On April 5, 2019, the Iowa Supreme Court issued an opinion in the case of Serena Konrardy and Carrie Rigdon n/k/a Carrie Burmeister vs. Vincent Angerer Trust and DeWitt Bank & Trust Company, as Trustee of said Trust.
The Trust provided that on the death of the Trustor, equal shares would be established for each of the Trustor’s five siblings. Each share was to be placed in individual trusts for the sibling and the spouse of a deceased sibling. If both a sibling and the sibling’s spouse had died, the Trust directed the trustee to distribute the Trust share to the living descendants of the sibling. At the time that the Trustor died, he was survived by three siblings and a spouse of a deceased sibling. A fifth sibling predeceased the Trustor and had no surviving spouse. Said sibling had a daughter and a son who predeceased him. The son was survived by his two children, Serena Konrardy and Carrie Burmeister, who are the plaintiffs in the case. Pursuant to the terms of the Trust, the shares payable to Serena and Carrie were immediately distributable to them.
The Trustor passed away on May 30, 2010. The distributions from the Trust paid to Serena and Carrie were made in October 2011. Between the date of death and the time of distribution the value of the Trust had significantly increased due to the rapid appreciation in the value of the farmland. The trustee determined Serena’s and Carrie’s shares based on the net value at the time of the Trustor’s death.
Almost four years later, in August of 2015, Serena and Carrie retained an attorney who sent a letter to the bank and the trustee, stating that his clients were seemingly treated differently than the remaining Trust beneficiaries and indicating that the share of the Trust paid out to Serena and Carrie was paid out on a significantly reduced basis and that they were not fully advised of the potential value of the real estate involved. The bank responded explaining the distributions were based on the language of the Trust requiring that the shares be immediately paid out to the descendants, and enclosed accountings for the years 2010, 2011 and 2012. Approximately eighteen months later, in March of 2017, Serena and Carrie filed a petition in equity claiming that their distribution should have been valued as of the date of distribution rather than the date of death. The defendants filed an interlocutory appeal after the District Court rejected the defendant’s Motion for Summary Judgment and the case was transferred to the Court of Appeals. The Court of Appeals affirmed the District Court judgment and the Supreme Court granted the Application for further review. The Supreme Court examined Serena and Carrie’s claims and found that they were untimely under Iowa Code Section 633A.4504. Said Code Section bars a claim against the trustee for breach of trust as to a beneficiary who has received an accounting or other report that adequately discloses the existence of a claim, unless a proceeding to assert the claim is commenced within one year after the receipt of the accounting or report. The Section goes on to state that an accounting or report adequately discloses the existence of a claim if it provides sufficient information so that the beneficiary knows of the claim or reasonably should have inquired into its existence.
The Supreme Court found that the breach of trust claims of Serena and Carrie were barred by the statute of limitations period. The court found that the letter sent by the bank to Serena and Carrie’s attorney constituted a report and adequately disclosed the existence of a claim. The letter from the bank enclosed a valuation of the Trust assets as of the date of death and a copy of the Trust accountings for the year of death and the two following years.
The case points out the importance of a Trust beneficiary to move quickly to pursue any breach of trust claims against the Trustee involving the administration of the Trust.