Friday, September 07, 2012

Surviving Spouse Rights in Iowa Still Evolving

The rights of a surviving spouse (male or female) in Iowa are not exactly "clear cut".  When you have numerous methods on how property can pass at death (named beneficiary, joint ownership, will, trust, intestate) and sprinkle in second marriage situations with kids from an earlier relationship, you can create a minefield of problems.  I have written previously on a court's allowance of the disinheritance of a spouse in a December 2009 district court case.  In a different district court, another court has taken a different approach.

Betty Rich was the surviving spouse of William Rich.  William Rich had three daughters from a prior marriage and none from his marriage with Betty.  Mr. Rich's will & trust combo created the standard AB trust with the QTIP provisions.  (Another future blog post.)  Betty wasn't thrilled with what she was receiving under her husband's estate plan (or from the insurance policies) so she proceeded to opt for her elective share.  She sought to obtain her spousal share from IRAs, securities, annuities and the trust assets.  Mr. Rich's children responded by claiming that Betty had agreed to keep their assets separate.  However, the court responded that separate assets doesn't necessarily mean a waiver of their spousal rights.

What becomes interesting in the ruling is the assets that were given to Betty.  Mr. Rich owned some IRA's in which Betty was not the named beneficiary.  The court held that the IRA's were exempt property and as exempt property, the spousal elective share provides that ALL of the exempt property goes to the spouse.  As to the other personal property (checking account, CD, annuities and investment account) Betty was entitled to 1/3 of those assets.

There was also some life insurance where Mr. Rich's children were the named beneficiaries.  The court found, based upon some old Iowa law, that life insurance is excluded from the elective share.  (I do have some questions on that piece of the ruling based on recent Iowa cases.)

I take no position as to whether this was the right or wrong outcome.  However, it does reinforce the potential value of a prenuptial agreement and the benefit of allowing for postnuptial agreements.  Without either, some Iowa courts may be willing to provide broad application for spousal rights that may not result in the understanding of the parties.  But that's why we have lawyers, right?

Thursday, September 06, 2012

Iowa Will Contest Rejected by Iowa Court of Appeals

The Iowa Court of Appeals issued a ruling today affirming a ruling of an appeal in a will contest case.  The contestants to the will were basing their argument that the testator (decedent) lacked sufficient capacity to execute her will as she suffered from certain delusions as to certain family members/beneficiaries.  According to the ruling, certain medical evidence was properly excluded as the proposed evidence related to medical information after the execution of the will, and not during the time period the will was executed.  In other words, any evidence concerning the testator AFTER the signing of the will may not be relevant in determining capacity at the time of signing the will.  In this case, the testator was diagnosed with cancer after signing the will and was under medication for that treatment.  The contestants also objected to the jury instructions used in referring to the delusions.  The Court rejected the appeal and affirmed the findings of the jury.

The will contestants also made the claim that the testator was unduly influenced, but the jury didn't agree.  Not a lot of facts provided in this ruling as to the evidence that was presented.