Wednesday, May 22, 2013

Top Ten Questions About Iowa Probate

The masses have demanded it, so finally, the top ten questions about the probate process in Iowa (hold your applause until the end):


  1. 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.)
  2. 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.
  3. 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.
  4. 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.)
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
Now that you are full with knowledge, fire away with any questions.

4 comments:

DJJ said...

Regarding the Iowa 2% cap for attorney fees, does this apply to the Small Estate process as well? The Iowa attorney I am dealing with says it doesn't and they are allowed to charge their normal hourly rate which they estimate will be 3-5k on a <75k simple estate (sole heir, house, 2 CDs, and bank account). Thanks and regards!

Matthew Gardner said...

DJJ- Great question. Actually, small estates in Iowa can have a different fee limit besides the 2% limit. Provided that there is a written agreement between you and the attorney, fees can exceed 2% and are based on the reasonable hourly rate of the attorney. However, if there is not a written agreement with the attorney providing for that, then yes, the 2% does apply.

Lost and hurt said...

My dad passed quickly he left no will. By the time my mom consulted a lawyer to put her as POA my dad was unable to sign document. She assumed the role because he was put on hospice on Friday passed Sunday night. My dad owned 160 acres of farmland in Iowa. Does my mom have the right to give it all to my brother and leave my dads 2 girls out. We are have same mother and father. Or does my sister and I have any legal action we can take to prevent that from happening or prevent my mother from selling the farm land that has been in my dads family for over 125 years to her sisters son who has rented and farmed the land for the past 4 years? We don't care if the farm was worth one cent or ten trillion we would never sell. It is the only thing we have left of our dad to pass down to generations. Please tell me their is something my sister and I can do to prevent the sale or prevent my mother in giving it all only to my brother. My dad told us the farm would not be sold. Day of his funeral my mother stood in the kitchen and told my brother and I your dad did say he does not want the farm sold.

Matthew Gardner said...

Lost & Hurt-

As I understand, your dad and mom had 3 kids: you, your sister and your brother. Without a will (and without other children from a prior relationship) all of the property passes to your mother. Now, your mother can do with that land as she pleases, to the exclusion of one, two or all of the kids. Unfortunately, that is her legal right as the new, sole owner of that property. Unless you want to buy it from her and she wants to sell it.