1. Divorce Issues for Farm Families
For the Iowa Association of Justice
Family Law Seminar
April 23, 2015
Presented by:
Jane Rosien Melissa Larson
Flander, Casper & Rosien David L. Jungmann, P.C.
223 E. Court Ave. #1 113 W. Iowa St.
Winterset, IA 50273 Greenfield, IA 50849
Ph. 515-462-4912 Ph. 641-743-6195
jrosien@fcrpc.com melissal@jungmannlaw.com
Special thanks to Hon. Chad A. Kepros for use of his outline titled Farm Issues in Divorce.

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I. Introduction
A. Farm divorces have a unique set of issues when compared to non-farm divorce.
B. A farm is not just an asset to be divided – it is a way of life that is passed from generation
to generation. See John S. Slowiaczek and David A. Domina, The Equitable Distribution
of Farms, 18 J. AM. ACAD. MATRIM. LAW 357 (2003).
C. Particularly with family farms, there are emotional ties to farm land, livestock, and even
equipment that come into play in a farm divorce. There are also considerations about
keeping the family farm going for future generations, as it has been done in the past.
D. The million-dollar question when it comes to property division: how do you let the
farmer be a farmer, and still fairly compensate the non-farming spouse?
II. Child Custody and Visitation
A. Child Custody
i. Keep in mind the sensitive issue of the children in a farm divorce (as in any
divorce), particularly those who may wish to continue the farming operation and
therefore feel compelled to “take sides” with the farming parent.
ii. A child’s interest in and enjoyment of a parent’s farming operation has been cited
as one factor in determining which custodial arrangement is in the child’s best
interests. In re Marriage of Grabill, 414 N.W.2d 852 (Iowa Ct. App. 1987).
B. Parenting Plan and Parenting Schedules
i. An open or flexible parenting time schedule with a farming parent may be
beneficial to the children during the busy seasons of a farming operation. This
type of schedule has been allowed, factoring in a fallback agreement as to
visitation in the event that relations and communication between the parents
breaks down. See e.g. In re Marriage of Freund, 814 N.W.2d 622 (Iowa Ct. App.
2012).
ii. Despite the demands of a farming schedule, the farming parent still has hope of
liberal visitation or even primary physical care given the right circumstances and
a favorable best interests analysis. See e.g. In re Marriage of Collingwood, 460
N.W.2d 486 (Iowa Ct. App. 1990) (farming father granted primary physical care
in part because of the stability of his plan to continue residing on and operating
the farm where the children had lived their whole lives, and because of the close
proximity to grandparents with whom the children had developed a close
relationship).
C. Extraordinary Visitation
i. The noncustodial parent may wish to benefit from the reduction in child support
afforded when such a parent exercises an extraordinary number of overnights with
a child in the period of a year.
ii. Concerns may arise as to whether or not the noncustodial parent has the ability to
actually exercise those overnights due to the demands of a farming schedule.
III. Child Support and Spousal Support

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A. Child Support
i. The Child Support Guidelines apply to farmers.
1. There is a rebuttable presumption that the amount of child support
determined under the guidelines is the correct amount of child support to
be awarded. That amount can be adjusted upward or downward, but only
if the court finds that adjustment is necessary to provide for the needs of
the children or to do justice between the parties under the special
circumstances of the case. See Rule 9.4 and 9.11.
2. The guidelines apply to farmers. In re Marriage of Cossel, 487 N.W.2d
679 (Iowa Ct. App. 1992) (mere fact that person is a farmer does not
justify a departure from the guidelines; impact of fluctuating income may
be compensated for by averaging income over a reasonable period); see In
re Marriage of Freund, 814 N.W.2d 622 (Iowa Ct. App. 2012) (trial court
failed to apply child support guidelines to income of farmer; case
remanded to trial court for determination under the guidelines).
ii. Under Rule 9.5, “net monthly income” (NMI) means gross monthly income less
specific deductions, including federal income tax, state income tax, and social
security deductions.
1. The guidelines do not limit the definition of gross income to federal
taxable income. See e.g. In re Marriage of Howell, 434 N.W.2d 629 (Iowa
1989).
2. Court must determine income from the most reliable evidence presented.
In re Marriage of Knickerbocker, 601 N.W.2d 48 (Iowa 1999); In re
Marriage of Powell, 474 N.W.2d 531 (Iowa 1991); In re Marriage of
Cossel, 487 N.W.2d 679 (Iowa Ct. App. 1992).
3. Parties must put on evidence of income. See In re Marriage of Hansen,
514 N.W.2d 109 (Iowa Ct. App. 1994) (it is not the Court’s responsibility
to search the record for proper figures to use in applying the child support
guidelines); Lessinger v. Lessinger, 258 Iowa 170 (1965) (case remanded
to determine income of farmer because no credible evidence was
presented at trial).
4. A farmer’s income, rather than net worth, is generally relevant for
determining child support under the guidelines. A substantial increase in a
farmer’s net worth can justify a departure from the guidelines, but when
changes in net worth are due to changes in commodity prices, the change
usually does not justify a departure. In re Marriage of Cossel, 487 N.W.2d
679 (Iowa Ct. App. 1992) (court not required to trace increases and
decreases in value of farm commodities; rather, value is established upon
sale at which point commodity is reflected in farmer’s income).

