Windfall for Residuary Beneficiary After Iowa Court of Appeals Finds Will Partially Valid

In Re Estate of Kremer, No. 3-861 / 12-1662, 2014 Iowa App. LEXIS 96 (Iowa Ct. App. Jan. 23, 2014)

 

A residuary beneficiary was a big winner after the Iowa Court of Appeals reversed a district court’s total invalidation of a will on undue influence grounds.

The bachelor decedent, who was 88 years old when he died, had executed a new will two weeks before his death. In the new will, he made provision for five beneficiaries, all of them friends. He specifically wrote in his will that he made no provision for his siblings or nieces and nephews because he wanted to provide for those who had helped him in his later years. He stated that the choice was not due to a lack of regard for his relatives.

The will made bequests of property to four beneficiaries. The values of these bequests were as follows:

Jim and Jean Gordon $ 6,111.11
Kimberly Gordon $ 1,099,490.00
Bernard Bergfeld $ 977,854.32

The residue of the estate, which was valued at $182,340.47, was left to Larry Troester.

A nephew (who was a beneficiary in an earlier will) and a sibling of the decedent filed petitions to set aside the will on the grounds of lack of testamentary capacity and undue influence. After an 11-day jury trial, the jury found that the decedent had testamentary capacity, but that the three Gordons had asserted undue influence upon him. The jury specifically found that Bergfeld and Troester had not unduly influenced the decedent. Over the proponents’ objections, the district court had instructed the jury that the entire will was invalid if procured by undue influence. Based upon the jury’s finding of undue influence by the Gordons, the district court set aside the entire will.

Bergfeld and Troester appealed, arguing that undue influence by several beneficiaries did not necessarily invalidate the will as to all beneficiaries. The court of appeals agreed, finding that Bergfeld and Troester should not suffer as innocent parties. The evidence showed that the decedent wanted to reward those who had helped him and that Bergfeld and Troester had provided him with much assistance. Relying on In re Estate of Ankeny, 28 N.W.2d 414 (Iowa 1947), the court found that Iowa law supported the partial invalidation of a will where four factors were true:

(1) the separate items are distinct and complete in themselves;
(2) other separate items of the instrument by no reasonable construction could be affected by the taint of undue influence charged against an offending beneficiary;
(3) the separate several items make a bequest or devise to persons having a natural claim to the testator’s bounty; and
(4) the instrument is so drafted as to make a complete disposition of testator’s estate.

The court found that the factors were met under the facts at hand. A complete disposition of the decedent’s estate could be made because any property not passing through a special bequest would pass under the residuary bequest to Troester.  In so holding, the court emphasized the jury’s finding that the decedent had testamentary capacity and the rule that “the testator’s intent is the polestar and if expressed shall control.” The court noted that the decedent made it very clear that he wanted his estate to go to his friends. The will, the court found, was complete, even without the two articles leaving property to the Gordons.

As a result of the decision, Mr. Troester, the residuary beneficiary, stands to inherit $1,287,941.58, instead of $182,340.47. We’ll be watching for an appeal to the Iowa Supreme Court.

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