Consequences which restrict a testator
There are various factors which could have an effect in how a testator distributes their estate. To ensure no restrictions occur in how a testator wishes their estate to be distributed we need to examine all the points as outlined in this article.
Clients need to be aware of the problems which can be caused should they not adhere to the Inheritance (Provision for Family and Dependants) Acts 1975 (1). However, there are other consequences that could come into play, which can have just as much of an impact as the Inheritance (Provision for Family and Dependants Act 1975) such as mutual wills, contract to leave property by a will and proprietary estoppel.
In this article we will examine a number of concepts and we will see how each can have a major effect in how we plan a testator’s estate, also we will examine what is the best approach a will writer can take and the steps that can be taken in meeting the testators objectives.
Firstly, let us consider the concept of a mutual will and ensure that we understand the principle of such a will and also be able to recognise such a will when we see it. The basic principle of a mutual will is that two people make their individual wills with the intention to enter into a mutual agreement which neither will revoke.
Although it is not possible to make a will irrevocable, if a party dies having carried out the terms of a mutual will, this will impose a trust on the other party to honour the agreement made under the mutual will. The remaining party can go on to make another will, however, this cannot affect the destination of the property subject to a trust made in the mutual will.
The effect under the doctrine of mutual wills is an equitable remedy which will intervene and impose a trust on the testator’s property. The two people making their wills agree to the terms that neither can revoke their will without the consent of the other person.
It is important to note that the agreement of not revoking does not have to be contained within the will; it can be written separately or just made orally. It, however, has to be shown clearly and satisfactorily there was evidence of the desire to create mutual wills which is decided on the balance of probabilities should it go to a court.
Thereby a floating trust is imposed and it will crystallise on the death of the first partner. Again, it should be noted that the survivor may deal with the assets as they wish in their lifetime i.e. spend the remaining monies before their death and therefore the ultimate beneficiary will not get anything. Hence mutual wills is not an effective way in protecting assets for a beneficiary for example, should the survivor go into a nursing home or enter into marriage.
The survivor, however, is not free to give away assets to avoid the effect of a mutual will as seen in the case of Healey v Brown (2), where Norris J stated that this would amount to a breach of a fiduciary duty, which would lead to early crystallisation of the trust.
Mutual wills are usually encountered in the context of a married couple or civil partnership but can equally be relevant to two testators who are not in such a relationship. A typical feature of a mutual will is that there are mutual beneficiaries in mind of the testators, to whom they wish their property to go to on the death of the remaining survivor.
Mutual wills must be distinguished from so called ‘mirror wills’ or ‘reciprocal wills’, which may outwardly look the same as mutual wills, but which lack the vital agreement which is required by the latter. The very existence of a mutual will depends on the parties making an agreement that, once the wills are executed, neither party can revoke them without the other’s consent.
In Fry v Densham-Smith (3), the Court of Appeal revised previous authorities and said that in order to prove the existence of mutual wills, the evidence has to establish:
a) a prior agreement by the testators to make mutual wills intending their agreement to become irrevocable on the death of the first to die; and
b) The making of pursuant to that agreement.
If the testators fail to execute mutual wills pursuant to their agreement, the agreement does not become irrevocable on the death of the first to die. So as to satisfy the court that, on the balance of probabilities, such an agreement had been made, evidence is required of an express agreement not to revoke the wills has to be:
b) Unequivocal or clear; and
An agreement will not be implied simply from the fact that the testators had made similar reciprocal or mirror wills.
In the Fry v Densham-Smith (4) case, the Court of Appeal found the trial judge had been entitled to find on the evidence that there had been oral mutual wills agreed so as to entitle the defendant to one half of the survivor’s estate, notwithstanding that the survivor had changed her will three times after the first party had died. A constructive trust had been imposed when the first party died and this was binding on the survivor’s estate.
Mutual wills were the subject of Charles and others v Fraser (5), which involved reciprocal wills, made in 1991 by two sisters. There was no reference to an agreement in the terms of the wills. The evidence justified a finding that both sisters had committed themselves to testamentary dispositions which the survivor could not revoke the will even although the remaining sister had changed her will upon the death of the first.
The duty judge was satisfied that there had been such agreement between the two sisters through a mutual will agreement. The judge especially remarked about the duty of the draftsman to ensure that in these cases, the need for the taking good notes is essential and is a ‘plain duty’.
Therefore the draftsman needs to distinguish and explain the difference between mutual wills and mirror wills as both are drafted in similar terms. This is especially so if the clients wish to provide for each other and for the survivor’s estate to pass to either, a common beneficiary,
or perhaps, each party’s share of the combined estate passing to different beneficiaries.
Practitioners should ensure each testator considers whether the survivor is free to revoke his will. Whilst clients may find the idea of mutual wills to be potentially attractive, practitioners should advise them of the problems.
Secondly, another restriction which can be placed on the testator is a contract to leave property by a will and we must understand how this principle works. A will only becomes operative on death of the testator, up and until this point the will is revocable should the testator have capacity. This will is revocable even and although the testator may have entered in circumstances where the existing will benefits the third party or perhaps another.
However, if the testator chooses to revoke the existing will and replace it with another, his estate may be liable to an action for breach of contract. Consequently, the compensation the estate has to pay could render the terms of any new will ineffectual.
