July 12 2009 – Heemstra Trial

Iowa’s Only GR8 Professional Law Firm:


REQUEST FREE CASE EVALUATION

  • This field is for validation purposes and should be left unchanged.

Des Moines Register. William Petroski. July 12, 2009.

July 12 2009 – Heemstra Trial 

Revocable trusts and other business arrangements are often relied on by Iowa farmers, but former Milo farmer Rodney Heemstra appears to have used them in a "very unusual" manner, says a leading expert on agricultural finance issues.

Neil Harl, a lawyer and Iowa State University emeritus professor of economics, said in an interview that revocable living trusts allow a farmer to retain ownership and act as the trustee. The individual keeps the powers until he or she dies, and then it becomes irrevocable, he said.

But in Heemstra's case, "it looks like you have somebody else as the trustee, and it looks like you are trying to give up the ownership interest so that the creditors couldn't track it. That is very unusual," said Harl, who has conducted hundreds of seminars on agricultural financing issues.

Heemstra and his relatives are being sued in a civil trial that began last week in Warren County District Court in Indianola. The plaintiffs are the family of farmer Tom Lyon, who was killed by Heemstra near Milo in January 2003 after they quarreled over land and cattle-watering equipment.

Lawyers for Lyon's estate have accused Heemstra of trying to avoid payment on a $5.68 million wrongful-death judgment. Almost immediately after the slaying, Heemstra and his wife, Berta, began transferring their farm interests into trusts and other business entities in an effort to conceal their assets, said Donald Beattie, a lawyer for the plaintiffs. The Heemstras were worth $3.7 million to $4.2 million before the slaying, records show.

On Friday, a convict who shared a prison cell with Rodney Heemstra said in a deposition read into the court record that Heemstra repeatedly vowed the Lyon family "would never get a nickel" from him.

Keith R. Brown, 48, who is serving a life sentence for first-degree kidnapping, was Heemstra's cellmate for 10 months in 2004 at the Anamosa State Penitentiary.

The civil trial resumes on Monday.

Trusts are considered tools to assist a surviving spouse or can be part of a strategy to reduce estate settlement costs, according to experts. In a trust, assets are entrusted to a trustee, who holds legal title and manages them until they are distributed to the beneficiary. The trustee can be a bank, trust company, another professional, family member or other person capable of managing the assets.

Each trust at issue in the Heemstra case has as its trustee or partner the wife, sister or cousin of Rodney Heemstra, or the sisters of Berta Heemstra, court documents show.

Scott and Brian Heem-stra, the adult sons of Rodney and Berta Heemstra, are named as beneficiaries of two of the three trusts. Berta Heemstra is the named beneficiary of the remaining trust.

Julie Holt of Blountville, Tenn., who was called as a witness in the Warren County trial Friday, was the trustee of one trust, known as the Appleroon Irrevocable Trust. She is a homemaker whose husband is a distant cousin of Rodney Heemstra. She acknowledged never having resided in Iowa or knowing exactly how much farmland the trust held. The trust, at least for a time, used a California post office box.

Joel Baxter, one of Heemstra's lawyers, told Judge Paul Huscher last week no fraud was committed by the Heemstras and there was no effort to conceal assets. He said the Heemstras were financially overextended and heavily in debt before the slaying.

Rodney Heemstra spent four years in prison for voluntary manslaughter before he was freed last October. A judge late last year ordered Heemstra to pay $5.68 million in damages to Lyon's family, which they have been unable to collect.

John Rigler, president of Security State Bank of New Hampton, said it's not unusual for farmers to use trusts and other business structures to try to shield their assets from creditors.

"It's a common technique among farmers who are in financial trouble," said Rigler, who formerly managed trusts for Wells Fargo and experienced the farm crisis of the 1980s.

Whether such tactics are permitted by the courts "depends upon how the judge sees it," Rigler added.

Statewide, studies of farmland ownership by ISU have shown an increasing shift since the early 1980s from sole, corporate and co-ownership to partnerships, trusts and limited liability companies.

But a report ISU issued in June suggests more farmers should develop plans to transfer their assets. The publication by the Beginning Farmer Center found that only 23 percent of Iowa farmers plan on retiring, and 30 percent said they never will.

"A lot of farmers have no retirement, estate plan or identified successor for farm business," said John Baker, the center's administrator.