Mirror Wills: Protecting Your Partner’s Financial Future

Mirror Wills: Protecting Your Partner’s Financial Future
Photo by Christian Mackie / Unsplash

If you're looking for a way to protect your partner's financial future, you may want to consider creating a mirror will.

A mirror will is essentially identical to that of a spouse or partner, and it's a popular option for couples who want to ensure that their assets are distributed according to their wishes. Here's what you need to know about mirror wills.

What is a Mirror Will?

A mirror will is a type of will that is identical to that of a spouse or partner. This means that if one spouse passes away, the surviving spouse will inherit their estate, and vice versa.

Mirror wills are often used by couples who want to leave everything to each other, and then to their children.

Mirror wills are also popular among couples who are in a second marriage and have children from a previous relationship. In this case, the couple can leave everything to each other, and then to their respective children, ensuring that all children receive an equal share of the assets once both spouses have passed away.

Why Make a Mirror Will?

A mirror will can protect your spouse or partner's financial future, which is especially important for unmarried couples. At present, only joint assets pass by survivorship. If an unmarried partner passes away, any assets in their sole name could potentially pass to their children, parents, or siblings under the rules of intestacy.

If a person has assets over £270,000 and does not have a will, their estate will pass under the intestacy rules. This means that the surviving spouse will receive the first £270,000 of the estate, and anything above this will be divided equally between the spouse and children (if any).

This could put the surviving spouse in a difficult position financially, and strain their relationship with their children or stepchildren.

For example, if the deceased spouse had a house in their sole name worth £500,000 and little other assets, the house may need to be sold to allow the children to receive their share of the estate.

This could result in the surviving spouse having to move out of their home and have an impact on them purchasing another property depending upon their financial circumstances. A mirror will would avoid any such issue.

Moreover, when one spouse's estate passes entirely to the other, it creates a spousal exemption in respect of inheritance tax. The second of them to pass away then has the use of their predeceased spouse's nil rate band and residence nil rate band (the RNRB is only available if the property is to later pass to their children or direct descendants) which may reduce or completely relieve the estate of any inheritance being payable.

What are the Disadvantages of Mirror Wills?

One potential issue to consider when creating a mirror will is that your spouse or partner could later change their will without your agreement or consent.

There's no obligation to keep the mirror will once one spouse has passed away, and this could result in children or stepchildren being left out of wills and not receiving a share of their parents' assets.

Additionally, if the surviving spouse remarries, their assets could pass to the new spouse and someone unknown to the first spouse/partner who has died. So you can see why it's vital to trust your spouse or partner when considering a mirror will.

What is the Difference Between a Mirror Will and a Mutual Will?

The alternative to a mirror will is a mutual will, which addresses the concern of a spouse or partner later changing the will. A mutual will is a type of will in which both parties agree that they won't revoke or amend the will at a later date without the consent of the other party. Therefore, once one party dies, the survivor cannot amend the will.

Mutual wills differ from mirror wills in that they don't allow changes to be made following a person’s death or during their lifetime without consent. This can be beneficial to a person who perhaps has children from a previous relationship as their spouse cannot later go back on their word and revoke the will as they can do with a mirror will.

However, many people don't choose to create mutual wills due to their restrictive nature. They don't account for changes that can occur in everyday life, such as remarriage and family disputes.

Mutual wills go against the principle that a person has the testamentary freedom to change their will at any point during their lifetime (if they have the capacity). Therefore, strong evidence must be provided to prove that the intention was for the wills to be mutual.

A will doesn’t actually need to state that it's a mutual will, nor does it need to be in writing. You have to be careful that a will isn’t taken to be a mutual will if this isn’t their intention. If you’re a client giving instructions to prepare your wills, it's always important to insist that the intention to create mutual wills is clearly set out and established within both mutual wills, if this is your wish.

A mirror will is a simple and cost-effective option for couples to ensure that their assets are passed on to their partner and children in a manner they desire, whilst also creating a spousal exemption for inheritance tax.

However, the potential issue of one spouse changing the will must be taken into consideration. If this is a concern, a mutual will may be a better option, although it's important to weigh the benefits against the potential drawbacks.

Ultimately, it's important to consult with a qualified professional to determine the best course of action based on your unique circumstances.