April 10, 2017

Contracts to Make Wills or Trusts

by Carol Warnick

Does the fact that a husband and wife create “mirror-image” wills or trusts mean that they have entered into a contract with their spouse to maintain the dispositive provisions in the document?  The law in Colorado is very clear that no contract exists merely because the documents are “mirror-image” or reciprocal.

Pursuant to Colo. Rev. Stat. § 15-11-514, a contract to make a devise may be established only by:

(i) provisions of a will stating material provisions of the contract, (ii) an express reference in a will to a contract and extrinsic evidence proving the terms of the contract, or (iii) a writing signed by the decedent evidencing the contract. The execution of a joint will or mutual wills does not create a presumption of a contract not to revoke the will or wills. (emphasis added).

In addition, contracts for testamentary disposition of property must be supported by sufficient valid consideration.  Specifically, the fact that testamentary documents were executed simultaneously and contain reciprocal provisions, other than provisions relating to a contract, is not evidence that such testamentary documents are made in consideration of each other.  Rieck v. Rieck, 724 P.2d 674, 676 (Colo. App. 1986).  A similar dispositive scheme contained in two separate documents does not suffice for valid consideration.  Id.

Despite the fact that the law in this regard seems very clear, it is surprising how often this comes up in the context of litigation.  When a surviving spouse changes an estate plan originally set forth in “mirror-image” documents with the first spouse to die, disgruntled beneficiaries often try to make the claim that the surviving spouse should have never changed his or her documents after the death of the first spouse because they had entered into a contract.  While the law is clear on the specific and necessary elements to prove such a claim, the beneficiary can still engage the estate or trust in months or years of litigation.

There is an easy fix to this problem, which, if contained as “boilerplate” in trust and will documents, should keep this issue from being so frequently litigated.  A simple savings clause in a document will do the trick.  See the example below:

No Contract to Make A Will

I have not entered into any contract, actual or implied to make a will.

The word “trust” can be substituted for “will” and the same provision should be added to revocable trusts which serve as will substitutes.

Check the “boilerplate” in your documents.  Adding such a provision may save your clients thousands of dollars later on in litigation costs.