In the Matter of the Estate of Karl A. Kloster

IN THE COURT OF APPEALS OF IOWA

No. 20-1245
Filed July 21, 2021

IN THE MATTER OF THE ESTATE OF KARL A. KLOSTER, Deceased.

SANDRA KLOSTER,
Appellant.
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Appeal from the Iowa District Court for Marion County, Elisabeth S.

Reynoldson, Judge.

Sandra Kloster appeals the order denying her claim for an elective share as

surviving spouse of Karl Kloster’s estate. AFFIRMED.

Nicole S. Facio of Newbrough Law Firm, LLP, Ames, for appellant.

Andrew B. Howie of Shindler, Anderson, Goplerud & Weese, P.C., West

Des Moines, for appellee.

Heard by Doyle, P.J., and Mullins and May, JJ.
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DOYLE, Presiding Judge.

Sandra Kloster appeals the order denying her claim for an elective share as

surviving spouse of Karl Kloster’s estate. She challenges the district court’s finding

that the premarital agreement she signed was enforceable, arguing it was

procedurally unconscionable. She also contends her decision to sign the

agreement was not informed because Karl failed to provide a fair or reasonable

financial disclosure and she had inadequate knowledge of his finances. Because

Sandra has not met her burden of showing the premarital agreement is

unenforceable, we affirm.

I. Background Facts and Proceedings.

Sandra met Karl Kloster in December 2007. At the time, Sandra lived in

Council Bluffs and worked as a long-haul truck driver while Karl lived and worked

in Knoxville. The two began getting to know each other through phone calls and

meeting briefly in person at rest areas and truck stops. Karl also visited with

Sandra at her home a couple of times and Sandra visited Karl in Knoxville.

In May 2008, Karl asked Sandra to marry him and move to Knoxville.

Sandra agreed and moved into Karl’s home in June. They married two weeks

later. It was the third marriage for each.

The day before they married, Karl brought Sandra to the office of his

attorney, Barry Griffith. Griffith presented Sandra with a premarital agreement,

which both Sandra and Karl signed and Griffith notarized. The agreement states:

WHEREAS, Karl A. Kloster and Sandra Hawks are mature
adults each having been married before and each having children
from their prior marriages who are now adults and said Karl A.
Kloster and Sandra Hawks now desiring to enter into marriage with
one another and in anticipation thereof, they desire by this Premarital
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Agreement, to fix and determine the rights each shall have in the
property and the estate of the other by reason of their marriage, and
to accept the provisions of this agreement as clear definition, full
discharge, settlement, and satisfaction of all their rights and claims
in the property of the other.

Under the agreement, each party would retain their respective separate property

“free and clear from all claims by the other of inheritance, dower or distributive

share, homestead, support, or any other interest commonly given by law to parties

becoming husband and wife.” It also provides that after Karl’s death, Sandra could

live in the Knoxville residence until she remarried or lived outside the home for

more than one year. While Sandra remained in the Knoxville home, Karl’s estate

would pay the utilities, maintenance of the property, real estate taxes, and similar

expenses, along with providing Sandra an allowance of $400 per month. By

signing the agreement, Sandra, and Karl agreed that they had made full disclosure

of their financial assets and liabilities were freely entering into the agreement. The

agreement also states that Griffith represented Karl solely and that each party had

a chance to consult independent legal counsel. Attached to the agreement was a

statement of Karl’s assets and liabilities, showing a net worth in excess of

$1,200,000. Sandra’s statement of assets and liabilities states only that she had

“more assets than liabilities” and knew of no potential lawsuits against her.

In 2019, Sandra petitioned to dissolve the marriage. Karl died before the

divorce was finalized. After the court admitted Karl’s will into probate and

appointed his son as executor in accordance with Karl’s wishes, Sandra applied

for an allowance as Karl’s surviving spouse and also to take her elective share of

the estate. The court ultimately found the premarital agreement enforceable and

denied the portion of Sandra’s application seeking an elective share of the estate.
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It ordered the estate to pay Sandra spousal allowance of $1000 per month for

twelve months.

II. Scope and Standard of Review.

Iowa law provides the surviving spouse may take an elective share of the

decedent’s estate. See Iowa Code § 633.236 (2019). The elective share is limited

to one-third in value of the property the decedent possessed “to which the surviving

spouse has made no express written relinquishment of right.” See id.

§ 633.238(1)(a). A valid premarital agreement that states one shall make no

claims against the other against the estate for right of inheritance waives a

surviving spouse’s claim to take an elective share against the will. See In re Estate

of Spurgeon, 572 N.W.2d 595, 598-99 (Iowa 1998).

Sandra argues the premarital agreement is unenforceable, claiming it was

procedurally unconscionable and her decision to sign it was not informed. See

Iowa Code § 596.8(1)(b) (providing a premarital agreement is unenforceable if the

it was unconscionable when executed), (c) (providing a premarital agreement is

unenforceable if one spouse was not provided a fair and reasonable financial

disclosure and that spouse could not reasonably have had an adequate knowledge

of the other spouse’s finances). A claim for an elective share and the question of

a premarital agreement’s validity are both tried in equity, and our review is de novo.

