Wills + Estate Planning: Mutual Wills

If, like me, you have been intrigued by the High Court battle being fought between Barbara Cook, Chief Executive of Diamond Products and her stepsiblings regarding Mutual Wills, this article explains what Mutual Wills are and why they are usually best avoided. These Wills may appear harmonious initially, but beneath the surface lie potential problems leading to legal disputes and unintended consequences.

Cook’s late mother made a Mutual Will with her stepfather in 2009 to reflect their unequal contributions to a property bought together. Their Mutual Wills left 75% of their property to Cook and her sister Jennifer Gough, and 25% to their stepsiblings. At her death Cook’s mother had completed her part of the agreement in their Mutual Wills. Cook’s stepfather then made a new Will some 3 months after her mother’s death. By writing a new Will he was able to charge an equity release loan against the property resulting in Cook and Gough’s claim he has broken this Mutual Wills contract and they have been deprived of £450,000 of their inheritance.

What is a Mutual Will:

Mutual Wills are made by two people (usually, but not always, spouses or civil partners), typically in the same terms. Parties make Mutual Wills on the understanding that neither party will alter or revoke either Will during lifetime without the other’s consent, or after the first death. The terms of the Will remain binding on the survivor after the first death regardless of whether they make a later Will.

Lack of Flexibility:

Mutual Wills suffer from a significant drawback—lack of flexibility. Once terms are set, adapting to life’s changes becomes challenging. Shifts in financial situations, familial relationships, or personal preferences can result in the Will becoming out of step with the testators’ wishes. The absence of adaptability makes Mutual Wills susceptible to unforeseen circumstances and may lead to unintended consequences.

Survivor’s Changing Circumstances:

The surviving party in Mutual Wills is often bound by the agreement, even if circumstances change. For instance, remarriage or financial difficulties can make the constraints burdensome. This lack of flexibility may strain subsequent relationships or cause financial hardship for the surviving party.

Undue Influence and Coercion:

Mutual Wills are susceptible to allegations of undue influence or coercion, especially when one party is more vulnerable. Claims of pressure leading to agreement may challenge the Will’s validity, requiring proof there was no coercion.

Disputes Among Beneficiaries:

Mutual Wills can foster disputes among beneficiaries, particularly if the terms favour one set of heirs. Inflexibility and changes in family dynamics may lead to resentment and legal battles. Resolving such disputes can be emotionally taxing and financially draining for all parties involved.

Revocation Challenges:

In the UK Mutual Wills are irrevocable unless both parties consent to changes. Mutual Wills create a binding contract and attempting to revoke a Mutual Will after a party’s loss of capacity or death presents legal hurdles, potentially leading to conflicts and lengthy court proceedings.

Conclusion:

While Mutual Wills may at first glance seem practical for couples with aligned estate planning goals, their inherent inflexibility and susceptibility to legal challenges should not be underestimated. Before opting for Mutual Wills, seeking detailed legal advice is crucial to fully understand potential pitfalls.

Exploring alternative estate planning strategies that offer greater adaptability and protection against unforeseen circumstances is essential for a more secure and effective approach. Couples may wish to consider life interest trusts within their Wills to protect their property assets and determine who will ultimate benefit from their share of any co-owned property. With each party being able to decide who will ultimately receive their share of the property, and no binding contract between the parties, life interest trust wills offer a practical solution to Estate planning.

For further information or to arrange an appointment to make or review/update an existing Will please contact our Wills, Probate & Tax Planning Team by calling on 01761 414 646, emailing us on enquiries@th-law.co.uk or contacting us through our website.