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Will Provision Transfers Farmland to Trust – Not Subject to Control By Executor of Will
- by Erin Herbold
March 15, 2010
It is a common estate planning tool for a revocable trust to be accompanied with a pour-over will to ensure that all of the decedent’s property ends up in the trust at death. Here, a mother executed a revocable living trust and transferred some of her assets to the trust during her life. She died in 2006, owning an 80-acre parcel of farmland and survived by three grown daughters - two living out of state. The Iowa daughter was named trustee. The 80 acres was never transferred to the trust, but Mom’s will devised the residuary of her estate to the trust.
The two daughters living out of state were named co-executors under the will and filed a petition asking the court for authority to sell the 80 acres pursuant to Iowa Code §633.386. The proceeds from the sale of farmland were not needed for funeral or estate administration costs, and the trustee filed a resistance claiming that the sale of the farm was not in the best interests of the estate. The trustee also argued that the farmland should have been transferred to the trust as residuary property. However, the trial court determined that it was in the best interests of all of the parties to sell the farm and ordered a sale by public auction.
The trustee appealed. On appeal, the court ruled that the trial court erred in focusing on the best interests of the parties in determining whether the land should be sold. The appellate court stated that before a court can analyze best interests, they must first look to §633.275 of the Iowa Code, which states that if property is devised to a revocable living trust it is no longer part of the estate. Thus, the purpose of the pour-over will, in this case, was to deposit the residuary property into the trust where it would be administered by the trustee, rather than the estate. The appellate court did not reach the best interests argument, because Mom clearly intended to deposit the farmland into the trust where it would be administered by the trustee. In re Estate of McDowell, 781 N.W.2d 568 (Iowa Ct. App. 2010).