The Winner Takes It All – How to avoid gambling when making Wills
I recently saw a couple whose wills (made many moons ago) had created an unusual situation. I asked them: “Do you know the Abba song….The Winner Takes It All?” The wife nodded enthusiastically and the husband looked at me as though I’d just announced that I was a banana. I explained further: “That’s the effect of your wills. On their own they make sense…but when you read them together the effect is a little odd….”
Quite often when couples come in to see me they take one of two approaches, the first is “we want to make a will together” and the second is “we want to make our own wills”. In truth most couples are probably aiming for something in between – a set of documents that interact sensibly but with individual aspects too.
You might have heard the phrase “mirror wills”. These are a set of wills which a couple make on similar terms which reflect each other. These are not to be confused with joint or mutual wills which are completely different concepts.
So in a set of mirror wills – Mr Smith’s will says “I leave everything to my wife Mrs Smith” and Mrs Smith’s will says “I leave everything to my husband Mr Smith”.
Then Mr and Mrs Smith decide how the wills should cover the scenario in which they have both passed away. Sometimes this is as simple as “and if my spouse has predeceased me, then I leave everything to my children.”
However, in 2016 we are used to a range of different family set-ups and you might not have the same children as your spouse. The husband might wish to leave an inheritance for his daughters whereas the wife might wish to leave an inheritance for her nephews. Alternatively one civil partner might wish to leave everything to the NSPCC and the other to the RNLI. How do you resolve this?
- A wishes to leave everything to B but if B has predeceased then to the NSPCC
- B wishes to leave everything to A but if A has predeceased then to the RNLI
What A and B have created is a “winner takes it all” situation. A and B are essentially gambling – whoever survives gets to choose the beneficiaries to receive their combined estate.
If A passes away first – all of A’s estate is paid to B. Then when B passes away the combined estate (all of B’s estate and the inherited estate from A) will be paid to B’s choice of beneficiary. This doesn’t seem entirely fair to A! Not to mention that A’s beneficiaries who will not receive anything at all, may feel a little hard done by and seek legal advice as how to retrieve “their fair share” of A’s estate.
In practice, this can cause all sorts of problems. So it is often sensible for A and B to come up with an agreed set of beneficiaries and both list those beneficiaries in mirror wills. So they both say: “and if my civil partner has predeceased me then 50% to the NSPCC and 50% to the RNLI”.
You can have flexibility as the wills can be individually tailored to leave little gifts to “your own” beneficiaries to be paid on your own death, but with the bulk of the estate left on similar terms: “I leave £500 to Waggy Tails Dog Rescue and everything else to A but if A has predeceased then me then 50% to the NSPCC and 50% to the RNLI.”
The wife who recalled the Abba song and the husband who didn’t looked aghast and noted that the wills had been in place for nearly 20 years and they had had no idea that’s how they interacted. Needless to say they have scrapped them and are starting again.
In my experience this type of confusion tends to arise when Wills are either homemade or drafted by non-legally trained Will writers. The couple I assisted, for example, had their previous Wills drafted by someone at their bank who seems to have taken a “one-size-doesn’t-quite-fit-all” approach and given very little advice or explanation. There is not much difference in cost between using a Lawyer and a non-legally trained Will writer. It is well worth paying a little extra for quality advice which will save problems in the long-run.