Farmland Is Partnership Asset – No Homestead Interest For Partner’s Surviving Spouse

Here, the widow of the decedent disagreed with the decedent’s brother over the proper disposition of a 120-acre farm. The farm was deeded to the decedent and his brother in 1969 by their mother, as tenants in common. The brothers orally created a farm partnership. The brothers rented the land to a tenant on a crop-share basis, put the income into a partnership account, and annually filed a partnership tax return for federal income tax purposes. 

In 1986, the brothers reduced their agreement to writing. The written agreement stated that each brother contributed “an undivided one-half interest” in the 120-acre farm to the partnership, along with cash and equipment. The profits and losses were shared equally. Importantly,   the partnership agreement specified that upon the death of one of the brothers, the remaining brother would have the option to purchase the other’s share. Ten years later, the decedent got married. Upon his death, his will was admitted to probate, bequeathing the homestead and all the land the decedent owned in Iowa and Arkansas to his wife. However, the will did not include a legal description of the property bequeathed. 

At trial, the widow claimed that the farm was an asset of the decedent’s estate, that the sale of the farm violated her homestead rights and that the decedent had revoked his will.  However, the trial court found that the 120-acre farm was a partnership asset. 

On appeal, the widow argued that the Iowa Code §486A.204 allowed the property to be deemed separate property from the partnership. However, the appellate court pointed out that the brothers clearly intended the property to be considered a partnership asset.   In addition, at the time the partnership was formed, Iowa law provided that all property originally brought into the partnership was partnership property. The decedent’s brother was also able to present proof that the land was a partnership asset, through the testimony of a neighbor and the formalized partnership documents. 

The widow also argued that the land was considered homestead property, but the appellate court disagreed. Because the court had determined that the 120-acre farm was partnership property, it was not possible for one partner (as against a co-partner) to  acquire a homestead interest in that property. The widow also failed to show the land was her homestead, under the requirements of Iowa Code §561.1, because she admitted at trial that she never paid taxes on the farm (the partnership met those obligations), never filed the homestead exemption in Marion County and carried an Arkansas Driver’s License. Additionally, she spent half the year in Arkansas. The court also disposed of the notion that the trial court gave undue weight to an old, revoked will.  Thus, the widow was not entitled to any right or inheritance of the 120-acre farm.In re Matter of the Estate of Liike, 776 N.W.2d 662 (Iowa Ct. App. 2009).