Wednesday, October 21, 2015
Many younger people feel invincible and don't believe it is necessary to have a will in place. I suppose you can wait until the day before you die to sign your will and all is fine. But for most people, except for Marty McFly, we don't know when our number gets called. It is one of the reasons we buy insurance - protection against the unknown.
For the cynical people out there you are probably saying "whatever lawyer boy, you are just trying to get some business." Yep. Lawyers need to eat, too. But it is frustrating to see situations where lack of proper planning disrupts the family relationships and they fall apart. Some basic planning steps would allow an easier transition without additional cost, delay and problems. Plus, those attorney fees in those situations are normally higher anyway. Putting an estate plan together is not as hard or expensive as you might think.
Estate Planning Awareness Week 2015 - schedule an appointment with a qualified attorney...or you can roll the dice.
Monday, July 27, 2015
Okay, that was enough of a legal mouthful. If you want a bigger mouthful, you can read the bill that was signed by Governor Branstad. This was a bill that was drafted and sponsored by the Probate Section of the Iowa State Bar Association. Another great job by the Section.
To give you an example of how this is useful, let's assume that you are the executor of an estate, or you represent the executor. And assume that you believe that decedent owned an account at a financial institution, or that you know for a fact that they owned an account at the institution. The executor has certain duties to (1) identify and account for assets and (2) distribute the property to the proper parties. But what if the financial institution isn't exactly cooperative with providing information or access about the decedent's accounts? After all, we are in the age of scams and paranoia over identity theft. Well, section 633.78 comes to the rescue in that you now have very clear authority in dealing with that account. Should the financial institution continue to be resistant, they can be held responsible for damages and attorney fees. Additionally, the financial institution is also protected in providing that information or account to you. Everybody wins!
You might wonder just how after something like this is useful. Well, in the past 26 days that the law has been in effect, I've used it one time and I'm getting ready to use it in another matter if we continue to have difficulties in getting cooperation. I would say that is a pretty quick and useful history already.
Sunday, April 05, 2015
Notice Publication - This is one of the primary delays. One requirement is that the executor/attorney needs to publish notice in a local newspaper to run for 2 consecutive weeks. Then, after the 2nd publication, there is a 4 month period in which anybody can file a claim in the estate or contest the will. There is also a requirement that notice be given to all interested parties. The claims process/will challenge ends than later of (1) four months after the second notice publication notice or (2) 30 days after mailing notice.
Inventory - An inventory needs to be completed and filed with the court. That includes getting date of death values and listing of all assets. Depending on the organization of the records and information, that may take some time to get assembled. This inventory should be filed with the court within 90 days after the appointment of the executor.
Tax Filings - In addition to filing the decedent's final individual income tax return, there are also fiduciary returns to be filed. In Iowa, the Iowa Department of Revenue has to approve and issue a proper clearance before you can close the estate. That review process can take up to 90 days after filing. Other tax filings potentially include the Iowa Inheritance Tax return and the federal estate tax return (for larger estates). Both of those returns also have to be approved and a proper clearance issued.
Creditors & Challengers - You also have the potential issue of claims filed in the estate and resolution of those claims. Then, if you have a will challenge, you are really getting the probate case extended out for several months or possibly years.
On average, I estimate a year to complete the probate process. Sometimes they can close sooner, but sometimes later. Every case is different with different facts and different persons.
Sunday, March 01, 2015
This question assumes that you are using a trust. Whether it is due to young beneficiaries, special needs, or other circumstances that call for managed control of assets, a trustee is the title assigned to person/entity. So what are the requirements?
- Capable - A trustee needs to handle investments, accounting, and tax returns. Some people's brains turn to mush with visions of talking cats when faced with dealing with financial issues. Your Uncle Bob might be a great guy, but if he is putting a name to the talking cat and not looking at investment returns and allocations, he might not be the best choice for trustee.
- Discretionary - Sometimes trustees have to make tough decisions. These may not be popular decisions with the beneficiaries and Uncle Bob may not want to disappoint his nephew/nieces. Does the 18 year old nephew entitled to get that Corvette Supercar? Unless his name is Matt Gardner, probably not. But Uncle Bob may have to tell him "no".
- Available - Life is busy. Raising two kids with activities, community activities, family events, work commitments, blogging...life is busy and asking someone to handle another activity in life can be overwhelming.
- Trustworthy -There are frequent stories of people get tempted by easy access to money that isn't theirs. Whether they just needed a "short-term loan" or they've fallen on hard times, sometimes the candy becomes too tempting.
Sunday, January 04, 2015
To deal with this situation as they relate to medical issues, there are a couple of different options:
- Medical power of attorney/HIPAA Release - If your child has sufficient capacity to execute documents, a medical power of attorney (MPOA) and a HIPAA release form would aid a parent in getting access to that information and being involved in health care decisions. The key question is whether the child is able to legally execute these documents.
- Guardianship - If the child doesn't is unable to understand and knowingly consent and authorize a MPOA document, the next step would be to establish a guardianship for the child. A guardianship is a court proceeding where you would request court approval to be appointed guardian (co-guardians) for your child to be involved and make certain decisions. Once appointed, you will continue to have regular court filings and be limited to certain decisions. You should consult with an Iowa probate attorney to get the guardianship properly set up and operating.
