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Advising Elderly and Potentially Impaired Farmland Owners - September 6, 2018

Some Elderly Iowans Own Farmland of Amazing Value

The Iowa State University Center for Agriculture and Rural Development (CALT) recently published a 35-year retrospective analysis of Iowa farmland ownership demographics.  Importantly, among other things, it reports:


“82% of Iowa farmland is owned free of debt, which represents a significant increase from 62% in 1982 and 78% in 2012.”


and


“47% percent of farmland is owned by women, 13% is owned by female landowners over 80.”


CALT also publishes quarterly and annual Iowa farmland value assessments, the history of which shows substantial value and appreciation, particularly over the lifetimes of 80+ year old landowners.


Collectively, these facts demonstrate that some elderly Iowans are quite wealthy.  If we assume that there are 36 million acres of farmland in Iowa having an average value of $7,000 per acre, then female octogenarians likely own debt-free Iowa farmland with a value  of approximately $27 billion (36 million X $7,000 X 82% X 13%).  This assumes that their land is encumbered in the average frequency, but I’ll suggest that their lands are even less frequently encumbered.  Elderly landowners who were children during the Depression generally do not like debt.


The Iowa Court of Appeals recently addressed a probate dispute between the competing wills of such a woman In the Matter of Estate of Lois B. EricksonGenerally, the Court found against a farming son who had persuaded his elderly mother to change her will to leave all her farmland to him at the expense of his siblings.  His elderly mother suffered from moderate to severe Alzheimer’s Disease.


The Court found that the farming son had called his mother’s lawyer with his mother claiming that another sibling had burglarized her home, although the son did all the talking.  Over the phone, the mother requested the will change from an equal bequest to her three children to the lopsided, new will favoring the farming son. The lawyer reported hearing the farming son “coaching her what to say” during the phone call.  The Court denied the new will from probate and found that the farming son had committed a tort against his siblings. Although the Court in In the Matter of Estate of Lois B. Erickson did not find that the tort “intentional interference with a bequest” requires that the testator suffer from a degenerative disease resulting in mental impairment, it was an important fact in this case.


Advising Clients with Diminished Capacities

This combination of aging landowners and valuable unencumbered farmland presents unique ethical issues for lawyers advising elderly and potentially impaired clients.  Lawyers have extra duties to clients with diminished capacities. These include some responsibility to determine if clients may have diminished capacities. 


Iowa Code of Professional Conduct Rule 32:1.14 governs the responsibilities of lawyers to clients with diminished capacities.  Regarding communications with such clients, Comment 3 provides:


The client may wish to have family members or other persons participate in discussions with the lawyer. When necessary to assist in the representation, the presence of such persons generally does not affect the applicability of the attorney-client evidentiary privilege. Nevertheless, the lawyer must keep the client’s interests foremost and, except for protective action authorized under paragraph (b), must look to the client, and not family members, to make decisions on the client’s behalf.


To assess diminished capacity, the rules may practically require lawyers to physically meet with farm widows and widowers who are conveying farm real estate, particularly if heirs are involved in the communication.  Lawyers must ensure that they “look to the client, and not the family members” to make the estate planning or real estate transfer decisions.  Comment 6 provides:


In determining the extent of the client’s diminished capacity, the lawyer should consider and balance such factors as: the client’s ability to articulate reasoning leading to a decision, variability of state of mind, and ability to appreciate consequences of a decision; the substantive fairness of a decision; and the consistency of a decision with the known long-term commitments and values of the client. In appropriate circumstances, the lawyer may seek guidance from an appropriate diagnostician.


Lawyers are not doctors.  However, the rules require lawyers to reasonably: (a) assess a client’s mental capacity, and (b) confirm that when family members speak to us on behalf of a client, they are merely and accurately communicating the decisions of our client. The Court’s decision In the Matter of Estate of Lois B. Erickson does not tell us enough to determine whether Rule 32:1.14 may have applied, but given that Iowa women over 80 years old may have farmland worth $27 billion, perhaps all Iowa lawyers should visit our elderly landowning clients who are changing wills and revisit Rule 32:1.14. 


Estate Planning Conflicts of Interest for Elderly Clients with Farmland Heavy Estates

Potential conflicts sometimes arise given a trusted family lawyer acting as an estate planner.  Trusted family lawyers often have multiple generations of the same family as clients.  Rule 32:1.7 governs lawyer conflicts of interest including estate planning conflicts.  Except for a few enumerated exceptions, “a lawyer shall not represent a client if the representation involves a concurrent conflict of interest.”  A lawyer generally does not have a concurrent conflict in preparing a will or codicil for a parent who disassociates a child from an inheritance.  However, if the lawyer has an estate beneficiary standing to benefit from the disassociation as a concurrent client, then maybe the lawyer has a conflict of interest, particularly if the will or codicil is executed by someone who may be impaired.  An impaired person may be without the capacity necessary to consent to an otherwise waivable conflict.  The Court does not suggest in In the Matter of Estate of Lois B. Erickson that such a conflict existed. 


The bottom line is that as the farmland owning demography ages, potential ethical issues for lawyers regarding impaired clients, and regarding conflicts between testators and competing beneficiaries, will become more frequent.