Posted: Thursday, 17 May 2018 @ 11:53
One typical scenario(or fear) which is played out by clients is as follows.
John and Janet meet and both of them are divorced and both have children from their previous relationship.
They both have a significant estate/assets but while their wills provide for each other they wish to ensure that their respective children are provided for too.(ultimately)
One option is to sever the joint tenancy of the property and ensure that their children are the ultimate beneficiary of any share.
Another option is to create a trust though understandably some people are put off the administration and the cost of doing this.
There is another method which certain clients like and I quite like but it does require a measure of risk tolerance, namely to do a mutual will.
So, what exactly is a mutual will?
A mutual will is where there are mutual testators, usually(but not always) husband and wife or civil partners and each leave all their property to an agreed third party e.g children of the husband and wife.
What is the key aspect of a mutual will?
An agreement not to revoke the will and the fact there is an agreement. Effectively a constructive trust is imposed meaning that the survivor becomes a trustee over the subject matter of the agreement.
What are the problems of a mutual will?
Mutual wills freak out many lawyers as they go against the concept of the ability to revoke a will and that it is quite easy for the survivor to spend all the assets and there is not too much legally to prevent this. You should also define those assets.
When do you recommend them?
Typically clients who trust their spouses and have good relationships with the children. The key is to have advance communication(no surprises) and the willingness of everyone to do the right thing.Openness counts.