with one of our consultants.
