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Can Mutual Wills Agreements Be Cancelled Unanimously?

January 23, 2022

Ontario

,

Canada

Issue

Can one of the parties to a mutual wills agreement unilaterally cancel the agreement prior to the other party's death?

Conclusion

A mutual wills agreement can be cancelled unilaterally by giving notice to the other party of the agreement of the revocation of the will. The notice that must be given must be sufficent such that the other party has the opportunity to alter their will. It can also be cancelled by joint consent. (Re Kerr, Nelson v. Trottier)

Law

In Hall v. McLaughlin Estate, 2006 CanLII 23932 (ON SC), there is a question of the validity of two subsequant wills created after the death of one participant in a mutual wills agreement. The court cites Snell’s Equity,13th ed. in giving an overview of the doctrine of mutual wills:

[6] A succinct statement of the doctrine of mutual wills is found in Snell’s Equity,13th ed., Sweet and Maxwell, London, (date unknown) at pp.219-20:

“Where two persons make an arrangement as to the disposal of their property and execute mutual wills in pursuance thereof, the one who predeceases the other without having departed from the arrangement has performed his part of the bargain and dies with the implied promise of the survivor that it shall hold good. Usually the parties give each other a life interest with remainders over to the same person but they may give each other an absolute interest with a substitutional gift in the event of the other’s prior death. The principle applies even where they agree to make wills leaving their property to third parties and no part to each other. The arrangement will not be presumed from the simultaneous execution of virtually identical wills but must be proved by independent evidence of an agreement not merely to make identical wills but to dispose of the property in a particular way. It must amount to a contract at law.

Once one of the parties dies, the arrangement becomes irrevocable, at least if the survivor accepts the benefits conferred on him by the other’s will. Until the first death, either may withdraw from the arrangement; and any material lateration by one party of his will without the agreement of the other party will prevent it from being binding….”

[7] The learned author adds that an arrangement for mutual wills means that the survivor holds the property in trust for the beneficiaries named in the will.

In Edell v. Sitzer, 2001 CanLII 27989 (ON SC), Cullity J., declined to interfere with the Trustee's use of a power of encroachment. In doing so he defined the doctrine of mutual wills as follows:

The doctrine of mutual wills has been applied where individuals make separate wills pursuant to an agreement about the terms of their respective wills. Where the requirements of the doctrine are satisfied, the survivor will not be permitted to defeat the agreement by revoking his or her will after the death of the other. This result is achieved by the imposition of a constructive trust on the survivor's estate for the benefit of those who were intended to benefit under the agreement. The fundamental prerequisite for the doctrine is that there be an agreement. The agreement must satisfy the requirements for a binding contract. The agreement must be proven by clear and satisfactory evidence. It should include a promise not to revoke the will or a promise that any new will would adhere to the agreed scheme. The nature and extent of the property to which the trust attaches and the rights, if any, of the survivor to consume, or dispose of it after the other's death depends upon the terms of the agreement. It is unnecessary for the survivor to obtain a benefit under the other's will.

In Rammage v Estate of Roussel, 2016 ONSC 1857 (CanLII), the deceased, Ruth, survived her husband, Alf, who had died several years before her. The plaintiffs were Alf’s children, and the defendants were Ruth’s children. At issue was whether Ruth and Alf's wills were mutual wills. As part of the decision that Ruth and Alf had mutual wills which could not be changed, the court stated:

[17] Reciprocal wills contain terms that are mirror images of each other. By definition, they represent the wishes of the two testators at the date of signing. The wills made by Ruth and Alf in 1998 are clearly reciprocal. However, the simple fact that the wills were made in that form simultaneously is not enough, by itself, to establish that they are mutual wills.

[18] Mutual wills are reciprocal wills that the makers have agreed cannot be changed, at least as to their effect, without the consent of the other. Once one of the testators has died, it is not possible for the surviving testator to receive such consent, and therefore the terms cannot be altered.

[19] For wills to be mutual, their provisions must be identical in the sense that each party receives an identical interest from the other, or that the remainder or gift over is disposed of in an identical manner.

In Nelson v. Trottier, 2019 ONSC 1657 (CanLII), there is an application for declarations that they have a constructive trust had arisen due to the violation of a mutual will agreement. In deciding that a constructive trust had not arisen because the mutual will agreement had not been violated the court stated:

[45] A mutual wills agreement is a contract. As noted, the purpose of imposing a constructive trust is to enforce the terms of the contract in circumstances where one of the parties to the agreement has died and cannot do so.

[46] One thing is clear. Given the parties to a mutual wills agreement can revoke their wills by mutual agreement or independently, provided they give notice to the other party [Dufour v. Pereira; Pratt v. Johnson, 1958 CanLII 79 (SCC), [1959] S.C.R 102], there is no need for equity to impose a constructive trust to enforce the agreement while both parties are living. They have contractual remedies to enforce the agreement if one of them breaches it.

In Re Kerr, 1948 CanLII 107 (ON SC), there is a discussion of the doctrine of mututal wills which states:

The guiding and determining principle which must govern the decision of the question presented in the case at bar is to be found in an old case of unquestioned authority which, while distinguished from time to time under varying circumstances, has, through succeeding generations, been followed and applied. I refer to the judgment of Lord Camden in Dufour v. Pereira (1769), 1 Dick. 419, 21 E.R. 332. A more complete report of this judgment is to be found in Hargrave's Juridical Arguments, vol. 2, at p. 304. In that case a husband and wife had executed a joint will, which is also referred to in the judgment as a "mutual will". According to the report to be found in Hargrave, Lord Camden, in one of the few judgments which he wrote (he apparently having followed the practice of reserving but few judgments), dealt with the questions before him in eloquent and forceful language, which I quote:

"A mutual will is a mutual agreement.

"A mutual will is a revocable act. -- It may be revoked by joint consent clearly. -- By one only, if he give notice, I can admit.

...

This decision was applied in In re Hagger; Freeman v. Arscott, [1930] 2 Ch. 190. Clauson J., referring to the case of Dufour v. Pereira, states at p. 195:

"To my mind Dufour v. Pereira decides that where there is a joint will such as this, on the death of the first testator the position as regards that part of the property which belongs to the survivor is that the survivor will be treated in this Court as holding the property on trust to apply it so as to carry out the effect of the joint will. As I read Lord Camden's judgment in Dufour v. Pereira that would be so, even though the survivor did not signify his election to give effect to the will by taking benefits under it. But in any case it is clear that Lord Camden has decided that if the survivor takes a benefit conferred on him by the joint will he will be treated as a trustee in this Court, and he will not be allowed to do anything inconsistent with the provisons of the joint will. It is not necessary for me to consider the reasons on which Lord Camden based his judgment. The case must be accepted in this Court as binding. Therefore I am bound to hold that from the death of the wife the husband held the property, according to the tenor of the will, subject to the trusts thereby imposed upon it, at all events if he took advantage of the provisions of the will. In my view he did take advantage of those provisions." There is an interesting discussion of Dufour v. Pereira in Stone v. Hoskins, [1905] P. 194, where, however, the principle was not applied because, as stated at p. 197:

" ... where the first person to die has not stood by the bargain and her 'mutual' will has in consequence not become irrevocable. The only object of notice is to enable the other party to the bargain to alter his or her will also, but the survivor in the present case is not in any way prejudiced. He has notice as from the death."

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