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.

12 comments:

concerned said...

If no will is left and a single father passes how is it determined who will be the executor of the estate. The next living of kin other then the minor children is a sibling. The exwife wants to be appointed. Is this possible?

Matthew Gardner said...

It is possible that the ex wife could be appointed, but it is up to the court to determine. First come first serve may be the result. After priorities are applied (which doesn't appear to apply here) it is opened up. At least this is the law in Iowa.

concerned said...

What do you mean by priorities? Is there not an order of appointment of the decendants..minor children, then to parents of the father (who are deceased) then to siblings, then to interested parties?
Also can the estate be held liable for child support until the children reach the age of 18?

Matthew Gardner said...

Good question. Minimal typing abilities from my phone.

When there is no will, there is a heirarchy process on who can be appointed administrator: (1) surviving spouse, if any; (2) heirs; (3) creditors; or (4) other persons showing good grounds.

The surviving spouse has 20 days to petition, and each successive category has 10 days. After those periods have run, #4 applies. This is only as to appointment and has nothing to do with inheriting. That is a separate matter and procedure.

Let me know if I can be of further assistance.

cowlady said...

Under what circumstances do we need to probate in Iowa?

Both of my parents are now deceased. I am an only child and have been left everything.

In 1996 my parents had my name put on everything. I was joint owner of vehicles and bank accounts.

They had life estate to the house, but it was in my name. Now the lawyer wants me to probate because he says the State of Iowa wants to "see" the transfer. I'm not nderstanding it. My parents did this way back then so I wouldn't have to worry about anything.

Do you have any advice?

Matthew Gardner said...

Cowlady-

I'm not sure why you would need to probate anything either, unless you want to pay probate attorney fees. I'd recommend a second opinion, but I don't see a reason for probate as there are no assets that are directed by the probate process. If there were some creditors you were concerned about, maybe.

Jodi said...

My dad recently passed away. My mom, his spouse, is still living. He left no assets. There is a car with a loan amount higher than the worth of the car. Also, the house and mortgage are only in his name and more is owed than the house is worth. My mom is currently living in the house and cannot afford the mortgage or car payments. What do we need to do? Do we need to petition the court to have someone assigned as executor? If so, when, where, how? Do we call the banks the loans are with and tell them of his death? We are at a loss.
Thank you!

Matthew Gardner said...

Jodi-

It isn't clear if you need to go through probate or not. You may not if the house was owned jointly. If she can't afford the house/car and she doesn't want to get any other financing, the bank will eventually take the items. Let them go through the work/effort to recover the assets. No reason for probate if they are going to eventually get the assets.

Anonymous said...

Mr. Gardner:

My dad recently passed away. His second wife has been looking for new houses during his death process. They still have their current house. It turns out my dad is the only signature on the note, but him and her are both on the mortgage, deed, etc.

My question is who is responsible for paying the mortgage. The estate or her since she is basically a joint-owner and the mortgage even states her as a borrower, which would make her a co-owner/signer?

Thanks for the insight!

Matthew Gardner said...

Anonymous-

A common question involves having a name on a mortgage. A mortgage document itself does not obligate someone to pay the mortgage, but merely consents to placement of a lien on property. The party that signed the promissory note is responsible for payment of the debt. However, the mortgage filed against the house gives the bank the ability to foreclose on the lien if the promissory note is not paid. Your situation creates a sticky scenario where she may not be obligated to pay the mortgage, but the equity in the house could be lost if someone doesn't pay it.

As you may expect, my first advice is to get copies of the key documents (current abstract) and contact an attorney ASAP.

Anonymous said...

My father passed in oct my stepmother does not want me or my sisters to have anything that belonged to my father are we intitled to anything that belong to him we live in iowa

Matthew Gardner said...

Anonymous-

It depends. If your father had a will and left everything to his wife (your stepmother) then no, you don't have a right to anything. If he didn't have a will, then under Iowa law you may potentially have some rights under the intestacy laws. However, there may be some struggles on agreements for division of assets.