Private Client Services Update – It’s Not Set in Stone: Reciprocal Wills Do Not Automatically Create an Irrevocable Estate Plan
By Sarah E. Messersmith, Estate, Trust & Wealth Transfer
In a world with an ever-increasing number of blended families and second marriages, it is not uncommon for couples to desire to treat all of their children and step-children equally. On many occasions, such couples elect to prepare wills or revocable trusts that provide for all assets to pass to the surviving spouse, and upon the death of the surviving spouse, to pass such assets to all of the husband’s children and the wife’s children, with each child getting an equal share. Alternatively, sometimes a couple may decide that upon the death of the second spouse, one-half of the assets will pass to the husband’s children and one-half of the assets will pass to the wife’s children.
This type of scheme works well if the couple lives to a ripe old age and passes away within a short time of one other, without the survivor making any changes to the estate plan. However, this is not always the case. One spouse can predecease the other, leaving the survivor widowed for a number of years. The survivor may remarry and may have other children or gain other step-children. The relationship between the surviving spouse and the children of the deceased spouse may deteriorate or disappear. The surviving spouse’s biological children may spend significant time and energy caring for the survivor during the end of his or her lifetime, while the step-children keep their distance.
Obviously, there are a number of reasons, both good and bad, why a surviving spouse may desire to make a change to the original estate plan. Solely because the original wills or revocable trusts were mirror images of one another and were signed at the same time, is the survivor barred from changing the plan? Does the execution of reciprocal wills automatically create a binding contract between the spouses which prohibits the surviving spouse from changing the estate plan?
The Virginia Supreme Court addressed this issue recently in the case of Keith v. Lulofs. 283 Va. 768, 724 S.E.2d 695 (2012). In this case, a husband and wife executed mirror-image wills in 1987 that left the entire estate to the surviving spouse and after the death of the second spouse, one-half to the husband’s son, Keith, and one-half to the wife’s daughter, Lulofs. The husband died in 1996 and the wife executed a new will, leaving her entire estate to her daughter, Lulofs. The Court held that “the language of ‘mirror-image’ wills is insufficient alone to form a contract” which would prevent the surviving spouse from modifying his or her estate plan. The Court explored the difference between contracts and wills, stating that “wills, unlike contracts, generally are unilaterally revocable and modifiable” because a testamentary disposition of assets is a gift. Although it is still possible for a contract to be established by implication based on the surrounding facts and circumstances, this requires clear and satisfactory proof of the contract.
The result of the Keith case makes sense. Not every couple who executes mirror image wills or trusts intends that those documents create a binding contract. For the couple who strongly desires to have an irrevocable estate plan in place, they have the option to execute an irrevocable trust or to memorialize the agreement with a separate contract. Furthermore, one spouse may provide for a surviving spouse and control the ultimate disposition of the remaining assets of his or her estate after both spouses are deceased by establishing a qualified terminable interest trust (QTIP), bypass/family trust or another form of trust that becomes irrevocable upon the death of the spouse creating the trust. Note, however, that this strategy only controls the assets of the one spouse, not the combined assets of both spouses. Regardless of the technique under consideration, the creation of an irrevocable estate plan should not be taken lightly, and the parties only should proceed after thorough consultation with an attorney.
Sarah Messersmith is an associate in the firm’s Hampton office. Her estate planning and administration work with clients ranges from the initial structuring and implementation of their estate plans to the resulting estate and trust administration. Sarah helps clients create wills, revocable and irrevocable trusts, powers of attorney and advance medical directives and assists clients with tax planning and succession planning issues. She also represents clients who are administering an estate or trust after a family member has died, providing assistance through the trust implementation or probate process.
The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2023.