There is a misconception that Wills are only for the rich and wealthy. No matter how many or how few assets you have, having a valid Will in place ensures that you decide how your assets will be distributed upon your death. Without a Will, the Administration Act 1969 determines how your assets are distributed on your behalf, and this can be an arduous and confusing process for your family at an already difficult time. Now, of course, no one plans to die, but when it happens under untimely circumstances, having a valid Will does make it easier for those left behind.
Couples who want to consider making Mutual Wills or Mirror Wills to ensure their estates and assets are properly distributed should not confuse the two. Let’s break down the difference.
Mirror Wills
This is when couples make Wills that dispose of their property in an agreed upon manner. As an example, this would be where couples leave everything to each other in the first instance and then to their children on the death of the survivor of them.
Mirror Wills can also work well for couples who have had previous relationships and children. Each of them would make a Will which would record that on the death of the survivor of them their whole combined estate (assets) would be divided into two equal shares; one share for the children of the spouse that died first and one share for the children of the spouse that died second. In this way, the estate is shared equally between the two families.
Complications, however, do arise when the surviving spouse changes their Will. Take, for example, a couple who have been married for many years and who have made mirror Wills that record that they give everything to each other in the first instance and then on the death of the survivor of them their entire estate is divided between their three children equally. Then let’s say that the wife dies and the husband then discovers that his wife had changed her Will prior to her death, unbeknown to him. Her new Will records that she wishes to leave the proceeds of a bank account in her sole name to her sister who is not very well off financially. This then comes as a bit of a shock to the husband who was hoping to rely on the funds in that bank account in his retirement with any balance to go to their three children.
It is important to note that mirror Wills do not create a legally binding agreement between couples. Either of them can revoke their existing Will and make a new one changing the agreed distribution of their assets without any consultation with their spouse.
Mutual Wills
Mutual Wills, on the other hand, do create a legally binding agreement between a couple. A couple can make Wills that dispose of their property in a way that has been agreed upon between them both. A promise is included in each Will which records that they will not revoke or alter their Will in a manner that fails to maintain what they have agreed upon and nor will they dispose of any property that the Will specifically deals with.
The point of mutual Wills is to be assured that on your death, the disposition of your assets will be carried out in accordance not only with your Will but also on the death of your spouse. Not surprisingly, however, this does not always pan out. On the death of the first spouse, the surviving spouse can still revoke their existing (mutual) Will and make another Will disposing of their assets in an entirely different manner. In that scenario, the beneficiaries who would have received assets on the death of the surviving spouse but didn’t because of the new Will made by the surviving spouse can bring a claim against the estate of the surviving spouse.
Gillespie Young Watson – Lawyers Wellington Wide
If you would like to speak to our ElderLaw team for expert legal advice on drafting wills, please call us at 05 569 3997 or email Joanne Davies.
