Mutual Wills - still alive and well

Friday 4th March 2011

The population at large is generally aware that it is possible to make a legal document (a will) setting out a person's instructions and wishes as to how their property and assets are to be distributed after death. There is also a similar awareness that most wills can be varied or  extended, or even revoked and entirely re-written should the testator, i.e. the person making the will, so wish.

However, what is less well known is that it is possible to make a will that cannot be changed. This is where two (or more) people make their wills on the basis that they have a binding agreement about how their property will be disposed of after their deaths. Such wills are known as "mutual wills". 

Requirements
In order for a mutual wills arrangement to arise, as well as making a will setting out the desired arrangements, the testators must also expressly and unequivocally agree that they will be bound by these arrangements. A mere common intention, belief or wish is not sufficient. 

Effect
Until the first death of one of the testators the mutual wills agreement is not binding and the wills can be revoked and property left in any other way.  However, on the death of the first testator the mutual wills agreement becomes irrevocable and the other testators cannot alter these arrangements. If, following the first death, any of the other testators try to give the property to someone different, that person will hold the property on trust for the original beneficiary under the mutual wills agreement.

As will be appreciated, this can be problematic for those concerned. Where a lot of time elapses between the deaths of the testators this can lead to unfortunate consequences, as events may occur which had not been contemplated when the wills were made.

Two recent cases
These difficulties are underlined by two recent cases.

In Charles v Fraser wills made by two elderly sisters provided that on the death of the first their estate should pass to the other, and on the second death the combined estate should be distributed between 15 beneficiaries. Half of these beneficiaries were selected by one sister and half by the other, as both were conscious that they had inherited property from their late husbands and therefore were careful to remember each side of the family equally. However, several years after the death of the first sister the other made a new will leaving almost all of her estate to just two people. Although there was no written record of any agreement that the wills should not be changed, the sisters had been unusually talkative about their wills. The evidence of several witnesses led the Court to conclude that the sisters had expressly agreed between them that they would not revoke their will after the death of the first of them. The terms of the mutual will therefore prevailed, and the two new beneficiaries were found to be holding the property on trust for the original beneficiaries.

Fry v Densham-Smith, gives an insight into a similarly uncomfortable situation which may arise where a couple have children from previous relationships. Although there was no written record of the mutual wills agreement, the Court of Appeal held that the surviving wife's son was holding her estate on trust for himself and for the husband's son equally under the mutual wills agreement.

In spite of the difficulties involved in establishing the existence of a mutual wills agreement, these cases show that, even where no written record is made, where there is sufficient other evidence the courts will affirm the agreement and uphold the parties' intentions at the time that the agreement was made, even when many years have passed.

The moral is: be very clear about whether or not the person making a will intends for it to be a mutual will, and that they fully understand the consequences of such an action. 

Ashfords' Trusts and Estates Team can assist on any matters regarding a will or trust. For taxation and estate planning advice please contact Rachael Crocker on 01884 203088. In the unfortunate event of a dispute in relation to a deceased person's estate or a trust, please contact Robert Horsey on 01884 203086.