The Risks of Agreeing to Mutual Wills or Deeds

A Mutual Will, not to be confused with a mirror Will, establishes a legally binding contract between two people that can’t be changed without mutual agreement. Whilst it’s possible to alter the terms whilst both parties are living, the terms of a mutual Will are fixed and binding for the survivor after the first person’s death.

Why Mutual Wills Are Used

In contrast with other Wills, a mutual Will is not voided on marriage or re-marriage. So, in certain situations, a mutual Will may appeal to couples anxious to protect the family’s wealth or business or prevent their spouse from disinheriting their children should they divorce, remarry and have a second family.

A recent judgment following a high-profile four-day High Court trial demonstrates how inflexible Mutual Will agreements can be, whether inside or outside the Will (as in this case).

Recent Case

Colicci & Ors v Grinberg & Anor [2023] EWHC 1177 (Ch)

The case centred around a promise by Ernesto Colicci and his first wife, Josephine Colicci, to make a Will through a mutual deed agreement in 2016.

The Background

Ernesto and Josephine married in 1982 and had two children, Robert and Rosanna. Together, they built a hugely successful ice cream and catering business, ECSI Ltd, incorporating it in 2003. The shares were owned equally by Ernesto and Josephine. After leaving full-time education, their children Robert and Rosanna joined the company as employees.

Although Ernesto and Josephine divorced in 2011, they still ran the business together, signing a shareholders’ agreement, leaving the business to their children, and prohibiting any future share transfer except with the consent of both shareholders.

Ernesto married Nora Grinberg in 2014 and later had a child together. Josephine followed suit, starting a second family with her new partner.

In 2016, Ernesto and Josephine signed a mutual deed agreement so that their two children would inherit their company shares when they died to safeguard their offspring’s futures and the Colicci empire. They also promised to make Wills to that effect.

In 2017, Ernesto, Josephine, Robert and Rosanna signed a new shareholder agreement, giving each adult child a portion of shares and promoting Robert to a director. Clause 18 explicitly stated that this new agreement superseded any previous arrangement, including the 2011 shareholders’ agreement.

Following the birth of a new baby in 2017, Ernesto made a Will to provide for his new wife and child.

He also wrote a letter of wishes making clear that he was disinheriting his adult children, Robert and Rosanna, to provide for Nora and his new baby.

Unfortunately, Ernesto died unexpectedly from Covid in 2021. His latest Will, leaving his ECSI Ltd shares to Nora, contradicted the terms of his 2016 mutual deed agreement with his ex-wife Josephine.

The Dispute

Josephine, Robert and Rosanna contested Ernesto’s 2017 Will because the 2017 shareholders’ agreement had not revoked the terms of the 2016 mutual deed agreement.

Nora argued that clause 18 of the 2017 shareholder agreement made it clear that Ernesto was released and was free to change his mind, leaving his shares (including an explanatory letter of wishes) to Nora in a new 2017 Will.

The Judgment

The judge, Recorder Mark Anderson KC, ruled that the mutual deed agreement between Ernesto and Josephine in 2016 “removed Ernesto’s and Josephine’s freedom to dispose of their shares on death”. They had made a binding, mutual promise that had created “testamentary obligations”.

The shareholders’ agreement in 2017 affected them as shareholders, not testators. Furthermore, clause 18 in this 2017 agreement does not mention the 2016 mutual deed agreement; instead, it refers to the 2011 shareholders’ agreement following Ernesto and Josephine’s divorce. The adult children were entitled to the shareholding.

Our Advice

It’s clear from this case (and other recent ones) that the courts will uphold mutual agreements, even if an individual changes their mind. Furthermore, careful consideration must be given to the wording of any contracts, and these documents must be regularly reviewed to accurately reflect the current situation and, above all, avoid ambiguity or potential conflict.

While mutual wills or deed agreements may seem like a good solution, particularly in family businesses, second relationships or blended families, fixed arrangements offer little flexibility and limited benefit.

So, if you’re considering making a Will with a spouse or relative on similar terms, you must decide whether you would like your Will to be irrevocable in the future. Setting up a trust mechanism or other family arrangements will likely deliver a much better outcome depending on the circumstances.

Please get in touch for more information or advice about this or any other estate planning issue. We’re here to help.

Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.