Iowa Estate Plan

 If you were luck to live until January 1, 2025, and you were worried about your beneficiaries having to pay Iowa inheritance tax when your estate is passed on to them, your worries are now over. The Iowa inheritance tax is fully repealed as of today! However, as a couple of remainders: If you died in 2024, you probably wouldn't be reading this anyway. But if you could, there would only be Iowa inheritance tax owed if your property passed to someone other than a charity, your spouse, or lineal descendant or ascendant. Thus, small category of coverage. Second reminder, we are still subject to the federal estate tax. Well, 99.99% are not as the exemption amount for 2025 is now $13,990,000. If your estate is below that figure, no worries.

  Living Trust FAQ A living trust, also known as a revocable trust, revocable living trust, or inter vivos trust, is an alternative way to own property during your life and transfer property at your death.  Living trusts have been in use for many years. You can create a living trust during your lifetime by signing a legal document that directs how property transferred to the trust: (a) will be managed, (b) when and to whom the income from the trust property will be paid, and (c) to whom, when and how the trust property will be distributed when you die. A person setting up the trust is called a settlor , grantor , or trustor of the trust. The party to whom you transfer your property is called the trustee . The persons who will receive the income during your lifetime or who will receive the trust property after your death, are called the beneficiaries . You may be the settlor, a trustee, and a beneficiary, all at the same time. The property in the trust is called the trust prin...

 I'll be the first to admit it: sometimes we breeze over the discussion of Advanced Directives and Living Wills discussion during estate plan consultations. And I'm pretty sure that a lot of clients don't really grasp the depths of these critical documents. Here's a pretty good guide and discussion of the issues and documents that relate to this topic.  A recent saga from a case in Oklahoma helps illustrate how complex this "simple" question can really be even when the client actually has a Living Will in place. The individual had a valid Living Will in place, but as her situation deteriorated, her family found themselves grappling with emotional turmoil, legal uncertainties and conflicting opinions. This post provides a good outline of the case, history and the issues that the courts and family had to deal with.  Moral of the story? Here a few key points to keep in mind when dealing with a Living Will question: Execute a document. ( Don't pull a Terri Sc...

M ost people like to start with considering friends and family members as trustees. They are going to be most familiar with you and your family, and they will understand your family’s dynamics.   In addition, family members often do not charge a trustee fee (although they are usually entitled to take a fee). Cost conscious clients see this as a plus, but it may not be the best decision in the long run.  Most individuals don't have experience on what is involved with being a trustee. Thus, they have to learn on the job and perhaps by trial and error. Unfortunately, that learning process is done at the expense of your assets and your beneficiaries. Having a family member or friend serve could lead to resentment if the family member does or does not take a fee. Being a trustee can be a lot of work and time intensive. For example, your brother may resent not getting paid for his services while overseeing trust assets for your children. Your kids may not appreciate the work that is...

  It isn't uncommon to be discussing an estate plan with a client on beneficiaries of their estate plan and they will mention that they want to leave a gift to a sibling, or a nephew/niece, or a friend, or son-in-law, or their favorite estate planning attorney.  (Okay, I made that last one up, but holding out hope...subject to ethical concerns.)  And while we can certainly make a bequest to those individuals, I always give the disclaimer that there is an Iowa Inheritance tax that would need to be paid.  Sometimes that prompts a few comments about taxes that aren't favorable to the Iowa tax system and fairness.  Mainly because gifts to children are exempt already, so those individuals that were either unable to have their own children or chose to not have children feel slighted by the tax rules. But that looks to be coming to an end.  The Iowa legislature recently passed a bill to repeal the Iowa Inheritance Tax.  It is phased in with reductions for the...

 Check out my post on the pre-mortem will contest on the Probate-Iowa blog.  Too tired to click and just want the short answer?  Can't do it in Iowa.  Have to wait until the person dies before you challenge the will.

As I discuss in more detail on the post on my Iowa probate blog , a recent ruling from the Iowa Supreme Court significantly changes the time period in which to bring a lawsuit for interference with inheritance.  In short: don't wait very long .

What is "elder abuse"? As provided in Iowa Code 235F , elder abuse means any of the following: 1.      Physical injury to, unreasonable confinement, punishment or assault of a vulnerable elder 2.      Sexual offense with or against a vulnerable elder 3.      Neglect by a caretaker of a vulnerable elder a.      Includes the deprivation of the minimum food, shelter, clothing, supervision, or physical or mental health care necessary to maintain life or health 4.      Financial exploitation of a vulnerable elder. Who is considered a vulnerable elder? A vulnerable elder means a person sixty years of age or older who is unable to protect himself or herself from elder abuse as a result of age or a mental or physical condition or because of a personal circumstance which results in an increased risk of harm to the person. Did you know that the elderly poor are at greater r...

Way back in 2009, or whenever I started this blog, I posted about probate topics as well as estate planning.  (I'm not sure I expected to be blogging still in 2020.  My dream of retiring at age 44 and retiring to a caribbean island just didn't materialize.)  Then one day I looked at the site address-Iowa Estate Plan--and decided maybe it made more sense to keep probate topics on one site and keep this as estate planning.  Plus, I purchased the Probate Iowa site and decided I should probably put something on it. There will always be some overlap between the topics, but with the convenience of a computer mouse and a click, you can easily maneuver back and forth to your heart's content. Check out Iowa Probate for posts about probate matters in Iowa.

