Showing posts from 2016

Avoid Inheritance Taxes in Iowa? Adopt that Nephew!

Adoption can be a wonderful thing.  My niece, in this picture, is adopted and she is a wonderful addition to our family.  However, adoption can have some funky applications in the estate planning world.  A recent ruling from the Iowa Supreme Court was interesting on a couple of issues involving an adoption: To avoid paying inheritance taxes for a bequest to a non-lineal descendant, a nephew was adopted by his aunt. Even though he was adopted by his aunt, the son's biological mother was still able to include an inheritance for her son. The first point is not all that unusual and I have advised clients of this very option.  Basically, whether you are adopted or biological, as a child in Iowa, you do not pay any inheritance tax when you inherit from your parents.  But, if you are a nephew, cousin, friend (basically a non-lineal descendant) there is an inheritance tax owed on an inheritance based on this table .  So, if reducing a tax bill is worth changing your heritage, you c

POA Planning for College-Bound Students

It is hard to believe that my oldest daughter is heading off to college this week at Drake University .  I'm excited for her as she starts this next journey in her life.  In addition to getting all of the necessary supplies, such as towels, laundry bags, books, pepper spray, etc., it is also important that parents of college-bound kids have the kids sign power of attorney documents .  While we may still think of them as young kids, the fact is that under the law, they are legal adults and entitled to full and independent control of their financial information/assets as well as medical decisions and privacy protection.  This is regardless of the fact that you as the parent may be paying their tuition and treating them as a dependent for tax deduction purposes.  However, it can be extremely beneficial to have your child sign a power of attorney document so that you are authorized to: obtain medical information and consent to medical procedures if necessary; access information ab

Second Marriages and Estate Planning

Not every marriage works out.  Duh.  Sometimes, after one ends, another marriage begins and several challenges begin.  You have the challenges of "mixing" families together, learning about snoring patterns, and discovering a new person.  You also frequently have the challenge of dealing with estate planning.  I'll skip the issues with snoring and focus on some of the estate planning points. If you are smart...and brave...bring up the subject of a premarital agreement (or a "prenup" if you prefer).  Just don't wait until you are on the way to the ceremony.  Not exactly a romantic subject and many people will steer clear of it because of the delicateness of the topic.  (" You think we are going to get divorced!?! ")  The premarital agreement can provide protection for each other, not only in the event of a divorce, but also upon the death of one of you.  Remember: you can't disinherit your spouse as part of your will or trust estate plan aft

Gaining--Not Losing Power--With Immediate Power of Attorney Authority in Iowa

A financial advisor recently reached out to me regarding the impact of a Power of Attorney document concerning financial matters.  In particular, the question was whether the person signing the document (the "principal") loses any power or authority once they sign the POA document.  As a reminder, the default rule ( and recommended direction in my opinion ) is that the agent's power is immediate upon signing.  In other words, it is not necessary to wait until the principal is incapacitated before there is authority for the agent to be able to act on behalf of the principal. So the question is: "Once the principal signs the POA for an immediate power, does that principal lose any power/authority?"  Quick answer: No. The POA document in this scenario simply adds another individual as an authorized party to deal with accounts or other financial interests.  Thus, the principal can continue to operate as normal.  The principal also has the ability to remove the