What are mutual wills?
Mutual wills are wills made by multiple parties with directions that depend on one another and that entail reciprocal benefits. Mutual wills also must include an agreement that the wills will not be revoked without notice by one of the parties to the other.
There is no restriction on one of the parties revoking the mutual wills agreement while all the parties are still alive (so long as they revoke the mutual will publicly), but once one of the parties is deceased the directions set out in the mutual wills become irrevocable.
An important question about mutual wills is whether mutual wills agreements can in certain circumstances be enforceable as contracts (as opposed to merely giving rise to some form of lesser agreement).
A contract makes the terms of an agreement legally enforceable obligations at law, which if breached can be remedied through monetary compensation or (especially in the case of land) through an order to perform the terms of the agreement.
The necessary elements for a contract are as follows:
- There must be an offer and acceptance of that offer;
- There must be consideration (a price given as value for another party’s promise, e.g. payment of money);
- There must have the capacity to enter legal relationships (usually met so long as the parties are adults and of sound mind);
- There must be an intention by the parties for the agreement to be legally binding; and
- The agreement must be sufficiently certain (the agreement must have meaning that can be constructed by the courts).
This case deals with whether it is possible for a mutual wills agreement to meet the necessary elements of a contract.
Marjorie and Robert were brother and sister, and lived together in the same family home with their respective families until Robert’s death.
Robert fell seriously ill and in February 1996 it was expected that he would have only a very short time left to live.
Robert organised for his solicitor to meet him in order to draw up a last will.
During the meeting Robert initially expressed an intention to leave his share of the family home with his daughter Robyn.
The solicitor said that during the meeting Marjorie (who was also present) interrupted Robert and said that she wanted him to leave his share of the family house with Marjorie. Marjorie promised that in exchange she would leave that half share of the property to Robyn in her will.
The solicitor suggested that Robert’s interest in the property be left to Robyn, but that Marjorie be given the right to live in the house for the rest of her life. However, Marjorie disagreed with this proposal.
Robert agreed and executed a will which left his share of the property to Marjorie, but if Marjorie failed to survive him then the share would go to Marjorie’s husband Keith. Conditions were placed on Keith’s ownership which if he failed to meet the share of the property would revert to Robyn.
Shortly thereafter Marjorie executed a will in which she left her share of the family house to Robyn or, if she predeceased Robert, to Robert with the same conditions as those in Robert’s will for Keith.
Robert died four days after he executed his will.
Marjorie inherited Robert’s share of the property. Robyn, acting on reliance on the mutual wills agreement, declined to seek a family provision claim in respect of Robert’s estate.
In 2001 Marjorie executed a last will which did not leave a half interest in the family house to Robyn. Marjorie died in 2012.
Robyn brought a claim against the executors of Marjorie’s will alleging that the mutual wills agreement between Robert and Marjorie was a legally binding contract.
In evaluating whether the mutual wills agreement met the necessary elements of a contract, the Court found as follows:
There was clearly an offer by Marjorie which was accepted by Robert.
This promise was supported by sufficient consideration. The Court found that the exchange of an absolute interest in the property during Marjorie’s lifetime constituted valuable consideration.
The defendant contended that the close family relationship between Marjorie and Robert suggested that a legally binding contract was not intended, but merely an understanding regulated by trust.
However, the Court rejected the idea that the closeness of Marjorie and Robert in the circumstances prevented a finding of legal intent. It was clear, being in the presence of a solicitor, that they contemplated that this was a solemn legal agreement.
While the two wills did not explicitly refer to the existence of a contract the solicitor recorded in the file note that the two wills would be executed mutually using the words “understanding that in her will she will leave ½ int. to my daughter” – the terms of the agreement can be plainly constructed from this, and as such the contract was sufficiently certain.
Thus, the Court found that there were all the necessary elements for a contract in existence.
Importantly, the Court determined that (while there was no explicit provision in the mutual wills agreement that the mutual wills could not be revoked) there was an implied term that the agreement would not be revocable upon the death of one of the parties.
Moreover, while under the general law of contract a third party (such as Robyn) could not enforce a contract the Court ruled that an exception applies for mutual wills agreements.
The Court ruled that the contract gave legal force to an obligation by the executors of the Marjorie’s will to hold a half share in the family property on a constructive trust for Robyn, and as such the Court ordered that this half share be transferred by the executors to Robyn.
This case highlights the importance of seeking legal advice if you decide to enter into a mutual wills agreement.
Click here for the full judgement text.