Iowa Partition Law Does Not Apply to Farmland Held by a Trust

December 18, 2023 | Kitt Tovar Jensen

On November 21, 2023, the Iowa Court of Appeals affirmed that Iowa’s partition law did not apply to farmland owned by a trust. Iowa Code chapter 651 contains special provisions for the partition of “heirs property.” Because the farmland was not held in tenancy in common, the farmland did not qualify as “heirs property.” See Iowa Code § 651.1. 

Background

Wilhelm Youngerman executed a will which created a trust. Upon his death, his wife, Helen, would be the sole beneficiary. After Helen passed away, the will directed the trustee to divide the trust assets into “equal shares” for each of their four children. The will gave the executors or trustees the power to “make division or distribution in money or kind or part in either at values.”

Helen was the sole beneficiary of the trust until she passed away in 2019. At that time, the trust held 106-acres of farmland, a wind farm lease on the farmland, and a checking account. The couple’s son, serving as successor trustee, hired a surveyor to divide the farmland into four equal parcels. The successor proposed that each sibling receive one of the parcels. He gave himself the least desirable parcel subject to the wind farm lease. One of children, Susan, objected claiming that the division was inequitable. The district court found the division equitable and affirmed the division. Susan appealed.

Trust Interpretation

When interpretating a trust, the intent of the grantor controls. First Nat’l Bank v. Mackey, 338 N.W.2d 361, 363 (Iowa 1983). On appeal, Susan argued that any division that was not perfectly equal would conflict with the grantor’s intent.

The Court of Appeals rejected this argument instead agreeing with the district court’s conclusion that “[t]he proposed distribution is fair and equitable and, perhaps, slightly less so to the successor trustee if anyone.” Susan’s proposed definition was overbroad.

Here, the terms of the trust clearly demonstrated that the grantor gave the trustee complete discretion to determine the distribution of the trust assets. Thus, the proposed distribution was within the grantor’s intent.

Applicability of Chapter 651

Iowa Code chapter 651 governs partition disputes of property between co-tenants and contains special provisions for “heirs property.” Susan claimed that Chapter 651 applied and required a sale of the entire parcel of farmland.

Heirs property is defined as:

real property held in tenancy in common that satisfies all of the following requirements as of the date of the filing of a partition action:

a. There is not a recorded agreement that binds all of the cotenants that governs the partition of the property.

b. One or more of the cotenants acquired title from a living or deceased relative.

c. Any of the following apply:

(1) Twenty percent or more of the interests are held by cotenants who are relatives.

(2) Twenty percent or more of the interests are held by an individual who acquired title from a living or deceased relative.

(3) Twenty percent or more of the cotenants are relatives.

Iowa Code § 651.1. Here, the siblings did not own the property as tenants in common. The trust owned the property. Additionally, the will was a recorded agreement binding all parties as to the partition of the farmland. As a result, the Court of Appeals affirmed Chapter 651 did not apply in the present case.