Grout as Trustee of Helen Schardein 2018 Revocable Trust v. Sickels
| Docket Number | 21-0556 |
| Decision Date | 27 January 2023 |
| Citation | 985 N.W.2d 144 |
| Parties | Richard GROUT AS TRUSTEE OF the HELEN SCHARDEIN 2018 REVOCABLE TRUST, Appellee, v. Dan R. SICKELS, Appellant. |
| Court | Iowa Supreme Court |
David J. Hellstern (argued) and J. Mason Bump (until withdrawal) of Sullivan & Ward, P.C., West Des Moines, for appellant.
Douglas D. Daggett (argued) of Douglas D. Daggett, P.C., Creston, for appellee.
Mansfield, J., delivered the opinion of the court, in which all participating justices joined. May, J., took no part in the consideration or decision of this case.
"The property by what it is should go, not by the title." William Shakespeare, All's Well That Ends Well act II, sc. 3, l. 140–41. Today's case tests that proposition. It is a case about one form of property ownership, a joint tenancy with right of survivorship. In the spring of 2014, a woman in her nineties purchased a lakeside lot and put it in joint tenancy with a man who was providing various services for her. This woman, notably, had devoted her career to real estate. Four and a half years later, in the fall of 2018, the woman suffered a serious stroke. Her nephew thereupon assisted her in creating a revocable trust. She transferred all her real and personal property, including her interest in the lot, into the revocable trust.
About five months later, in the spring of 2019, the woman died. The lakeside lot was sold, and disputes have arisen between the trust and the man who had provided services as to how the sale proceeds should be divided.
The man contends that he is entitled to all of the sale proceeds because the joint tenancy continued until the woman's death and he is her survivor. The trust counters that the joint tenancy was severed when the woman transferred her interest in the lot to the trust. The trust further contends that it is entitled to all of the proceeds, not merely half, because the woman put in the funds to purchase the lot and paid certain expenses on it. The man responds that even if he is not entitled to all the proceeds because the joint tenancy was severed, he should receive half of them. Following a one-day trial, the district court awarded all the sale proceeds to the trust, and the court of appeals later affirmed.
On further review, we find that no Shakespearean dilemma has arisen here. Two separate documented transactions occurred—in 2014 and 2018—and we conclude that full effect should be given to both of them. There is no need to choose between "what it is" and "the title."
Giving the man all the proceeds from the sale of the lot—as if he continued to have joint tenancy with right of survivorship with the woman after 2018—would negate the 2018 transaction. That is not legally acceptable. Likewise, giving the trust all the proceeds from the sale of the lot—as if the woman had not purchased the lot in 2014 to be jointly owned by herself and the man—would negate the 2014 transaction. That is not legally acceptable, either. Therefore, we affirm in part and reverse in part the judgment of the district court and the decision of the court of appeals. Specifically, we hold that the net proceeds from the sale of the lot should be divided equally between the man and the trust, after giving the trust credit for certain expenses it paid during the course of the joint tenancy.
Helen Schardein was a lifelong resident of Mount Ayr who passed away on March 30, 2019, at the age of 98. During her lifetime, Schardein worked in real estate as a broker and as the owner of an abstracting company. She also accumulated real property including her own residence, rental properties in Mount Ayr, a vacation home in Florida, a property being purchased by Dan Sickels on contract, and a lot fronting on Sun Valley Lake that she owned in joint tenancy with Sickels. Additionally, at her death, Schardein had investment accounts totaling about half a million dollars and other personal property.
Schardein's husband predeceased her by many years, and the couple had no children. Schardein had a younger sister, however, who lived in California. Her sister's son, Richard Grout, Jr., lived in Oregon. Grout would visit Iowa and stay with Schardein about once a year.
Sickels moved to Mount Ayr in 2012. He met Schardein when he rented a place to live from her. He later agreed to buy that house from her on contract. Sickels did handyman work on Schardein's rental properties. At first he billed her; then he stopped doing so. Sickels also drove Schardein around to do shopping and other errands because Schardein had macular degeneration
and was unable to drive herself.
