The Tricky Issue of Mutual Wills - Practical Tips for 'Policing' Agreements
It is widely accepted that mutual Wills can be fraught with difficulty and have the potential to result in complex litigation. How can you protect a client who is a beneficiary under such a Will, and minimise the risk of litigation arising in the future?
This article considers some practical steps which it may be appropriate to take when acting for a beneficiary of a mutual Will following the death of the first mutual testator, before the death of the second.
What Are Mutual Wills?
In essence, the doctrine of mutual Wills applies where two or more testators agree:
- to make Wills on certain terms
- not to revoke or alter the terms of their Will unless both testators consent
They often arise in the context of second marriages or civil partnerships where a testator wishes their spouse to have the benefit of their assets upon their death, but also wants certainty that their combined estate will pass to their children on the death of the surviving spouse.
Whilst some Wills may be expressly described to be mutual Wills, this is not a formal requirement and it may be necessary to look to extraneous evidence of the agreement between the testators to establish whether the doctrine applies.
Providing the necessary requirements are met, a constructive trust is created over the property covered by the mutual Will agreement, which is held on trust for the beneficiaries named in the mutual Wills. Following the death of the first testator, the second testator will therefore be restricted in their ability to dispose of the trust property in any other way, even if they attempt to make a later Will which revokes the mutual Wills.
The survivor remains free to dispose of any property which is not covered by the mutual Will agreement, and could therefore make future Wills which deal only with those assets.
An Example
To put this into context, let's consider a typical scenario:
- Fred and Mary married in 2010. Fred has a son, Robert, from an earlier marriage.
- In 2015 Fred and Mary make mutual Wills. It is agreed that they will each leave their estate to the other absolutely, on the proviso that Robert shall inherit the entirety of the combined estates in the event that Fred is predeceased by Mary and vice versa.
- Fred passes away in 2014 and his entire estate passes to Mary, in accordance with his mutual Will.
- Following Fred's death, Robert's relationship with Mary sours. She moves away from the former matrimonial home she shared with Fred and Robert loses touch with her.
- Robert approaches you, concerned that he has lost contact with Mary and that she may now attempt to make a new Will, excluding him as beneficiary.
Based on the evidence, you are able to conclude that Mary and Fred intended and agreed to make binding mutual Wills. Having established this, what steps might you consider taking to protect Robert's position following Fred's death, and to minimise the risk of future litigation on Mary's death?
Location, Location, Location
On a practical level, the first step will be to establish where Mary is now living and it may be necessary to instruct tracing agents to assist with this. This is important not only in establishing a correspondence address for Mary, but as the former matrimonial home forms part of the property which is now subject to the mutual Will trust, you will need to establish that Mary has not disposed of this.
Seek Early Agreement
As a next step, consider writing to Mary to set out the position, reminding her of the existence and effect of having created a mutual Will and seeking her agreement that the doctrine applies to the Wills she and Fred executed in 2012.
Taking this step at an early stage could prevent Mary from executing any further Wills throughout her lifetime which attempt to dispose of her estate differently, potentially avoiding a dispute with the beneficiaries of any later Wills after her death. If later Wills are made, this correspondence could serve as useful evidence in any future litigation, if the existence of mutual Wills is disputed.
Restrictions on Inter Vivos Dispositions
Although Mary has an absolute interest in Fred's estate, this is qualified in that she holds it on trust for Robert, as the beneficiary of the mutual Wills. Therefore, Mary is not only prevented from revoking or amending her Will to provide for different dispositions on her death, she is also restricted in her freedom to deal with the residuary estate throughout her lifetime.
It was held in the case of Healey v Brown [2002] that inter vivos dispositions made by the surviving testator to a mutual Will agreement, which are evidentially in breach of the agreement made, can be readily described as a fraud upon the agreement if the surviving spouse deliberately seeks to gift away significant parts of the estate of the first to die from its intended beneficiaries.
In her capacity as trustee, Mary must therefore be able to account to Robert for any dispositions of trust property she may propose to make, to demonstrate that they do not constitute a fraud upon the mutual Will agreement.
Mary could therefore be required to provide details of the assets held in Fred's estate, as well as providing advance notice of any proposed dispositions of trust property which are over a certain threshold (eg £10,000). This will mitigate the risk of Mary breaching her fiduciary duties owed to Robert.
In addition, Mary should be requested to provide regular (ie bi-annual) updates to Robert as to the size and nature of the trust assets and property. This will allow Robert the opportunity to identify any unexpected or undisclosed significant dispositions and to investigate these as appropriate.
Safety Net
Whilst the above steps may provide your client with some reassurance that their interests are protected, much of this relies on the co-operation and communication of the second testator. In cases where a property is involved, a regular review of the HM Land Registry Day List will reveal any pending applications and official searches with priority lodged against the relevant title number, which may alert you to a pending sale or other disposal of the property.
In situations where your client has no direct contact with the surviving testator and may not be notified of their death, entering a standing search will ensure that you are notified in the event that probate is granted for them.
Conclusion
These are examples of some of the practical steps which may be useful in 'policing' a mutual Will agreement in order to protect a beneficiary's interests. However, this is a complex area and there is no one-size fits all solution. The appropriate steps will very much depend on the nature and construction of the mutual Will agreement in question.