Mutual Wills in Australia: understanding, examples, and tips to avoid disputes
There are many misunderstandings when it comes to estate planning. An example is understanding the distinction between ‘mirror Wills’ and ‘mutual Wills’.
Mirror Wills are usually made by couples. They are effectively identical to and reflect each other. They may be changed or revoked at any time by either Will-maker. Mirror Wills are not classified as Mutual Wills simply because they are in reciprocal terms.
In Australia, the doctrine of Mutual Wills can be summarised as follows:
- an agreement by two people to make Wills on the same binding terms; having not revoked his/her Will one party dies and the other survives; and
- equity imposes a trust.
To establish the existence of mutual Wills, it is crucial to prove certain key elements. Firstly, there must be clear evidence of an agreement among the parties to create mutual Wills. Secondly, these Wills should contain specific terms and provisions indicating that they are mutual and irrevocable. Finally, it is important to demonstrate that the parties intended to create a legally binding contract by executing such Wills.
While a mutual Wills agreement can be oral (there is no requirement for a written contract), the courts have expressed that there is a ‘heavy burden’ in evidencing a mutual Wills agreement, and the absence of a written contract often makes it very difficult to succeed in establishing such agreement. The courts have also expressed that caution should be taken in accepting evidence of interested parties (ie who seek to benefit from the establishment of an oral mutual Wills agreement).
History of mutual Wills
The English case of Dufour v Pereira from the 1700s is the first reported decision in English law dealing with a mutual Will. In this case, a husband and wife executed a mutual Will that outlined the distribution of their property. According to the mutual Will, the surviving spouse would inherit the property for life, and upon their death, it would pass to their children and grandchildren.
After the husband’s death, the wife inherited the property as per the terms of the mutual Will. However, she later revoked the Will and replaced it with a new one, which altered the distribution of the property, leaving it to only one of their daughters instead of all the children, as originally agreed. The Court was satisfied that there was a mutual Will agreement in place and the wife was not at liberty to change her Will after her husband died.
Recent Australian interpretation of the doctrine of mutual Wills
In a recent decision by the Queensland Supreme Court, Forster v Forster (No 2) [2022] QSC 30, the court reiterated the significance of mutual Wills in the context of blended families.
The case revolved around Mrs Forster and her late husband, who had previously entered into a written agreement. Under this agreement, they promised to create mutual Wills that would leave their respective estates to each other initially, and then, upon the death of the last survivor, divide the assets equally among their children from previous marriages.
The agreement explicitly stated that neither Mrs Forster nor the deceased could create a new Will unless it adhered to the principle of an equal distribution among the five children. Furthermore, they were prohibited from taking any action that would deplete the estate, apart from using funds for reasonable living expenses. This meant that Mrs Forster couldn’t, for example, sell or gift property in a way that would diminish or defeat her stepson’s entitlement to the inheritance upon her death.
Fearing that Mrs Forster might attempt to reduce his eventual share, the deceased’s son took legal action. He sought a declaration that the properties inherited by Mrs Forster were held on trust for the five children. There was no evidence of any wrongdoing on the part of Mrs Forster, but merely a suspicion on the part of the son. Accordingly, the court found that Mrs Forster received the estate absolutely and was free to use it as she saw fit during her lifetime.
The decision of Forster v Forster (No 2) [2022] QSC 30 was recently applied and upheld in the New South Wales Supreme Court of Appeal decision of Thynne v Sheringham [2023] NSWCA 181.
Tips to avoid disputes
When it comes to mutual Wills, taking certain precautions can help minimise the risk of a dispute among the parties involved. These include:
- Legal advice: Seek legal advice when creating mutual Wills to ensure they are drafted correctly and are suitable to your specific circumstances. This will help avoid ambiguity and minimise future disputes.
- Documentation: Properly document the agreement to create mutual Wills and execute the Wills simultaneously. This documentation should clearly reflect the intention to create a binding contract. It will be helpful to clearly specify the assets which are the subject of the agreement and the powers of the survivor in dealing with the property the subject of the agreement.
- Regular review: Periodically review and discuss the terms of the mutual Wills to ensure they remain aligned with the parties’ wishes. If changes are desired, seek the agreement of all involved parties and formalise any alterations.
- Consider alternatives: Depending on the specific circumstances, alternatives such as testamentary trusts or other estate planning strategies may be more appropriate than mutual Wills.
By following these tips and ensuring careful consideration and planning, individuals can help reduce the risk of disputes arising from Mutual wills.
Sometimes, despite the best of intentions, disputes can arise. For example, if someone tries to change their Will in breach of a mutual Will agreement, the beneficiaries under the original Will whose interests may be prejudiced by such change are entitled to protect their position in the Supreme Court by commencing proceedings against the surviving party seeking orders to enforce the mutual Will (and/or protect the assets in the estate to ensure the effect of the mutual Will is not defeated).
