What are mutual wills, and why would I choose one?

What’s the best way for my partner and me to make wills that benefit each other but still protect our children from previous relationships? This is an increasingly common estate planning question I hear from clients with blended families.

While one option is to create a mutual will agreement, these don’t suit everyone, and it’s important to be aware of the risks as well as the benefits.

Mutual wills can be a useful way of ensuring provision is made for those you want to recognise in your will, particularly if you pass away before your partner.Credit:

Many couples want their wills to complement each other and ultimately protect their assets for any children from previous relationships, so will look for estate planning options beyond a ‘traditional’ will containing only one person’s independent wishes.

Often, people confuse mutual wills with ‘mirror wills’ – these are not the same.

Mirror wills have reciprocal terms but do not bind the other party. For example, if one party were to pass away, the other would be free to create a new will which could be consistent with what the couple agreed on during their lives, but doesn’t have to be.

In contrast, a mutual will is a legally binding contract where both parties agree to make their wills in the same terms and agree not to change them without the other party’s permission (so if you die, your spouse cannot change their will to favour their own children and omit your offspring).

Some mutual wills give considerable flexibility for a surviving spouse to update their will or dispose of assets.

A recent litigation client thought she and her late husband had made mutual wills and was shocked to discover that they didn’t – they were mirror wills. Now the husband’s estate is being contested by a child from his first marriage.

There are many estate-planning strategies to “keep assets in the bloodline”, and mutual wills are just one option.

They work best for older couples with a blended family, who are unlikely to have further children, own joint assets together, and want to benefit each other initially but also ensure their respective children are protected and benefit from their combined wealth.

If you are of an age where you could divorce, repartner and have more children, mutual wills are probably too inflexible for you.

Mutual will essentials

Firstly, there has to be clear evidence of the spouses agreeing to a mutually binding will that cannot be revoked by one party without the consent of the other.

Best practice is to put this in writing to avoid confusion and any later expense (although there have been some cases where the court has found the existence of a mutual will based on only verbal promises).

The agreement must also be carefully drafted to contain specific wording that it is intentional, mutual and irrevocable. It helps to be specific, including a list of assets that you both agree will be considered part of the combined estate, and clearly outlining what each spouse or child is entitled to.

This way, for example, if you win the lottery after your partner dies, you are not under a legal obligation to share this non-nominated windfall with your stepchildren.

Good legal advice is crucial if you wish to avoid confusion and disputes, and to determine whether a mutual will is your best option. Once you document it properly, review it regularly. We suggest every three years or whenever your circumstances change, including if you acquire or dispose of assets.

There’s a growing amount of case law being decided around mutual wills. I’ve seen many cases brought by parties who would have received a much more favourable outcome if a mutual will had been in place.

Some mutual wills give considerable flexibility for a surviving spouse to update their will or dispose of assets so long as nominated people are not excluded. Others have very strict conditions around the selling and gifting of nominated assets.

There are some ways that a mutual will can be updated if your situation changes – for example, if you separate, it’s likely to be in everyone’s best interest to make the mutual will null and void and free each party to update their will to reflect their new circumstances.

A good legal specialist will review each family’s situation and existing assets and suggest a will structure and the ownership of assets to best carry out your wishes.

As an example in the case of home ownership, this may involve severing a joint tenancy and changing to a 50-50 ownership agreement so that a couple can dispose of their share as they wish.

Mutual wills can be a useful way of ensuring provision is made for those you want to recognise in your will, particularly if you pass away before your partner. However, it’s important to seek specialist advice as there are broader estate planning strategies that may better suit your individual situation.

Emma Blay is an estate litigation and administration specialist and a senior associate in the Wills and Estates team at national law firm Barry Nilsson.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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