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5. Farm subsidy payments may be either included as additional forms of
income, or may be considered indirectly as a reason to vary from the
guidelines.
iii. Depreciation
1. Depreciation is an income tax deduction that allows a taxpayer to recover
the cost or other basis of certain property. It is an annual allowance for the
wear and tear, deterioration, or obsolescence of the property. Most types
of tangible property (except land) are depreciable. I.R.S. Publication 946,
How to Depreciate Property (2014).
2. Although the child support guidelines do not specifically provide for
deduction for depreciable expenses, the Court has adopted the view that
“depreciation should not categorically either be deducted as an expense or
treated as income, but rather that the extent of its inclusion, if any, should
depend on the particular circumstances of each case.” In re Marriage of
Gaer, 476 N.W.2d 324 (Iowa 1991). See also In re Marriage of
Knickerbocker, 601 N.W.2d 48 (Iowa 1999); In re Marriage of Starcevic,
522 N.W.2d 855 (Iowa Ct. App. 1994).
3. The court will generally allow a deduction from income for reasonable
depreciation (calculated as though taken using the straight-line method)
because depreciation is a valid cost of doing business.
a. If the farmer has elected to expense certain depreciable assets or
depreciated assets using an accelerated method of depreciation,
these expenses will usually be reallocated as through straight-line
depreciation has been taken. See In re Marriage of McDermott,
827 N.W.2d 671 (Iowa 2013) (Court cited the trial court’s failure
to recalculate Section 179 expense deductions that averaged
$11,204 per year through straight-line depreciation as a reason why
it was fair for the trial court to include a one-time gain of $9,176
from the sale of timber in the party’s income); In re Marriage of
Vogl, 797 N.W.2d 131 (Iowa Ct. App. 2010) (husband’s farm
losses ignored in determining income because losses only shown
because of Section 179 elections; if Section 179 elections were
recalculated on a straight-line basis he would not have had losses);
In re Marriage of Nelson, 789 N.W.2d 437 (Iowa Ct. App. 2010).
b. Under the straight-line method of depreciation, the cost of the
property, less its estimated salvage value, is deducted in equal
amounts over the period of its remaining useful life. In re
Marriage of Gaer, 476 N.W.2d 324 (Iowa 1991).
c. Many cases allow for the deduction for depreciation. See In re
Marriage of Knickerbocker, 601 N.W.2d 48 (Iowa 1999)

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(reasonable depreciation of personal property farming assets using
a straight-line method of depreciation allowed deduction to do
justice between the parties;; reasonable depreciation on farm
machinery and other assets related to the farm business is an
expense reasonably necessary to maintain the business); In re
Marriage of Hoksbergen, 587 N.W.2d 490 (Iowa Ct. App. 1998)
(farmer elected to deduct $17,116 for GDS and ADS assets which
the court found to be excess depreciation that should instead be
amortized over 7 years thereby increasing the farmer’s income by
$14,500 for purposes of child support); In re Marriage of Cossel,
487 N.W.2d 679 (Iowa Ct. App. 1992) (expenses converted to
straight-line depreciation).
4. However, deductions for depreciation are not always allowed. The
decision on whether to allow a deduction for depreciation is in the
discretion of the court based on all of the circumstances, including the
amount of depreciation claimed and the property depreciated. In re
Marriage of Worthington, 504 N.W.2d 147 (Iowa Ct. App. 1993) (initially
allowing deduction for straight-line depreciation, but then increasing the
resulting amount of child support under the guidelines on the basis that the
adjustment was necessary to avoid substantial injustice; with straight-line
depreciation, income would only be $71 per year, but the Court adjusted
child support to $440 per month).
a. In re Marriage of Starcevic, 522 N.W.2d 855 (Iowa Ct. App. 1994)
(court denied any deduction for farm equipment where husband
had non-farm full time job and operated farm as a hobby or tax
shelter).
b. In re Marriage of Ruth, 2006 WL 468773 (Iowa Ct. App. 2006)
(court refused deduction for straight-line depreciation because
allowing the deduction would result in an injustice to the children
and be inappropriate under the circumstances).
iv. Farm Expenses
1. The value of personal benefits provided to an employee, such as real estate
taxes, insurance, gasoline, and other vehicle expenses) may be considered
in determining gross income for child support purposes. In re Marriage of
Beecher, 582 N.W.2d 510 (Iowa 1998). Only the after-tax value of these
benefits should be considered, and it may be appropriate to normalize a
farmer’s income by adding back in expenses that are for personal use or
have a dual business-personal purpose. In re Marriage of Titterington, 488
N.W.2d 176 (Iowa Ct. App. 1992) (income of farmer for child support
purposes increased for benefits provided by the family farm corporation,

