Tag: Blended Family
Don’t let the similar sounding names fool you – while there are some similarities between “mirror wills” and “mutual wills,” there’s also a world of difference.
Mirror wills – also referred to as reciprocal or joint wills – are typically created by spouses who want to leave their estates first to each other, and then ultimately to their joint children.
The wills will “mirror” one another in that they typically state that the person leaves everything to their spouse, and if the spouse should predecease them, then everything goes to the children. With a mirror will, the survivor is free to change his or her will in the future if circumstances change.
So, what then is a mutual will? Mutual wills are a similar, yet clearly distinguishable, estate planning vehicle, with the key differentiator that the will of the surviving spouse cannot be changed after the first spouse dies.
Mutual wills are most commonly used by spouses who enter into marriages with children from previous relationships. While they wish to benefit each other upon death, they also want their respective children to have benefits upon the death of the surviving spouse. While a mutual will has elements of a mirror will, it also involves an agreement not to revoke or vary the terms after one of the spouses dies.
While this agreement can be made orally, it makes proving the agreement problematic if it’s later disputed. For this reason, the drafting lawyer should confirm the intention for mutual wills then document that intention with an express written agreement. The agreement should clearly outline the scope of the property to be governed by the agreement and the rights of the survivor to use that property during their lifetime. Ideally, this agreement should also be acknowledged in the will.
Mutual wills are a useful tool when a couple are agreed that their property should be distributed in a particular way and are content to waive their right to change those plans after the first death. However, because mutual wills “lock in” a pattern of estate distribution – and circumstances and situations can often change – these wills are often a source of controversy and dispute. They require careful drafting, and careful consideration before they are created.
You can find a detailed overview of the law related to mutual wills in Canada here: https://hullandhull.com/wp-content/uploads/2015/01/oct-2007-wills.pdf.
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BMO Wealth Management recently released a report entitled “Estate planning for complex family dynamics,” which details the findings of a survey commissioned to ask Canadians for their views on estate planning, inheritance, and communications about these topics within their families. The results of this survey illustrate the importance of communication in avoiding family conflict, particularly in situations where a parent is in a second marriage or common-law relationship.
Only 30% of respondents indicated that their parents had discussed their estate plans or shared details about their wills with them. The report suggests that parents who were separated or divorced were less likely to discuss their estate plans with their children.
The survey respondents were asked whether they believed the distribution of their parents’ estates had been fair. About half of the respondents believed the distribution had not been fair. The report states that respondents whose parents had any kind of relationship other than a first marriage were most likely to feel that the distribution was not fair. Of the respondents who believed the distribution was fair, three-quarters responded that their parents had divided the estate equally. The remaining quarter of respondents who thought their parents had distributed their estates in a fair way reported that the unequal distribution was justified.
When asked about what would constitute a fair distribution of assets, respondents to the survey gave a wide range of answers. Most respondents believed that children of a testator should be treated equally. A minority of respondents believed an unequal division might be fairer, for reasons such as financial need or a particularly close relationship with one child.
The dynamics of a blended family are fertile ground for conflict. Communication with all interested parties about what to expect after the death of a parent or spouse can help ease tensions and avoid surprises after death that often lead to estate battles.
You can find a copy of the full report on the BMO website.
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Mutual wills, are separate and distinguishable from mirror wills. Namely, mutual wills are reciprocal wills that the makers have agreed cannot be changed without the consent of the other. Once one of the them has died, it is not possible for the surviving partner to receive such consent, and therefore the terms cannot be altered. Mirror wills, on the other hand, can be changed by either party as they decide, and without notice to the other party.
The distinction between mutual wills and mirror wills is becoming increasingly relevant given the rise of blended families (families consisting of married couples and their children from previous relationships).
Most individuals who marry into a blended family want to ensure that both their children and their new spouse will be protected once they pass away. The execution of a mirror will may not always be sufficient to ensure this outcome.
This issue was recently considered in the Ontario Superior Court of Justice decision in Rammage v. Estate of Roussel, 2016 ONSC 1857.
In this case, Alfred Roussel (“Alfred”) and Ruth Roussel (“Ruth”) were married in 1997. Each had two children from previous relationships. In 1998, Alfred and Ruth executed wills by which they gave their respective estates to each other and provided for an equal division amongst their four children on the death of the surviving spouse (the “1998 Wills”). Alfred died 2009 leaving his estate to, Ruth. Ruth decided to prepare a new will in 2010 leaving the entirety of her estate to her two children. Ruth later died in 2013.
Alfred’s children took issue with the fact that Ruth’s estate passed entirely to her beneficiaries and not them and litigation ensued.
As there was no direct written or oral confirmation that the 1998 Wills were mutual, Alfred’s children had to rely on extrinsic evidence to support the existence of a binding legal contract. Justice Reid considered the context. Specifically, the fact that the 1998 Wills were made in context of 13 years of cohabitation including a commitment of marriage, the fact that Alfred had been the breadwinner for many years, the fact that Alfred and Ruth had acted throughout their marriage as if they had a family consisting of four children, the fact that the obituary was indicative of a unified family and that Alfred and Ruth had told the four children they would be left everything once both had passed.
Justice Reid held, that in the circumstances, Alfred’s children had satisfied the onus on them of proving that a verbal contract had existed between Ruth and Alfred to the effect that neither Ruth nor Alfred could change their 1998 Wills.
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During Hull on Estate and Succession Planning Episode #46, Ian and Suzana discuss various family law topics which facilitate the creation of a successful estate plan. They focus on "Sweetheart Wills", property analysis, constructive trusts, and the importance of transparency and dialogue especially when dealing with blended families.