Mutual Wills and Estate Planning: What Spouses Should Know

Feb 2018 | Estate Planning & Probate

married-couple-feet-.jpg

When completing estate planning, many spouses execute wills that are mirror images of each other. For example, both wills say that upon the death of one spouse, everything goes to the surviving spouse. And then, upon the second death, their wills give everything to the same set of children or to the same set of people or charities. Such wills are called “reciprocal wills.” With reciprocal wills, the surviving spouse is free to change his or her will, gift assets to others, and name beneficiaries as he or she sees fit. In other words, the surviving spouse receives everything and is then free to do whatever he or she wants with it.

If the wills are “mutual wills,” however, the surviving spouse doesn’t have the same freedoms. With mutual wills, the spouses agree that the surviving spouse will not change his or her will after the death of the first spouse. Mutual wills are not as common as reciprocal wills, especially in situations where the two spouses share the same set of children, because usually both parents place the same importance in passing their estate to their shared descendants. However, this same understanding does not always exist when the spouses have children from prior marriages or one spouse brings more wealth into the marriage.

What does a “mutual will” look like?

A well-drafted mutual will includes language in which both spouses unambiguousy declare that they both intend to make mutual wills that restrict both spouses from changing the distribution plan in their wills after one of them dies. It is best practice to also state in the wills that either spouse can change his or her will during their lives, but only after giving adequate notice to the other spouse of the intention to do so.

However, a mutual will can still exist without any such language in the will. Without this language, though, other evidence would be required to prove that the spouses intended to be bound by the wills. Even an oral agreement would suffice, although the court would subject allegations of an oral contract create mutual wills to a high degree of proof. Portmann v. Herald, No. 49563-5-II (Wn. App. 2018); Arnold v. Beckman, 74 Wn.2d 836, 841 (1968).

Can a spouse ever change his or her will?

Yes, under some circumstances. If no consideration is provided for the mutual wills, except the mutual agreement of the spouses, either spouse can change the will prior to the death of the first spouse. However, the change cannot be done in secret. The spouse changing the will must provide adequate notice to the other spouse so he or she has a chance to change his or her will too. After the first spouse dies, however, the surviving spouse cannot change the will.

Can the surviving spouse thwart the mutual will by making nonprobate designations after the death of the first spouse?

No. A seemingly clever way of avoiding the restrictions of a mutual will arrangement would be to convert assets from probate assets to nonprobate assets and name beneficiaries inconsistent with the wills. For instance, a surviving spouse might create a joint bank account with right of survivorship with someone not named in the mutual wills. This strategy, however, is subject to being set aside by a court. In one unpublished case, the court rejected a surviving spouse’s attempt to work around the mutual will in this manner, and established a constructive trust on the funds placed into a joint account with right of survivorship. In re Estate of Hodgson, 2006 WL 1135035 (Wn. App. 2006) (unpublished). 

Can a surviving spouse make gifts after the first spouse dies?

Yes and no. A surviving spouse is free to make gifts, but cannot make gifts that are intended to undermine the agreement inherent to the mutual wills. In particular, if the gifts are made with “testamentary intent,” such as death-bed gifts, they need to be consistent with the distribution plan in the mutual wills, or the gifts can be set aside by a court. See Newell v. Ayers, 23 Wn. App. 767, 770 (1979).

Bottom Line

If you and your spouse intend to create wills that restrict both of you from changing your wills later, you should clearly state this agreement in your wills. When doing so, it’s important to keep in mind that you will each have significant restrictions later. If one of you has died and the distribution plan later makes no sense, too bad. You can’t change it, and you can’t take steps to work around it, such as by making gifts or beneficiary designations contrary to the agreed distribution plan. Be sure to consider these issues carefully before making mutual wills.

Please contact Chad Horner or Sharon Netherton to discuss your estate planning needs.