Each day gets crazier and crazier on COVID-19's impact on our society, including in the estate planning world.  Under Iowa long-standing law ( Iowa Code sec. 633.279 ), when an individual signs their will, it is required that they sign in the presence of two individuals.  This has been pretty strictly adhered to by Iowa courts in requiring the physical presence of the witnesses. Today, Iowa Governor Kim Reynolds issued a proclamation suspending the requirement of physical presence of individuals witnessing the signing of wills and medical power of attorney documents provided that the signing takes place where the witnesses and individual can see and hear one another through electronic means, such as video conferencing. The other portion of the proclamation deals with the remote notarization of documents.   Technically, Iowa's remote notary law wasn't scheduled to take effect until July 1, 2020 so the Governor's proclamation essentially "fast tracked" the...

The recent passage of the “ Setting Every Community Up for Retirement Enhancement” Act (SECURE Act) in December 2019 created some significant changes to retirement accounts.  One big change of SECURE resulted in changes to allowing what is commonly referred to as “stretch” IRA’s. Previously, beneficiaries such as children and grandchildren, were able to have funds withdrawn from an inherited retirement account over the rest of their expected life. That allowed younger beneficiaries to extend (or stretch) the IRA distributions over several years, or potentially decades for very young beneficiaries. The result was that the taxable income was spread over a long period of time that allowed the account to continue to grow (hopefully). With a few exceptions, the stretch IRA is no longer an option and funds from a traditional IRA/401k must be withdrawn within ten (10) years of your passing. Many clients incorporated provisions in your estate plan that used the “conduit” trust as a ...

If you are (a) currently acting as the guardian and/or conservator for an Iowa resident or (b) plan to be appointed as guardian and/or conservator for an Iowa resident,  bigly changes are in place for 2020 for annual reports or initial reports starting January 1, 2020 . I'll leave the procedural details out for now.  (Nobody except for attorneys really read those anyway). Maybe another post for another day.  But for the annual reports for guardians and/or conservators, the forms are going from the very basic two pages (or so), to 16 and 19 pages long, respectively.  Granted, some of the information that goes on the forms is fairly simple to fill out, but it is a substantial change to what was previously required under the old statute and rules and will take more time and effort.  But hey, all of the guardians and conservators that I work with have  plenty  of time to learn the new forms, fill them out and either file or have an attorney file...

A recent ruling from the Iowa Court of Appeals addressed gifts from a parent (now deceased) to a trusted child.  Applying the standard involving "confidential relationships" and gifts during life, the Iowa Court of Appeals affirmed that the recipient of the gifts was required to return the gifts received during mom's life back to her estate. Photo by  Rene Böhmer  on  Unsplash Quick facts:  Mom and dad had four kids.  Dad passed away a few years ago and one of the sons started assisting mom with her financial affairs.  This son was also a Florida-licensed attorney (cue the evil character background music).  Unfortunately, sibling love was not bountiful even when mom was alive, which continued after mom passed away.  Following mom's death, it was eventually revealed that numerous accounts and funds had been transferred ("gifted") to the son that was helping mom out, but that the gifts were "at his mother's direction" and his siblings we...

First and foremost, I don't handle divorces and won't go further with any divorce questions because my knowledge ends with that.  In 20+ years of practice, handling a divorce 20 years ago was good enough to put away those materials. But for those that have gone through a divorce, there is typically the question about how a divorce impacts your estate plan documents.  The Iowa legislators realize that many people don't go through the process to update their estate plans after a divorce, so they have implemented a series of code sections throughout the Iowa Code that essentially provide that if you get a divorce, any provisions that provide for your beloved "ex" are ignored.  Those various code sections are consolidated here to help you sleep a little easier at night: Iowa Code section 598.20A provides that if you list your ex-spouse (or relatives of your ex-spouse) as your beneficiary of life insurance, that designation is ignored. Iowa Code section 598.20B ...

Currently in Iowa, if a decedent owns personal property that totals $25,000 or less, and that property would normally pass under a Will or the intestate statute, you can skip probate with just an affidavit .  The governor recently signed a bill that increased that figure up to $50,000 (for deaths after July 1, 2018), along with a few extra new additions to the affidavit. So...what does that mean lawyer boy?  This: If the dead person owned real estate, the affidavit doesn't work. If the dead person owned other types of property that all together total more than $50,000, the affidavit doesn't work. You still have to pay inheritance taxes , if any are due. You still have to pay the creditors, if any. You still have to pay the state back for any Medicaid debts due. Otherwise, you use the affidavit to transfer those small estates. Here's a common scenario where the affidavit could be used: John Smith passes away.  When he died, he owned his truck, lived in a...

You gotta love email.  In seconds, I can transmit a message around the globe to one person or to hundreds of people, or I can share a photo of my dog, Georgia.  Or you can email your parents' attorney and tell the attorney what changes to make to your parents' estate plan to exclude one of your siblings.  Whoops. In  Estate of Boman , decided earlier this year, the on-going feud between two sisters and their brother, plus a little "spice" mixed in with the stepmother, resulted in jury trial supporting the claim of undue influence for a will and also intentional interference of inheritance by the sisters.  The court's ruling specifically identified the numerous email communications from the sisters to their dad's attorney as significant evidence supporting the brother's claim.  While the brother (will contestant) was not able to successfully support his claim of lack of capacity as his evidence failed to find lack of capacity for "the day the will ...

This past year, I had the opportunity to go skydiving. What a blast! I had wanted to skydive for a while so I was anxious to jump out. However,  when you are on the edge of the plane door, looking out at the ground several thousand feet below you, a slight pause is a natural feeling. Thinking about your possible demise can be unnerving. Similarly, sometimes doing your estate planning can have the same feeling.  Unfortunately death is a certainty for all of us and it doesn't necessarily get any easier later on. As I stood on the edge of the plane, I didn't pause long as my tandem guide jumper basically pushed me out (with him and the parachute thankfully).  My job as your estate planning attorney is to do the same thing. Push you out of the plane!  Or, better yet, to get your affairs in order (just in case that parachute doesn't open).

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 chan...

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; a...

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 p...