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including real estate loan payments, real estate taxes and insurance,
heating fuel, and personal gasoline and other vehicle expenses). See also
In re Marriage of McKarney, 522 N.W.2d 95 (Iowa Ct. App. 1994)
(deductions not allowed for purposes of calculating child support because
they were for personal, rather than business, use).
2. Only expenses reasonably related and necessary for the farming operation
should be deducted in determining income for child support. See In re
Gurst, 2008 WL 508488 (Iowa Ct. App. 2008) (court disallowed reduction
of income for fuel, gas, oil, fertilizer, and depreciation for purchase of
farm equipment because all of the farm ground was rented out and they
were not needed for farming business).
3. Prepaid items such as seed, fertilizer, chemicals and fuel are often paid for
in the year prior to the crop year for which they will be used. The pattern
and amount of pre-paid expenses should be examined to determine
whether some or all of those costs should be added back into the farmer’s
income for child support purposes.
v. Income Averaging
1. Income of farmers should usually be averaged over a reasonable period of
time.
a. The length of time to average is whatever period most accurately
reflects the fluctuations in income. For farmers, commodities
fluctuate in value, production varies because of weather conditions,
and farm programs may have substantial impact on a farmer’s net
income. In re Marriage of Cossel, 487 N.W.2d 679 (Iowa Ct. App.
1992).
b. It is unrealistic and unfair to fix child support based solely on the
most recent income received. In re Marriage of Knickerbocker,
601 N.W.2d 48 (Iowa 1999).
c. Child support should not be readjusted each year based on each
year’s income. State ex rel. Pfister v. Larson, 569 N.W.2d 512
(Iowa Ct. App. 1997). Rather, support should be set in a single
amount, based on a reasonable average of income, subject to future
modification. In re Marriage of Blume, 473 N.W.2d 629 (Iowa Ct.
App. 1991).
2. There is no fixed period for the length of time over which to average.
Instead, use the period that best captures the fluctuation for the specific
farmer.
a. 3 years. In re Marriage of Cossel, 487 N.W.2d 679 (Iowa Ct. App.
1992); In re Marriage of Schnur, 2008 WL 2038808 (Iowa Ct.
App. 2008).

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b. 4 years. In re Marriage of Knickerbocker, 601 N.W.2d 48 (Iowa
1999).
c. 5 years. In re Marriage of Hoag, 380 N.W.2d 8 (Iowa Ct. App.
1985).
vi. Earning Capacity/Imputing Income
1. The use of earning capacity, rather than actual income, to calculate child
support is a deviation from the child support guidelines. Before using
earning capacity the court must make a determination that if actual
earnings were used, substantial injustice would occur or adjustments
would be necessary to provide for the needs of the child and to do justice
between the parties. In re Marriage of Nelson, 570 N.W.2d 103 (Iowa
1997).
2. Under Rule 9.11(4), the Court may calculate child support based on
earning capacity rather than actual income if the Court makes a finding of
fact that a parent is voluntarily unemployed or underemployed without just
cause. In determining earning capacity, the Court considers employment
potential and probable earnings level based on work history, occupational
qualifications, prevailing job opportunities, earning levels in the
community, and other relevant factors. The Court shall not use earning
capacity rather than actual earnings unless a written documentation is
made that, if actual earnings are used, substantial injustice would occur or
adjustments would be necessary to do justice between the parties.
3. While the guidelines are based on the parties’ income, the Court has the
discretion to consider the parties’ net worth as a permissible factor in
setting or modifying child support. Such consideration is appropriate in
determining whether a deviation from the guidelines is inappropriate to
provide for the needs of the child and to do justice between the parties
under the special circumstances of the case. When a party owns substantial
assets, such as tillable land, which could or should be income producing,
the Court may impute income to the party for purposes of calculating child
support. State ex rel. Pfister v. Larson, 569 N.W.2d 512 (Iowa Ct. App.
1997).
4. The Court may impute additional income to the farmer for ability to work
outside the farm with a finding that such an adjustment is necessary to
provide for the needs of the child and to do justice between the parties.
This type of income imputation is more likely when the farmer has in fact
supplemented income with other work previously and when the labor on
the farm is less than full-time. See In re Marriage of Raue, 522 N.W.2d
904 (Iowa Ct. App. 1996) (attributed additional income of $500 per month

