Why mutual wills may not be the answer for some couples

Passing on your estate

What tools, besides mutual wills, can ensure my hard-earned assets go to my kids?

That question was a sequel to an earlier column but the last few weeks I was distracted having been involved in a senseless vehicle crash and I wrote two road safety columns.

So, I’ll start by restating the problem and then reminding you how mutual wills are an imperfect fix.

Gail is a 40-year-old divorced mother of a 20-year-old daughter. She finds love with Ron, age 35, who has no children. Gail goes into the relationship with significantly more assets than Ron.

Ron moves into Gail’s house and their assets are combined.

Ten years into the relationship, at ages 50 and 45 respectively, Gail and Ron have wills written. They go with the classic will approach of leaving everything to each other, with the estate going to Gail’s daughter when the last of them dies.

Gail sadly dies of cancer at age 55. Ron, now 50, quickly finds love with a younger partner Patricia, aged 35, who brings three children into their new relationship. Gail’s daughter becomes estranged from Ron, upset at how quickly he shacked up with a new partner who’s the same age as she is.

Ron changes his will to leave everything to his new partner. Gail’s daughter ends up with nothing of an inheritance.

A “mutual will” is an imperfect fix. A mutual will is when the will-makers have an agreement (contract) that neither of them will ever revoke their wills. If they had done that, Ron changing his will would have breached that contract and Gail’s daughter would have legal recourse to right that wrong. But mutual wills do nothing to stop Ron from frittering away the assets to nothing.

And what if Ron has a child or two with his new, younger partner and/or adopts her children? Those children will have a legal claim they can pursue against Ron if he doesn’t leave them anything in his will.

The only protection mutual wills give is handcuffing each other from ever revoking their will. The assets themselves are not protected. An alternative would have been simply for Gail to transfer her assets to her daughter instead of combining them with Ron’s assets. That’s a bed alternative, though, because Gail wants to enjoy her wealth herself. She would also like to ensure Ron is looked after if she dies before he does. She just wants whatever’s left over after she and Ron die to go to her daughter.

There are other fixes, but they are also imperfect. One is to use a legal beast called a “trust.” A trust is not a separate legal entity, but it behaves sort of like it is.

Gail, the “settlor” could have transferred her assets out of her name and into the name of a trust. When doing so, she would have named herself as the “trustee”—the person with control over the trust assets. That would have allowed her to use whatever she wanted of trust assets while she was alive. And she would have named someone she could rely on to take over as trustee after she died.

That new trustee would have been required to follow the rules Gail set up for the trust, which would have included providing Ron with some level of financial support from the trust while he was alive.

The trust rules would also have provided that whatever’s left of trust assets would go to Gail’s daughter on Ron’s death. Regardless of the new relationship or new children Ron has after Gail’s death, the assets within the trust would have been protected.

Because assets are in the name of the trust, and not in Gail’s name, there’s no probate process, expenses and fees on Gail or Ron’s death.

Sound ideal? Unfortunately, there are many downsides.

Trusts are expensive to set up, with lawyers charging in the range of $5,000 to $10,000 and up. And there are significant tax implications. Except for special kinds of trusts that can be set up only after you’re 65, transferring assets into a trust is treated similarly to transferring assets to another person for tax purposes, triggering capital gains.

And trusts are required to file tax returns. The income tax payable on annual income earned on trust assets that’s not paid out to beneficiaries is at the highest personal marginal rate.

The most challenging limitation of trusts is the one that makes all estate planning difficult. It’s impossible to foresee and plan perfectly for the future. What if Ron never finds love again and suffers an injury that prevents him from working? Or he becomes ill with a disease requiring expensive care that exceeds the amount of trust income that has been allotted.

In those circumstances, Gail would have wanted her life partner to have full access to her assets, not limited to an annual level of support that preserves a bunch of money to eventually go to her daughter who won’t need it anyway.

Clever drafting of trust terms can anticipate and plan for many future possibilities. But the possibilities are endless, and no set of terms can perfectly plan for them.

Blended families have become the norm. The classic will that leaves everything to the other spouse and then to the children becomes inadequate when stepchildren are involved.

There’s no perfect fix, but there are some tools that can provide imperfect solutions.