See In re Estate of Myers, 825 N.W.2d 1, 3 (Iowa 2012); In re Marriage of Shanks,

758 N.W.2d 506, 511 (Iowa 2008). Sandra bears the burden of proving the

agreement is unenforceable. See Shanks, 758 N.W.2d at 511.

Turning first to whether the premarital agreement was procedurally

unconscionable, our primary focus “is the advantaged party’s exploitation of the
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disadvantaged party’s lack of understanding or unequal bargaining power.” Id. at

517.

Courts have found the following factors, among others, are relevant
to procedural unconscionability: the disadvantaged party’s
opportunity to seek independent counsel; the relative sophistication
of the parties in legal and financial matters; the temporal proximity
between the introduction of the premarital agreement and the
wedding date; the use of highly technical or confusing language or
fine print; and the use of fraudulent or deceptive practices to procure
the disadvantaged party’s assent to the agreement.

Id. at 517-18 (internal citations omitted). Of these factors, the district court found

Sandra proved temporal proximity because the premarital agreement was

presented to her and signed the day before she and Karl married. But the court

found no other factors exist and concluded temporal proximity alone could not

render the agreement procedurally unconscionable.

We agree that Sandra has failed to show the premarital agreement is

procedurally unconscionable. As the district court observed, the agreement “is not

highly technical, nor does it contain confusing language.” And though Karl

“arguably had greater sophistication in terms of business experience,” the court

found that Sandra is an intelligent person “who possessed sufficient sophistication

that she could have read and understood the Agreement.” Most important is that

Sandra was provided with ample opportunity to read the document and was

advised to have an attorney review the agreement with her. She did neither.

Although Sandra and Griffith gave conflicting accounts on what occurred at the

meeting in Griffith’s office, Griffith’s testimony is bolstered by a memorandum he

dictated the morning after the meeting in which he summarized what occurred.

The memo states, in part:
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I pointed out to Sandra at the beginning of our meeting and
before she signed the agreement that she should take the agreement
to another attorney to have them go over for her and with her. Before
signing she stated that she did not want to review it with an attorney
and she understood what the agreement was about. She said she
just wanted to get the signing of it over with. It was apparent she
was not going to take it to another attorney. She then signed while
in my office along with Karl and I notarized their signatures and gave
them each a signed copy to take with them.

That Sandra failed to read the document or have it reviewed by an attorney

of her choice does not render the agreement unconscionable. See id. at 518

(“Equitable principles will not permit a party to eschew an opportunity to consult

counsel as to the legal effect of a proposed contract, execute the contract, and

then challenge the enforceability of the agreement on the ground she did not have

adequate legal advice.”). As our supreme court has noted, “it is not sufficient that

a party made an imprudent bargain”:

People should be entitled to contract on their own terms without the
indulgence of paternalism by courts in the alleviation of one side or
another from the effects of a bad bargain. Also, they should be
permitted to enter into contracts that actually may be unreasonable
or which may lead to hardship on one side. It is only where it turns
out that one side or the other is to be penalized by the enforcement
of the terms of a contract so unconscionable that no decent, fair-
minded person would view the ensuing result without being
possessed of a profound sense of injustice, that equity will deny the
use of its good offices in the enforcement of such unconscionability.

Id. at 515 (emphasis added) (citation omitted). On the facts before us, Sandra falls

short of her burden.

We then turn to whether Sandra’s decision to sign the agreement was

informed. A premarital agreement is not enforceable if (1) “a fair and reasonable

disclosure of the property or financial obligations of the other spouse” was never

made and (2) the person against whom enforcement is sought “did not have, or
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reasonably could not have had, an adequate knowledge of the property or financial

obligations of the other spouse.” Iowa Code § 596.8(1)(c). Karl’s personal

financial statement was attached to the prenuptial agreement, and the district court

found Sandra provided no evidence that Karl failed to disclose any of his assets or

significantly understated or overstated the values. The district court also

concluded that Sandra had adequate knowledge of Karl’s property and financial

obligations.

Again, we agree that Sandra has failed her burden of showing Karl failed to

reasonably disclose his financial information and that she did not have adequate

knowledge of it. Sandra testified that she knew Karl owned farmland that was

encumbered by a $200,000 debt. She knew that Karl owned rental properties and

had visited some of them. She had spent time at Karl’s home and knew that he

owned several antique cars. As our supreme court has recognized, section

596.8(3) only requires a “fair and reasonable” disclosure and “adequate”

knowledge of the other party’s property and financial obligations. Shanks, 758

N.W.2d at 519; In re Marriage of Spiegel, 553 N.W.2d 309, 317 (Iowa 1996) (“We

have never required that a party have precise valuations of the other’s assets; a

general knowledge of the true nature and extent of the other’s properties is

sufficient.”). Sandra admitted she has no proof that Karl concealed any of his

assets from her.

Sandra has not met her burden of showing the premarital agreement is

unenforceable. Because the agreement waived her right to elect against the will,

we affirm.

AFFIRMED.