A Mutual Will Agreement is a contract between two parties, usually spouses.
Under a Mutual Will Agreement each party agrees that they will not change their Will without their spouse’s consent, or if their spouse has died, the consent of their agreed beneficiaries (who are usually their children). By executing this Agreement, the parties ensure that certain mutually agreed upon testamentary intentions are given effect. Whilst under a Mutual Will Agreement the surviving spouse is able to use the matrimonial assets for their genuine retirement and living expenses, they are not allowed to deprive their agreed beneficiaries of their entitlement by transferring or giving away their assets to others.
So who uses a Mutual Will Agreement?
- Second marriages: Mutual Will Agreements are a popular tool for second marriage type relationships where each party wants to ensure that their own children are not ‘cut out’ if they die before their new spouse.
- Fear of new partners: Mutual Will Agreements can be a tool of comfort for those who are concerned about what will happen after they have died. It is not uncommon for people to fear their partner recoupling and agreeing to leave their estate to their new partner instead of the original couples children.
- Easing Paranoia – by having a Mutual Will Agreement in place your children can see that, even though you left your estate to your partner, when that partner dies your children are still going to get ‘their share’. This can go along way to preserve relationships in blended families and ease paranoia about ‘getting left out’.
A Mutual Will Agreement does not stop you from making a new Will during your lifetime. Like any contract the terms of the Mutual Will Agreement can be revoked or altered by the parties to it whilst you both have legal capacity. What it does mean is that after the death or incapacity of one party, the other party can’t make any sweeping changes without the consent of the ultimate agreed beneficiaries. In the event that a party does change their Will without agreement, then an action may be brought by the beneficiaries.
It is important to note that a Mutual Will Agreement does not prevent a new partner from making a claim against an estate or from the Family Court making property orders on relationship breakdown. It is simply not possible to contract out of those laws. We can talk to you about other alternatives if this is your concern.
A Mutual Will Agreement will ensure that, with the exception of certain legal claims, your estate will pass in the manner agreed by you and your spouse at the time the Mutual Will Agreement is signed regardless of who dies first and what happens thereafter.
If you would like to discuss the benefits of a Mutual Will Agreement as part of your estate planning, get in touch with our Estate Planning team.