ITA Quarterly Newsletter • August 2020

October 25, 2020

Greetings [FIRST]:

ITA President's Message

Craig Schrader, Vice President Trust, West Bank and President of the Iowa Trust Association

It has been a challenging time to be planning the 2020 ITA Fall Conference.

Your Board members met in July to decide how best to stage the Conference during the time of the COVID-19 pandemic. After considering the safety of the presenters, attendees, and vendors it was decided to provide a “virtual conference” experience in 2020. This meant paring down the program and speakers we had originally planned to present into four daily Webinars, which we feel will provide relevant and timely topics for our membership.

The Board views this year’s revised format as an opportunity to experiment with new ideas. For one thing, attending the Conference will be very economical and convenient; the cost for attending has been reduced, one registration fee will cover a department’s entire staff, and there will be no travel or lodging costs for the attendees. Bank management should be delighted!

The four daily webinar sessions should also prove to be less intrusive to your work day. These sessions were deliberately kept short and focused, which will allow you and the rest of the staff to attend the Conference while making efficient use of your office time. And if someone needs to miss a session all of the presentations will be recorded and made available for later viewing.

Admittedly there are downsides, too. The ITA’s loyal vendors will not have the opportunity to present their services and products to attendees and explain the advantages of doing business with them. The Board encourages ITA members to be mindful of this and to support our vendors, many of whom are providing sponsorship for this year’s Conference.

Probably the biggest detriment to a virtual conference will be the missed opportunities for our members to visit with the other attendees. The Fall Conference provides a great opportunity to network with and learn from other departments. The Board has, however, made sure the Peer Group Meeting is still part of the virtual Conference. While admittedly not a substitute for attending the Conference in person, participating in the Peer Group meeting may be the next best thing

Again, thank you for your continued support of the ITA. We look forward to your participation in the Fall Conference, which should be a new and valuable experience for everyone.

Register today for ITA Fall Webinars

September 29 - October 2

While there will not be a live event this year, ITA wants you to gain the expertise you
need to remain a leader in the trust profession. ITA is proud to present a series of
webinars and meetings developed to keep you up-to-date with current issues and deliver
messages to thrive in your position. Pricing for the webinar is per organization, so the
webinars are a great opportunity for your entire staff to learn and grow. While there will not be a live event this year, ITA wants you to gain the expertise you need to remain a leader in the trust profession. ITA is proud to present a series of webinars and meetings developed to keep you up-to-date with current issues and deliver messages to thrive in your position. Pricing for the webinar is per organization, so the webinars are a great opportunity for your entire staff to learn and grow.

Webinar topics:
Directed Trusts
Recent Estate Planning Developments
Chas to Confidence During Times of Economic Stress
Perform Like A Champion
and Peer Group Meeting

For complete details and registration, see the ITA website.

Trust Briefs: The Importance of Valuation at Time of Death, Getting a Signed Waiver, and the Statute of Limitations

By Eric LeSher, Trust Officer for Raccoon Valley Bank

Trust Briefs is a series of articles and commentary about current topics and issues involving trusts, estates, guardianships and conservatorships.

In April 2019 an interesting case was decided by the Supreme Court of Iowa in favor of a trustee and the trust they administered. The decision in this case is instructive in that it points out the importance of valuing a trust’s assets as the date of death, getting a signed waiver, receipt and release as to final distribution (“waiver”) from a beneficiary and the importance of filing a claim in a timely manner. In this case the trustee did the right thing by doing a valuation as of the date of death and getting a signed waiver. In contrast the beneficiary (plaintiff in this case) failed to file a claim in a timely manner. The beneficiary’s failure ultimately resulted in a ruling by the Supreme Court of Iowa that led to a summary judgement in favor of the trust and the trustee. Although I do not know for sure, my guess is that the beneficiary failed to seek legal advice before accepting their then calculated interest in the estate and signing the waiver. After accepting their interest and signing the waiver, the beneficiary then probably realized they failed to consider the potential value of their interest that might have been had they not signed the waiver at which point they sought legal advice in an attempt to get more money. Let’s take a look at this matter using a case brief format.

