Mirror Wills vs Mutual Wills

Most people at one stage in their life make a will and often couples do this together. When it comes to two people making wills there is often confusion around the terms ‘mutual wills’ and ‘mirror wills’. Each has a very distinctive meaning with significant consequences depending on what type is chosen.

Mirror wills

Many couples choose to draft their wills so that they each have the same beneficiaries, preventing any issues of who inherits what, depending on which partner dies first. These wills are called ‘mirror wills’, appropriately named as the terms of the wills mirror each other.

It is not uncommon in modern life for couples to have families from previous relationships and, therefore, have different beneficiaries they would want to leave their estate to. However, if partners choose to leave everything to each other on the first death, and then to their own respective beneficiaries if their partner does not survive them, then unfortunately the first deceased partner’s beneficiaries would not be entitled to inherit unless the surviving partner also included them in their will.

This is because, upon death, the estate passes to the remaining partner for them to choose what to do with it. This can be problematic as it depends on which of the couple dies second as to whose beneficiaries ultimately inherit the estate. Mirror wills resolve this issue as the same beneficiaries are included in each will, and the estate can be appropriately divided between them following the second death.

The advantages of making mirror wills are that, firstly, they provide an element of security to couples, who may be concerned about whether their chosen beneficiaries would be able to inherit any of their assets if they were to pass away before their partner. They are also very flexible in nature because they can be changed at any time. This is important for many people as life’s circumstances often change.

However, the flexible nature could be a disadvantage too, as after a partner dies the surviving partner is under no obligation to keep the will the same. They can make changes, which could result in the first partner’s chosen beneficiaries no longer being named as beneficiaries in the second partner’s will.

Mutual wills

An alternative to mirror wills are mutual wills. These are wills made by a couple under the same terms, like a mirror will, with the exception that the partners are entering into an agreement with each other not to change or revoke the terms of the wills in their lifetime or after the death of the first deceased. This agreement is viewed in law as a contract between the couple which will be binding and make any future wills invalid, unless notice is provided and the couple give consent to each other to make changes or revoke the original mutual will.

These types of wills can remove any risk of a surviving spouse disinheriting the first deceased partner’s beneficiaries. However, it is important to exercise a degree of caution with mutual wills because of their inflexibility. As mentioned before, circumstances can change, and what may have been appropriate when the mutual will was made may no longer be a person’s wishes in the future.

This may be particularly true if there is a significant period between the death of the first partner and the second as, in that time, not only do personal circumstances change but so can legislation.

Whilst the restriction on the potential for a surviving partner to disinherit the first deceased partner’s children may be attractive, on balance, preventing the surviving spouse from making changes that may be required for their own financial reasons or for reasons of mitigating any inheritance tax liability may not outweigh the advantages.

For many people, the solution that seeks a balance between flexibility and protection may be in the form of a trust. This is because trusts can be set up to identify specific assets and outline the terms on which the surviving spouse is able to benefit from them, whilst also stating who the ultimate beneficiary is to be, once the surviving spouse has passed.

In practical terms, this means that, whilst the surviving spouse is able to have the benefit of their deceased spouses’ assets and change their will whenever they feel it appropriate, the deceased spouse has ensured that once they have both passed, their assets go to their chosen beneficiaries.

There may, however, be significant tax consequences of establishing a trust like this, so financial and legal advice should always be sought before doing so.

In conclusion, making a will may be one of the most important things you do in your lifetime, in order to provide for your loved ones after your death. It is, therefore, important that you seek proper legal advice from a specialist who can offer you comprehensive estate planning and will drafting support, to ensure the appropriate style of will is used for your needs.