Sunday, November 30, 2014
When I discuss a power of attorney document with a client, one of the questions that I go through is whether they want the authority to be a springing power or an immediate power. For example, do you want the person you identify to have authority to act on your behalf only when your doctor says you don't have sufficient capacity? Or, alternatively, do you want that person to have authority immediately, regardless of your capacity level?
For many clients (and for many attorneys) the initial thought/answer is 'why would you give someone power over your assets when you don't need any help?' Here are my three responses:
1. You may have sufficient capacity, but you aren't around. Some examples work best. You are on vacation in a remote location where you don't have access to modern communications. Lake in northern Canada. Cruise. Mars. You get the idea.
2. Good Days - Bad Days. With many forms of dementia, it is a gradual deterioration and not a "black and white" diagnosis. Thus, when you are at a doctor's office, it may be a better day and your doctor may not be willing to cooperate in determining whether you are incapacitated or not, even though your family members are observing your struggles on the bad days.
3. Convenience. Sometimes it may just be easier to have someone sign documents on your behalf because you can't get away; or you are traveling for work.
4. Trust Issue. For me, this is the clincher/closer. If you trust someone to act on your behalf when you are incapacitated, surely you would trust them to act in your best interest when you have your full capacities? More importantly, if you don't trust this person for any reason, then we really need to look closer at your nominee.
Iowa recently enacted the Uniform Power of Attorney Act this past summer, which incorporated the prevailing preference by the members of the Uniform Law Commission, making the authority an immediate power (i.e., regardless of capacity) as the default provision. If the document is silent, the statute provides the power is an immediate power. You can still make the authority a "springing" power by a specific inclusion in the document.
The immediate power gives you the ability to use the powerful authority not only now when you have your capacity, but also later if you don't have your capacity. You really can't beat that flexibility, in my opinion, although that brings up some discussion points for another post about the potential for abuse.
Sunday, November 16, 2014
- Power of Attorney (health) - This document enables health care decisions, such as medicine, doctor, facility, therapy, etc. to be made by a selected individual. While more than one can be named, it is typically preferred to name one responsible individual.
- Power of Attorney (financial) - This document provides for someone to handle financial matters. Iowa's recently updated statute provides significant changes to this position. This can be the same person under health powers, but need not be the same person. Again, normally better to just have one individual in this position.
- Living Will - This document is one that will provide final instructions should the individuals life deteriorate to the point where their existence is continuing only with the help of life-support. (Not a DNR. Different topic for another day.)
- Declaration for Final Disposition of Remains - Following someone's death, several "permanent" decisions are made as to who will make decisions on the disposition (burial, cremation, other) of the body. Nothing uglier than fights at the funeral home when it should be a time of memories.
- Last Will and Testament/Revocable Trust - The Will only has the authority after death and after it has been admitted to probate. It will provide directions over are the assets are distributed and who is in charge. A revocable trust is similar to a Will, but handles things a little differently.
- Beneficiary Review - Frequently overlooked (or unable to locate) are beneficiary designations of retirement accounts, life insurance, annuities or other assets. Hey, even I admit that I myself have neglected to keep up on all of my beneficiary designations. Remember, that these beneficiary designations take priority over the provisions in a will or trust (unless they are the beneficiary listed).
- Ownership Review - Also frequently overlooked, a common "culprit" are bank accounts where someone is intended to be listed as simply able to sign checks, but is listed as a joint owner instead.
Sunday, November 09, 2014
But in a recent ruling from Iowa Court of Appeals (Mohr v. Langerman and Mohr, No. 13-1422, Oct. 15, 2014), I'm left scratching my head. As always, the facts are "interesting". Put all those pieces together and you have a case that makes you go hmmm.
Facts: Jerry Mohr was married for 24 years. But, while he was married, he (1) intentionally had intercourse with another woman for the purpose of having a child and (2) lived with yet another woman and helped raise her child. While Jerry lived in Arizona, he died owning some property in Iowa. And, of course, he apparently didn't feel the need to have a will. Duh. So when the end came for Jerry, he left behind quite the legal mess. Following his death, the biological relationship was conclusively established in Arizona between Jerry and the son that he had with the woman he had one relationship with for that purpose. You know, that DNA testing that gives you a nearly 100% confidence level. You know, a court ruling by a court and that whole full faith and credit clause of the US Constitution.
Iowa's intestate laws provide that if someone doesn't have a will, and they die with a spouse and children that are not children of that surviving spouse, the spouse and the children will divide the estate. (Probably need to update the intestate law summary for this blog...another day.) In particular, Iowa Code § 633.222 provide that a biological child inherits from their father if there is paternity evidence or the child has been recognized by the father.
Seems simple enough. Code says if there is paternity evidence or recognition, and since we have DNA evidence, end of story. Not so fast my friend. Although pretty much every person 5 years of age or older knows what "or" means, our court feels that they can't give a plain English interpretation of "or". What the Iowa Court of Appeals basically said was 'while we think we know what "or" means, because the Iowa Supreme Court says that "or" doesn't mean "or" in these circumstances, we are stuck with that ridiculous position.' What????