Over time, Sickels became Schardein's travel companion. They took trips to Florida together, and eventually Schardein bought a condominium on the beach in Pensacola. They would visit that condominium in the winter, and Schardein rented it out at other times.
In 2014, Schardein purchased a lot on Sun Valley Lake (the Lake Lot) for $85,000 cash. She arranged that the property be deeded to herself and Sickels as joint tenants with right of survivorship. As noted by the district court, Schardein was "was quite aware of the legal consequences of such a deed from her experience as an abstractor." The real estate broker who handled the transaction testified that she prepared the deed that way according to Schardein's instructions:
Sickels maintained that Schardein decided to make him a joint tenant in return for all that he was doing for her. As he put it, "[S]he ... had expressed to me that she wanted to do something for me but she didn't want to rewrite her will ...." Additionally, by virtue of this ownership interest, Sickels was able to obtain a boat permit for the lake. This enabled him to fish on the lake, and Schardein would join him in the boat. A trailer on the Lake Lot was also jointly titled in the names of Schardein and Sickels.
Schardein paid the property taxes and the association dues on the Lake Lot. The record indicates that each party paid for insurance on the property. Schardein paid for the utilities and mowing.
Witnesses agreed that Schardein retained her mental acuity until late October 2018, when she suffered a serious stroke
. After that, Schardein became unable to speak or move very well. She was hospitalized in Des Moines and then transferred to a rehabilitation facility in West Des Moines.
Shortly after Schardein suffered the stroke, Grout flew to Des Moines to see his aunt. On November 13, while she was in the rehabilitation facility, Schardein, with the assistance of others, executed a general power of attorney in favor of Grout and a declaration of trust. Schardein was unable to physically read or sign the documents. They were read to her and signed by the spouse of attorney Douglas Daggett at Schardein's direction. Attorney Daggett notarized both documents. Two witnesses also signed.
The declaration of trust established the Helen Schardein 2018 Revocable Trust (Trust). The Trust was to be used for Schardein's benefit during her lifetime, and upon her death its assets were to be distributed in accordance with her 2005 will. Under that will, 35% of Schardein's assets were to go to Grout and his sister, 35% to the nieces and nephews of Schardein's late husband, 20% to certain charitable organizations, and the remaining 10% to other individuals. The trust declaration identified both real property and personal property that was being transferred into the trust. The list of real property included Schardein's home, the Florida vacation home, Sickels's home ("subject to contract"), other property, and the Lake Lot.
Utilizing the power of attorney he had been given, Grout that same day executed a warranty deed conveying "[a]ll of [Schardein's] undivided interest in and to [the Lake Lot]" to the Trust. The deed recited that it was "given for estate planning purposes." It also contained preprinted warranty language that the "Grantors hereby covenant with grantees, and successors in interest, that grantors hold the real estate in fee simple."
In December, Schardein moved into an assisted living facility in Mount Ayr. Sickels continued to see her there until the family barred further contact. As noted, Schardein died on March 30, 2019. After her death, Sickels (who was at that time unaware of the Trust) filed an affidavit of surviving joint tenant and listed the Lake Lot for sale. The property eventually sold for $80,000. During the title review, the warranty deed transferring Schardein's interest in the property to the Trust showed up. At this point, all parties agreed that the sale should go forward with the proceeds placed in escrow pending resolution of their disputes.
At the time of Schardein's death, Sickels was four and a half years delinquent on his contract payments to her on his house. Sickels claims that he had a verbal commitment from Schardein to forgive that balance, but he ended up paying off the full balance due in the fall of 2019.
On May 20, 2020, Grout filed a petition in the Ringgold County District Court for partition of the Lake Lot, naming Sickels as defendant. Grout sought not only partition, but an award of all the net sale proceeds on the ground that Schardein had provided all of the monetary...
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