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on the basis that the husband was a skilled plumber and had time available
to supplement his farm income).
B. Spousal support
i. Spousal support can be a way to compensate a spouse who exited the traditional
work force to contribute to the farm and/or family (reimbursement), or to help that
spouse get back on his or her feet (rehabilitative), or to provide support for a
spouse who is not economically able to support his or her self (traditional).
ii. The same income considerations as those in calculating child support can apply
(see above).
iii. When a court makes a determination on spousal support, it must also look to the
property division to determine the sufficiency of that division and if spousal
support is appropriate. See In re Marriage of Lattig, 318 N.W.2d 811 (Iowa Ct.
App. 1982).
IV. Property Division
A. Discovery of Property
i. The information gathered through formal discovery should include identification
of traditional farm assets and farm assistance programs. The parties have a duty
to disclose all property owned and debts owed. In re Marriage of Driscoll, 563
N.W.2d 640 (Iowa Ct. App. 1997).
ii. Parties must show ownership to the Court. See In re Marriage of McDermott, 827
N.W.2d 671 (Iowa 2013) (fact that farm was transferred by husband’s family to
husband and wife jointly with full rights of survivorship sufficient to find that
gifted portion was gifted to husband and wife jointly rather than to husband
alone); In re Marriage of Elsbernd, 2008 WL 2038811 (Iowa Ct. App. 2008) (the
former husband claimed that the trial court erred in determining the value of the
grain, livestock, and farm equipment; the court of appeals affirmed the trial
court’s valuation of the farm assets because husband had not shown credible
evidence that certain property was actually owned by other members of his
family); but see In re Marriage of Freund, 814 N.W.2d 622 (Iowa Ct. App. 2012)
(title not controlling in determining donative intent; real estate transferred to
husband and wife jointly but was determined to be a gift to husband only).
iii. As in any divorce case, parties may attempt to hide assets in order to prevent the
other spouse from receiving an equitable distribution of property, so thorough
discovery is a necessity.
B. Assets
i. Farm assets
1. Traditional farm assets include livestock, growing crops, stored crops,
machinery, land, the homestead, buildings, improvements and other farm
implements.

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2. Federal, state and local farm assistance programs should likewise be
identified because they can add value to the farm and to the income of the
individual famer or farm business.
3. Remember the possibility of hidden assets.
a. A close inspection of grain production and expense records may be
required to uncover hidden grain, especially since it can easily be
hidden through related parties. Look at USDA records and crop
insurance records, commodity credit loan records, loan records,
hedge contracts, warehouse receipts, etc.
b. Owned equipment may not always be on the depreciation schedule
and equipment which is on the depreciation schedule may be
undervalued.
i. A farm equipment valuation expert who visits the farm and
personally inspects the equipment may be required.
ii. Closely look at tax elections where equipment may be
expensed and written off in the year of purchase.
iii. Beware of sham transactions where equipment is either
sold to or hidden by relatives or friends, especially when
the individual farms with or shares equipment with others.
c. Pay close attention to prepaid input costs which are often incurred
to reduce income for tax purposes in a given year but can also
appear to dissipate assets or increase debts.
d. Growing crops can present an issue when it comes to valuation.
ii. Non-farm assets
1. Personal real estate, personal vehicles, furniture and appliances, life
insurance, personal bank accounts, pensions, stocks, bonds, IRAs, mutual
funds, certificates of deposit, personal property and collectibles, etc.
2. Other business entities owned by either or both parties or in which either
party has an ownership interest.
iii. Valuation
1. Appellate courts refuse to disturb the trial court’s valuation of farm assets
when it is the range of permissible evidence. In re Marriage of
McDermott, 827 N.W.2d 671 (Iowa 2013); In re Marriage of Richardson,
2007 WL 2710953 (Iowa Ct. App. 2007). See also In re Marriage of
Freund, 814 N.W.2d 622 (Iowa Ct. App. 2012) (because of intricacies of
property valuation appellate courts give substantial leeway to the trial
court; the court defers to the trial court’s valuations when they are
accompanied by corroborating evidence or support credibility findings); In
re Marriage of Reinking, 821 N.W.2d 286 (Iowa Ct. App. 2012); In re
Marriage of Lovett, 2006 WL 2615062 (Iowa Ct. App. 2006).