The implications of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (6) will also be relevant if the contract includes land.
The final topic we will examine today is the equitable concept of proprietary estoppel and again this is very important topic to be identified and explained to a client. This is very much like the concept of mutual wills; proprietary estoppel is a development of equity which has
seen a number of high profile cases before the courts within recent years, culminating in the House of Lords as in the case of Thorner v Majors (7).
In Thorner v Majors (8) a claimant worked on his cousin’s farm for a period of 29 years without any payment on the promise that the cousin would give him the property on his death. The cousin had a will stating this, but it was revoked by its destruction as the testator wished to
remove one of the other legacies from within that will. In this case the testator died before he got around to making a new will and therefore his estate was distributed under the rules of intestacy. The House of Lords found in this case that the nephew was entitled to the farm house under the doctrine of ‘proprietary estoppel’.
The concept of proprietary estoppel applies when X acts to their detriment on the faith or a belief, which is known to and encouraged by T, that he either has been given or will be given a right to T’s property. Equity says in that situation T cannot insist on what might otherwise be his legal rights if to do so would be unconscionable.
In other words, suppose X is T’s faithful housekeeper who works all hours of the day for T and there eventually comes a point where T says to X, something along the lines of ‘I can’t afford to keep paying you, but I’ve made up my mind to give you the house’. X decides to continue working for T for no wages and from time to time T repeats his encouraging words to X until T dies. T’s will however leaves the house and everything else to distant relatives with no provision for X.
Although T was legally free to leave his property by will in the ways that he did, there is every chance that X could make a claim of proprietary estoppel’. If X successfully proves sufficient detrimental reliance, the court will intervene and order provision from the estate, thereby depriving the beneficiary named in the will.
In Thorner v Major (9), the House of Lords said the main issue was the character and quality of the assurances given to the claimant, which needed to be such that they were reasonably understood to be a commitment by the deceased and could reasonably be relied on by the claimant. The claimant must also have suffered some detriment which in this instance was the number of years of free work undertook on the testator’s farm.
Any part of the deceased’s estate can be the subject of such a claim but it is important to note that the promisee will not necessarily be awarded as he thought he would be promised. The court will award the minimum necessary to achieve an equitable result. There must be proportionality between the expectations and the detriment. In Jennings v Rice (10), the claimant was promised ‘all this’ but was only aware of the house and contents (valued at £435,000.). The court of Appeal agreed with the trial judge to award everything (1.2 million pounds) or even the house and contents would be disproportionate to the detriment suffered.
The claimant was awarded £200,000.
The difficulty for anyone advising the testator is that he is unlikely to be aware of words or conduct which amount to the sort of assurances that may be the basis of a proprietary estoppel claim. Even if, on taking instructions, you are made aware through questioning that there may arise such a situation, the most that you can do is advise the testator of any implications if a will is made which reneges on any promises made.
It should also be noted that proprietary estoppel claims do not have to wait until death as the court can intervene during the promisor’s lifetime and can order that provision is made in accordance with the promise as seen in the case of Gillett v Holt (11). In Gillett v Holt (12) the defendant had provided a home and a job for the applicant on a farm for over a period of 30 years and although the defendant had made oral promises on several occasions implying the farm and his estate would be his and Mr Holt had even made a will giving the farm to the applicant.
The two later fell out and Mr Holt sacked Mr Gillet and changed his will, removing Mr Gillet. The applicant argued that the defendant owed him proprietary estoppel.
The court held in this matter that proprietary estoppel claims do not have to wait until death in a court can intervene in a promisor’s lifetime and make a order that the provision is made for the promise.
In this article we have seen that there are many constraints which may have already been created by the testator in their actions either in writing or by making oral statements.
Therefore the will writer needs to be able to identify what the potential issues are and explain the consequences of such actions to the testator.
Also a will writer needs to examine any past documents (either in wills or other agreements) the testators/clients have in place, as these may actually amount to a mutual wills or proprietary estoppel which on the death of one partner binds the remaining partner to honour in the eyes of equity. The key is to look at the wording in those wills and to see if there is a clear intention to make mutual wills. Examples of a mutual will wording maybe, ‘we have agreed that these our said wills should not be revoked unless made in both of our lives’ or ‘I rely on such agreement to make a mutual will.’ These are clear indicators of the type of will your clients have made previously.
2 Healey v Brown  W.T.L.R. 849; (2001-02) 4 I.T.E.L.R. 894 Ch D
3 Fry v Densham-Smith  EWCA Civ 1410
4 Fry v Densham-Smith  EWCA Civ 1410
5 Charles v Fraser  EWHC 2154 (Ch);  W.T.L.R 1489; 13 I.T.E.L.R.
7 Thorner v Majors  UKHL 18,  3 All ER 945
8 Thorner v Majors  UKHL 18,  3 All ER 945
9 Thorner v Majors  UKHL 18,  3 All ER 945
10 Jennings v Rice EWCA Civ 159,  1 p & CR 100,  1FCR 501
11 Gillet v Holt  Ch. 210;  3 W.L.R. 815 CA (Civ Div)
12 Gillet v Holt  Ch. 210;  3 W.L.R. 815 CA (Civ Div)