Transfer of Farm to Farming Son Survives Undue Influence Claims

On October 30, 2024, the Iowa Court of Appeals affirmed the district court’s dismissal of claims against a son who was financial agent for his dad when he received a gift of eighty acres from his father. The other children argued the son had unduly influenced the father into gifting the land, but the record showed the father highly valued continuing the family farm and had remained in control of his own decisions. The court found the son had rebutted the presumption undue influence.

Facts

The Natvig family consisted of Godfrey, his wife, and their eight children. In Godfrey’s 2004 will, he provided for equal inheritance among the children, with a special provision granting Michael the option to purchase the family farm. Over the years, Godfrey transferred portions of the farm to Michael, who lived on the farm and helped with its operation. Godfrey wanted to ensure the Natvig family farm was maintained and continued.

In 2015, Godfrey executed a power of attorney naming his son Michael and his daughter Ellen as his agents. . The siblings grew concerned about Godfrey’s estate planning after Ellen began looking into his financial matters. In 2016, Godfrey deeded 80 acres to Michael. He later executed a codicil to his will, explaining that he had already given all of his real estate to Michael in recognition of his past and future services. Godfrey then revoked Ellen’s status as his attorney-in-fact.

In 2017, the siblings filed a lawsuit, seeking Michael’s removal as attorney-in-fact and  alleging Michael breached his fiduciary duties to Godfrey and the siblings. The district court dismissed their claims after hearing testimony from Godfrey and finding that no fiduciary duty existed between Michael and the siblings.

After Godfrey's death in 2018, Michael was appointed executor of the estate. The siblings filed an action in 2019, alleging that Michael unduly influenced Godfrey to execute the 2016 codicil and that Godfrey was suffering from an “insane delusion” at the time. They also argued that Michael acted improperly by receiving the warranty deed to the 80 acres while he was acting as Godfrey’s attorney-in-fact. Finally, they sought an accounting of all of the farm rental income and inheritance money Godfrey received while Michael acted as his financial agent.

After a three-day trial, the district court rejected the merits of the siblings’ claims and dismissed the petition. The court found Michael could appropriately explain where Godfrey’s cash was spent. It also found the 2016 codicil was valid and the transfers of farmland to Michael were not the result of Michael’s undue influence. The siblings appealed the judgment.  

Opinion

On review the Court of Appeals affirmed, first finding that Michael had adequately explained the use of cash for Godfrey’s benefit and at Godfrey’s direction. No further accounting was required. Although $97,200 of checks had been made out to “cash,” the evidence showed that the the majority of the cash payments went to Godfrey’s caretaker and that the other funds were spent on Godfrey for personal expenses and charitable donations at Godfrey’s direction.

The court then addressed the siblings’ challenge to the 80-acre transfer. Although all agreed that Michael was in a confidential relationship with Godfrey, the court ruled that he rebutted the presumption of undue influence. Michael showed that he acted in good faith and that his father acted freely, intelligently, and voluntarily.  The transfer was made directly by Godfrey, not by Michael acting as his agent. Michael presented proof of cognitive testing in 2016 showing Godfrey had contractual capacity. Further, Godfrey’s attorney testified that Godfrey met with him alone and explained that he wanted ensure Michael received the farm since Michael had helped with farming operation for years. Finally, Godfrey’s testimony in the 2017 litigation showed he acted freely, intelligently, and voluntarily when transferring the land.

Finally, the court rejected the siblings’ claim that Godfrey acted under an "insane delusion” that his siblings would sell the land upon his death.  The court found there was ample evidence showing Godfrey’s reasons for transferring the 80 acres and executing the codicil.