My columns are intended to provide general information and cannot be relied on to make estate planning decisions. Please consult with a lawyer and estate tax accountant to explore all options as they might apply to your specific situation.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.


Inattention and bad driving habits lead to crashes on the road

Road safety reinforcement

Was my outrage warranted? Was it fair for a reader to call her a twit?

She did fail what was plainly there to be seen ahead of her—a red light with fully stopped traffic. Her victim, in the last vehicle in the row of stopped traffic, might never fully recover. But does the offender deserve ridicule?

With a senseless rear-ender crash every six minutes in British Columbia, that are many “twits.” And they’re the tip of a much, much larger iceberg because there is a multitude of inattentive drivers for every one whose inattention causes a crash. But it’s unfair and unhelpful to ridicule only those whose inattention cause crashes as that ignores the bigger problem.

The driver didn’t choose to be dangerously inattentive. Nobody does. She came by it honestly. When we learn to drive, we are taught all sorts of safe driving behaviours, such as:

1. Walk-around of your vehicle and look up and down the street before getting in to back out of your driveway.

2. Look under vehicles parked at the sides of the street to watch for the legs of little folks who might dart out.

3. Keep your hands at the 10 and 2 positions on the steering wheel.

4. Shoulder-check every time you pull out, pass or turn right.

5. Wait until oncoming traffic is clearly stopped before completing a left turn.

6. Stay off your phone.

7. Etc., etc., etc.

But the importance of those safe-driving behaviours is not enforced. In fact, just the opposite occurs. You’re may in a hurry so you only check only your mirrors before backing out of your driveway. The odds were in your favour and a stroller wasn’t being pushed along the sidewalk. You experienced positive reinforcement for your road safety failure.

Your mind is on other things, and you don’t scan under parked vehicles for the legs of little folks. Again, the odds are in your favour. Nothing bad happens—positive reinforcement for distracted driving. You shoulder-check most of the time, but sometimes you miss doing it. Nothing bad happens and you miss doing it more and more. You gradually start reaching for your phone, first when waiting at stop lights but then here and there during light traffic. No crash. You are led to believe you can drive safely while engaging in telephone conversations and texting.

Our roadways and vehicles have become so easy to navigate and drive, it takes precious little attention to get from point A to point B 99% of the time. There are clearly marked lanes, easy to follow traffic lights and signs, and large bright yellow warning signs. Forget about texting, you could probably read a physical newspaper during your commute—99% of the time. The problem is, inattention leads to crashes.

We don’t make a choice to become an inattentive driver. It’s a gradual, step by step process. And it’s reinforced. Our increasing levels of inattentiveness are rewarded again and again because we make it safely to our destination. Road safety laws don’t help. They actually compound the problem.

Everyone (I hope) knows it’s distracting to engage in a cell phone conversation while you drive. It certainly was common knowledge before our provincial government passed cell phone driving laws in 2010. But our political leaders, contrary to a provincial government report that said there is no difference in the level of distraction between handheld and hands-free cell phone use, chose to ban only handheld cell phone use. That report is no longer available online. I’d be happy to e-mail it to you.

So, what loud and clear message did they give drivers? It’s perfectly safe to engage in cell phone discussions while driving as long as you spend the extra money for hands-free technology. That messaging leads to the logical conclusion it must also be safe to engage your brain in other distracting ways as well.

Our police forces conduct distracted driving “blitzes,” targeting hand-held phone use, further reinforcing the message that engaging in a telephone conversation while driving is not “distracting” as long as it’s hands-free. It drives me bonkers.

But back to my point. I’ve been an inattentive driver. I’ve been the “twit”.

I remember close calls. A column I wrote way back in 2012, told the story of a horrible crash in Kelowna on March 20, 2012, when a motorcyclist, with his wife on the back, was sitting at a complete stop in traffic at a red light on Highway 97 in Kelowna. The driver of an SUV was the “twit” in that crash.

The motorcyclist was killed and his widow suffered serious injuries. It was just another one of those senseless rear-end crashes that occur every six minutes in British Columbia.

I shared a technique a friend used to maintain attentiveness behind the wheel. Jess drives with her hands at the 10 and 2 positions 100% of the time. I said I was going to give that a try. I shared its success in a follow-up column a year later.