Keeping in mind that this statute was originally written decades ago before we knew what DNA was or what we can do with DNA, and realizing that once statutes are written, it is a slow and difficult process to amend a statute, the court still maintained that the legislature needs to amend the statute to prevent our Supreme Court's ridiculous ruling from over a hundred years ago. Another reason why judges and lawyers get a bad rap, should anyone care to read this probate case.
Now, in all fairness, the Court eventually comes around and determines that the son is actually Jerry's son, but it does so via an awkward, backdoor analysis that contorts itself to fit on the page it was written. Maybe they felt they were constrained by ancient rulings and couldn't establish/correct the proper rationale, so they wanted to get the right result in another method. Basically they relied on the testimony of the mother of the child and her basically self-serving statements that Jerry "recognized" their child as his son. Never mind that we have this fantastic DNA evidence that can conclusively establish that it was his son, we're going to follow this testimony of a mother trying to get an inheritance to her son. Good grief.
The morale of the story: if you have a biological child out there that you want to disinherit, and you don't want to spend a minimal amount of money to have a will written, you can just refuse to recognize that child as in fact your child and, according to Iowa courts, that child will not inherit from you.
Sunday, September 28, 2014
Deeds with married couple, joint tenants or survivor language - As I've written before, there can be issues (and have been many issues) where the way ownership of real property is listed on the deed can have serious impact on estate plan. Tenants-in-common, joint tenants with full rights of survivorship, etc. It used to be if you had a deed that transferred ownership to two or more people (such as a couple) without the magic language of "joint tenants with full rights of survivorship and not as tenants-in-common" it was presumed to be tenants-in-common which can have a significant different intended result. Soon, that will no longer be true. NOW, straight from the Iowa legislature, that rule is changed. Iowa Code §557.15 will soon provide that IF a deed fits under any of the following descriptions: (a) identifies two grantees as married to each other at time of instrument; (b) says "joint tenants" or something similar; or (c) includes language such as "or their survivor", the presumption is that ownership is with full rights of survivorship and NOT as tenants-in-common. This can be a significant benefit to property owners (in the future) that may be a little lax in using legal services.
Sunday, June 22, 2014
Herbert and Velma were married in Florida. While they lived in Florida, they signed post-marital agreement which included certain limitations on rights of each spouse at the death of the other. Florida permitted post-marital agreements. After 14 years, they moved from Florida to Iowa. (Quick aside: Really? I love Iowa and all, but moving to Iowa from Florida in the retirement years seems a little backwards.)
After moving to Iowa, Herbert passed away and Velma tried to do an "end around" the post-marital agreement and take a spouse's elective share. I don't feel like going into an extensive analysis of the Iowa Court's ruling, but basically they said the contract was validly made in Florida and should have Florida laws applied to it and that there wasn't an Iowa public policy argument that should prevent the application of the post-marital agreement. One of the key points to keep in mind here is that they lived in sunshine state for 14 years after they signed the agreement.
What was especially interesting in the Court's ruling were some of the comments that the court made that clearly indicated that they would like to see Iowa move to a point where post-marital agreements are allowed. Unfortunately, there are a few key Iowa lawmakers that have refused to allow this change in Iowa law.
As we continue to have more and more second marriages, the role of a post-marital agreement can become even more important for couples choosing to make their own decisions and arrangements. Refusing to allow adult couples the freedom to make these decisions needs to be changed.
Thursday, April 10, 2014
Some key points from the Uniform act: (1) provides for improved remedies in event of abuse/misuse of authority; (2) clear guidance for agents; (3) addresses powers involving co-agents; (4) specific and general authority of agents; and (5) statutory form to use for individuals without attorney access.
Sunday, March 16, 2014
Listed below are the more common options on ownership of real property in Iowa that could be placed on a deed with joint ownership. Note two things I just indicated: these comments apply to real property (you know, land, dirt, back 40...not your car) and land located in Iowa. These same rules may not apply in Louisiana, or any other state. Also, I have a previously blogged about some possible concerns with joint ownership.
- "John Smith and Mary Smith" or "John Smith and Mary Smith as joint tenants" or "John Smith and Mary Smith as tenants-in-common" - The result of this type of ownership (sometimes kind joint tenants or tenants-in-common) provides that upon the death of one of the joint owners, the other joint owner continues to own a 1/2 undivided interest, and the estate of the deceased owner will handle the other 1/2 interest. Thus, if John dies first, his will (if he has one) or the intestate statutes (if he doesn't have a will) will dictate the ownership of his half interest. Mary may be surprised/upset/concerned with who she is owning the property at that time after John dies. Or, it is possible that Mary may be the only beneficiary and becomes the sole owner of all of the property. HOWEVER, just because Mary is the surviving spouse of John does not guarantee that she will receive John's 1/2 share at his death. Also, using "and" or "or" doesn't make a difference.
