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In re Luella Taylor Trust

Court of Appeals of Iowa

October 24, 2018

IN THE MATTER OF THE LUELLA TAYLOR TRUST, and IN THE MATTER OF THE QUENTIN L. TAYLOR TRUST. STANLEY R. TAYLOR and GREGORY L. TAYLOR, Appellees.

          Appeal from the Iowa District Court for O'Brien County, David A. Lester, Judge.

         A beneficiary appeals a district court order finding he no longer had an option to purchase the farmland held in his parents' trusts.

          William K. Klinker of Smith, Grigg, Shea & Klinker, PC, Primghar, for appellant Bradley D. Taylor.

          Kyle S. Irvin of Corbett, Anderson, Corbett, Vellinga & Irvin, LLP, Sioux City, for appellees.

          Heard by Tabor, P.J., and Mullins and Bower, JJ.

          TABOR, JUDGE.

         This appeal involves a dispute among sibling-beneficiaries over the interpretation of language in their parents' irrevocable trusts directing the sale of farmland. Bradley Taylor, the son who farmed, seeks to exercise a trust provision giving him "the first opportunity to purchase" the land. The district court decided Bradley's opportunity expired when the three-year period set in the trust lapsed without agreement to a sale by all six siblings. Bradley asks us to reject that interpretation. Because the trust language shows the parents intended Bradley have a chance to buy the land without each sibling having veto power, we reverse the district court order and remand for further proceedings.

         I. Facts and Prior Proceedings

         In 1999, Luella and Quentin Taylor established identical revocable trusts to direct the distribution of their assets to their six living children: Bradley, Monette, Roann, Stanley, Rodney, and Gregory. Both parents signed a first amendment to their trusts in 2002 and a second amendment in 2008. This appeal focuses on the first amendment to Article IV(D)(3) and the following disputed language:

I request that my trustee keep all of my farm real estate [intact] for a period of three (3) crop years from the death of trustor's wife or the trustor, whichever occurs later and during the three (3) year period my trustee shall rent my farm real estate to my son, Bradley D. Taylor under the terms and conditions that existed at the time of my death or my wife's death, whichever occurs later. No sale shall occur during this period unless all my children agree otherwise.
Additionally, if and when any of my farm real estate is sold, I direct that my son, Bradley D. Taylor shall be afforded the first opportunity to purchase any or all of my farm real estate at a price agreeable with all my children. If they are unable to agree, then I grant to my son, Bradley D. Taylor, the exclusive right and option to purchase any or all of my farm real estate at a price to be arrived at by my son, Bradley D. Taylor, selecting an appraiser knowledgeable in farmland values in Northwest Iowa; my remaining children shall select an appraiser knowledgeable in farmland values in Northwest Iowa, and the two (2) appraisers selected shall pick a third appraiser knowledgeable in farmland values in Northwest Iowa and the average price determined by the appraisers shall constitute the value of the farmland for purposes of sale to my son, Bradley D. Taylor. My son, Bradley D. Taylor, shall have sixty (60) days after the appraisal is completed to determine whether to exercise this option. If my son, Bradley D. Taylor, does exercise his option granted herein, he shall file the election with the O'Brien County Clerk of Court within sixty (60) days of the appraisal date. If no election is filed within the sixty (60) days of the appraisal, the option shall expire and my children shall dispose of my farmland as my trustee shall determine to be in the best interest of the trust.[1]

         According to their terms, the trusts became irrevocable after both Luella and Quentin died. Luella died on March 29, 2014. Quentin died on October 3, 2014.

         In late October 2014, the district court approved the appointment of Security State Bank of Sutherland, Iowa, as the trustee for both trusts.[2] In crop years 2015, 2016, and 2017, Bradley rented the 340 acres of farmland held in the trusts.

         As the three years following Quentin's death drew to a close, the bank and beneficiaries engaged in a flurry of filings about the sale of farmland contemplated in the trusts, listed chronologically below.

         (1) In July 2017, the trustee bank applied for orders on the sale of the farmland. See generally Iowa Code § 633A.6202(2)(a) (2017) (allowing trustee to petition the court to "[c]onstrue and determine the terms of a trust"). The bank asserted the wording of the Taylors' trusts left several issues unaddressed, including:

a. The deadline, method and timing for parties to name their respective appraisers;
b. The date to be used to determine the value of the land;
c. The breakdown of parcels to be sold;
d. The meaning of "date of appraisal" and how notice of the appraisal amount is given to ...

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