“I found it takes effort to keep my hands at a particular location on the steering wheel,” I wrote. “Any time my mind wanders, whether it be thinking about the office, my kids, or whatever the distraction, my hands naturally move to one of those more comfortable positions that most of us end up using after years and years of driving.”

It’s not about an optimal hand position. I had readers e-mail me to complain I had it wrong, that 9 and 3 is safer, or 8 and 4. The particular positioning isn’t the point. The point is to maintained a hand position. If your hands stray, that’s the wake-up call your mind has wandered. Try it.

Thank you for being patient with this road safety “distraction”. Next week I’ll get back to ways to protect against your estate going to someone else’s kids.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Maybe there should be tough penalties for inattentive driving?

Road safety

A sharp jolt rocked my pick-up truck.

It was about 8:15 a.m. May 22, on Highway 97 in West Kelowna. I was stopped behind other traffic waiting for a light to change.

I know a little bit about car crashes. They occupied my almost exclusive area of practice until approximately a year ago. The vast majority of crashes are entirely preventable, and not by being a super-duper, highly skilled driver but by simply by paying attention.

ICBC statistics show there were 287,040 car crashes in 2022. Dividing that number by 365 (day in a year), it comes out as an average of 786 crashes every single day. That, in turn, works out to be approximately one crash every two minutes.

I could go through every crash scenario to illustrate how the cause is almost always simple inattention but it’s easiest with a “rear-ender.” Approximately 30% of all car crashes are rear-enders. All you have to do is monitor traffic in front of you. There’s nothing complex about it.

A competent driver will monitor not only the vehicle immediately in front, but also traffic further ahead. That allows the driver to best anticipate changes in traffic flow. But even the least competent driver should be able to notice traffic ahead of them slowing —or just sitting there at a complete stop.

With a crash in B.C. every couple minutes and about 30% of them being rear-enders, that’s one rear-ender every six minutes. We are an utter failure when it comes to road safety.

So yes, I was a little annoyed with the driver behind me, who somehow failed to notice my fully stopped pickup truck. After traffic cleared, I pulled forward expecting the absent-minded driver to follow so we could stop somewhere safe and exchange information. But she didn’t.

Her vehicle remained at a full stop, not budging.

I reversed, returning to my initial position directly in front of her vehicle, and got out to find out what was going on. She was in a state that I would best describe as hysterical. Clearly struggling to maintain her composure, her entire upper body was shaking as if she was shivering with hypothermia.

A couple of things I made out from what she was saying was that she had left a safe distance between her vehicle and my truck and she hit her head on the steering wheel. My irritation quickly melted with the realization the young lady had nothing to do with the crash. Her car was been hit from behind with such force that it was propelled into the back of my truck.

My irritation was replaced by a feeling approaching outrage towards the driver whose level of inattention was so great that he or she plowed, at significant speed, into the back of a fully stopped vehicle. I held my outrage in check as information was exchanged.

I remember the incredible grace of the young driver, who spoke to the middle-aged offender responding to her apology with consoling words like, “Things happen”. She also said reassuringly: “At least nobody was hurt”.

I looked down at her, my heart full of compassion.

The significant damage to the connective tissues of the neck and back are almost never apparent at the roadside. Just like it takes time for a heavy workout to lead to sore muscles, it takes time for the strained and torn connective tissues of the neck and back to become inflamed and painful. But unlike sore muscles that ease over a few days, victims of a rear-ender and other crashes often face weeks, months and even years of pain and restriction of their functions. Some will never fully recover.

Your head has a similar weight as a bowling ball. It sits on a neck that hasn’t evolved to withstand the extreme forces that occur when that bowling ball is propelled backwards and forwards during a rear-end collision.

I checked in with her the following day. On top of her neck and back pain and stiffness, she had a headache that wouldn’t quit. I am crossing fingers and toes with the hope she will be lucky and enjoy a complete recovery over time.

With our current “no fault” ICBC system, she will not receive anything of compensation for her pain and the impact that pain will have on her activities and enjoyment of life. The negligent driver who plowed into the back of her vehicle has exactly the same rights to funded care, vehicle repair and income loss.

We can do better.

“No fault” has stripped away all consequences for inattentive driving except for an increased insurance rating, which may, or might not, actually increase the cost of insurance.

