Tuesday, May 13, 2008

Iowa Enacts Final Disposition Directives Act

Following a controversial decision by the Iowa Supreme Court and after some wrangling in the Iowa legislature, Governor Chet Culver signed SF 473 into law on April 11, 2008. Effective July 1, 2008, this new chapter to the Iowa Code (chapter 144C) authorizes an individual to designate an individual to make decisions over the disposition of their bodily remains following their death. The designation does not indicate how a person wants their body remains to be handled, only who has the authority to make those decisions that are "reasonable under the circumstances".

Now, what is "reasonable under the circumstances"? Under the definitions section, consideration should be given to the deceased's financial situation, religious beliefs and cutural or family customs.

Also, if the designee doesn't promptly step forward and assume their responsibility, they forfeit their rights. In fact, the designee has either 24 hours after notification or 40 hours after death to exercise their authority. Iowa Code section 144C.8 After, that, the power is gone and moves to the next person on the priority list.

This new law also covers situations beyond immediate funeral arrangements. For example, disinterment or decisions about an autopsy.

I imagine most attorneys will begin placing appropriate designations on their medical power of attorney forms. Here is the suggested language to use for the declaration:

I hereby designate ................ as my designee.  My designee shall have the sole
responsibility for making
decisions concerning the final disposition of my remains
and
the ceremonies to be performed after my death.

This
declaration hereby revokes all prior declarations. This designation becomes
effective upon my death.
My designee shall act in a manner that is reasonable under
the circumstances.


I may revoke or amend this declaration at any time. I
agree that a third party
(such as a funeral or cremation
establishment, funeral director, or cemetery) who
receives a
copy of this declaration may act in reliance on it. Revocation of this
declaration is not effective as to a third
party until the third party receives
notice of the revocation.
My estate shall indemnify my designee and any third party
for
costs incurred by them or claims arising against them as a result of their good
faith reliance on this declaration.


I execute this declaration as my free and voluntary act.
This new chapter is a needed step by the Iowa legislature. Unfortunately, for the Stark family, it is too late. However, like many aspects of an estate plan, the usefulness of this chapter is only beneficial if the plans are communicated to those key individuals. Knowing where the document is, who the designee is and what one's wishes are can be critical to putting your final affairs in order.

Friday, May 09, 2008

Testamentary Trusts in Iowa

Joel Schoenmeyer has a good post on testamentary trusts on his Death & Taxes blog. Many clients think of estate planning in terms of either having a trust or a will. In fact, a testamentary trust plan involves both concepts. For those individuals that are not comfortable with the revocable trust plan which involves transferring all of one's assets to their trust and the cost of setting up such a plan, a testamentary trust is an alternative which gives you control from the grave over how your assets are handled.

For example, if you have young children and you aren't interested in a revocable trust, a testamentary trust would control when and how your children would access those funds in the future if something should happen to you. Without such a testamentary trust and with just a simple will, your children would receive 100% of the assets at the "mature" age of 18. Not ideal, eh?

While you maintain control, such a plan does require your estate to go through the probate process before the assets are transferred to the trustee. In other words, you maintain control over distribution provisions, but you do lose the probate avoidance by planning with a testamentary trust. Certainly a middle ground approach for many individuals that accomplishes many goals.