Reasonableness Standard for Survivorship Transfers Under Mutual Wills

Introduction

This commentary examines the Supreme Court of New Hampshire’s decision in Michelle Boucher, individually and as executrix of the Estate of Alan C. Gilman v. Estate of Alan C. Gilman & a., Case No. 2023-0559 (Apr. 16, 2025). At issue was whether a surviving spouse’s inter vivos quitclaim deed conveying jointly held property breached the implied covenant of good faith and fair dealing inherent in a mutual wills agreement. The parties are Michelle Boucher—Denise Gilman’s daughter and executrix of Alan Gilman’s estate—and Lynne R. Gilman, Alan’s second wife, now claiming title to the Madison property. The trial court imposed a constructive trust on Lynne’s title and voided the deed; the Supreme Court reversed.

Summary of the Judgment

The Supreme Court reversed the trial court’s declaratory-judgment order. It held that:

Alan and Denise did enter a mutually binding contract when they executed identical mutual wills.
The wills were silent on inter vivos transfers, so the surviving spouse had discretion—subject to implied good-faith limits—to dispose of the property.
Applying the four-part Centronics v. Genicom reasonableness test, the Court found no evidence of bad faith or abuse of discretion by Alan when he quitclaimed the Madison property to Lynne.
Because the conveyance did not exceed the limits of reasonableness, the implied covenant was not breached and the constructive trust remedy was unwarranted.

Analysis

Precedents Cited

Centronics Corp. v. Genicom Corp. (132 N.H. 133 (1989)): Established the four-question framework for assessing a breach of the implied covenant of good faith and fair dealing when a contract confers discretionary power.
Short v. LaPlante Trusts (174 N.H. 384 (2021)): Reconfirmed that every contract carries an implied covenant of honesty, decency, and reasonableness.
Birch Broadcasting v. Capitol Broadcasting (161 N.H. 192 (2010)): Clarified the standard of review for factual findings on covenant breaches.
In re Estate of Couture (166 N.H. 101 (2014)): Set out the deferential standard for probate-division factual findings.
Conduent State & Local Solutions v. N.H. Dep’t of Transp. (171 N.H. 414 (2018)): Confirmed the standing analysis for parties with a direct interest in probate matters.
Annotation, Right Of Party To Joint Or Mutual Will…To Dispose Of Such Property During Life, 85 A.L.R.3d § 19 (1978): Generally holds that absent an express restriction, a survivor may transfer property for necessities and support.
Schwartz v. Horn (290 N.E.2d 816 (N.Y. 1972)): Likewise permits a survivor to transfer property to meet daily needs despite defeating the testator’s contingent devise.

Legal Reasoning

The Court’s reasoning proceeded in three stages:

Existence of Discretion. The mutual wills contained no express prohibition against inter vivos conveyance of the Madison property, so Alan retained some discretion over it after Denise’s death.
Reasonableness Inquiry Under Centronics. The Court applied the four Centronics questions:

Did the wills confer discretion tantamount to depriving Michelle of substantial value? Yes, but only to the extent of conveying the property.
Did the parties intend a legally enforceable contract? Yes—the wills expressly declared they were made pursuant to agreement.
Did the exercise of discretion exceed limits of reasonableness? No—the conveyance aligned with the common purpose (maintaining the property for the surviving spouse), met community standards (Lynne’s substantial contributions), and lacked any bad-faith motive.
Did the abuse of discretion cause the damage? Michelle’s loss flowed from events Alan had no obligation to guard against—Lynne’s support of household expenses and financing.

Absence of Bad Faith. The record showed no intent by Alan to thwart his agreement with Denise. Rather, the conveyance to Lynne mirrored the parties’ longstanding arrangement: mortgage payments by Alan, household expenses by Lynne, and joint borrowing.

Impact

This decision clarifies the reach of the implied covenant of good faith in the mutual-wills context:

Survivors retain reasonable discretion to manage, encumber, or convey jointly held property absent express restrictions in the will.
Beneficiaries seeking to challenge such transfers must show the exercise of discretion was unreasonable, in bad faith, or contrary to the wills’ common purpose.
Probate courts will defer to factual findings about reasonableness unless they are unsupported by evidence or plainly erroneous.
This standard balances the testator’s intent to provide for a spouse with the contingent beneficiary’s expectation, promoting fairness and predictability in estate planning.

Complex Concepts Simplified

Mutual Wills: Identical wills executed by spouses pursuant to an agreement that bind the survivor not to revoke or alter the disposition after the first death.
Implied Covenant of Good Faith and Fair Dealing: A contract term, not written but assumed, requiring parties to act honestly and reasonably in exercising any discretionary powers.
Quitclaim Deed: A transfer instrument that conveys whatever interest the grantor holds, without warranties of title.
Constructive Trust: An equitable remedy imposing a trust on property acquired in breach of a duty, to prevent unjust enrichment.
Joint Tenancy with Rights of Survivorship: Co-ownership where a deceased owner’s share passes automatically to the surviving joint tenant(s).
Probate Standing: The legal ability to bring a claim in probate court, here affirmed for an executrix with an interest in estate assets.

Conclusion

The Supreme Court’s decision in Boucher v. Gilman establishes that, under mutual wills, a surviving testator’s inter vivos conveyance of jointly held property does not breach the implied covenant of good faith and fair dealing so long as:

The wills contain no express bar to such transfers;
The survivor acts honestly, decently, and reasonably;
The conveyance aligns with the common purpose of providing for the surviving spouse; and
No bad-faith motive subverts the testator’s agreement.

This framework provides probate courts and estate planners with a clear, balanced test—rooted in Centronics and subsequent New Hampshire precedent—to assess challenges to survivorship transfers under mutual wills.