Case: Konrardy v Vincent Angerer Trust 925 N.W.2d 620 (2019),

Facts: Vincent Angerer established the Vincent Angerer Trust on March 27, 1998. Vincent died on May 30, 2010. Per the terms of the trust, upon his death each beneficiaries share was to be placed in an individual trust for each of his siblings and their spouse. If and when a sibling and spouse died, the trust instructed the trustee to distribute that trust share to the living descendants of that sibling. Vincent had five siblings. When Vincent died on May 30, 2010, he was survived by three siblings and the spouse of a deceased sibling. The fifth sibling, Cecelia Howard, predeceased Vincent and did not have a surviving spouse. Cecelia Howard had a daughter and a son who predeceased her. The son who predeceased her had two daughters (Konrardy and Burmeister) who are the plaintiffs in this case. Now, for brevity sake and other reasons, I will not draw out the family tree in this document but having done it privately, I believe Konrardy’s and Burmeister’s interest in the net value of the estate was therefore 5% each, approximately $85,000 based on an estate value of about $1,700,000 at the time of Vincent’s death. On October 19, 2011, Konrardy and Burmeister both signed a waiver which stated in part, “The undersigned hereby specifically waives notes [and] waives any and all accounting and production of vouchers…”. On August 11, 2015, an attorney representing Konrardy and Burmeister sent a letter to the trustee claiming that his clients had been treated differently than the other beneficiaries and that their share of the trust was paid out on a significantly reduced basis as they were not advised of the potential value of the real estate involved. In a response to the attorney dated August 19, 2015, the trustee explained that the distributions to Konrardy and Burmeister were based on the language of the trust directing the trustee to “immediate pay out of any share to the descendants when both the sibling and spouse have passed away.” The trustee also included in his response to the attorney accountings for the years 2010, 2011, and 2012. The attorney for Konrardy and Burmeister acknowledged the trustee response to him on September 9, 2015. On March 15, 2017, the attorney for Konrardy and Burmeister filed a petition in equity against the trust and the trustee, claiming the distributions should have been valued on the date of distribution in October 2011 rather than May 2010. Keeping in mind; 1) that the time period referred to above slightly different than that referred to below, 2) the percentage referred to below was not available in October 2011, and 3) individual values assigned to land are unique and are estimates, I looked it up and according to the Iowa State University Extension office the value of value of Iowa farmland rose by 32.5% during calendar year 2011. As such, one can see where the plaintiffs and their attorney might believe that pursuit of a lawsuit might have been worth the expense of said lawsuit.

Issue: Did the appellate court error in affirming the district court’s ruling that the defendant’s request for a motion for dismissal be denied?

Holding: The Iowa Supreme Court vacated the court of appeals affirmation of the district court’s ruling and remanded it back to the district court for entry of summary judgement in favor of the defendant. The Iowa Supreme Court ruled that plaintiff failed to initiate their action within one year and their claim was barred under Iowa Code section 633A.4504.

Rationale: In making its ruling, the Iowa Supreme Court cited Iowa Code 633A.4504(1) which bars a claim from being filed unless it is commenced within one year after the receipt of the accounting or report. In this case, the claim was filed about eighteen months after receipt of the accounting or report. Thus, the importance of knowing the statute of limitations.

Note: The plaintiff also made a claim that the defendant’s interpretation of the trust language was incorrect. More specifically, the language in the trust document that stated, ““immediate pay out of any share to the descendants when both the sibling and spouse have passed away.” Since the Iowa Supreme Court ruled that the statute of limitations barred the action, they did not address the defendant’s claim that the trustee did not interpret the trust correctly.

Landowner Resources for Informed Decision Making

By Mollie Aronowitz, AFM, Peoples Company Sustainability Director and Land Manager

Landowner Lee Tesdell and his sons, Omar and Ramsey, on their farm in Polk County, Iowa (photo provided by Practical Farmers of Iowa)

The management cycle of strategy, execution, and improvement is in full swing. Land managers are completing post-plant farm tours and scheduling droning and tenant meetings for July/early August.

There will be much to consider for 2021. Significant market volatility for many crops across the country and current events will play a role in 2021 planning. Now is a good time for landowners to build a base of resources to return to later in the year.

Here are two white papers on land conservation and ownership that continue to be an excellent source for landowners:

•   Socially Responsible Farmland Investment, Dr. Mike Duffy and Steve Bruere
•   Your Farmland and the Future, Teresa Opheim and Steve Bruere

Another valuable resources is Practical Farmers of Iowa. PFI is a farmer-led organization with members across the country. PFI's mission is to help farmers build resilient farms and communities. At the beginning of 2020, PFI launched new programming directed to non-farming landowners.

“We know that the majority of farmland in Iowa is not farmed by the people who own it,” says Jorgen Rose of Practical Farmers of Iowa. “Non-operating landowners have a huge role to play in stewarding our natural resources and building a resilient, diverse and profitable agriculture. Our goal is to connect them with the resources they need to make decisions about their farmland.”

Landowners can visit PFI’s landowner webpage and can sign up for PFI’s quarterly e-newsletter here.

PFI also suggests these resources from other parts of the country:

•   The Farmland Information Center has a variety of information and resources for landowners.
•   The Land Stewardship Project (LSP) has significant resources for landowners that can be found here. In particular, their Conservation Leasing Toolkit is a great resource.

Legislative Tool Helps you connect with Legislators

The Iowa Bankers Association's Legislative Action Center allows bankers to easily contact legislators electronically. Letters on key pending legislation and regulations are posted on the site and can be easily edited and/or personalized for bankers to send to their respective elected officials and regulators at the state and federal level. The Legislative Action Center is available at the IBA website.

Contribute to the Iowa Trust Association
As a reminder, the Iowa Trust Association (ITA) welcomes contributors to their quarterly newsletter. If you would like to comment on recent activities in the industry or let us know about an upcoming event that would be of interest to our readers, please feel free to contact Darcy Burnett, at (800) 987-7365. Thank you for your interest in our publication and we look forward to hearing from you.

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Contacts

Iowa Trust Association

If you have any questions, please contact the Iowa Trust Association at 800-987-7365

Darcy Burnett, CMP
Senior Education Coordinator
dburnett@iowabankers.com