The law of contracts is the law of promises. Each party to a contract makes a promise to the other and, absent fraud, mental incompetence, torture, etc., the law will enforce these promises.
The law of wills deals with succession of property ownership at death. Assuming certain formalities are followed, the law will enforce the intentions of a person who died as expressed in a will.
So what happens when the law of contracts and the law of wills come together in the form of a contract affecting succession of property ownership at death? Colorado law allows people to enter into contracts concerning post-death succession. A short section of the otherwise very long Colorado Probate Code confirms that contracts to make a will, or not to revoke a will, or to die without a will, are valid in this state as long as they meet a requirement that the terms of the contract are stated in writing.
This requirement can be met by putting the contract terms into a will; by referencing the existence of the contract in a will and then proving the specific terms of the contract with some other document, or by signing a document containing the terms of the contract.
Although there are multiple ways such contracts can cause trouble, a typical scenario would be: Bob and Alice are married. They each have two children by a prior marriage and no children together. Bob and Alice agree to sign reciprocal wills. The wills say that when the first person dies, the family wealth goes to the survivor. Then when the survivor dies, half the remaining wealth goes to Bob's kids and half goes to Alice's kids.
A few years later, Bob is the first to go. But, Alice has decided she doesn't like Bob's kids so she amends her will (or creates a new will), leaving everything to her kids. Bob's kids go to court and argue Alice was a party to a binding contract prohibiting her from changing her will, and they are entitled to half her estate.
What courts seem to say in these situations is that rules of contract law apply to determine whether there was a valid and binding contract, the precise terms of the contract and the remedies available for breach of contract. Who wins such a dispute will depend on the specific facts involved and the nuances of the law of the state where the alleged contract was entered. Court rulings fall on multiple sides of the issue.
The Colorado statute governing contracts of succession tries to clarify at least one issue that has been a source of dispute with this sentence: "The execution of a joint will or mutual wills does not create a presumption of a contract not to revoke the will or wills."
Bottom line, contracts dealing with the succession of property ownership at death are a bad idea. An experienced estate-planning lawyer can help you achieve your estate planning objectives without risking the chaos possible when the law of contracts crashes into the law of wills.