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In re Estate of Hord

Supreme Court of Iowa

June 21, 2013

IN THE MATTER OF THE ESTATE OF LOIS L. HORD, Deceased.
v.
LARRY WAUGH, Executor of the LOIS HORD ESTATE and Trustee of the CARL R. HORD TRUST, Appellee. IN THE MATTER OF THE CARL R. HORD TRUST ANNE T. WALSH, KATHRYN TRABERT, GARY R. SHUCK, DONALD C. SHUCK, WILLIS E. SHUCK, and JOHN DALY, Appellants,

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Monona County, James D. Scott, Judge.

The remainder beneficiaries of a will seek further review of a court of appeals decision invalidating their interests.

Christine B. Long and Amy R. Teas of Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines, for appellants.

Patrick L. Sealey, Joel D. Vos, and Allyson C. Dirksen of Heidman Law Firm, L.L.P., Sioux City, for appellee.

APPEL, Justice.

In this case, we must consider whether remainder beneficiaries may enforce the terms of a spendthrift trust against the trustee when the remainder beneficiaries previously purported to convey what was at the time a future interest in real estate held by the trust. For the reasons expressed below, we hold that the applicable statute of limitations bars the remainder beneficiaries from enforcing the terms of the spendthrift clause of the decedent's will. As a result, we vacate the decision of the court of appeals and affirm the judgment of the district court.

I. Background Facts and Prior Proceedings.

Carl and Lois Hord were husband and wife. They did not have children. The couple owned approximately 210 acres of farmland in Monona County as tenants in common. Carl died testate on June 18, 1992. His will was admitted to probate in the Monona County District Court on June 30.

Article VI of Carl's will created the Carl R. Hord Trust and directed that the residue of his estate, which consisted only of his undivided one-half interest in the farmland, be placed in it. Article VI named Lois and Larry Waugh, a longtime family friend and tenant on the farm, to serve as trustees. Article VI also named Lois as a life beneficiary of the trust and directed that, upon her death, the farmland would pass in equal shares to the couple's niece and five nephews.

Article VI also contained a spendthrift clause. Specifically, the spendthrift clause stated:

No interest, under this Article, shall be transferable, assignable, or become subject to any encumbrances by any beneficiary, nor shall such interest be subject to the claims of any creditors of any beneficiary prior to the actual distribution by the Trustees to the beneficiary.

On May 20, 1993, the attorney for the Carl R. Hord Trust sent a letter to five of the six remainder beneficiaries of the trust. The letter informed them that the present value of their individual interests was $12, 471.16 and that Lois, though not required to by law, had paid the $1247.12 inheritance tax owed by each of them. The letter also indicated the attorney's belief that Lois had spoken to each of the remainder beneficiaries about the possibility each might relinquish his or her interest in the farmland to Lois. Finally, the letter indicated Lois would not expect reimbursement for the amount of the inheritance tax if they transferred their interests to her.

Without consulting attorneys or reviewing Carl's will, five of the six remainder beneficiaries, Mary Ann Trabert, Gary Shuck, Donald Shuck, Willis Shuck, and John Daly, executed quitclaim deeds to Lois in September and October, which she promptly recorded. Waugh had no knowledge of Lois's correspondence with the five remainder beneficiaries or that they transferred their interests to Lois. The only duty Waugh performed as trustee was to ...


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