Deed of Variation - Mutual Will (2nd death)

Trusts Discussion
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I am administering an estate where the deceased (Mrs) made a mutual Will with her late husband in 1995, and husband died in the late-90s. The mutual Will was his last Will, and the same firm who prepared the Will administered his estate.

Mrs made a number of later Wills with the same firm (the last of which was 2010) purporting to revoke all previous Wills and deal with her estate in a different manner. Unfortunately it seems the Will drafter(s) did not look back at the 1995 Will or consider that Mr had died creating binding obligations on his wife under the mutual Wills.

Clearly there are a number of issues but it has been accepted by the disappointed beneficiaries under the 2010 Will that the mutual Will is valid and binding in so far as a constructive trust arises governing the beneficial interests. The assets can all be traced through as the estate is not overly complex.

The beneficiaries under the mutual Will wish to pass assets down a generation in some cases and also to honour some of the provisions under the 2010 Will.

Has anyone had experience of varying entitlements under a mutual Will so that the usual retrospective IHT and CGT treatment applies provided the variation is executed within 2 years of death? I assume it is possible (as the beneficiaries would be prejudiced otherwise and are not party to a mutual Will) but the rarity of mutual Wills means it is not something I have not found a clear answer on so far. I should add that the 2010 Will applies in so far as the executor appointment and administrative provisions are concerned, so the executor of the Will needs to be a party to the deed because the IHT position may well alter assuming the variation can be made.

Given the complexity of the circumstances it is likely Counsel’s opinion will be sought, but I would greatly appreciate any thoughts on the variation aspect.

Many thanks indeed for considering this.

Dan Milano
Moore Barlow LLP

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My understanding is that mutual wills relate to the execution by, typically, spouses of two wills (or one joint will) which are executed so as to dispose of agreed property as set out in an enforceable arrangement between the spouses (under which their wills are to be irrevocable).

So long as the surviving spouse has not, and does not, change their will (assuming the first to die stuck to the agreement), ie the original beneficiaries would inherit as per the will, it would not seem to constitute a breach of their agreement if one or more DoVs were subsequently executed despite the fact that under the DoVs the ultimate beneficiaries are not necessarily those who were to originally benefit.

Malcolm Finney

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Mutual wills bind only the surviving testator(s). The beneficiaries are able to deal with their inheritance in the same manner as in any other estate.

It is not unusual for the beneficiaries under the mutual will to vary the dispositions of the estate, perhaps to avoid strife within the family. I have come across this a couple of times.

The executor need only be joined in the variation if there is additional IHT to pay as a result of the variation AND they are holding sufficient assets to be able to discharge that additional liability.

N.B. I refer to “surviving testator(s)” as mutual wills can be made by more than two persons (and they don’t have to be married to each other or in a civil partnership). I have heard of valid mutual wills being made by siblings.

Paul Saunders FCIB TEP

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