We have fines for speeding, failing to wear a seatbelt and handheld cell phone use. How about a much more significant fine if your inattention that causes a crash?

I’m thinking $5,000 or, to make it meaningful for those of all income levels, how about 10% of your annual reported income? Consider how such a consequence would change driving behaviour No more absent-minded daydreaming. No more rolling across sidewalks that you should stop behind. No more backing up before being absolutely certain it’s safe. You would hold off on making that phone call while driving. You would tell your passenger to hush and help watch for hazards during periods of heavy traffic.

Does that sound like too severe a consequence? Think of the victim.

Sorry to those who were expecting a column about more ways to protect against your estate going to someone else’s kids. That’ll come next week, unless I feel compelled to write a follow-up road safety column.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.


'Handcuffed' by mutual wills

Locking in your will

Can you guard against your life savings ending up in the hands of someone else’s children?

I posed that question last week, after telling a story about how plausible future events could lead to that negative outcome. The problem arises with the very common scenario of blended families.

Two people fall in love and make a life together. Each has children from previous relationships. They work hard together, to save for their retirement. In their mid-50s, they make wills that mirror each other. Each will says when one dies, everything goes to the other so they can live the rest of their life in comfort. When the second dies, everything is split between the children.

What they fail to consider, however, is what might happen in the time that will pass between their two deaths. If one of them dies at age 60, the other might live another 40 years. That is a lot of time for a potential deterioration in the relationship between the surviving spouse and their stepchildren. And lots of time for the surviving spouse to find love again.

The surviving spouse could review their will and no longer want their stepchildren to get an equal share of their estate. They might want to cut them out altogether.

They become financially entwined with a new life partner and it makes sense for each to make wills leaving everything to each other. As a result, the stepchildren might end up with none of the life savings amassed by their parent, the deceased spouse.

There’s no perfect solution, but there are options. One is to make an agreement with your spouse where each of you agree you will not revoke your will after the other dies. The terminology for this is making “mutual” wills.

To have legal effect, that agreement must be clear. Terms of the agreement can be made within your wills themselves, contained within a separate written contract or both.

That might sound like a perfect solution but perfect solutions are illusive when trying to plan for an uncertain future. All sorts of future events could occur where having the surviving spouse handcuffed to a mutual will made years before would result in gross unfairness.

Unfortunately, the only person who could have removed those handcuffs, the other deceased spouse, is not there to do so.

Put yourself in the shoes of the surviving spouse. You have no children of your own and the mutual will you are handcuffed to leaves everything to your two stepchildren. It seemed right at the time. Your assets came about with the help of your deceased spouse. But you were in your mid-30s when your much-older spouse passes away. You were lucky enough to find another life partner and have three children together.

Fast forward to when you’re in your 50s. Your stepchildren, who were put through extensive university programs, are independently wealthy. You have no intention of disinheriting your stepchildren, but you want to ensure your biological children receive your support on your death as well. If your late spouse was still alive, they would want that too. But you can’t change your will.

Another example is your ability to amass significant additional assets after your spouse passes away. Your estate, at the time you handcuffed yourself to a mutual will, was relatively small. Now it’s much more significant.

You would like to change your will to leave parts of your estate to others, while still providing for your stepchildren, but the handcuffs get in the way.

The younger you are when making wills, the more likely there will be a scenario where mutual wills end up being inappropriate. As you and your spouse age, that likelihood goes down because the potential amount of time between each of your deaths becomes less.

Ironically, the more you and your spouse grow old together, the value of mutual wills goes down as well.

Next week, I will describe other ways you can ensure your children benefit from your hard-earned assets.I’ll warn you now, though, none of them are perfect.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

More The Last Word articles

About the Author

Lawyer Paul Hergott began writing as a columnist in January 2007. 

Achieving Justice, based on Paul’s personal injury practice at the time, focused on injury claims and road safety.  It was published weekly for 13½ years until July 2020, when his busy legal practice no longer left time for writing.

Paul was able to pick up writing again in January 2024. After transitioning his practice to estate administration and management.

Paul’s intention is to write primarily about end of life and estate related matters, but he is very easily distracted by other topics.

You are encouraged to contact Paul directly at [email protected] with legal questions and issues you would like him to write about.

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

Previous Stories