A landmark decision on the topic of inheritance contracts or deed of mutual wills occurred in the case of Barns v Barns (2003) 196 ALR 65, in which the High Court ruling provided crucial guidance on the enforceability and interpretation of such agreements.
Background of the case
The Barns v Barns case centred around a dispute between siblings over the distribution of their late parents’ estates. In 1958, John and Ida Barns had entered into a deed of mutual wills, agreeing on the disposition of their combined assets after their deaths. The agreement stipulated that upon the death of the surviving spouse, their remaining estate would be divided equally among their four children.
However, after Ida Barns’ death in 1984, John Barns altered his will, effectively disinheriting one of his sons, Michael. This deviation from the terms of the mutual wills agreement sparked a legal battle between Michael and his siblings, ultimately leading to the case being heard by the High Court of Australia.
The implications of the court’s ruling
In a landmark decision, the High Court upheld the validity and enforceability of the deed of mutual wills between John and Ida Barns. The court ruled that the agreement created a binding obligation on the surviving spouse, John Barns, to distribute the remaining estate in accordance with the terms of the mutual wills.
The ruling established several significant principles that have had far-reaching implications for inheritance contracts and deeds of mutual wills in Australia.
Enforceability of inheritance contracts: The Barns v Barns case affirmed that inheritance contracts, including deeds of mutual wills, are legally enforceable agreements, provided they meet the necessary contractual requirements. This recognition has strengthened the legal standing of such agreements and provided greater certainty for individuals seeking to secure their legacy through this type of testamentary will.
Strict interpretation of contract terms: The High Court emphasized the importance of strictly interpreting the terms of inheritance contracts, upholding the intention of the parties at the time the agreement was made. This principle has underscored the need for clear and unambiguous drafting of these agreements to ensure that the parties’ wishes are accurately reflected and can be enforced as intended.
Limitations on unilateral revocation: A key aspect of the ruling was the court’s determination that, once a deed of mutual wills is in place, the surviving party cannot unilaterally revoke or alter the agreed-upon terms without the consent of the other party or their beneficiaries. This principle has served to protect the interests of beneficiaries and prevent unilateral deviations from the original agreement.
Equitable remedies for breach: The Barns v Barns case also highlighted the availability of equitable remedies, such as constructive trusts, in cases where a party breaches the terms of an inheritance contract. This provision has empowered beneficiaries to seek appropriate remedies and ensure that the agreed-upon distribution of assets is upheld.
Contact expert legal professionals when estate planning
The Barns v Barns decision reinforces the importance of seeking professional legal advice when drafting inheritance contracts or deeds of mutual wills to ensure they are properly constructed and comply with all legal requirements.
It’s also important that such a contract or deed – as with any type of will – be periodically reviewed and if necessary, updated to reflect any changes in circumstances or intentions. Failure to do so may result in unintended consequences or legal challenges, a reminder that when creating such an important legal document, careful consideration, expert legal advice and meticulous drafting is essential. Contact Felicio Law Firm if you need more information on this important topic today.
To read part I: Understanding How Inheritance Contracts Work
