Joint vs. Contractual Wills in Texas: How Best Laid Plans Can Go Awry
When & Why Contractual Wills Are Used & How to Protect Your Interests as a Testator or Heir
Joint wills have been used for decades as a way for two parties to share one will when they have the same vision for their estate, fully agreeing on how to distribute their property. Better suited for simple estates with minimal beneficiaries, joint wills tend to come into play with spouses, domestic partners, and family members, particularly those looking for a seemingly easy way to simplify an estate plan and memorialize their wishes in a single document.
As straightforward as joint wills may appear on paper, the reality is they may not be the most prudent option for achieving testators’ shared objectives. In fact, with joint and contractual wills in Texas, specific limitations and distinct challenges can arise when it’s time to administer the will and enforce its terms. That can open up some disadvantages and unforeseen obstacles, some of which can spark contentious disputes in the future.
To understand what those are, how these wills work, and how to protect your rights and interests when you are a party to them, here is a closer look at:
- Joint Wills in Texas: What Are They & How They Work
- When Joint Wills in Texas Get Tricky
- More Issues Associated with Contractual Wills in Texas
- Alternatives to Joint & Contractual Wills in Texas
- The Bottom Line: Think Twice About Joint & Contractual Wills in Texas
Joint Wills in Texas: What Are They & How They Work
In the Lone Star State, joint wills are defined by Texas Estates Code § 254.004 (formerly cited as TX PROBATE § 59A), which states:
A contract executed or entered into on or after September 1, 1979, to make a will or devise, or not to revoke a will or devise, may be established only by:
(1) a written agreement that is binding and enforceable; or
(2) a will stating:
(A) that a contract exists; and
(B) the material provisions of the contract.
The execution of a joint will or reciprocal wills does not constitute by itself sufficient evidence of the existence of a contract.
Over the years, various case law has teased out some of the finer points of this law, including Wiemers v. Wiemers (Tex.1984), which elaborated that:
A comprehensive plan for the disposition of all property owned by both parties is the primary characteristic of a joint and contractual will.
Accordingly, joint wills in Texas are estate planning devices that tend to include both a will and a contract, with:
- The will disposing of property as the testators see fit: Generally, the testators in joint wills leave everything to the survivor of the two, with some third party named as an heir when the lone surviving testator passes away. In the real world, this type of estate plan may be associated with married parents who want to leave it all to each other when one of them passes and, then, the children when the surviving parent dies.
- The contract portion of joint wills dictating certain terms: Joint wills need to specify the existence of a contract in order to create one; in other words, simply drafting and executing a joint will does NOT establish a contract if that joint will does not specifically state that a contract exists.
Notably, not all terms of joint wills may be included in or subject to the terms of the contract contained in that will. Nevertheless, when joint wills do contain contracts, they become contractual wills, bearing similar weight and legal liabilities as contracts generally do under Texas law.
Joint Wills vs. Mutual Wills vs. Reciprocal Wills
Mutual wills and reciprocals wills are akin to joint wills, but they are not exactly the same things. While all of these estate planning devices can be designed with similar effects, they differ in the facts that:
- A joint will is a single document that lays out two (or more) parties’ shared wishes for how their property is to be distributed upon their death.
- Reciprocal wills are two separate will documents that essentially mirror each other’s terms. Like joint wills, reciprocal wills can be used by two parties to leave everything to the survivor of the two while also naming some third party as a beneficiary when both testators pass away.
- Mutual wills combine the elements of joint and reciprocal wills, with two separate will documents that mirror each other and a third contract document related to the disposition of property in the will. This structure effectively makes mutual wills function very similarly to joint wills.
While joint, reciprocal, and mutual wills may sound incredibly similar in nature, they can have drastically different impacts on testators’ options later, especially when it’s time to administer a will and enforce the terms of any contact that may be involved.
When Joint Wills in Texas Get Tricky
Regardless of their specific terms, both wills and contracts can generally be revised and updated at any point, as long as the creators of those devices are still alive. Traps and pitfalls can pop up, however, when one of the creators or testators passes away.
When that happens, the contract portion of a joint or contractual will becomes irrevocable. Simply put, contracts between two people cannot be changed when one of those people dies; so, the contract portions of contractual wills cannot be altered once one of the testators passes away.
At that point, the surviving testator is bound to the terms of the contract even though:
- (S)he retains the right to revoke the will: According to the ruling in Magids v. American Title Ins. (Tex. 1971), “if the same document contains both the will and the contract, ‘it is the contractual portion of the will and not the will itself which is irrevocable.’”
- (S)he may need to make changes later: With evolving life circumstances, surviving testators may find it necessary to dispose of property in a different manner than has been outlined in the contractual will, especially if the survivor outlasts the decedent by years or even decades. Nevertheless, the surviving parties will be bound to the terms of the contract, losing the option to make changes affecting the property in question.
