Are Mirror Wills the most beneficial for you and your partner?
Clients often come to meet with us at Wolferstans Solicitors with their spouse, civil partner or partner requesting “Mirror Wills” initially leaving their assets to one another, but they may be mistaken in believing they guarantee that their assets pass to their intended ultimate beneficiaries, such as their children.
In many circumstances, this may be the most cost-effective way of having Wills prepared, as they will each be provided with their own Will that is in the same terms as that of their spouse, civil partner or partner and a reduced fee may be charged for the two together. With that being said, any responsible solicitor or professional Will-drafter should provide a warning.
A Mirror Will is not binding on either party, such that should one of them pass away, the other remains free to change their Will should they choose to do so. A significant aspect involved in seeking Mirror Wills, therefore, is trust. Without one of them knowing it, the assets may be moved away from the expected ultimate beneficiary.
A common issue that can arise is where the surviving spouse, civil partner or partner may enter a new relationship. In the event that they remarry, the original Will they may have executed many years before, will be automatically revoked. When making a new one, therefore, their priorities may have shifted. This could be to the detriment of the ultimate beneficiaries from their original Will, such that the new spouse may be given a share of assets belonging to the first. Further, should their new spouse outlive them, they could be due to inherit the estate and choose to pass this along with their own assets to their own children, potentially cutting out stepchildren who will then have received nothing from either of their parents’ estates.
The outcome of Mirror Wills are not necessarily all doom and gloom such as in the above examples. They can be very efficient from an Inheritance Tax perspective. In passing all assets between spouses or civil partners on the first death (but, notably, not those in a relationship who are not married or in a civil partnership), they are maximising the availability of the nil rate allowance; any that is unused will be transferred to the survivor’s estate on the second death. That is the position of legislation at the time of writing and can mean that on the second death there is an allowance of £650,000 (the availability of the residential nil rate allowance is beyond the scope of this article).
Furthermore, with the right legal advice at the right times, the pitfalls of revocable Mirror Wills can be avoided. For example, assets can be ring fenced within a trust that operates following the testator’s (the person who made the Will) death to be protected for their intended beneficiaries even if the surviving spouse, civil partner or partner remarries or cohabits with someone new.
“Mutual Wills” are an alternative option to Mirror Wills. Mutual Wills, contrary to Mirror Wills, are binding on the surviving party to the Wills and cannot be revoked after the first death. The effect of this type of Will is that the assets are held in trust until the last party to the Wills passes away. Wolferstans will be happy to provide more detail on this type of Will if you wish to know more, but they are infrequently used by many solicitors or professional Will-writers due to the problems that can arise.
In any event, if a person perceives him or herself to be a disappointed beneficiary from such a scenario as described above, he or she ought to obtain his or her own legal advice about the prospect of making a claim on an estate from which they feel they ought to have been provided some benefit.
Ultimately, we must all remember, the law in England & Wales reflects the fact that we all have the freedom to pass our assets on in any way that we wish. The Courts are reluctant to take any action to undermine this fundamental principle.
If you would like to make an appointment to discuss making a new Will or reviewing your current Will, then please get in touch with our New Client team.