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Mirror wills - reflecting on the alternatives

View profile for Jodi Flint
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Mirror wills are wills made by two partners where both wills leave all of their property in the same way. This usually means leaving everything to each other and then dividing the funds on the second death between children. In the case of a couple with one or more second marriages, this will mean them deciding on an agreed division between both sides of the family, following the death of the survivor.

For example, Tom and Mary have no children of their own. Tom has a daughter, Sybil from a previous marriage, and Mary has a son, George from her previous marriage. They decide to draw up mirror wills in which they leave everything to each other and, on the death of the survivor all of their combined property is divided equally between Sybil and George.  This is a normal arrangement to which they both mutually agree, and in the vast majority of cases, it works to the satisfaction of all.

However mirror wills are not legally binding and can lawfully be changed by the survivor after the first death. This was the case in the recently reported case of the estate of Roger Jones, who had four children by his first marriage, who he wished to provide for. Mr Jones had also inherited money from his mother. He and his wife Lulu drew up mirror wills.

When he died Roger left everything to Lulu on the understanding that on her death Roger’s money (including the inheritance from his mother) would be divided between his four children and Lulu’s son and daughter. When Lulu died, Roger’s children found out that she had changed her will to leave everything to her son and daughter. They received nothing from either their father’s or their grandmother’s estates and their only hope of inheritance would lie in a costly and uncertain legal challenge.

So, although most mirror wills operate successfully on the trust between both parties, what other options are available?

The first is to consider making mutual wills instead of mirror wills. As with mirror wills these are drawn up in the same form for each person but are binding upon each other when the first spouse dies. Where mutual wills are in place, any property inherited from the spouse of the first to die cannot be ‘redirected’ by a later will made by the survivor.

However there can be problems with the inflexibility imposed by mutual wills and, for this reason, many solicitors would advise against them. Simply put, they do not allow for quite desirable alterations to be made in the case of changes to legislation or taxation. They also need to be very carefully drafted to enable alteration by mutual consent before the first death.

A more effective and flexible way to protect the wishes of the first spouse to die is to leave the property to the survivor upon what is known as a life interest trust instead of an absolute gift. This means that the survivor can enjoy the use of the property for their lifetime but the rights of the children of the former marriage are protected.

A Life Interest Trust:

  • Leaves the property to named individuals to administer – the Trustees;
  • States that the survivor is to have the enjoyment of the property during their lifetime;
  • Confirms that after the death of the survivor the property is to pass to the people (beneficiaries) selected by the person making the will.

A life interest trust can be very flexible in its terms, allowing property to be passed to the survivor in case of necessity, and also for the trust to be brought to an end in the survivor’s lifetime, in the case that circumstances may make this appropriate.

All decisions on the trust have to be agreed by the appointed trustees, one of which can be the survivor and one of which could be an adult child of the first marriage. There is also the potential to appoint an independent trustee, either a family friend or a professional, to ensure that decisions are taken with the needs of all in mind.

If Roger Jones had left his property to a life interest trust for Lulu, rather than as a direct gift, his children would currently be enjoying their rightful inheritance.

For more information and advice on the best solution for you, please email Jodi Flint or Richard Stone, or or call our team on 0800 118 1500 to find out how we can help you today.

 

 

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