Estate Case Involves Breach of Family Settlement Agreement and Renouncement of Will
The decedent and his first wife had three children. After the wife’s death, the family experienced “acrimonious intra-family disputes” and litigation involving the wife’s estate. The problems started when the decedent exercised a power of appointment under his late wife’s will. The children squabbled for several years. The family eventually reached a settlement agreement which was read into the court record, reduced to writing, and incorporated into the court’s order enforcing the settlement. Under the agreement, any family member who materially violated the agreement waived and forfeited their rights to receive any property from the decedent’s estate.
The decedent married his second wife, Maxine, shortly thereafter. Two years after the settlement agreement was entered into, the decedent’s daughter, Patricia, obtained the decedent’s signature on an offer to buy, which sold the decedent’s interest in the family farm to the Patricia’s son for $405,000. The contract required a $100 down payment and annual payments of $32,000 with any unpaid balance forgiven at the decedent’s death. The decedent died three months later.
After other family members discovered the real estate contract, more litigation ensued. After a trial, the court held that the contract to sell the farm was the product of Patricia’s undue influence. The court had the contract set aside, the deed voided and the land partitioned. The estate and the brothers were also awarded attorney fees. On appeal, the court affirmed, but also found that securing the signature on the contract was a material violation of the family’s settlement agreement. This ruling became final when the Supreme Court did not grant further review.
The current appeal involved the executor’s distribution of estate income equally to the decedent’s two sons because Patricia’s interests had been forfeited. Patricia objected. The probate court held Patricia had no interest in the estate by reason of the court’s prior opinion in the matter. The court stated that the issue had been decided in previous litigation and that decision was binding. A “flurry” of resistances and post-trial briefs followed. The court later clarified that Patricia’s children also could not take an interest in the estate because their interests were taken through their mother’s interest, which was deemed forfeited.
Patricia and her children appealed. Both issues were affirmed on appeal. The court agreed that the issue of whether Patricia had forfeited her rights under the will had already been decided and the court’s prior opinion was the law of the case. The court also held that the children had no independent right to inherit because their interests were all through their mother’s rights. Because Patricia forfeited all her rights by violating the settlement agreement, the children had no rights to anything in the decedent’s estate. In re Estate of Nelson (Lewis case), No. 2-022/11-0603, 2012 WL 652457 (Iowa Ct. App. Feb. 29, 2012).
In a case decided the same day, the court was asked to determine whether the surviving spouse, Maxine, was entitled to her share of the decedent’s estate. Before her marriage to the decedent, Maxine signed a prenuptial agreement prohibiting her from taking the statutory share of her husband’s estate. The decedent established a marital trust for Maxine under his will. After the decedent’s will was admitted to probate, Maxine received a notice advising her that she had four months to file an election to take an elective share or else she would be deemed to take under the will. The deadline for filing an election expired on September 25. On October 18, Maxine filed a document stating, “I am of course the surviving spouse in the Estate of Louie Nelson. Under the Iowa Probate Code, I refuse to take under the Will.” At the same time, she also signed a quitclaim deed to Patricia’s son to supplement the warranty deed signed by the decedent that conveyed the property at issue in the opinion regarding the real estate contract. In court documents filed during that suit, Maxine continued to claim she had elected to take against the decedent’s will.
A hearing was held several years later regarding several other estate issues. Maxine requested the court determine her rights. The district court held that Maxine had not elected to take against the will because she had waived her right to take the statutory elective share by reason of the prenuptial agreement. Instead, the court determined Maxine’s document was actually a rejection of the will. This renouncement was not ambiguous, and she reiterated her rejection in several court documents.
Maxine appealed contending that the district court erred in its ruling by failing to hold she was entitled to take under the decedent’s will. The court agreed that Maxine did not make an election to take against the will. The court, however, found that Maxine had disclaimed or renounced the will and affirmed the trial court.
The court examined an exhibit filed by Maxine in which she affirmatively abandoned and surrendered her rights under the will. Maxine’s exhibit stated that she sought to avoid receiving property under the will so Patricia could inherit the decedent’s property instead. But, when the court invalidated the real estate contract Maxine wanted to change her position because she wanted to receive the property so Patricia could have it. However, Maxine could not change her position. Once filed, under Iowa Code § 633E.5, a disclaimer is irrevocable. In re Estate of Nelson (Nelson case), No. 2-027/11-0898, 2012 WL 652477 (Iowa Ct. App. Feb. 29, 2012).
Comment: Unfortunately, nobody won in either of these cases. The decedent’s sons did finally inherit from their father, but at the cost of years of litigation. Patricia tried to circumvent the probate procedure and ended up forfeiting all rights to any inheritance for her or her children. And, Maxine, the surviving spouse, ended up losing her rights to the marital trust the decedent set up for her benefit. Ironically, in his will, the decedent had expressed his hope that his children would no longer fight and litigate over their inheritance.