- John Smith and Mary Smith, as joint tenants with full rights of survivorship and not as tenants-in-common - This type of ownership provides that upon the death of one of the owners, the other owner automatically becomes owner of the entire property. This applies regardless of what the will provides and regardless of whether John or Mary really wanted it that way. However, this specific language must be used in the deed in order to have the property owned with such a result. This may not always be desired, as maybe you want to control what happens to that property at your death. For example, if you and a friend own property together, do you want that property to go to your friend or to your family?
- John Smith, life estate, with remainder to Mary Smith - This form of ownership basically gives John the ownership of the property for his life, with full ownership passing to Mary at John's death. John and Mary basically share rights during their lives. I won't dig into the buried neurons from law school in my little brain to explain the potential variations and issues associated with this form of ownership. (e.g., what if Mary isn't living at the time of John's death?) Suffice it to say this is just another method to title real property.
- NOT - Transfer on death or "Lady Bird Deeds" - "But my cousin's brother-in-law from (insert state other than Iowa) said that his barber's neighbor titled his property as "transfer on death" to his brother. Can I do that in Iowa?" No. The life estate is close to that type of ownership, but Iowa does not recognize these types of deeds. These are presented as ways to avoid probate in other states, but for several good reasons, Iowa does not recognize them.
Sunday, February 23, 2014
As reported in Forbes, PSH's will was signed after his first-born, but was not updated when his next two children were born. Now, like in NY, the laws will typically provide some protection for "after born heirs" (those kids born after a will) but with some missing language in PSH's, plus some other problems, the issue will not be clearly determined until the court's get involved.
In Iowa, a child born after the execution of a will and which they are not provided for under the provisions of the will, will receive the amount they would have received if their parent had died without a will (intestate) pursuant to the provisions under Iowa Code § 633.267. However, what if you have specific requirements, conditions and provisions for the children. If they are receiving their inheritance under § 633.267, then those same provisions may not apply and the kids will be subject to different provisions.
What lessons can we learn?
(1) Periodically review your will and other estate plan documents - adding a child, grandchild or other family member is a logical change justifying a review and update.
(2) Include specific language in your estate planning documents to reference subsequently born children.
(3) Don't do drugs.
Sunday, December 29, 2013
It is not necessary to have the attorney who drafted the will handle the process. The "administrator" or "executor" can select whatever attorney they choose. The "administrator" or "executor" is the individual appointed by the court to handle the various steps in probating an estate. If there is a will, they are called the executor. If there is no will, they are called the administrator. (Impress your friends with that information. Your welcome.)
In Iowa, the probate process primarily consists of 5 stages.
- The filing of the initial set of documents to open the estate.
- Publication of notice in a newspaper for filing of claims and giving notice to heirs and creditors.
- Waiting the time period for the filing of any claims or contests to the will.
- Filing of the report and inventory and payment of taxes.
- Distribution to beneficiaries/heirs and discharge of the executor/administrator.
Every state is different in how the probate process is administered and you should contact a knowledgeable attorney to handle the probate process. Feel free to contact me if you have any questions about the probate process in Iowa.
Friday, December 20, 2013
Half wasn't enough for William, so the attorney-gloves came out and the challenges for undue influence and interference with an inheritance were made by William. The four elements for undue influence in Iowa are: (1) the person making the will/trust was susceptible to undue influence; (2) the defendant had the opportunity to exercise influence; (3) the defendant was inclined to influence to gain improper favor; and (4) the result was clearly the result of the undue influence.
Following an extensive summary of the undue influence history in Iowa, as well as the rest of the country, the Court was wrangling with the standard required to be successful on this type of a will contest. Back in the day, it used to require a "clear and convincing" standard. That made it really hard to show undue influence as those types of cases are challenging enough. So the Iowa Supreme Court eventually changed it to "preponderance of evidence" in a 1998 ruling in Estate of Todd, 585 N.W.2d 273 (Iowa 1998). Basically, that means you have to show more than half of the evidence in your favor and not such high level of "clear and convincing". The highest level of proof is saved for criminal cases and his the old famous "beyond a reasonable doubt". As a result, the range starts at beyond a reasonable doubt, then clear and convincing, then preponderance of evidence, then you lose. (Forgive me any legal-purists and professors.)
Well, now with today's ruling that standard has been "fudged" a bit. The Court focused on the term "clearly" in the last element of the claim. It essentially moves the standard of proof from a preponderance of evidence to a little higher to require a showing that the influence "clearly" was the result of the person's actions. They didn't go on to say they are moving back to the "clear and convincing" standard, but they moved the hurdle a little bit higher with what they are calling a hybrid approach. As a result, what can be a tough case just got a little bit tougher.
Sunday, August 25, 2013
- Probate establishes that it is a valid will of the deceased. If there are questions about whether the individual had sufficient mental capacity, or was unduly influenced, or if they followed the legal requirements of executing a will. (witnesses, etc.) Probate establishes the will as legally valid.
- Probate establishes and identifies the assets of the decedent. If you are a beneficiary of an estate, how do you know what you are entitled to receive (I.e, 40% of the estate) if you don't know about all of the assets. Probate requires an inventory to be filed that lists all of the assets and the values of the assets.
