What Is a Mutual Will & How Does It Work?

Understanding Mutual Wills

A mutual will is a legally binding agreement between two or more people, often spouses or partners. It outlines how their assets will be distributed after both have passed away.¹ Here is how it works.

Creation and Agreement

The parties make decisions together about how their assets will be handled. They choose beneficiaries, such as children, family members, or charities. They agree on how and when assets will be distributed.

This agreement is then put into legally valid will documents. Each person has their own will, but both reflect the same shared terms.

Binding Agreement

A mutual will includes terms that limit changes over time, such as:

• Irrevocability Clause: After one person dies, the surviving person cannot change the agreed distribution of assets.
• Consent Requirement: While both are alive, any updates must be approved by everyone involved.

First Party’s Death

When one person passes away, the agreement becomes fully active. Then, the terms apply to the surviving person. The structure helps protect the original wishes and keeps the plan in place.

Surviving Party's Role

The surviving person takes on responsibility for managing the estate. They must follow the agreed terms when handling and distributing assets. They cannot change how jointly covered assets will be passed on.

Upon the Death of the Surviving Party

After the second person passes away, the estate is distributed as originally agreed. Assets go to the named beneficiaries. The process follows the instructions set in the mutual will.

Practical Example

Mia and Sam create a mutual will. They agree that when one of them dies, the surviving partner receives the entire estate. After the second person dies, the estate is divided equally among their children.

When Mia passes away, Sam must follow the terms of the mutual will. Sam cannot change the plan to leave the estate to someone else. This helps carry out Mia’s wishes and ensures their children receive the assets as intended.

Pros: What Are the Benefits of a Mutual Will?

Mutual wills offer several advantages, especially for couples who want to help make sure their shared wishes are followed after both partners pass away. Here's a look at some of the main advantages.

Ensures Shared Wishes Are Respected

A mutual will helps confirm that both partners’ intentions are carried out, no matter who passes away first. This can be helpful for:

• Couples with children from previous relationships: Helps prevent the surviving partner from changing how assets are divided in a way that favors their own children.
• Blended families: Provides clear direction on how assets should be distributed, which may reduce confusion or conflict.

Simplifies Probate

Because wishes are clearly documented in legally binding agreements, mutual wills can help make the probate process more straightforward for the surviving partner. This may reduce the time and costs often tied to probate court.

Protects Beneficiaries

The binding nature of a mutual will limits the surviving partner’s ability to change the agreed-upon distribution. This helps protect beneficiaries from unexpected changes later on.

Promotes Communication and Planning

Creating a mutual will usually involves open discussions between partners. This process can help both individuals better understand each other’s goals and reach an agreement on how their estate should be handled.

Cons: What Are the Drawbacks of a Mutual Will?

While mutual wills can help carry out shared wishes, they also come with limitations that may not work for every couple. Here are some of the key drawbacks to consider.

Lack of Flexibility

Once one partner passes away, the surviving partner is generally unable to change the terms of the will. This can create challenges if circumstances change, such as:

• Changes in personal situations: Events like having more children or shifts in finances may require updates that are difficult to make.
• Relationship changes: Separation or divorce does not automatically void the agreement, which can lead to legal complications.

Potential Legal Challenges

The enforceability of mutual wills can vary by location. In some cases, the surviving partner may contest the agreement, which can lead to legal disputes, delays, and added costs.

Complexity and Cost

Mutual wills involve detailed legal agreements that must be carefully written and clearly understood by both parties. This added complexity often leads to higher legal costs during both setup and estate administration.

Limited Applicability

Mutual wills are not the right fit for every situation. They may be less suitable for:

• Couples with unequal assets: A different approach may better address each partner’s individual needs.
• Couples expecting future inheritances: A more flexible will may allow for easier updates if financial situations change.

Understanding both the advantages and limitations can help couples decide if this option fits their needs. Legal guidance can help confirm the will aligns with applicable laws and personal goals.

Alternatives to a Mutual Will

Exploring other options can help you build an estate plan that fits your situation and allows for more flexibility. Here are several alternatives to consider:

• Mirror wills: Also called reciprocal wills, these are separate wills created by spouses or partners. Each will includes similar instructions for how assets should be distributed, but they are still individual documents tailored to each person.¹
• Living trusts: A living trust is a legal document that places your assets into a trust while you are alive. You can continue to use those assets, and after your death, they are transferred to your chosen beneficiaries.
• Transfer on death accounts and deeds: Transfer on death (TOD) accounts and deeds let you name beneficiaries who will receive specific assets after you pass away. This process allows those assets to transfer directly, without going through probate.
• Joint tenancy with right of survivorship: This type of ownership allows property to pass directly to the surviving co-owner when one owner dies. As a result, the property does not need to go through probate.

When a Mutual Will Might Be the Right Option

Mutual wills can be a good fit for some couples, especially in situations where long-term plans are clearly defined and unlikely to change. They are typically considered in the following cases:

• Couples with children from previous relationships: Mutual wills can help outline how assets will be divided, making it easier to follow an agreed plan and support children from both sides of a blended family.
• Strong shared goals and commitment: These wills depend on trust and shared long-term intentions. They tend to work well for couples who are aligned on how they want their estate handled.
• Desire for certainty in inheritance: If there is a clear goal to leave assets to specific beneficiaries, such as children or charities, a mutual will can help reinforce those decisions.
• Limited changes expected: This approach is often more suitable when a couple does not expect major life changes that would require updates to their wishes.
• Focus on the surviving spouse: For some, a main priority is making sure the surviving spouse is provided for. A mutual will can help support that outcome while maintaining the original agreement.

