When planning their estates, many couples consider creating either Mirror Wills or Mutual Wills to ensure that their assets are distributed according to their wishes after their death. While these two options may seem similar, they have significant differences that could affect how your estate is managed in the future.
Mirror Wills: flexibility with limited protection
Mirror Wills are typically used by couples to mirror the distribution of their assets in a way that ensures each partner’s wishes are respected. While these wills are generally drafted to reflect the same terms, they are non-binding. This means either party can change or revoke their will at any time, with no obligation to inform the other. As a result, Mirror Wills offer flexibility, but at the cost of certainty.
The lack of binding agreement between the will makers can sometimes lead to complications if one partner changes their will after the other’s death, potentially leaving the intended beneficiaries at a disadvantage. Such changes may also occur without the knowledge or consent of the surviving partner, leading to disputes that can be costly and time-consuming to resolve.
Mutual Wills: binding but inflexible
Mutual Wills, in contrast, go a step further by creating a binding agreement between the partners. Once a Mutual Will is made, neither party can materially alter the will without the consent of the other. This binding contract prevents either partner from changing the distribution of assets after the other’s death, providing a level of certainty and protecting the agreed-upon distribution.
However, this arrangement comes with its own drawbacks. The requirement for mutual consent to make any material changes can lead to inflexibility, particularly if life circumstances change. For example, the birth of grandchildren, changes in family dynamics, the introduction of a new partner or significant changes in one’s financial circumstances. A Mutual Will would prevent such updates without both parties agreeing. This rigidity can make Mutual Wills feel outdated as time passes and circumstances evolve.
Why a Trust could be a Better Option
A Trust provides a much more nuanced vehicle to balance the transfer of wealth to your intended beneficiaries, providing firm, but flexible decision-making criteria for your chosen trustees. By establishing a Trust and appointing an independent trustee, you can ensure that your asset pool is managed according to your wishes, with the trustees having the ultimate authority to make decisions based on changing circumstances. This flexibility ensures that your beneficiaries are cared for, even if unexpected events occur after your passing.
Seek Advice
If you’re considering how to structure your estate planning, it’s important to speak with a legal expert to ensure the best solution for your situation.