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2. Valuation is accomplished at the time of trial. Iowa Code § 598.21(5).
3. Valuation requires careful examination. In re Marriage of Schnur, 2008
WL 2038808 (Iowa Ct. App. 2008) (the appellate court upheld the trial
court’s refusal to accept a farm corporation appraisal which only evaluated
the corporation’s income tax returns and deducted losses; this method of
valuation neglected important factors that increased the value of the farm;
farm corporations have the ability to manipulate income by storing crops
instead of selling in that tax year or choosing which year to deduct loans).
4. Valuation requires competent evidence. In re Marriage of Thompson, 826
N.W.2d 515 (Iowa Ct. App. 2012) (no error in relying on real estate
appraisal to determine the value of the farm and in refusing to allow the
party’s banker from offering an opinion of value; the Court was entitled to
accept the professional well-researched appraisal over the banker’s
speculation or the self-researched valuation offered by the wife).
5. A reduction in valuation for deferred tax consequences is only appropriate
when a sale is contemplated. If seeking reduction for tax consequences,
the party must put on evidence of what tax consequences are claimed.
a. In re Marriage of McDermott, 827 N.W.2d 671 (Iowa 2013) (if the
Court orders the sale of the farm, then the Court must consider the
tax consequences of the sale in making its property distribution; in
addition, when the Court enters a lump sum payment of cash that
will in all probability require the liquidation of capital assets,
consideration of the tax consequences is appropriate in making an
award; here, the district court did not order a sale and even though
a lump sum payment of over $1 million was ordered, the Court did
not consider tax consequences on the assumption that the husband
could obtain a mortgage to pay the lump sum).
b. In re Marriage of Black, 2001 WL 57999 (Iowa Ct. App. 2001) (it
is inappropriate to decrease the appraised value of a farm
corporation upon consideration of tax consequences when the
parties do not intend to sell the asset and incur tax liability).
c. In re Marriage of Reinking, 821 N.W.2d 286 (Iowa Ct. App. 2012)
(record did not support finding that husband would have to sell the
property to pay the $125,000 cash settlement to wife; moreover,
husband offered no evidence at trial as to the specific tax
consequences claimed or the amount thereof, and husband’s bald
assertions of tax consequences on appeal were insufficient to
support his claim).
d. In re Marriage of Adams, 805 N.W.2d 397 (Iowa Ct. App. 2011)
(dissolution record does not show that a sale of the farm was

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ordered, necessary, or otherwise relatively certain, and the parties
appeared to agree that sale should be avoided to preserve the
property for their children; reduction in value for $122,000 in
deferred tax consequences was not appropriate).
6. Discounts for minority interest and lack of marketability may be
appropriate when valuing a farm corporation. The Court may discount the
value of stock for minority ownership and lack of marketability in
distributing assets in a dissolution of marriage proceeding, but there is no
requirement that a discount be applied. In re Marriage of Steele, 502
N.W.2d 18 (Iowa Ct. App. 1993); see In re Marriage of Kitzman, 817
N.W.2d 31 (Iowa Ct. App. 2012) (approving a 40% discount for minority
interest and lack of marketability in valuing husband’s interest in closely-
held family farm corporation).
7. Growing Crops
a. The Courts may value growing crops separately.
i. In re Marriage of Godes, 2001 WL 1267708 (Iowa Ct. App.
2001) (assigned a value to growing crops by estimating the
probable yield of the crop at harvest, calculating the value
of that yield, and deducting the value and amount of labor
and expense required to mature, care for, and market the
crop).
ii. In re Marriage of Johnson, 2003 WL 21543550 (Iowa Ct.
App. 2003) (growing corps may be considered as property
separate from the value of the real estate, and “the
reasonable cost of harvest” may be considered in
determining the value of growing crops).
iii. In re Marriage of Brun, 2003 WL 22806203 (Iowa Ct. App.
2003) (trial held in late September and October, when the
crops were not yet harvested, forced the parties to estimate
their value; Court heard evidence from both parties and
found a value based on expert testimony based on the
expected yield, the expected price, and the expected cost of
the harvest).
iv. In re Marriage of Martin, 436 N.W.2d 374 (Iowa Ct. App.
1988) (appellate court first addressed the issue of how to
value growing crops for equitable distribution between the
parties to a divorce, concluding that in attempting to value
marital property in a dissolution action, the value of crops
growing upon real estate owned by both parties may be
considered as property separate from the value of the real