Factors to Consider Before Opting for a Mutual Will

Here's a breakdown of the most important factors to carefully evaluate before choosing a mutual will.

Potential for Future Changes

Life can change in ways that may affect how you want your assets distributed. A mutual will may limit your ability to adjust. Think of these life changes:

• Remarriage: If you may remarry after your partner’s death, a mutual will can restrict how you provide for a new spouse.
• New children or beneficiaries: Births, adoptions, or changes in relationships could make the original terms less suitable.
• Asset fluctuations: Significant increases or decreases in wealth may make the original plan feel unbalanced or impractical.

Need for Flexibility

A mutual will is typically difficult to change, which can be a concern as circumstances evolve. Consider the following if you are:

• A younger couple: Life stages, finances, and goals often shift over time. A fixed agreement may not keep up.
• Changing estate goals: Your views on legacy or tax strategies may change as you age, and a mutual will can limit those adjustments.

Trust in Your Partner

This type of will depends on long-term alignment between both partners. Think about:

• Your shared goals: Both partners need to stay aligned on how assets should be handled, even as situations change.
• Undue influence concerns: Some couples use mutual wills to prevent outside pressure on the surviving spouse. Consider whether this risk applies in your situation.

Complexity of Your Estate

The structure of your estate can influence whether a mutual will is appropriate. A mutual will may work for straightforward estates. More complex situations or larger estates may require more flexible options, such as trusts.

Legal Considerations

Rules around mutual wills can vary widely depending on where you live. Requirements, enforceability, and options for changes differ by jurisdiction (state or county). Legal guidance can help you understand your options.

Consult an estate planning attorney for guidance before deciding if a mutual will is the right choice.

Steps to Creating a Mutual Will

Creating a mutual will involves a series of steps to help reflect the shared wishes of both partners and meet legal requirements. Each step builds on the last to create clear, enforceable documents.

Step 1: Evaluate Your Estate Planning Needs

Start by reviewing your overall estate planning needs. Consider:

• The size and complexity of your estate
• Who your beneficiaries are
• How you want your assets distributed

This step helps you decide if a mutual will fits your situation.

Step 2: Inventory Assets

Create a detailed list of everything you own. This may include:

• Real estate
• Bank accounts
• Investments
• Personal property
• Other valuable items

Having a full inventory makes it easier to plan distributions and spot potential challenges.

Step 3: Discuss and Agree on Terms with Your Partner

Set aside time to talk through the details with your partner. You should agree on:

• How assets will be distributed
• Guardianship for minor children
• Any conditions or legacies you wish to include

Clear agreement is important since the terms generally become binding after the first death.

Step 4: Consult with an Estate Planning Attorney

Given the legal complexities and implications of mutual wills, consulting with an estate planning attorney is essential. An attorney can provide advice tailored to your specific circumstances, help you understand the legal requirements, and ensure that your separate wills comply with state laws.

Step 5: Draft the Wills

Your attorney will draft the mutual wills based on the agreed-upon terms. These document details how assets are to be distributed, name executors, and include any other legal provisions necessary to ensure that your wishes are carried out.

Step 6: Review and Revise as Necessary

Carefully review the draft wills with your partner and attorney. This is the time to make any adjustments or revisions to ensure that the documents accurately reflect your wishes and are clear and unambiguous.

Step 7: Execute the Wills According to Legal Requirements

Once the mutual wills are finalized, they must be executed properly to be valid. This typically involves signing the will in the presence of witnesses. The specific requirements can vary by jurisdiction, including the number of witnesses required and any additional steps needed to make the will legally binding.

Step 8: Store the Wills Safely

Store the executed wills in a safe, secure location. It's also wise to inform the executor of the wills or a trusted family member of their location, so they can be easily found when needed.

Step 9: Review Periodically

While mutual wills are intended to be irrevocable after the first death, it's wise for both parties to review their entire estate plan periodically while both are alive. This allows you to reconsider your decisions in light of any changes in your circumstances, relationships, or the law. However, remember that changes to a mutual will require the agreement of both parties.

Step 10: Consider a Memorandum of Understanding

In some cases, partners may choose to accompany their mutual will with a memorandum of understanding. This separate document can outline the reasons behind specific decisions in the will and can be helpful in preventing disputes among beneficiaries by providing context for your choices.

Conclusion

Mutual wills allow couples to formalize shared decisions about how their assets will be handled. They can help keep those decisions consistent, even after one partner passes away. Still, every situation is different, so it is important to weigh your options carefully.

If you are ready to begin, consider using a free will creation service from Fabric by Gerber Life. It offers a simple way to start putting your plans in place as a couple.

Sources

1. Mutual wills vs mirror wills: key differences and risks. https://www.stewartslaw.com/news/are-mutual-wills-a-good-idea/.