Monday, April 28, 2008

What to Do When Someone Dies in Iowa

Besides taxes, the other sure thing in life is that it comes to an end eventually. A common question becomes "what's next?" (I'll skip the whole afterlife heaven and hell discourse and stick to the worldly issues.) And of course you have the whole "what to do with the body issue".

Depending on the planning that was done beforehand will dictate a lot that will be done afterwards. For example, if the decedent properly used a revocable trust, it may not be necessary to go through the probate process. Good planning and organization prior to our "time" is important in helping to alleviate the work that our family and friends are forced to go through.

Transfer of Assets

If all of the assets were held jointly, it may not be necessary to go through the probate process, although there may be some other advantages with going through probate. Also, if the asset has a named beneficiary (e.g. life insurance, IRA, etc.), that asset will pass automatically and not subject to any will, trust or other dispositive document. Otherwise, other than joint assets or named beneficiaries, the estate plan of a will, trust, or the state's plan will determine where those assets go. (And it might not matter that you're the child from the first marriage or dad liked you the best.)

Payment of Bills/Claims

Depending on financial situation of the decedent, there may be certain bills and expenses that need to be paid. Through certain publication processes in the probate process, all potential claims can be "pulled out of the woodwork" in order to determine how much should be paid and whether it is a valid debt or not. Also, if the decedent was receiving certain public assistance benefits (e.g. Medicaid) during life, of if the decedent's predeceased spouse received such benefits, there may be a lien against any remaining assets that follows those assets.

Taxes

In Iowa, if the only beneficiaries are a surviving spouse, children, grandchildren, parents or other lineal descendant or ascendant, there is no Iowa Inheritance tax and no need to file an Iowa inheritance tax return. There are some issues if there have been certain gifts within the past three years which should also be examined.

Federal estate taxes are normally not applicable for estates less than $2,000,000 (for 2008). If the estate is below that figure, typically it is not necessary to file a federal estate tax return. Again, gifts during life of the decedent are important to review also.

Summary

This list is not meant to be exhaustive, but mainly as a guide of some items to consider when it becomes necessary, and hopefully help you choose to do some proper planning ahead of time. You should consult with an experienced attorney when it becomes necessary to sort through all of these items.

Thursday, April 24, 2008

National Health Care Directives Day

I missed it last week, but April 16th was National Healthcare Decisions Day 2008. Most people have an opinion on what type of medical treatment they would receive if they had the opportunity to visit with their healthcare provider. It certainly makes sense that one would want to establish ahead of time what type of medical treatment if they weren't capable of visiting. Unfortunately, a 2003 article reported that less than 50% of severely or terminally ill had an advanced directive in their medical record.

If you don't have an advanced directive already, take steps to have one signed. Then, after getting it signed, the next step is to have it included as part of your medical record.

Sunday, April 13, 2008

Making a Revocable Trust Work Right

John Dedon of Dedon On Estate Planning has a good summary on some key issues to keep in mind after you establish your revocable trust. One of the key advantages of a revocable trust plan is the capability of your estate to stay out of probate. While there are advantages and disadvantages to each plan, one of the biggest downfalls, as noted by Dedon, is the failure of individuals to properly fund the trust (read - transfer assets to the trust).

While it is possible to transfer certain types of assets that are left in an individual's name to a trust post-death, there are no guarantees that it can be accomplished. It typically involves time and expense, some of the key issues a trust seeks to avoid.