It is the view of Geoff Armstrong, Special Counsel, at Bennett & Philp Lawyers that Mutual Will Arrangements should be implemented only after very careful consideration and possibly avoided altogether in some situations. Each spouse should realise that the arrangement will curtail their power to dispose of their own property freely during their lifetimes and on death.
Typically, Mutual Will Arrangements (‘MWA’) are used in blended family situations in an attempt to provide for a spouse while ensuring assets pass to the Willmaker’s children from an earlier marriage. The aim here is to keep control of one’s own assets to ensure that the children from the previous relationship are protected.
The gist of an MWA is to ‘lock-in’ provisions in Wills that have been made by the spouses. In effect, each spouse agrees with the other not to revoke the terms of the agreed Wills unless the other consents. Having agreed that, a subsequent revocation by a later Will made without the consent of the other will give rise to a claim for damages or specific performance by disappointed beneficiaries.
Wills made pursuant to an MWA should not be confused with Wills made by spouses which are merely reciprocal. In the former case, there is a definite contract between the parties binding each to the agreed terms of the Will. In the latter case, such a contract does not exist and reciprocation is in good faith only.
Ideally, MWAs should be specific as regards what assets are subject to its terms. Agreements referring to my estate etc are unsatisfactory. Some of the issues which have arisen in practice are as follows:
- The Will is revoked by operation of law and not by a deliberate act of the Willmaker. For example, marriage revokes a Will unless specifically contemplated in that Will.
- An MWA will need to be taken into account on divorce and will become redundant.
- Long term provisions have become out of date.
- The terms of the MWA are too wide – does it include assets acquired after the date of the contract or even after the date of the death of the first party to die?
- Are assets inherited after the date of the contract from a third party caught by the MWA?
- The MWA inadvertently includes non-property provisions eg. appointment of executors and trustees and guardians for children.
- There is a claim on the estate which seriously impacts the effectiveness of the agreement – does this amount to a breach? An MWA cannot be made to defeat such claims.
Throw into the mix the difficulties of proving the existence of an oral MWA and it is easily understood how MWAs are potentially litigious and why they occupy a great deal of court time and haunt the dreams of estate planning lawyers. Such agreements are not for the faint-hearted.
Mutual Will Arrangements have a place where necessary and appropriate but require the input of sound and reliable legal advice. They should not be entered into lightly and must always be carefully drawn.
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