Mutual Will Agreements and Blended Families: Are They Right For You?

Mutual Will Agreements and Blended Families: Are They Right For You?

We often are asked to make wills for husbands and wives and de facto spouses and, increasingly, same sex partners.

Sometimes, couples mistakenly believe that it is possible for them to make one will that will represent their combined wishes, when of course they need to make their own individual wills (it’s one of life’s truisms that we are destined to leave this world the way we were born – alone).

In most cases, each partner’s testamentary wishes will be almost exactly the same, where perhaps they agree to appoint each other their executor and give their respective estates to each other and then their children.

Not surprisingly, we commonly call such wills “mirror wills” given that they reflect the same wishes of each party.

It’s complicated

But we live in an increasingly complicated world and one size estate plan does not necessarily fit all, especially in the case of blended families.

Wills for partners with blended families will not necessarily want “mirror wills” because their interests may be conflicted between members of “their” side of the family.

The wills and estate planning of parties in a blended family situation should be treated with extra special care and skill as the risks of conflict and confusion are so much greater.

A “cookie cutter” approach may be all well and good when everyone’s “happy families” but people need to consider what may happen to their assets when one or both partner dies and the effect of these events on their blended families.

Here’s a story

If you are particularly concerned to make sure that your assets and those of your partner are distributed in a certain way, you may consider a mutual will agreement.

Mutual will agreements are when two parties agree to make their wills in a certain way and intend to be bound by that agreement, which is usually but not always in the form of a deed (another legal term for a written agreement) signed at the time of making their wills.

Here’s a story of a man called “Mike” and his new wife “Carol” each of whom have three children from their first marriages.

They make mutual wills whereby whoever survives the other shall inherit the estate of the other and when they both die their estates shall be divided equally between Mike’s children and Carol’s children.

At the same time, Mike and Carol sign a mutual will deed, in which they agree that:

·     During their lifetimes, they will not change or revoke their wills without each other’s consent; and

·     After the death of one of them, the other will not change or revoke their will.

What are the advantages?

Mike and Carol may well consider that by making mutual wills and entering into a mutual will deed that they’re protecting “their” side of the family.

These are the advantages of mutual will deeds:

·     There is greater certainty about how their assets will be treated;

·     Members of the blended families may feel secure in the knowledge that everything will be sorted out whichever party dies first or second;

·     Assets which may otherwise fall beyond the estate of the first party to die (usually the family home if it is in joint names) will be included and dealt with according to the terms of the will of the last person to die.

What are the disadvantages?

As with everything in life and in law, Mike and Carol may be wary of issues as time goes by and everyone’s circumstances change.

There are certain disadvantages of mutual will deeds:

·     If Mike dies first, Carol is not restricted in terms of how she can use the asset (eg the family home);

·     Mike’s kids will have to wait for Carol to pass away before they get their entitlements (a real issue if Carol is much younger than Mike);

·     If Carol enters into a de facto relationship, new rights are created and Carol’s de facto would have a claim against the assets while Carol is alive and on her death;

·     Similarly, if Carol remarries, her will is automatically revoked by operation of law but her contractual obligations under the mutual will deed will remain, muddying the waters further!

A balanced, measured estate plan

As you can see from Mike and Carol’s situation, there can be a lot of pitfalls on their journey in life and death. There are nIo absolute certainties and it really is a question of reviewing your estate plan regularly to make sure everything is set in place the way you want to at that time.

Ideally, Mike and Carol should get their own independent legal advice because of the understandable conflicts or potential conflicts.

It is certainly possible for Mike and Carol to have their mutual will agreement incorporated in the terms of a Binding Financial Agreement under the Family Law Act. In fact, this is highly desirable if they want to protect the assets they each brought into the relationship.

As solicitors, we will be able to give considered advice to Mike and/or Carol about what their balanced, more measured estate plan having regard to the assets that are likely to available in their respective estate.

For example, while the family home is always a bone of contention between opposite sides of blended families, often falling into the lap of the children of the younger second spouse, it may well be that the older spouse has superannuation or life insurance proceeds which may well be enough to satisfy the claims of the children of that spouse.

Summary

Yes, it’s complicated, all right, and while mutual will deeds have a role in certain situations, they certainly should not be seen as a “set and forget” option because life does not necessarily work out the way intended.

Which is why we advocate obtaining independent specialist legal advice in regards to your estate planning at each step of your life’s journey as your circumstances change.

If you have a blended family and would like our advice about will and estate planning call us on 08 8276 7955 or email us your query at admin@dirosalawyers.com.au.

This blog is published by Di Rosa Lawyers for informational purposes only and is not considered legal advice on any subject matter. By reading and re-publishing the blog, you acknowledge that there is no solicitor-client relationship between you and Di Rosa Lawyers. This blog should not be used as a substitute for legal advice from a legal practitioner who specialises in the area and you are urged to consult us or seek your own independent legal advice on any specific issue or matter.