Opinion ID: 1292125
Heading Depth: 2
Heading Rank: 1

Heading: The Iowa Trust Code

Text: The children also maintain a provision of the new Iowa Trust Code supersedes our reasoning and that of the court of appeals in Cross. That provision provides: Unless otherwise specifically stated by the terms of the trust, the interest of each beneficiary is contingent on the beneficiary surviving until the date on which the beneficiary becomes entitled to possession or enjoyment of the beneficiary's interest in the trust. Iowa Code § 633.4701(1) (emphasis added). The children contend Alfred's will is insufficiently specific concerning the nature of Richard's interest in the trust fund. Christa rejoins that the trust code does not apply in this case, and, to the extent it purports to apply retroactively to this case and divest Roger's estate of a vested property right, it is unconstitutional. See Iowa Const. art. I, § 21 (No ... law impairing the obligation of contracts shall ever be passed.); see also Iowa R.R. Land Co. v. Soper, 39 Iowa 112, 117 (1874) (recognizing retrospective laws may be declared unconstitutional if they interfere with vested rights). Although the legislature enacted the trust code in 1999, see 1999 Iowa Acts ch. 125, and it did not become effective until 2000, see 1999 Iowa Acts ch. 125, § 109, it purports to apply to all trusts past, present, and future, as well as all proceedings concerning trusts commenced on or after July 1, 2000. See Iowa Code § 633.1106; see also In re Clement Trust, 679 N.W.2d 31, 37 n. 1 (Iowa 2004).
Alfred's will states with sufficient specificity that Richard's interest vested upon his mother's death. By its terms it states Richard took an indefeasibly vested interest in fee. It is true Alfred's will does not mimic the statute and state the interest of each beneficiary is not contingent on the beneficiary surviving until the date on which the beneficiary becomes entitled to possession or enjoyment of the beneficiary's interest in the trust. This is not surprising, however, since Alfred's will was written decades before the new trust code was a glimmer in the legislature's eye. We do not think the statute requires magic words. We must think things not words, or at least we must constantly translate our words into the facts for which they stand, if we are to keep to the real and the true. Oliver Wendell Holmes, Jr., Law in Science and Science in Law, 12 Harv. L. Rev. 443, 460 (1899). This is not so much a matter of interpretation than it is of translation. Translating the old-fashioned phrase indefeasibly vested interest in fee into post-trust code language, we find a specific statement that Richard need not survive Pearl. See In re Estate of Arends, 311 N.W.2d 686, 689 n. 2 (Iowa Ct.App.1981) ([I]ntention should be determined at the time the will is made, based upon the facts then existing.). This reading of the statute is consistent with the overall framework of the trust code. The provisions of a trust shall always control and take precedence over any section of this trust code to the contrary. Iowa Code § 633.1105. The provisions of Alfred's will that granted Richard a vested interest therefore trump any provisions in the trust code that would, by default, mandate a different result. Notwithstanding the enactment of the new trust code, the intent of the testator still reigns supreme in this instance.
Some history will also illuminate matters. As indicated, Alfred referred to Richard's interest as an indefeasibly vested interest in fee. Given the history of the law in the area, Alfred's use of this phrase is telling. The question has often arisen in the courts as to whether, in the absence of such a phrase, one should imply a condition of survival of the possessor of the precedent estate. Historically, courts did not do so; for various reasons, remainder interests were usually construed as vested rather than contingent whenever possible. See, e.g., Fulton, 179 Iowa at 951, 162 N.W. at 254; Schrader, 158 Iowa at 88, 139 N.W. at 161. In the context of the case at bar, there was a pervasive constructional preference in the property law for vested future interests over contingent future interests and for early vesting over vesting at a later time; this means, in this context, that there is a constructional preference for there being no condition of survivorship of the life tenant. Bergin & Haskell at 127 (emphasis added). Thus in 1916 in Lingo we stated: [ A ] ll estates will be regarded as vested unless a condition precedent thereto is so clearly expressed that it cannot be regarded as vested without doing violence to the language of the will. To effectuate this rule, words of seeming condition are, if possible, to be construed as postponing the time of enjoyment.... The law presumes that words of postponement relate to the enjoyment of the remainder rather than the vesting thereof, and the intent to postpone the vesting of the estate must be clear and manifest. Lingo, 174 Iowa at 467, 468, 156 N.W. at 404, 405 (emphasis added). For example, we held the mere grant of a life estate to one does not render a beneficiary's interest contingent on the life tenant's survival. See id. ; see also Clarken v. Brown, 258 Iowa 18, 24, 137 N.W.2d 376, 379-80 (1965) (holding where testator devised a life estate to his brother and at the death of his brother to his lawful heirs that the remainder vested, as there was nothing in the will to indicate to the contrary); Lytle v. Guilliams, 241 Iowa 523, 529, 41 N.W.2d 668, 671 (1950) (similar). Over time, however, this preference waned so that it was unsettled by the time Alfred wrote his will in 1972. See Henkel v. Auchstetter, 240 Iowa 1367, 1375, 39 N.W.2d 650, 654 (1949) (Many of the reasons which generated the favoritism have long been nonexistent. It is no longer an important rule of construction, and should not be.). Viewed in this historical context, Alfred's use of the phrase indefeasibly vested interest in fee is evidence Alfred intended to forestall any implied inference that Richard's interest was contingent upon Richard surviving his mother. Although the new Iowa Trust Code completely reverses the common law preference for vested interests and deems all interests contingent upon survival to the time of possession unless specifically stated otherwise, it is also clear the provisions of the trust must govern. In this case we are constrained to follow the intent of the testator, determined at the time the will is made and based upon the facts then existing, that specifically granted a vested remainder to Richard, which is a specific statement he need not survive Pearl. See Iowa Code § 633.1105; Arends, 311 N.W.2d at 689 n. 2.
Because we find the Iowa Trust Code does not apply retroactively to divest Roger's estate of a vested property right, we need not address Christa's constitutional claim in this case.