Iowa Estate Plan

Hopefully you've done the proper thing and put together an estate plan.  But what do you do with the original will?  The original will is an extremely important document.  In Iowa, as in many other states, if the original will cannot be located, there is a presumption under the law that the decedent intentionally destroyed the will.  Even if you can find a copy of a signed will, it may not be enough.  It is possible to argue to a court that it was not revoked, but the law requires you to show by clear and convincing evidence that they did not destroy (revoke) the will. So, some options and things to think about for storing a will: Keep it with the attorney - normally the safest, so long as the family can find the attorney and the attorney/firm is still in business. ( We don't charge for this service, but we are a pretty cool law firm.) Keep it in your freezer - never understood the use of a freezer as storage.  Could get tossed out, cooked, freezer...

The Iowa Court of Appeals had a recent ruling on a will contest based on a claim of undue influence and lack of "brotherly love". Mom left her substantial estate to one of her two sons, and disinherited the other son completely. The disinherited son challenged the will based on undue influence and lost, then filed an appeal. The Court of Appeals goes through a thorough analysis of the undue influence elements in a challenge to a will. Those elements being: (1) susceptibility to undue influence; (2) opportunity; (3) disposition to unduly influence; (4) result which is the effect of undue influence. Of interesting note is the fact that apparently there was a recording of her estate plan changes. While it is not clear whether these were video or audio taped, the court indicated the recording corroborated the attorneys' statements about her susceptibility. The use of a recording, in my opinion, could cut both ways in supporting a will. For example, if a recording is ma...

While it may be hard to believe, people and relationships change over time. (Duh.) However, some people's Last Will and Testaments don't change in a similar fashion. A question that occasionally arises when it comes time to probate someone's will is 'what if this person doesn't want to serve as executor?' Going back to 1864 and the 13th Amendment to the Constitution abolishing involuntary servitude, no one is legally required to serve as the executor of an estate, or a trustee of a trust, or guardian for a minor. If you are nominated to serve and don't want to get involved because: (a) it is going to get messy, (b) you don't have the time or (c) you don't like dealing with attorneys, you can simply decline to serve. Of course, you may have to battle any moral coercion to fulfill the decedent's wishes, but that is for each person to deal with. Hopefully, the testator named an alternate name as a backup in the event the first choice either decl...

A common question that arises in some estate administration is "whether the beneficiaries of the decedent are responsible for any unpaid debts?" Short answer: generally, no. Barring any issues such as fraudulent activities by the beneficiaries, if the estate is a bankrupt estate and insufficient assets to pay the debts, that will be the end of the story on the debts. The court may determine which creditors are paid and how much of their claims are paid, but that unpaid amount of the debt will not pass to the beneficiaries. Thus, when a client signs their will and jokes that their kids won't get anything except their unpaid bills, that isn't entirely accurate. Image: scottchan / FreeDigitalPhotos.net

Apparently Congress was following my posts and decided to wait until the last minute to make changes to the federal estate tax system. Three significant changes to be aware of from the TRA 2010: Exemption Amount Change - While $1 million was scheduled for the exemption amount for 2011 the new act implements a $5 million exemption per person. Thus, a married couple could pass on $10 million without worrying about federal estate taxes. With these type of numbers, there will be very few estates that will have any federal estate liability. In addition, for those individuals that passed in 2010, their estate can choose either the old 2010 "no estate tax - carryover basis" rules or the new "$5 million exemption - stepped-up basis". Portability - In somewhat of a surprise, one of the bigger changes was the addition of the idea of portability. The idea is essentially if your spouse doesn't "utilize" their exemption amount, the surviving spouse can take ...

With plenty of time left in 2010 (insert sarcasm tone), Congress is moving towards modifying the federal estate tax system. Here is a quick summary of where we are currently, where will be if they don't pass anything, and what the current bill (" Tax Relief, Unemployment Insurance Reauthorization, And Job Creation Act Of 2010") would provide. (Disclaimer: this is the quick and dirty summary for discussions at holiday parties and should not be relied upon as an extensive analysis.) What we had in 2009 - $3.5 million exemption per person, 45% tax rate What we had in 2010 - No federal estate tax. "Carryover basis" on inherited assets, with limits. What we will have in 2011 with no change - Federal estate tax for estates greater than $1 million, with a rate of up to 55%. Under the current proposed bill - $5 million exemption, 35% tax rate above that. One of the more interesting items in the proposed bill includes a "portability" provision. Historica...

I recently attended the Farm Estate and Business Planning Seminar in Ames, Iowa , which is put on by the Iowa State University's Center for Agricultural Law and Taxation with Roger McEowen as the Director. Each year I'm impressed with the materials and speakers presented. One of the speakers this year, Wayne Reames, discussed utilizing trust protectors. I have used trust protectors in the past for substantially-sized estates, but Mr. Reames further highlighted some of the benefits in even modest estates. A common problem is who is to serve as trustee. A trustee is responsible for investing and managing trust assets, which can be substantial, preparation and filing tax returns, preparing and providing accounting reports and dealing with distribution requests from beneficiaries. This can be a daunting task for many people. Rather than having friends or family members serve as trustee, and potentially be in over their head, naming a bank as a trustee may be a better solutio...

Another guardianship proceeding in Iowa is getting some notoriety lately after another one recently was in the news. The Des Moines Register has been following a story involving a 16 year old mom's battle to get her 1 year old daughter back from the 16 year old's family members. Unfortunately, the story highlights some legitimate concerns over the guardianship process in general: (1) Publicity - This is open record for the whole world to watch your life on stage. Like all court proceedings, they are open proceedings for the public or the media. The Des Moines Register brought in their legal counsel to prevent/"urge" Associate Probate Judge Klotz from closing the proceedings and requests to keep the reporter out of the courtroom. (2) Delay - The time involved in getting the facts before the court and for the court to review the evidence can take months. The challenge is do you take the child away from the parent for safety concerns or do you return the child ...

Parents, grandparents and others wanting to benefit family members with special needs should act carefully in providing for lifetime gifts or testamentary gifts. The primary options when it comes to planning for gifts with special needs children in Iowa include: Gift to Disabled child. The problem with a gift is the impact it may have on eligibility for public assistance benefits. It may even disqualify the child from getting those benefits until the funds from the gift are completely exhausted, at which time the child will need to reapply for benefits. Disinherit the disabled child . To avoid the issue of disqualification from public assistance, a simple route is to disinherit the special needs child altogether. There is no legal requirement that one must provide for a child under their estate plan. Distribute to a Another Person for Disabled Child's Benefit. Another option is to distribute the funds to someone (a sibling for example) for that person to manage and distribute...

Despite a noticeable absence from this blog, Mr. "Life and Death Lawyer" is back at it. I have a posting on the Iowa Law Blog about a recent Iowa Court of Appeals case dealing with trustee removal and trustee fees.