Providing for beneficiaries in blended families-The Mutual Will

BY: VALERIE DYE

The term ‘Blended Family’ is used to refer to married couples who have children from previous relationships. This type of family often presents a challenge in will and estate planning as each party often have a desire to leave assets to their children. Without careful planning, the children of one party may not benefit from an inheritance. Take for instance the following scenario: John is widowed and has two children from his previous marriage. He also owns a home which he had previously owned with his dead wife. John subsequently marries Mary who also has two children from a previous marriage. Mary and John live together in John’s home. Several years later John dies and Mary inherits all of John’s assets. It is highly likely that Mary can then make a will leaving all her assets (including the home she inherited after John died) to her children. Even if she dies intestate her children will be the beneficiaries of her assets and not John’s children.  Unfortunately, in this scenario, John did not take steps to ensure that his children were left an inheritance after his death.

One way of making provisions for all beneficiaries in a blended family is for couples to execute mutual wills. In the Superior Court of Justice Case, Rammage v Estate of Roussel, 2016 ONSC, Justice Robert highlighted the elements of a mutual will.  Essentially the mutual will is a reciprocal will in which both parties receive identical benefits from each other and they both identify the same third parties to whom the assets will go after the surviving spouse dies. For instance, to ensure that John’s children, as well as Mary’s children, receive shares of their assets after they are both dead John could have bequeathed his assets to Mary with a provision in his will that upon Mary’s death the assets will go to all four children equally. Mary would also have made a will leaving her assets to John with a provision that upon John’s death the assets will go to all four children equally. In such a case, regardless of which party dies last, the result would be the same.

In order for the parties to obtain these results from their wills, the will must be stated to be irrevocable. Of course, this is an exception to the general rule that wills are always revocable prior to the testator’s death. Further, as stated by Justice Reid in Rammage v Estate of Roussel, ‘there must be evidence of a binding legal contract in order for the will to be interpreted as a mutual will. As such, one party will be unable to alter his or her will without the consent of the other.  Furthermore, once such a contract is established one party is not allowed to change his or her will after the death of the other since at that point the dead party’s consent cannot be obtained.  As soon as one party dies the mutual will becomes irrevocable. The surviving party will now hold the existing assets in trust for all four children. The agreement not to revoke the will may be either a separate document or it may be incorporated in the will. In the absence of a written agreement, the court may infer the existence of an oral agreement as in did in Rammage v Estate of Roussel.

If the surviving party decides to breach the agreement and revoke his or her will the children of the deceased party can bring an action in court to enforce the terms of the will.