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estate; “although the growing crop may be considered and
expectancy only, it is an accrued and accruing asset and has
a value to the parties.”).
v. Borchardt v. Iowa Dist. Court ex rel. Kossuth County, 838
N.W.2d 870 (Iowa Ct. App. 2013) (case remanded to the
trial court to determine the value of growing crop that
existed at the time of the dissolution trial; trial court
empowered to consider not only the existing record but to
also consider additional evidence necessary to determine
value and whether any income tax consequences need to be
considered; on remand the trial court determined the value
by subtracting the cost of the crop from the sales proceeds
based on sale occurring after trial; appellate court noted
that the fact that a growing crop results in income does not
mean that it is not also an asset for equitable distribution).
b. The Court may also not value growing crops separately.
i. In re Marriage of Conley, 284 N.W.2d 220 (Iowa 1979)
(“[t]he 1978 corn crop. Aurelia contends the trial court
failed to decide what should be done with the 1978 corn
crop. However, the decree was entered in June 1978 while
the crop was still growing. It was part of the land, so when
John was given the land he was also given the crop.”).
ii. Brown v. Geer-Brown, 2008 WL 3367560 (Iowa Ct. App.
2008) (the district court did not abuse its discretion in not
valuing growing crops because there was no evidence
presented that any crops existed).
iii. In re Marriage of Drake, 2005 WL 1225952 (Iowa Ct. App.
2005) (husband was awarded crops that had not yet been
harvested; court did not assign a value to the crops or
consider them in property division).
iv. In re Marriage of Bishop, 2003 WL 1524449 (Iowa Ct.
App. 2003) (wife argued that she was entitled to half the
value of the farm equipment, livestock, and growing crops
because they were “marital property” but without valuing
the assets, the court agreed with the husband’s contention
that the commodities were part of a continuing farm
operation and as such, the wife benefitted from the property
without having to contribute to it and it was equitable for
the district court to award the assets to the husband).

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v. In re Marriage of Johnson, 778 N.W.2d 218 (Iowa Ct. App.
2009) (because husband depended on income from the farm
to pay his operating expenses, he was permitted to keep the
growing crop without valuing it as a separate asset).
C. Debts
i. Farm debts
1. Real estate debt
a. Mortgage of homestead or other such debt
b. Mortgage of farm land or other such debt
2. Non-real estate debt
a. Loans for purchase of farm machinery and equipment, livestock
b. Operating loans are generally used to finance the current crop
production and to care for and feed livestock
c. Tax debt
ii. Non-farm debts
1. Non-farm real estate debt
2. Personal loans for purchase of tangible items or financing of travel
3. Personal credit cards
4. Medical bills, utility bills, student loans
5. Loans against retirement accounts or life insurance
6. Judgments
7. Tax debt
8. Look for things that appear to be farm debt but may not be, like utilizing
funds from an agricultural loan to remodel a home.
D. Distribution of Property
i. Less than an equal share of property may be awarded to the non-farmer spouse.
1. Equitable distribution of marital property, based on the statutory factors,
does not require an equal division of assets. Iowa Code §598.21(5); In re
Marriage of McDermott, 827 N.W.2d 671 (Iowa 2013).
2. There is a public policy which favors preserving family farm operations.
Even though farmland is often a couple’s principal asset, Iowa courts are
reluctant to order the farm property to be sold with the proceeds divided
between the parties. See e.g. In re Marriage of Callenius, 309 N.W.2d
510, 515 (Iowa 1981) (citing In re Marriage of Andersen, 243 N.W.2d
562, 564 (Iowa 1976)); In re Marriage of Briggs, 225 N.W.2d 211 (Iowa
1975); cf. In re Marriage of Conley, 284 N.W.2d 220 (Iowa 1979). But
see In re Marriage of McDermott, 827 N.W.2d 671 (Iowa 2013) (since
husband expressed a strong desire in preserving the family farm, trial court
should do everything possible to respect that desire, but husband’s interest

