Supreme Court Challenge to Mutual Will Contract
On July 17, 2026, Primmer attorneys Kevin M. Henry and Angelina L. Debeaupuis prevailed before the Vermont Supreme Court in the case of Inouye v. Estate of McHugo. The case resulted in Vermont precedent regarding the enforcement of mutual will contracts and the remedies for breach.
After nearly 10 years of litigation, Primmer attorneys Kevin M. Henry and Angelina L. Debeaupuis have successfully litigated a claim to uphold a mutual will contract in the case of Susan Inouye v. the Estate of Patricia McHugo et al. The litigation involved matters of first impression, three trips to the Vermont Supreme Court, and resulted in Vermont precedent regarding the enforcement of mutual will contracts and the remedies for breach.
Background
Vermont residents John and Patricia McHugo married, raised three children and eventually divorced in the late 1970s. Even though their marriage dissolved, John and Patricia remained close throughout their lives and eventually each moved (independently) to Arizona.
In the mid-1990s, when their children were adults, John and Patricia made an agreement regarding their estate planning and each executed a separate, but identical, mutual will. The key provisions of the wills were that the assets of the first to die were to be held in trust for the benefit of the survivor. Upon the death of the survivor, the assets held in trust would be distributed to the three beneficiaries equally, and the assets of the second to die would likewise be distributed equally. Importantly, the mutual wills also contained a provision that neither of them could change nor revoke their will without the consent of the other. Complicating the litigation was the fact that John and Patricia, despite being divorced, held most (if not all) of their assets jointly for the purpose of avoiding probate.
In 2006, Patricia moved back to Vermont and, because she had a strained relationship with her daughter, Susan, she made a new will (unbeknownst to Susan), which left her estate to her other two children, Gregory and Nancy. In 2010 John died. His assets transferred directly to Patricia because they were jointly titled. Following John’s death, Patricia transferred her interests in real estate to Gregory and Nancy, and also jointly titled or made them beneficiaries on her financial accounts so that they would pass to them upon her death.
In 2016, Patricia died and Susan learned that she had made the 2006 Will, excluding her. Believing that the 2006 Will was a breach of the mutual will contract that Patricia made with John, litigation ensued.
Court Proceedings
Susan initially brought suit in federal court in Arizona. That case was ultimately dismissed for lack of subject matter jurisdiction. The litigation then moved to Vermont where Primmer attorneys pursued the case. Susan first challenged the allowance of the 2006 Will in the Probate Division, arguing that it was a breach of the mutual will contract and that the mutual will previously executed by Patricia was the operative will. The Probate Division disagreed and Susan appealed to the Vermont Supreme Court. In McHugo I, the Vermont Supreme Court affirmed, holding that even if it were demonstrated that Patricia breached the contract by making the 2006 Will without John’s consent, the Will was nonetheless valid under Vermont law.
Next, Susan filed a lawsuit in the Civil Division against the Estate of Patricia McHugo for breach of contract, and against Gregory and Nancy for unjust enrichment having been the recipients of her one-third share of the estate. In March 2024, after a two-day bench trial, the Civil Division ruled against Susan. The trial court found that the mutual will contract only required that John be on notice that Patricia made a new will without his consent, and that it was then incumbent on him to make changes to his own will. Because he did not, the trial court found that he had complicitly consented. In McHugo II , the Supreme Court reversed. The Court held that there was a valid and binding contract between John and Patricia, that the contract required his affirmative consent for Patrica to make a new will, and that the evidence did not establish that he consented. The Court remanded the case back to the trial court to consider remedies.
On remand, the trial court found that Susan was entitled to a constructive trust on one-third of the real estate that was transferred to Gregory and Nancy during Patricia’s lifetime and also entitled to recover one-third of the financial accounts that went to them upon Patricia’s death. In addition, the trial court awarded pre-judgment interest on the value of the financial accounts dating back to 2016. The total value of the judgment was approximately $1.5 million.
Finally, in McHugo III , the Vermont Supreme Court affirmed the judgment. In doing so, the Court rejected the argument that Susan was not entitled to anything because Patricia’s contractual obligation to leave her one-third of the assets applied to assets that she received under Johns’s Will, which were none because the assets were jointly titled and passed to her by operation of law. The Court also rejected the argument that Patricia was free to divest herself of assets by outright gift or transfer on death to avoid having any assets in her estate for Susan. Finally, the Court affirmed the ruling that Gregory and Nancy were unjustly enriched by receiving Susan’s one-third of the assets and that the trial court was correct to award pre-judgment interest on equitable grounds because they had held and benefited from the assets for nearly 10 years, and the amounts were documented by an inventory of assets at the time of Patricia’s death.
For more information about Kevin Henry, please visit his profile.
For more information about Angelina Debeaupuis, please visit her profile.
