Cavelle Lindsay, Practice Group Leader of Wills and Estates explains mutual wills and how they may affect an individual or couple.
Anne: “Welcome, today I’m in the studio with Cavelle Lindsay from Mullane and Lindsay Solicitors, Newcastle and Tea Gardens. Hi Cavelle, thank you for joining me today. Our topic for discussion today is mutual wills, surviving your second spouse. Cavelle, I understand you’re going to speak about mutual wills, what are mutual wills?”
Cavelle: “Well Lorraine, you often see mutual Wills being made when a couple decide to make Wills and they agree on the terms of each Will before giving instructions to the solicitor. If the couple agree that after the first of them dies, that the survivor will not change his or her Will, then the Wills are Mutual Wills. The agreement can be oral or in writing.
We see this often in a second marriage, each spouse may have children from a previous marriage whom they would like to receive part of the estate. The couple agree as to what is to happen when the first of them dies and then when the second of them dies. If there is an agreement and the Wills are signed, then they are Mutual Wills. The agreement can be evidenced in writing usually by signing a Will Contract which sets out the terms of the agreement. Alternatively the parties can sign a statutory declaration to the effect that there is an agreement and that agreement provides that the Wills will not be changed after the first spouse dies.”
Anne: “What happens if the agreement is not in writing or properly documented?”
Cavelle: “Great question – if there is nothing in writing then the agreement exists however the terms of that agreement may not be known by anyone other than the couple. In the event that the surviving spouse breaches the agreement and changes the Will after the death of his or her spouse, if the existence of the agreement is not known to an affected third party, then that person may be denied the opportunity to enforce the agreement.”
Anne: “Are you able to give us an example and what might happen when the first spouse dies and they have a mutual wills agreement?”
Cavelle: “There actually has been a recent case which was heard in the Supreme Court on this topic. For background:
- Edward John Stanford died on October 2022 at aged 74.
- He was survived by his 2nd wife, Dulcie – they were married for 24 years.
- Edward had two children from a previous marriage – Brendan and Dina.
- Dulcie also had two children from a previous marriage.
- Edward and Dulcie decided when they made their Wills, to execute mutual Wills to ensure that their property devolved as the Wills provided unless they agreed otherwise and not to do anything that had the effect of significantly reducing their estates.
- In 2011 Edward was diagnosed with suffering dementia and Dulcie. cared for him until 2018 when his condition required him to be admitted to a nursing home.
- To finance part of a nursing home bond, Dulcie sold the family home and applied some of the proceeds of sale to the bond and purchased a less expensive home to live in.
- Dulcie also applied part of her pension to pay the deceased accommodation expenses and a time she only had about $300 per fortnight live on and needed to draw upon savings to live
- the deceased actual estate comprised of the balance of an accommodation bond of $211,000.
- Edward and Dulcie make an agreement about how their estates would be distributed on their deaths and that would not revoke the covenants and promises. As the deceased died without revoking his will Dulcie was bound to give effect to her agreement with the deceased.
- In this instance Brendan the deceased son made a claim on the estate for provision. Given the value of the estate was not significant, and Dulcie was an elderly widow who was apparently unable to increase her income and was never likely to be better off financially, the court found that she should be left with sufficient proceeds to allow her to purchase a suitable new residents and have sufficient funds left over to enable her to live without financial anxiety. Any provision for Brendan made out of the deceased estate would significantly impact on Dulcie, because it would diminish the funds available to her
- the court found that the deceased clear testamentary test intentions for over 15 years, as demonstrated by his execution of the binding legal enforceable agreement that the entirety of his estate should pass to Dulcie. This is reflected an understanding of the deceased obligation to Dulcie. The court had to respect the deceased freedom intense testamentary disposition and the contractual arrangement entered into him by him.
- Dulcie in this instance stated that she had no intention of changing how well the parties agreements gave rise to an obligation by each of them to comply with the agreement of mutual wills.
- There was no evidence that there was a real risk that dealt Dulcie would change her will in a way that reduced ordinary Brendan’s entitlement
- if Dulcie’s will remain unchanged there was a reasonable prospect that Brendan would receive provision from her estate upon her death and this was a factor which weighed against me the making of any provision for him from the deceased estate
- in this incident the court also found that Brendan had established had not established that adequate proper provision had been made for him in the will the court’s discretion to make a family provision was not enlivened.
So in this instance, the agreement to execute mutual Wills was upheld.”
Anne: “What happens if a spouse breaches that agreement?”
Cavelle: “If a spouse has not upheld the agreement and made a new Will, then there will need to be an analysis of the Wills and what the differences are between the terms of the two Wills. If the terms of the Will have changed from the Will that was subject to the agreement, then there is arguably a breach of contract claim that could be raised against the person who has made the new Will.”
Anne: “And who would make this claim?”
Cavelle: “It would be the beneficiary whose entitlement has been adversely affected by the change in the Will.”
Anne: “Would you make this claim whilst the person who changed their Will was still alive or on their death?”
Cavelle: “That is a good question – and it would depend on the circumstances, and the terms of the mutual will agreement and the Will itself. If any of the listeners find themselves in this situation, it is a complex area of the law so please arrange an appointment with either myself, Kristy Nunn or Robert Lindsay to discuss your queries.”
Anne: “Last question, why would anyone want a Mutual Will with a spouse?”
Cavelle: “A few reasons:
- if you want to leave your spouse your estate (or part of it) and be sure that on their death they will include in their will a particular gift to your children.
- If you and your spouse agree to look after one another’s children from previous relationships but you want to be sure that the children can legally enforce that agreement.
- If you want to give your children from your previous relationship the protection and right to sue the estate of your spouse (the one you have made the mutual Will with) if that person fails to make agreed provisions to your children in their will.”
Anne: “Thank you very much for your time and helpful information today, Cavelle. Thanks again to Mullane and Lindsay Solicitors, Newcastle and Tea Gardens.”