The Complete Guide to Mutual Wills in NSW

Estate Planning

When planning for the future, most people create a will to outline what should happen to their property and assets after they pass away. But what happens when two people want to make a legally binding agreement about their estates? This is where a mutual will can be a powerful tool.

This guide explains what a mutual will is, when it might be useful, and how it works under NSW law.

What is a Mutual Will?

A mutual will is a specific type of legal agreement where two or more people create wills with terms that are agreed upon in exchange for each other. In simple terms, they make a promise not to change their wills without the other's consent.

While it's best practice to have a formal contract, it isn't strictly required. As long as the agreement is clear and precise enough for a court to enforce, it can be considered a valid mutual will.

When are Mutual Wills Used?

Mutual wills are most often used in blended families. For example, consider a person who has children from a previous relationship. They may want their current partner to be able to live in and use their property after they die, but also want to ensure that property ultimately passes to their own children.

By creating a mutual will, they can agree that the surviving partner will inherit the estate but is legally bound to pass it on to the children upon their death, rather than leaving it to someone else.

What Happens When One Person Dies?

If one person in a mutual will agreement dies without changing their will, the agreement becomes legally binding on the survivor. This is enforced by the courts to prevent what is known as "fraud on the trust."

Because the first person passed away believing the agreement would be honoured, the court will not allow the surviving person to break that promise. It would be unfair for the survivor to receive the benefits of the estate and then dispose of the property in a way that goes against the original agreement. The court steps in to ensure the terms are carried out as promised.

Can a Mutual Will Be Changed or Revoked?

Yes, a mutual will can be changed, but only under specific conditions.

While both people who made the agreement are still alive, either one can revoke their will. However, they must give clear and sufficient notice to the other person that they are changing their mind.

Once one person has died, the survivor cannot unilaterally change their will to contradict the terms of the mutual agreement.

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