974 N.W.2d 70
Iowa2022Background
- Donald K. and Collen Davis created the Donald K. & Collen Davis Family Trust in 2016; the trust provided that after the first settlor's death the surviving settlor "shall not have the power to amend, revoke and/or terminate" the trust.
- Collen died in September 2017; Donald remained surviving settlor and trustee and owned the trust's primary asset, farmland.
- In April–May 2018 Donald and all four beneficiaries (including Katina Little) signed a two‑page "Consent to Modify Trust Agreement" purporting to authorize Donald, as surviving settlor, to amend the trust; Donald executed a First Amendment on May 30, 2018 changing dispositive provisions and successor trustees.
- Donald died November 13, 2019; Little sued trustees Keith and Donald J. Davis, challenging the amendment as invalid.
- The district court granted summary judgment for Little, holding the amendment void based on Iowa Code § 633A.1105 (trust terms control the Trust Code). The Iowa Supreme Court affirmed on a different statutory ground.
Issues
| Issue | Plaintiff's Argument (Little) | Defendant's Argument (Davis/trustees) | Held |
|---|---|---|---|
| Whether a surviving settlor plus all beneficiaries can validly modify an irrevocable trust without court approval when the trust was created by multiple settlors | The trust's irrevocability clause and the lack of Collen's consent mean modification required court approval under § 633A.2203(1) | § 633A.2202(1) allows modification with the consent of the settlor and all beneficiaries; the surviving settlor's consent suffices | Held for Little: § 633A.2202(1) requires consent of all settlors and all beneficiaries; absent consent of deceased settlor, dispositive terms cannot be modified without court approval under § 633A.2203(1); the amendment is invalid |
| Whether the trust's irrevocability term (and Iowa Code § 633A.1105) bars statutory modification such that the district court's reliance on § 633A.1105 renders the amendment void | The trust terms control and preclude any amendment by the surviving settlor | The Trust Code and common law permit modification/revocation in specified circumstances despite an irrevocability clause | Court held the district court erred to the extent it concluded § 633A.1105 made modification impossible; but affirmed judgment on the separate ground that all settlors must consent |
Key Cases Cited
- Culver v. Title Guarantee & Trust Co., 70 N.E.2d 163 (N.Y. 1946) (held joint settlors all must consent to revoke or modify; protects interests of deceased settlor)
- Sawyer v. Sawyer, 152 N.W.2d 605 (Iowa 1967) (Iowa precedent recognizing consent-of-all beneficiaries rule for terminating trusts)
- Harrison v. City Nat’l Bank of Clinton, Iowa, 210 F. Supp. 362 (S.D. Iowa 1962) (applied Restatement principle that settlor and all beneficiaries can consent to termination)
- In re Frei Irrevocable Trust Dated October 29, 1996, 390 P.3d 646 (Nev. 2017) (contrary authority permitting modification where a deceased settlor’s consent was presented via power of attorney)
- Buckalew v. Arvest Tr. Co., N.A., 425 S.W.3d 819 (Ark. Ct. App. 2013) (held court must protect interests of deceased settlor; modification invalid without appropriate judicial consent)