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in preserving the farm should not work to the detriment of wife in
determining an equitable settlement).
3. The court may award the farm-operating spouse a larger percentage of the
farm assets to encourage the undivided ownership and operation of family
farms. In re Marriage of Callenius, 309 N.W.2d 510 (Iowa 1981). In
order to offset this inequitable distribution of assets, courts have recently
awarded non-operating spouses a larger percentage of the assets not
attributed to farming. In re Marriage of Lacaeyse, 461 N.W.2d 475 (Iowa
Ct. App. 1990). But see In re Marriage of McDermott, 827 N.W.2d 671
(Iowa 2013).
4. Courts try to avoid forcing the parties into a continued business
relationship, so joint ownership is discouraged. In re Marriage of
Lundtvedt, 484 N.W.2d 613 (Iowa Ct. App. 1992). Therefore, distribution
of assets during a divorce is even more complex and requires additional
consideration when a farm is part of the parties’ assets. Where the
husband purchased the farm land but the wife operated a milking
operation for thirty years, the court refused to award joint ownership of the
land to the husband given his past history and relationship with the
children and his ex-wife. In re Marriage of Simon, 2014 WL 7339335
(Iowa Ct. App. 2014).
5. Sometimes courts cite the severe tax consequences of a liquidation to
justify awarding the farm property to one party or the other. In re
Marriage of Bishop, 2003 WL 1524449 (Iowa Ct. App. 2003).
ii. There are limits to the public policy of preference to the farming spouse. In re
Marriage of McDermott, 827 N.W.2d 671 (Iowa 2013). In McDermott, the trial
court valued the farm, crops and farm equipment, awarded them to the husband
who stated a desire to keep farming, and ordered the husband to pay a cash
equalization payment in excess of $1 million. The Court of Appeals reversed and
reduced the lump sum payment to $250,000 on the basis that the trial court failed
to consider the tax consequences of the property distribution and thus overvalued
the assets awarded to the husband and on the basis that inequity would result from
including the full value of the farm property which was acquired from the
husband’s family. The Iowa Supreme Court vacated the Court of Appeals’
judgment and affirmed the trial court ruling on the farm value and distribution
issues. In so holding, the Supreme Court found:
1. There is a public policy in favor of preserving family farming operations,
which stated that a less than equal property distribution may be
appropriate so that the farmer-spouse might retain ownership of the farm.
Thus, when the farmer-spouse wants to preserve the farm, the Court
“should do everything possible to respect that desire.”

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2. However, the farmer-spouse’s “interest in preserving the farm should not
work to the detriment of the other spouse in determining an equitable
settlement.” The Court went on to find that an equal division was what
was equitable in this case.
3. A forced sale is not a preferable method to divide marital assets because
such a sale tends to bring lower prices.
4. When a sale is ordered, and the proceeds divided, then each party is
generally responsible for one-half of the tax consequences arising from the
sale. It is only appropriate to reduce the value of the property for tax
consequences if the property is either sold or if an ordered lump sum
payment of cash will in all probability require the liquidation of capital
assets. In this case, the Court found that the husband would be able to
take a mortgage against the property to fund the lump sum payment and
that the property would generate sufficient cash flow to make the
mortgage payments and fund the equalization payment. Therefore, the
Court refused to consider income tax consequences. The dissent disputed
the finding, especially considering the husband historically generated only
$55,000 per year in farm income.
iii. Property inherited by either party or gifts received by either party prior to or
during the marriage is the property of that party and is not subject to a property
division except upon a finding that refusal to divide that property is inequitable to
the other party or the children of the marriage. Iowa Code Ann. § 598.21(6). The
factors a court reviews to decide whether gifted or inherited property should be
divided include:
1. Contributions of the parties toward the property, its care, preservation or
improvement;
2. The existence of any independent close relationship between the donor or
testator and the spouse of the one to whom the property was given or
devised;
3. Separate contributions by the parties to their economic welfare to
whatever extent those contributions preserve the property for either of
them;
4. Any special needs of either party; and
5. Any other matter which would render it plainly unfair to a spouse or child
to have the property set aside for the exclusive enjoyment of the done or
devisee.
In re Marriage of McDermott, 827 N.W.2d 671 (Iowa 2013); In re Marriage of
Thomas, 319 N.W.2d 209 (1982); In re Marriage of Larson, 808 N.W.2d 449
(Iowa Ct. App. 2011) (inherited farmland not treated as marital property
following long-term marriage in which parties moved to the farm and in which