- Probate identifies beneficiaries and makes sure the proper procedures are followed. How else can you confirm that a beneficiary is notified about their inheritance? The legal system ensures that they are located and given proper notice and a mechanism process to make sure their rights and interests are protected.
- Probate identifies any proper creditors of the decedent. There may be some unknown creditors lurking out there that the decedent owed money or potentially owed money. Probate pulls those creditors "out of the weeds" and requires them to file a claim or forever be banished. Or something like that.
- Probate confirms all of the tax requirements are satisfied. Some people may not be aware about the tax requirements or full awareness of past history. Probate allows access and a process to finalize any tax requirements.
Tuesday, July 09, 2013
Sometimes it works. But, let's play some "what if" scenarios:
- What if the daughter has creditor problems - her creditors can go after and garnish the joint account and take the money away from mom.
- What if the daughter has tax liens and garnishment?
- What if there are other intended beneficiaries and the daughter decides she doesn't want to share with the others. She has no legal obligation to divide the money out.
- What if there are bills for mom that need to be paid after her death?
- What if the daughter decides to "help herself" or "borrow" some of mom's money while mom is still alive and using the money? There is nothing stopping her from taking the money out.
Sunday, June 09, 2013
Wednesday, May 22, 2013
- Can an out-of-state person be an executor? Yes, despite what many attorneys tell their clients. However, there is an Iowa statute that provides an Iowa resident should be appointed with a non-Iowa resident who is serving as a personal representative. However, I have routinely had judges approve a non-Iowa resident to serve alone, under certain conditions. (Property of the decedent stays in Iowa; use Iowa bank for the account; etc.)
- Do we have to go through full probate? Ready for the classical legal answer? Maybe. (7 years of college for that answer.) The first step is an analysis of how assets are owned and whether there were any named beneficiaries. If everything is owned jointly or has a beneficiary, it may not be necessary to go through the probate process. If there are other assets, as long as they aren't greater than $25,000 in value and not involving real estate, you may be able to use an affidavit to distribute those assets. If that doesn't work, but the assets are less than $100,000, you may be able to use the small estate process (which doesn't really do a whole lot from a regular estate, but can save some costs.) Otherwise, if you don't fit in any of the prior categories, you may be required to go through the probate process. You can see that this isn't an easy "yes or no" response, but requires an inspection and review of the decedent's assets.
- Are attorney fees really 2% of the estate? This is the subject of a prior post, but the Iowa Code generally limits attorney fees to no more than 2% of the size of the estate. As the Iowa Supreme Court has noted, this is a ceiling on fees, not a mandatory amount for fees. Having said that, it is fairly routine, historically, that attorney fees be set at 2% of the estate. But just because it has been that way previously, doesn't mean that it will always be that way.
- Are retirement plans/annuities/insurance included in the estate? If these assets had named beneficiaries, they will be paid to those beneficiaries, regardless of what the estate plan (will or intestate) otherwise provides. However, even though they pass outside of the probate management process, they are still subject to being reported on the Report and Inventory for the estate. Also, with the exception of the life insurance to named beneficiaries those accounts are included in the calculation of attorney fees and court costs. (Everyone loves that fact.)
- Are there death taxes in Iowa? Sort of. There is an Iowa inheritance tax that certain beneficiaries will owe a tax on if they inherit property. However, if you are a spouse, charity, or lineal descendant or ascendant of the decedent, there is zero inheritance tax. Thus, siblings, cousins, nephews, friends, etc. would owe a tax on an inheritance. For estates less than $25,000.00 in size, there is an exemption.
- Do we have to wait until probate is completed before we can deal with the property? No, you can proceed with handling/managing the assets immediately upon appointment, but there are limitations as to distributions to beneficiaries. Also, depending on the provisions of the will, you may need to get court approval for certain actions over property of the decedent. Otherwise, you as the personal representative have authority to properly manage the estate assets, whether that means collecting income or selling an asset.
- Do we have to use the same attorney that drafted the will for probate? Only if I was the attorney that drafted the documents. (I'm kidding, I'm kidding.) There is no requirement that you use the attorney that drafted the will or the decedent's regular attorney. The personal representative for the estate should retain an attorney that they want to work with for the process.
- What if we can't find the original will? That can be a problem. Normally, you NEED the original will. It can be possible to probate a copy of a signed will, but it can be very challenging to get it admitted into court. That is a more involved question.
- I am the "power of attorney" - we don't need to go through probate, do we? The authority of an agent under a power of attorney document ceases at death. (Technically, the title is the attorney-in-fact.) Thus, there is no longer any power to deal with the property of the decedent.
- Do we need to use an attorney? An Iowa attorney? A local attorney? As long as that attorney is me, then yes. (I'm joking, again.) You don't have to use an attorney, but I can't imagine trying to go through the process. And no, I'm not saying that just to get business. Probate isn't rocket science, but there are just numerous items/issues that most people aren't familiar with handling. Until I write the DIY Probate book, you really need to use an attorney. And you need to use an attorney licensed to practice in Iowa. If they aren't licensed here, they can't practice law in Iowa. And finally, you don't need to use the attorney in the same county. Much of the court systems in Iowa are going electronic, so court filings can be completed while I sit in my pajamas at my computer listening to music.
