It is often the case that, at the time of death, the deceased spouse wants to benefit the surviving spouse for life and then have the property pass to the children. This is particularly the case in an ag estate. But, what if there is indebtedness still owing on the farm land at the time of death of the first spouse and the farmland is left to the surviving spouse for life with a remainder to the children - is that the surviving spouse’s responsibility or the responsibility of the children as the remaindermen? That was the issue in this case.
A farmer died owning machinery and equipment, over 25,000 bushels of corn and soybeans and undivided interests in land. The farm operating note was paid off at the time of death, but another note with a balance of almost $80,000 remained unpaid at the time of death. That note was secured by the farm real and personal property. The farmer’s will left everything to his wife for her life, and then to the children. The farmer’s will did not make any specific reference as to how debts, taxes and expenses were to be paid other than to state that they were to be paid out of the estate. The children argued that all of the farm personal property that passed to Mom that was security for the indebtedness should be used to pay debts and expenses of the estate and the mortgage debt. Mom argued that Iowa law (the abatement statute) specified that the children took the remainder interest subject to the mortgage because the will did not direct otherwise. The trial court agreed with Mom, and the Iowa Court of Appeals affirmed. The court noted that the purpose of the Iowa abatement statute (Iowa Code §633.436) is to specify the order in which various bequests become subject to claims against and to protect the interest of a surviving spouse. Because the farmer’s will was not explicit enough to override the abatement statute, the statute controlled. In re Estate of Riebhoff, No. 5-883/05-0895, 2006 Iowa App. LEXIS 225 (Iowa Ct. App. Mar. 15, 2006).