16. 16
wife gave up teaching to assist on the farm and raise children, when record did not
support an intent by husband’s parents for wife to share in the farm nor evidence
of a close independent relationship between husband’s parents and wife); In re
Marriage of Hattery, 743 N.W.2d 870 (Iowa Ct. App. 2007); In re Marriage of
Stanley, 2007 WL 2963751 (Iowa Ct. App. 2007).
iv. Below-market sales may be considered gifts. See In re Marriage of Wosepka,
2008 WL 5235375 (Iowa Ct. App. 2008) (holding that mother made a gift of
approximately $160,000 to her son by selling him a farm at a below-market price.
The Court determined that the difference in the value between the sale price and
the fair market value should be considered a gift).
v. Placing property in joint ownership does not, in and of itself, destroy the separate
character of gifted or inherited property. In re Marriage of Larson, 808 N.W.2d
449 (Iowa Ct. App. 2011); In re Marriage of Liebach, 547 N.W.2d 844 (Iowa Ct.
App. 1996).
vi. Property acquired before marriage may be divided as part of the marital estate,
however the court may consider property owned by one party before the marriage
as one of several factors in determining equitable distribution. Iowa Code Ann. §
598.21(5)(b).
vii. When gifted, inherited, or premarital property appreciates during the marriage, the
Court may separately consider the nature of the asset appreciation and
contributions to the increased value in determining if and to what extent the
appreciation should be shared.
1. Appreciation of inherited or gifted property may be included in the
divisible estate. See In re Marriage of White, 537 N.W.2d 744 (Iowa
1995); In re Marriage of Friedman, 466 N.W.2d 689 (Iowa 1991) (the
appreciated value of assets may be divided where the increase is due to the
talent, time, and effort of the marital partners).
2. Even when a premarital asset is not divided as marital property, the spouse
not receiving the property may nonetheless receive a portion of the
increase in value of the premarital asset. In re Marriage of Kragel, 840
N.W.2d 727 (Iowa Ct. App. 2013); In re Marriage of Grady-Woods, 577
N.W.2d 851 (Iowa 1998).
3. Courts consider the tangible contributions of each party, the reason for
property value appreciation, the length of the marriage, and statutory
factors to determine the equitable distribution of assets that appreciate in
value. In re Marriage of Grady-Woods, 577 N.W.2d 851 (Iowa 1998).
Tangible contributions of each party during a marriage, including
homemaking, assure that one party does not receive part of the appreciated
value of property brought into the marriage merely for being present in a
relationship. In re Marriage of Grady-Woods, 577 N.W.2d 851 (Iowa

17. 17
1998). See e.g. In re Marriage of Calhoun, 2014 WL 250240 (Iowa Ct.
App. 2014) (husband awarded 25% of appreciation of farm value after two
year marriage because husband expended effort and money to improve the
farm property; husband not entitled to one-half of the appreciation because
the marriage was short and much of the increase in value was rising land
value independent of his contributions); see also In re Marriage of Boyd,
829 N.W.2d 190 (Iowa Ct. App. 2013) (awarding the wife approximately
11% of the appreciation on the husband’s inherited farm in recognition
that the wife contributed toward the improvement of the farm, had some
health issues, and had a long-term marriage).
4. Appreciation of property value may occur due to the efforts of the parties
or to fortuitous circumstances. Some of the case law holds that greater
contributions of time and effort toward the marriage warrant a larger
distribution of the appreciated property value. See e.g. In re Marriage of
Eastman, 2003 WL 22700556 (Iowa Ct. App. 2003); In re Marriage of
Richards, 439 N.W.2d 876 (Iowa Ct. App. 1989) (an equitable distribution
of the appreciated value of inherited property “should be a function of
tangible contributions and not the mere existence of the marital
relationship”). However, the Iowa Supreme Court has refused to
differentiate fortuitous gains from gains made by the efforts of the parties,
so it is not clear how much weight this distinction carries. In re Marriage
of Fennelly, 737 N.W.2d 97 (Iowa 2007) (dividing the appreciation of the
former wife’s investments equally with the former husband even though
the increase in value was solely due to fortuitous market circumstances
and not the efforts of the husband).
V. Planning Before Marriage & Succession Planning
A. One way to remove issues about farm assets in property division is to prepare for the
possibility of a marital relationship ending by entering into a prenuptial agreement.
i. The stigma or negative association with a prenuptial agreement may be a barrier
to overcome, but the topic should be discussed with farm clients.
ii. In any situation where substantial assets, including gifted and inherited assets, it is
important to plan for the future. Farming is no different.
iii. A prenuptial agreement can always be modified if both spouses agree.
iv. The goal is to provide for a financial settlement as opposed to stock or ownership
in a family farm business. Building non-farm assets can be a way to provide a
level of security for a non-farm spouse in the event of a future dissolution.
B. Another way to remove issues, or at least lessen the issues, in the event of a farm divorce
is succession planning.

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i. Succession planning refers to the process of transferring ownership and
management of a farming operation to a succeeding operator. This most often
applies in situations where parents wish to pass the farm on to a child or children.
ii. When giving a gift, devising property, and selling property, the transferee must
make the intention clear.
1. If property is gifted, clear written documentation must be made of the gift,
the deed should only be in the recipient’s name (not that of both spouses if
that is not the intention), and all gift tax laws must be followed.
2. A will or trust document which transfers land ownership should only be in
the recipient’s name (not that of both spouses if that is not the intention).
3. Purchase agreements for family farm land should not be accomplished by
using both spouses’ names unless that is the intention.
iii. If the intention is to have the farming spouse be the successor in the farming
operation, but not the non-farming spouse, the “joint tenants with rights of
survivorship” language must be avoided.
iv. Recall that the deed language alone may not be enough if the other spouse
contributes to the appreciation of the gifted or inherited property, has special
needs that necessitate division of such property, or has a close relationship with
the person who devised property or made a gift.