When Denise Ellis died in 2019 she bequeathed $4.2 million to her brother Martin. Siblings of her late husband sued. She had agreed with her husband that the survivor of the two would split assets half in half with each side of the family, they said. It was a fraud on her late husband for Denise to bequeath all her assets to only her side of the family, they alleged.
Graeme and Denise did not have children. He worked as a builder in Christchurch; she owned a hairdressing salon. Successive wills signed during their 45 years marriage made differing arrangements for distribution of their assets on death. Wills signed four years prior to Graeme’s death saw each intend to leave all assets to the other with a gift over if their spouse was already dead; the estate of the surviving spouse was to be divided one half to Denise’s only sibling, her brother Martin, and one quarter each to Graeme’s siblings, Velma and Mervyn.
Denise inherited all assets on Graeme’s death. After Denise died, Graeme’s siblings sued when they learned she had signed a new will twelve months after Graeme’s death with her brother Martin now sole residuary beneficiary. This breached an agreement made with her late husband, they alleged. Each side of the family was to inherit half, they claimed. The High Court was told of comments made by Graeme at social occasions in Denise’s presence about the ‘half in half’ arrangement he and Denise had written into their wills.
The High Court was asked to determine whether their wills were corresponding wills (wills with similar terms) or mutual wills (wills with similar terms coupled with an agreement not to depart from those terms). Subsequent wills can be overridden if there is a prior mutual will. It is a fraud for someone to inherit benefitting from terms of a mutual will and then fail to honour terms of the mutual agreement. Courts require clear evidence that mutual wills were agreed. Mutual wills create considerable inflexibility. They tie up assets after one spouse’s death in a manner which may not be tax effective, failing to anticipate future changes to taxes and estate duties.
Justice Osborne ruled the prior wills signed by Graeme and Denise had similar terms but were not mutual wills. There was at that time a ‘mutual expectation or desire’ that assets would be divided ‘half in half’ when both were dead but this was no more than an ‘honorary agreement.’ There was no binding enforceable agreement that the survivor would split assets equally between each side of the family.
Denise’s brother was entitled to retain all her assets.
Clarke v. Clements – High Court (11.10.21)
21.168