Tuesday, March 12, 2013
The probate process in Iowa can be broken down into essentially 5 general steps:
- Initial opening of the estate - this is the filing of the initial paperwork to get a docket number and the formal appointment of a personal representative.
- Notification period - legal publication in the newspaper is arranged, heirs/beneficiaries are given notice, and creditors are given notice of probate.
- Report and Inventory - Within 90 days of opening the estate, the personal representative is required to file a document with the court listing the decedent's assets and their values, in addition to the information on the heirs/beneficiaries.
- Tax Filings - The other sure thing in life, besides death, is taxes and it doesn't change after death. The personal representative is obligated to complete and file the necessary income tax filings with the revenue authorities (IRS and Iowa Department of Revenue and Finance)
- Close Estate - After the end of the notification period, filing of the Report and Inventory and completion of the tax filings (assuming there are no disputes or fights with the family or creditors) the Final Report, with the proper receipts from the beneficiaries, are presented to the Court for review and approval. Court costs, attorney fees and final distributions are handled at this step.
Thursday, February 28, 2013
Monday, February 25, 2013
local news story helps provide another sad example of why it is important to establish some basic estate planning, regardless of your age. A young lady was involved in an automobile accident that has left her in a coma and unable to deal with her personal affairs. As a result, her friends and family are struggling with the financial restrictions of getting access to her accounts to deal with various matters.
Two relatively simple documents-Financial Power of Attorney and Medical Power of Attorney-would have made this job much easier and cheaper. The cost for getting these basic and essential documents in place is minuscule when compared to having to go to court to establish a guardianship and/or conservatorship for someone in this situation. Commonly younger individuals don't realize the need or importance for such documents as they are young and immortal, or believed to be less likely to have a need for these provisions. Unfortunately, that isn't always true. (One minor correction to the news story: a Living Will is not the proper title for the document needed here, but rather the power of attorney documents noted. A Living Will is the "pull the plug" declaration for end-of-life decisions.)
Thoughts and prayers to her friends and family as they seek to help her out. Please consider helping this young lady out.
Friday, February 22, 2013
The Iowa Supreme Court issued an interesting ruling today on the disposition of one's bodily remains. Short summary: Wife dies. Husband and wife were "on a long break" after 43 years of marriage, but had never formally divorced or filed for a legal separation. Wife had given instructions in her Last Will as to where she wanted to be buried, verbally told her family members (10 kids!!) and wrote a letter to her son, that was shared with her sister, the executor and the kids about her final wishes. Husband didn't want wife to be buried in Montana, as she desired and expressed to everyone, so he went ahead and buried her here in Heaven a/k/a Iowa. Royal rumble in the courts ensued.
Think you have the right to determine what happens to your body after you have "departed planet Earth"? Unless you take your body with you, guess again. In the Court's ruling, you have no rights whatsoever as to what happens to your bodily remains. Iowa Code § 144C.5 which was amended a few years ago, is titled "Final Disposition of Remains - Right to Control" sets out the chain of authority over the individuals that can make that decision. The deceased person is not on the list.
Thus you, as the dead person, have the right to determine who makes the decision but not actually the decision yourself. (I.e., buried, cremated, shot into space, sprinkled around the farm, etc.). Also, don't put those instructions in your will. I never recommend that in the first place as your will may not surface until it is too late, plus the Court clearly stated that placement in the will isn't compliant with the Iowa Code. (Justice Cady, whom I believe is one of the premier judicial minds in our courts, issued a strong and rationale dissent that is worth the read.) And if you don't designate anyone, the Code provides that your spouse is the sole decision-maker (just like in my house), followed by your adult children, and so forth.
I often get a chuckle from clients when I bring up this topic in the estate planning meeting, but this ruling reinforces the value of making plans to cover all of your matters: financial, family and remains. Moral of the story: Pick the person that you trust to make decisions about your remains, and follow the requirements with including that choice with your durable power of attorney document.
Sunday, February 10, 2013
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The Iowa Code was modified in 2011 to provide a window of opportunity for an unborn to have rights of inheritance following the death of the parent. Essentially, if a child is born within two (2) years after the death of a parent, they can inherit from that parent just as if they had been born prior to the parent's death. If a deceased has left any genetic material, the personal representative of the estate must report that fact to the court and also leave sufficient assets for that potential person to receive their inheritance.
While it is possible that an embryo, or other material, can be frozen much longer than two years, the two year window was used merely to provide some reasonable period time and not to keep it indefinitely Medical advances certainly create some interesting legal scenarios.
Monday, January 21, 2013
Well, it was 15 years in the making but the time has come...Gardner Law Firm, PC, located in Urbandale, Iowa, is created, established and the doors open (except I close for lunch and occasional golf). While the struggles that I will likely have as a solo attorney pale in comparison to those of Martin Luther King, Jr., I find his quote inspirational as I open the door on the day we celebrate his birthday.