In practice, that could end up putting surviving testators in a bind, particularly if they need to make adjustments, like (but not limited to):
- Adding in new beneficiaries, as new children or grandchildren are born
- Remove certain beneficiaries from a will because the relationship sours
- Selling certain assets, like offloading real estate when it’s necessary to move into assisted living facilities
- Putting specific safeguards in place for an inheritance, like setting up a special needs trust or restricting access to funds for those with addiction or gambling issues
- Gifting cash, like giving loved ones a down payment for a home or covering school tuition costs
- Paying for medical care and/or legal assistance needs
More Issues Associated with Contractual Wills in Texas
Losing the flexibility to make certain financial choices after the death of a loved one can be reason enough to think twice about joint and contractual wills. That’s not the only reason, though.
Unfortunately, these estate planning devices can backfire for testators and beneficiaries in various ways, creating novel issues and problems with regards to:
- Verbal promises: An oral promise to be named as the sole beneficiary of a will does not constitute grounds for a promissory estoppel claim against a decedent’s estate, according to In re Estate of Gilbert (Tex. App.—San Antonio 2017). In other words, the promise to name a sole beneficiary has to be in writing in order to be enforceable under Texas law.
- Divorce: If the testators of a contractual will plan to divorce and one of those parties changes his will before the divorce occurs, Texas law will view the testators as divorced for the sake of determining the relationship between a decedent and a surviving spouse. According to the ruling in Stephens v. Stephens (Tex. App.—Waco 1994), “[Texas Estates Code] would have voided all bequests made by [the decedent] to [the surviving spouse]. … The court’s consideration of the divorce as an accomplished fact follows the equitable maxim ‘equity will treat as done that which by agreement is to be done.’”
- Subsequent wills: Texas courts will consider a will that a surviving testator creates after a joint will, regardless of the contractual element of the first will. According to Nesbett v. Nesbett, (Tex.1968), “there was no question as to competency, execution, witnessing and proof of the wills—and since there was no question but that the second will provided for revocation of the joint will, the probate court and the district court had no alternative but to admit the second will to probate rather than the joint will, without regard as to whether the joint will was mutual and contractual.”
- How surviving testators handle an estate: Beneficiaries cannot pursue a breach of contract claim regarding joint wills when one testator is still alive. According to Meyer v. Shelley, (Tex. App.—Amarillo 2000), “Since [surviving testator] has not died, [beneficiaries] can hardly prove what property he owned at the time of his death. And, since they cannot prove that, they can hardly prove that he breached any covenant to give them a percentage of the property he owned at his death… [T]he mere fact that [surviving testator] may have entered into such a will did not in and of itself impose upon him a duty to forego dissipating his property while alive.”
Given these and other matters, contractual wills can clearly be far more complicated than they appear on the surface, creating all sorts of conundrums, headaches, and disputes that may have been sidestepped with alternative estate planning.
Alternatives to Joint & Contractual Wills in Texas
Outside of contractual wills, testators can have several other options for leaving everything to beneficiaries while making sure their wishes are preserved in the future. In fact, some of the alternatives to contractual wills can be far more efficient and successful in achieving the testators’ goals.
Those alternatives may include (and are not limited to):
- Separate wills: While mirror wills can detail folks’ shared wishes regarding an estate, they can also designate certain property to fund trusts upon death. With this arrangement, a surviving testator won’t be limited by the terms of a contractual will, and specific property can be automatically transferred to a trust, reserving it for the intended beneficiaries.
- Trusts: These estate planning devices can be established during life, with testators funding trusts with various property and setting up rules and restrictions for precisely how and when that property is to be distributed to the named beneficiaries. Similar to contractual wills, trusts can have terms that are irrevocable after the trust maker passes away. Unlike joint wills, trusts won’t lock any loved ones into a contract that may limit their options later.
- Payable on death (POD) or transferrable on death (TOD) designations: With assets like bank accounts, certificates of deposit, and even vehicles, property can automatically be transferred to a designated beneficiary, regardless of whether the decedent had a will in place. This is another way to ensure specific assets are reserved for certain heirs without the cumbersome elements that can come with contractual wills.
Depending on your needs and situation, these and/or other alternatives to joint wills may offer a much better solution for accomplishing your estate planning objectives.
The Bottom Line: Think Twice About Joint & Contractual Wills in Texas
If you or a loved one is considering a joint will, remember:
- This is NOT the only estate planning option available, and in all likelihood, it’s not the best option if you want to reserve some flexibility to make different decisions later on.
- In the short term, joint wills may seem like a simple, safe choice when two parties have the same vision for distributing their property and administering their estate. Failing to look past the surface, however, can backfire big time for testators.
- In the big picture, contractual wills can be restrictive, limiting surviving testators’ options for an estate while potentially spurring complex legal issues and contentious disputes in the future.
Discover More About Wills, Estate Planning & Estate Administration
Beyond joint and contractual wills, several aspects of estate planning and administration can put you in the center of sensitive situations and complicated, high-stakes choices. Whether you are a testator, an executor, a beneficiary, or another party handling important estate legal matters, you can turn to an experienced Austin estate and probate attorney at the Law Office of Todd A. Wilson (now also TAW Law TX). We are ready to share confidential advice in a convenient, no-obligation consultation. Simply reach out to get more answers today.
Todd A. Wilson
Todd A. Wilson has been practicing law since 2007, with the aim of educating all strata of society and sharing crucial insights about the importance of estate planning, probate, and more.
The Law Office of Todd A. Wilson (also known as TAW Law TX) offers affordable estate planning and probate services.