Two people can make an agreement to the effect that following the death of one of them, the survivor will not revoke or alter his or her will. By a “mutual will” or “mutual will agreement” two people agree to dispose of property in a certain way, and each agrees not to break the agreement after one of them dies. Mutual wills are enforceable in BC, but the law in this area is underdeveloped and complex. A number of complications can arise, making estate litigation necessary to enforce promises. Here are answers to some FAQs about mutual wills in BC.
Are “mutual wills” and “mirror wills” the same?
No. A “mirror will” is one that contains provisions that parallel the provisions of another person’s will. A common example is where each spouse creates a will that leaves everything to the other spouse, with the estate to go to their children when the surviving spouse dies. The general rule in BC is that a will-maker is entitled to revoke or alter his or her will at any time, so there is nothing preventing a surviving spouse from making a new will that differs from the mirror will after the first spouse dies. In contrast, a “mutual will” creates an obligation on the surviving spouse to not change his or her will. A mutual will can be created using clear language in the will, or it can be contained in a separate mutual will agreement entered into at the same time the wills are executed.
Why use a mutual will?
“Mutual wills” or “mutual will agreements” can be entered into by any two people, but are commonly used by spouses. For example, a mutual will may be used where each spouse has children from a previous marriage. In a blended family situation, the purpose of a mutual will agreement is to bind the surviving spouse to provide for the children of the spouse who dies first. A mutual will can also be used to ensure that a surviving spouse makes charitable bequests, as was done in a BC estate litigation case called University of Manitoba v. Sanderson Estate.
In the Sanderson Estate matter, the spouses had no children. They executed mirror wills providing that the estate of the first spouse to die was to be held in trust for the surviving spouse for his or her lifetime, with all of the residue to go to the University of Manitoba on the death of the surviving spouse to establish a bursary fund. When the Sandersons executed their mirror wills, they also executed a written mutual wills agreement stating that they agreed with one another that their respective wills would not be altered or revoked by either during their lives or by the survivor after the death of one of them.
What happens if a mutual will is not followed?
If the survivor alters or revokes his or her will contrary to mutual will promise, the originally intended beneficiaries can bring an estate claim to enforce the agreement. In Sanderson Estate, Mr. Sanderson made a new will after Mrs. Sanderson’s death which was inconsistent with the mutual will agreement. His new will divided the residue of the over $1.7 million estate among several family members, with the balance going to the University. The University sued, claiming it was the sole beneficiary, entitled to the entire residue. The estate litigation was decided in favour of the University, with the BC Court of Appeal’s decision in the case affirming several important principles in the law of mutual wills:
- A mutual wills agreement can be revoked or changed by the spouses prior to the death of one spouse if both agree to revoke or change it, or if appropriate notice is given.
- The agreement becomes binding when one spouse dies without revoking or changing his or her will.
- As the deceased spouse who relied on the promise can no longer intervene to enforce the obligation, equity will enforce the survivor’s obligation. The Courts can impose the equitable remedy of a “constructive trust” to enforce an obligation under a mutual will if the survivor breaks the agreement.
- It is not necessary for the survivor to be “unjustly enriched” for this type of estate claim to succeed. Even if no benefit flowed to the survivor under the will of the first to die, a constructive trust may still arise. The obligation to not revoke a mutual will binds not only that portion of the estate which may come from the estate of the first to die, but also the survivor’s own property.
Can the survivor dispose of all his or her assets prior to death?
The law is not entirely clear on this issue. Although a will normally does not govern a will-maker’s use of their assets during their lifetime, some courts have found that a constructive trust arises at the time that the mutual wills agreement becomes binding (i.e. upon the death of one of the parties to the mutual wills agreement). This trust that arises in mutual wills cases has been characterized as a “floating trust” which allows the survivor to enjoy the use of their assets (and those inherited by way of the mutual will) subject to a “fiduciary duty” that limits their ability to dispose of the combined assets during their lifetime.
Bottom line on mutual wills in BC
If a mutual will is changed or revoked after the first party has died, beneficiaries under the mutual will may sue to enforce the obligation. The Court can enforce the obligation created by an agreement not to revoke mutual wills by imposing a constructive trust on the property for the benefit of the person or people entitled to receive it from the estate. The law in this area is complex, so do not hesitate to reach out to our estate litigation team if you need legal advice.