I will be doing the same work that I did previously at my previous firm: estate planning (wills/trusts), probate administration (handling final matters for deceased people), real estate, and business planning (setting up business entities, helping individuals buy or sell businesses, succession planning, etc.)
Check out www.gardnerlawpc.com for more information (when the site is completed).
Wednesday, January 02, 2013
Finally, today we received some updated rules on the federal estate tax system for 2013 and beyond. (Can I say "permanent"?). I'll update more on the details of the statute after it is digested, but essentially most of the rules from 2012 will remain in place. (Slightly more than $5 million exemption per person and continued portability options for spouses.) The Iowa Academy of Trust and Estate Counsel have a quick summary of the tax bill here.
I expected this to happen, but I'm often wrong when it comes to predicting what Congress will do. At least we have a better set of rules to work with and estate planners will know what to tell clients for the future.
Friday, November 02, 2012
However, on appeal, the Iowa Supreme Court determined that the statutory language of the spousal elective share provisions (Iowa Code § 633.238) specifically limits the elective share to ONLY the probate property. Thus, payable on death (POD), transferable on death (TOD), or any other account that has beneficiaries listed upon death could be passed on to other beneficiaries and exclude the spouse. In other words, if you want to disinherit your spouse, this is how you accomplish that result.
This ruling at least clears the issue in Iowa, for now, as there have been conflicting cases, including one I wrote about a few years ago.
An interesting fact that may have played a role in this case--or maybe not--was that the surviving spouse had assigned his elective share rights to a judgment creditor and it was the judgment creditor that was seeking to enforce the elective share rights. If this was a destitute surviving spouse living on cat food and government support programs, would the court have made the same decision? Probably will never know. Sometimes bad facts create bad law.
Friday, September 07, 2012
Betty Rich was the surviving spouse of William Rich. William Rich had three daughters from a prior marriage and none from his marriage with Betty. Mr. Rich's will & trust combo created the standard AB trust with the QTIP provisions. (Another future blog post.) Betty wasn't thrilled with what she was receiving under her husband's estate plan (or from the insurance policies) so she proceeded to opt for her elective share. She sought to obtain her spousal share from IRAs, securities, annuities and the trust assets. Mr. Rich's children responded by claiming that Betty had agreed to keep their assets separate. However, the court responded that separate assets doesn't necessarily mean a waiver of their spousal rights.
What becomes interesting in the ruling is the assets that were given to Betty. Mr. Rich owned some IRA's in which Betty was not the named beneficiary. The court held that the IRA's were exempt property and as exempt property, the spousal elective share provides that ALL of the exempt property goes to the spouse. As to the other personal property (checking account, CD, annuities and investment account) Betty was entitled to 1/3 of those assets.
There was also some life insurance where Mr. Rich's children were the named beneficiaries. The court found, based upon some old Iowa law, that life insurance is excluded from the elective share. (I do have some questions on that piece of the ruling based on recent Iowa cases.)
I take no position as to whether this was the right or wrong outcome. However, it does reinforce the potential value of a prenuptial agreement and the benefit of allowing for postnuptial agreements. Without either, some Iowa courts may be willing to provide broad application for spousal rights that may not result in the understanding of the parties. But that's why we have lawyers, right?
Thursday, September 06, 2012
The will contestants also made the claim that the testator was unduly influenced, but the jury didn't agree. Not a lot of facts provided in this ruling as to the evidence that was presented.
Monday, July 02, 2012
If you guessed (d), I like the way you think, but unfortunately you are wrong. If you guessed (a), you are correct!! Congratulations on your first star to being a junior lawyer. The Iowa Court of Appeals affirmed this position in an opinion issued June 13, 2012. (See the opinion here.) One of the issues in this case involved the issue of whether the Iowa Trust Code, which became effective in 2000, applied to trusts that were in existence prior to that time. (For example, a trust established in 1987.) The Iowa Trust Code is pretty clear that it does, and it is a little more clearer now.
If you guessed (b), don't be too hard on yourself as that very well could have been the position prior to the Iowa Trust Code.
(In case you were wondering, I am related to the attorney that represented the successful party in this appellate ruling...it is me. So yes, I'm sort of tooting my horn.)
Sunday, February 26, 2012
|My daughter Maggie|
Iowa law provides that if the amount of the inheritance is above $25,000, it is necessary that a conservatorship be opened for the minor. A conservatorship, while beneficial in handling the assets for a minor that can't handle those assets, can be a challenge and potentially frustrating experience. Some issues associated with a conservatorship:
- Annual reporting requirements - each year (or occasionally other periods) a report is filed and review by the court for all income and expenses of the conservatorship.
- Annual expenses - there are annual court costs and potentially attorney fees to handle those reports.
- Bonding requirements - a conservator has to post an insurance bond before they can be appointed. This can be difficult to get for many people.
- Limitations - Want to change the investments? Need a special disbursement? You'll have to go to court first.
- "Handcuffs" off at 18 - When the child turns 18, all of the money is immediately theirs. Buy a new car with 412 hp? (I love that car.) Purchase a ton of new clothes? All are options as the child can do anything they want. Not sure how many 18 year olds could handle that responsibly.
