Background
Tracy Dvorak created the Tracy M. Dvorak Trust in September 2019, providing that upon her death, half the trust property would go to Amber Kochevar and half would be held in trust for Jeramie Dvorak. When Tracy died in March 2023, Jeramie later filed a petition alleging breach of trust against Amber, who had been appointed sole trustee.
Amber moved to resign and have a successor trustee appointed. The district court accepted her resignation, appointed Farmers Savings Bank as successor, and ordered that Amber was “released from any liability to Trust or its beneficiaries” upon filing a final report. Amber then moved for summary judgment based on this release order. Jeramie opposed, arguing the district court lacked authority under Iowa law to release a trustee from liability.
The district court denied summary judgment, finding that the Trust Code (Iowa Code chapter 633A), not the Probate Code (chapter 633), governed the privately-created trust, and that the Trust Code does not permit release of a resigning trustee from liability. Amber appealed.
The Court’s Holding
The Court of Appeals affirmed the denial of summary judgment. The court addressed a threshold statutory interpretation issue: whether Iowa Code § 633.10(4) requires both that a trust be “established by court decree” and “subject to continuous court supervision” for the Probate Code to apply, or whether continuous court supervision alone is sufficient. The court held that both conditions must be met, based on the plain language of “that is” in the statute, which modifies “trust established by court decree.” The legislature’s use of “that is” rather than “or” indicates the two elements are linked and both required.
Applying this interpretation, since the Tracy M. Dvorak Trust was created privately and not by court decree, it is governed exclusively by the Trust Code, not the Probate Code. The court noted that although the trust later came under continuous court supervision in January 2025, this subsequent court involvement does not retroactively subject it to Probate Code provisions.
The court further held that under Trust Code § 633A.4106(2), “the liability for acts or omissions of a resigning trustee . . . is not released or affected by the trustee’s resignation.” Therefore, the district court had no authority under the Trust Code to release Amber from liability. Because genuine issues of material fact remained regarding Jeramie’s breach-of-trust claim, summary judgment was improper.
Key Takeaways
- A trust created privately, without court involvement, remains governed exclusively by the Trust Code even if it later comes under continuous court supervision.
- The Probate Code applies only to trusts that are both established by court decree AND subject to continuous court supervision—not to trusts that become subject to court supervision after creation.
- Under the Trust Code, a resigning trustee cannot be released from liability for breach of trust, and beneficiaries retain the right to pursue such claims even after the trustee resigns.
Why It Matters
This decision clarifies the boundary between Iowa’s Trust Code and Probate Code by requiring that a trust actually be established through court decree for Probate Code provisions to apply. The ruling protects trust beneficiaries’ remedies against former trustees, ensuring that a trustee cannot escape liability through resignation and a release order. For practitioners, it establishes that merely placing a privately-created trust under court supervision does not trigger all Probate Code protections or procedures that might apply to trusts created by judicial action.
The decision also demonstrates the court’s careful statutory interpretation methodology, applying the principle that each word must be given meaningful effect rather than treating alternative conditions as independently sufficient. This approach affects how courts will interpret the interplay between the Trust Code and Probate Code going forward.