Be careful when making a Mutual Will

A man got in touch with his lawyer to make amendments to his Will some five years after his partner had passed away.  The couple had a mutual wills clause in their respective Wills, whereby they each “contracted” to give one of their investment properties to the deceased’s sister, once both the man and his partner had passed away.

Life circumstances change.  After the couple had made their Wills the man’s partner and her sister had a major falling out, but the couple did not get around to updating their Wills to remove the sister (the man’s sister-in-law) as a beneficiary of the property. 

The financial stability of the couple also changed and it became apparent that funds would need to be freed up for the survivor’s aged care after their partner’s death.

The man wanted to update his Will and put the investment property on the market, but he was shocked to find out that the clause in his mutual Will was binding.  This meant that if the man removed his sister-in-law from his Will, she still had the ability to make a claim against his Estate and, if successful, jeopardise the already diminishing inheritance of the couple’s children provided for in the Will.

This situation could have been avoided by the couple providing for their family in a mirror Will, rather than a mutual Will. 

Mirror Wills simply mean the Wills mirror each other.  Using a mirror Will, the surviving partner is able to change their Will knowing that the clauses in each Will are not a binding agreement – as is the case with mutual Wills. 

Mutual Wills are a useful structure to put in place for blended families who want to ensure that all children from previous relationships are treated fairly and provided for when one parent passes away.

If there is a valid reason for leaving a significant family member out of your Will, or if you are updating a Will that has a mutual Wills clause once the other party to the Mutual Will has passed away, you need to have a clause explaining the reason for making that change, or for leaving a beneficiary out altogether.

It is important to understand that this type of “explanation” clause does not stop anyone from contesting your Will if you have changed your Will in breach of a mutual Wills clause, but it will at least show the Court the reason why you have either left a close family member out of your Will, or removed a beneficiary from a mutual Will altogether.

If you are wanting to provide for your blended family or your wider family members, it is important to seek legal advice to ensure you are using the correct structure, that will allow flexibility in the event that your personal circumstances change. 

If you change your mind about the beneficiaries in your Will, or your financial status changes, it is important to update your Will without delay. The facts of this particular case highlight that it would have been prudent for the couple to both update their Wills as soon as the combined circumstance of the fall-out with the sister and the financial stability deterioration occurred.