Monday, February 13, 2012
Some issues to keep in mind when your estate involves Iowa farmland:
- "Death Taxes" - For 2012, the federal estate tax exemption amount is $5M, which excludes are large portion of the individuals dying in 2012. However, for the larger estates, or estates with significant life insurance or retirement plans, there may be some issues. Also, in less than a year, the exemption amount is scheduled to be reduced back to $1M. With just a 150 acre farm, at average values, you potentially have estate tax exposure.
- Disputes - Handling the farm if there is more than one child can be challenging. What if there is one child that is involved in farming and one that isn't? What if neither are involved? What if the kids don't get along with each other? How will decisions be handled in the future when there are multiple owners?
- Expenses - Probate fees and costs in handling your estate may be a substantial expense for some situations. Plan for that contingency or consider alternatives.
- Education - Discussion with family members about information in dealing with the farm can be critical. Are there leases involved? Where are the abstracts located? Why you formulated the estate plan that you did?
There are plenty of problems that are involved, and not always easy answers. With careful planning with an experienced planner, you can hopefully alleviate many of the problems, or at least deal with them the best way possible.
Sunday, February 12, 2012
Tuesday, December 20, 2011
So, some options and things to think about for storing a will:
- Keep it with the attorney - normally the safest, so long as the family can find the attorney and the attorney/firm is still in business. (We don't charge for this service, but we are a pretty cool law firm.)
- Keep it in your freezer - never understood the use of a freezer as storage. Could get tossed out, cooked, freezer burned, or destroyed by accident.
- Keep it in your bank deposit box - Not bad, but could be an issue getting it out of the box after death. Unless there is another person authorized, the only person capable of getting into a bank box after death is the executor. You need an original will in order to be appointed executor. (See the problem? Catch 22.) Some banks can help you set the box up for access after death, but make sure you ask the question and get it taken care of.
- Store in house in [insert location] - As long as it is in a location where family can find it if necessary. (I've had estates where we never found one that we knew existed.) Risk of house burning or misplaced.
Saturday, July 16, 2011
Wednesday, May 25, 2011
Going back to 1864 and the 13th Amendment to the Constitution abolishing involuntary servitude, no one is legally required to serve as the executor of an estate, or a trustee of a trust, or guardian for a minor. If you are nominated to serve and don't want to get involved because: (a) it is going to get messy, (b) you don't have the time or (c) you don't like dealing with attorneys, you can simply decline to serve. Of course, you may have to battle any moral coercion to fulfill the decedent's wishes, but that is for each person to deal with.
Hopefully, the testator named an alternate name as a backup in the event the first choice either declines to serve or cannot for some reason, which I strongly recommend for my estate plans.
Sunday, February 20, 2011
Monday, January 10, 2011
Exemption Amount Change - While $1 million was scheduled for the exemption amount for 2011 the new act implements a $5 million exemption per person. Thus, a married couple could pass on $10 million without worrying about federal estate taxes. With these type of numbers, there will be very few estates that will have any federal estate liability. In addition, for those individuals that passed in 2010, their estate can choose either the old 2010 "no estate tax - carryover basis" rules or the new "$5 million exemption - stepped-up basis".
Portability - In somewhat of a surprise, one of the bigger changes was the addition of the idea of portability. The idea is essentially if your spouse doesn't "utilize" their exemption amount, the surviving spouse can take advantage at their death. Previously, unless the assets were properly titled, it was possible that the first-to-die spouse may not use their exemption and it is lost forever for no one to use. Portability concept avoids that situation. However, it creates different "issues" that arise out of second marriage situations.
Gift Tax Exemption - The lifetime gift exemption was matched to the federal exemption amount as well ($5 million). Thus lifetime and/or death transfers up to $5 million are permitted.
Monday, December 13, 2010
Sunday, September 19, 2010
Monday, September 06, 2010
Monday, July 26, 2010
Parents, grandparents and others wanting to benefit family members with special needs should act carefully in providing for lifetime gifts or testamentary gifts.
The primary options when it comes to planning for gifts with special needs children in Iowa include:
- Gift to Disabled child. The problem with a gift is the impact it may have on eligibility for public assistance benefits. It may even disqualify the child from getting those benefits until the funds from the gift are completely exhausted, at which time the child will need to reapply for benefits.
- Disinherit the disabled child. To avoid the issue of disqualification from public assistance, a simple route is to disinherit the special needs child altogether. There is no legal requirement that one must provide for a child under their estate plan.
- Distribute to a Another Person for Disabled Child's Benefit. Another option is to distribute the funds to someone (a sibling for example) for that person to manage and distribute the funds for the benefit of the special needs child. However, this can be risky as it the assets are exposed to the creditors of that person, ex-spouses, bankruptcy, and possibly gift taxes.
- Special Needs Trust. Distribution of the funds to a properly drafted supplemental needs trust can avoid all of issues addressed while providing for a little extra benefit and resources for the special needs child. Extreme care is necessary in preparing such a trust.
No matter the plan, you should seek the advice of experienced counsel in making the arrangements for a special needs child.