Iowa Court won’t rewrite Will to match intent

“My kids will do the right thing.” This statement is an ingredient for a recipe of headaches and bad blood between your children. When assets are unequally distributed under law, trusting your adult children to “make it right” is a risk you should avoid and can avoid.

Promises and conversations that are not in the Will are not legally enforceable and a recent Iowa Court of Appeals case confirms it in The Estate of Delores Todd.

This recent case in Iowa describes how trust in adults to do the right thing can go horribly wrong. To summarize the case, the courts in Iowa and likely every state in the country, will not write the decedent’s intent into a Last Will and Testament. When a Will is not ambiguous, the court is bound by the words in the Will and lacks the authority to reform or rewrite the Will.

What went wrong?

Delores, a widowed parent, had seven children that she treated equally. When the children were young, she would set a timer to ensure equal time with toys and she divided candy equally so each child had identical amounts. When the children were adults, Delores would equally distribute the proceeds of farm income.

Delores had 5 parcels of land and decided to give some children land and some cash to avoid splitting up the parcels. She asked one child to help her value the land. They both agreed that it was impossible to know the land values at the time of death so they discussed that the siblings would make it right if it wasn’t consistent with current values.

In her 2010 Will, Delores devised the parcels of land to 5 children and required them to pay the other 2 children equalization payments.

Where things went wrong was a specific dollar amount, for equalization payments, was used in the Will. The equalization amounts were calculated specific to the value of each parcel of the land that a child inherited. The child was then required to pay a sibling who didn’t inherit land, a specific amount of money within 6 months of Delores’ death.

Why didn’t the kids do the right thing?

The appellants in this case were the two children who did not inherit the farmland and were gifted specific dollar amounts to be paid by their siblings who inherited land.

It is possible that some of the 5 siblings carried out their mother’s intent.

Although it seems selfish to not carry out your parent’s wish, situations are rarely in black and white. Maybe one of the land-inheriting children stepped up during Delores’ lifetime to help take care of her needs. Maybe a land-inheriting child thought they did more work on the farm and deserved more. Maybe a child had greater financial need for the inheritance.

Unfortunately, it doesn’t matter why the kids didn’t do the right thing. It only matters that the law does not allow for a Will to be rewritten after the testator dies.

What should you do?

One thing I make clear in my client meetings is that your intent for your estate distribution has to be legally enforceable. Specific, unambiguous, language in the Will can legally be enforced.

The district court determined that Delores’ Will signed in 2010 could not be rewritten by the court. The Will distributed farmland to a specific beneficiary and equalized it with a dollar value by the receiving beneficiary to a specific beneficiary that was not gifted farmland. The equalization amounts were calculated using low estimates of farm values which became inequitable a the time of death compared to the current market value of the farmland. One beneficiary of farmland who talked with the parent prior to the execution of the Will stated “‘Put [the land value] in low, and if it’s not right, we will have to make it right—I’m sure we will have to make it right.’ The beneficiary believed his mother included the fixed values for the equalization payments intending that the siblings ‘would make it right if it wasn’t’ consistent with current values.”

A Will or Trust can be written to account for a changes in value of the asset. The Will can require the executor, after the death of the testator, to obtain an appraisal for each parcel of land for the year of death. The Will can then require the executor to calculate the equity for the other five children in that parcel of land. And in the legal document, state with specificity that each child shall pay the equity in their parcel to the other children and that amount shall be a lien on their parcel.

It sounds like a lot of steps, but if you know farming, you know that dividing parcels of land decreases the value of the land. If you can avoid having all children own all the land equally, that saves headaches in the future.

You don’t own land parcels, but you do have a bank account

If you think this Iowa case doesn’t apply to your assets, let me share a few examples when the same thing can happen.

If you add a child to your bank account as a joint owner, that child is immediately an owner of that asset and it does not transfer through your Will. It doesn’t transfer at all after your death. It is already owned by the child on the joint account. That child does not have to share the money.

If you add a child to the deed of your house, that child is immediately an owner of the house and it does not transfer through your Will. It doesn’t transfer at all after your death. It is already owned by the child as a joint tenant. The child does not have to share the house.

Did you double check to see if I copy/pasted a sentence by accident? If you did, it is because it seems like a house should be treated different than a bank account. It is only treated differently if you plan for it to be treated differently.

Other warnings

The beneficiaries named for assets that transfer by contract or operation of law will receive the asset without conditions attached to it.

I’ll give you an example of when an asset transfers by contract instead of through the Will. Julie comes in to write a Will and review her estate plan. She has named her sister, Cindy, as the beneficiary of her life insurance policy. Julie’s intent is for Cindy to pay for her funeral expenses and to divide the rest equally to her other siblings. Regardless of Julie’s intent, Cindy will receive the life insurance policy payout and have no obligation to pay the funeral expense or to share the rest with her other siblings. Cindy may do what Julie intends or not. To assure the equal distribution to her siblings, Julie should name all siblings as equal beneficiaries. Let the siblings work out how to cover the funeral expenses or you can pay the funeral expenses in advance with a pre-paid burial plan.

Hope Wood JD is here to help

We are not here to scare you into getting your Will and estate plan completed. We are here to say that we have the experience to help you avoid headaches for your heirs and we offer services to make the process stress-free and low-cost. Learn more at https://www.hopewoodjd.com/will-in-a-day