Timmins and Lindebak win Iowa Court of Appeals Trust Case

Posted on: April 4th, 2024

Beneficiaries of a trust appealed a district court ruling denying their petition to terminate the trust. Grefe and Sidney’s Heather Timmins and Aaron Lindebak represented the trustee who opposed the termination. Jeanne Winn named her daughter and granddaughters as beneficiaries to the trust upon her death. The beneficiaries jointly petitioned to terminate the trust because the net value distributed would have been greater if distributed immediately, partially due to tax consequences. The Court noted that two of the purposes of the trust were agreed to by all parties, including: 1) to incentivize the granddaughters’ educations, and 2) ensure there are assets left for the granddaughters to receive. The third recognized purpose concerned the spending habits of the beneficiary daughter and whether the trust was intended to have a long-term distribution.

The Court concluded that guaranteeing a continuing income was a material purpose of the trust and that a lump sum distribution prior to the beneficiary daughter’s retirement did not align with that purpose. It was noted that Jeanne was warned of the tax consequences when she created the trust and declined to change any of the terms. The Court considered the purposes of the trust and determined it was necessary to continue the trust to fulfill at least some of the purposes.

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