Undue influence and Mutual Wills
A Mutual Will is an agreement between (at least) two people as to how their property will be disposed of on their deaths. These agreements are mutually binding and cannot be altered or revoked after the death of the first individual. Mutual Wills are rare but when they do arise they tend to be made between couples.
On the death of the first individual the property which passes to the survivor is held on an implied trust for the ultimate beneficiaries in the Wills.
However, as the recent case of Naidoo v Barton confirms, Mutual Will agreements are liable to be set aside for undue influence.
Dr and Mrs Naidoo made Mutual Wills in 1998, leaving everything to the survivor, and then on the survivor’s death everything to David Barton, one of their seven children.
Dr Naidoo died shortly afterwards and Mrs Naidoo made a subsequent Will in 2015 leaving everything to Charan Naidoo, another one of their children, and David Barton’s brother.
Following Mrs Naidoo’s death David Barton challenged the 2015 Will on the grounds that the Mutual Will could not be revoked following Mrs Naidoo’s death and remained valid.
Charon Naidoo argued that the 2015 will was valid and the Mutual Will should be rescinded on the basis of:
i) a common mistake; and
ii) David Barton’s undue influence.
Charan Naidoo alleged that Dr and Mrs Naidoo had been working on the common mistake that the survivor would be able to alter their Will. The court rejected this argument and considered that Dr and Mrs Naidoo had understood the nature of Mutual Wills and that they would not be able to alter them after the first death.
However, the court was more supportive of Charon Naidoo’s allegation of David Barton’s undue influence. David Barton contended that the common law test of undue influence should apply, rather than the equitable tests for lifetime transactions. The difference between these two approaches was that in probate claims undue influence must be proved, while in lifetime transactions there is presumed undue influence in cases where there is a relationship of trust and confidence that is combined with a transaction which requires an explanation.
The court found that “a Mutual Wills agreement is a contract first, before there is any basis for equity to intervene” and since “the equitable doctrine of undue influence (lifetime transactions) is apt to avoid such contracts, the common law doctrine in relation to validity of wills should not be used”.
As such the court applied the lifetime test to consider the validity of Dr and Mrs Naidoo’s Mutual Wills. The court considered the relationship of trust and confidence of Dr and Mrs Naidoo in their relationship with David Barton. It was said that the reason for the sole disposition to David Barton was that they trusted him to provide for the rest of the family. The court found the only explanation for the drafting of the Mutual Wills was a degree of undue influence by David Barton, and therefore the Mutual Wills were void because of this.
There was no dispute over the validity of the 2015 Will.
This case clarifies that the burden of proving undue influence in challenging a Mutual Will is very different to challenging a ‘normal’ Will and that there can be presumed undue influence in the context of Mutual Wills.
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