Estate Planning is essential to prevent intestacy procedures from determining how property will be disposed of when a person dies in Iowa. Good estate planning avoids the need and costs of probate and allows a person to control the distribution of his/her estate after his/her death.
Goals of estate planning:
1. Reduce estate and income taxes
2. Protect assets from beneficiaries’ creditors
3. Assure children receive Assets after spouse’s death
4. Provide adequate income and assets for surviving spouse
Tools to accomplish goals of estate planning:
1. Will
2. Revocable trust
3. Irrevocable trust
4. Irrevocable insurance trust
5. Durable power of attorney for financial decisions
6. Durable power of attorney for health care decisions
7. Living will
8. Gifts
9. Buy/sell agreement
10. Life Insurance
11. Annuities
12. Pension Plans
13. Joint tenancy
14. Life estates with remainder interest
15. Disclaimer
16. General power of appointment/special power of appointment
17. Payable on death accounts
18. Transfer on death accounts
Consider the amount of your Gross estate- If your gross estate is over $2 million (the figure for 2008--figure changes yearly), you must file an estate tax, the first $2 million is not taxable in 2008. With an unlimited marital deduction, the estate passes to spouse. There is a Gift tax of 12K per year for passing to others, and a lifetime credit of $1 million. As the estate tax is a complex and yearly changing tax, please consult a professional and take this advice as only general guidance and not legal advice.
Estate Procedures:
The Estate- The estate is the property that must be managed after a death. After determining whether the estate is intestate (no will) or testate (will) , the estate is opened. An Executor is appointed, and a list of property is developed. The Executor publishes a notice twice in the legal newspaper with a 4 month suspense. This includes a Notice to beneficiaries including action to set aside the will, and a Notice to creditors, including sending a Letter to creditors with a 1 month suspense to respond. The executor checks property to see if it needs to be probated or not (if the estate is properly designed, there may be no need for probate—only property that is not joint must be probated). The executor must file Insurance policies. The Executor should check to see if Claims are filed by creditors on time (within the one month suspense—if not, they can be disallowed by statute). If there is not enough money, the executor can eliminate creditors. The executor can dissallow claims and bar claims unless creditors request a hearing 20 days from mailing notice. The executor may order paying of debts (IA Code 633.425), but has liability if the executor pays the claim before 4 month period and the claim ends up being disallowed by the court. (IA Code 633.433). The executor then pays Taxes, and closes the Estate.
Intestate Procedures (No valid will):
Intestate Procedures are covered by statute, Iowa Probate Code, Iowa Code 633.211 to 633.226. This is one reason to have a valid will. A valid will supersedes the statute and allows you to determine who you leave your property to and under what conditions.
To determine who receives the estate under intestate procedures, the following factors need to be considered:
1. Was there a surviving spouse? If not then, go to point 3.
2. If so, the surviving spouse takes all legal or equitable estates in real property not sold on execution or judicial sale or relinquished, all personal property in hands of decedent as head of family exempt from execution, all other personal property not necessary for payment of debts or charges. Iowa Code 633.211.
3. If there was a common disaster with both spouses dying in the same accident (defined in Iowa Code 633.523)or the spouse does not take, or no surviving spouse, the issue (children) take under Iowa Code 633.219 per stirpes (if a child is dead and had 2 brothers, his/her share is divided equally with his/her descendants, if a child would have had a 1/3 share (if he had 2 brothers) and if the deceased child had 2 children, his 2 children would then get 1/6 share (1/2 of the 1/3 share)) , then to parents, then grandparents, then to great-grandparents, , then issue of deceased spouse, then to the state.
a. Determine children
b. Determine if any children left descendants who outlived intestate
c. Determine the state’s method of determining succession. Iowa utilizes per stirpes where younger generations divide shares equally with older generations. Other states may use per capita variations, and readers are cautioned to review state laws.
d. Determine ancestors and collaterals
e. Determine if any children were born out of wedlock. Children born out of wedlock can still inherit from the biological parent.
f. Determine if children were afterborn. Biological children born after the death of the parent can still inherit.
g. Adopted children can inherit as if they were biological children. Iowa Code 633.220.
h. Determine if there are any unworthy heirs. If a person murders another they are presumed to be an unworthy heir. A person causing another’s death may also be an unworthy heir.
i. Advancements- In some cases, a person may have obtained their portion of the estate in advance. Iowa Code 633.226 deals with advancements. However, usually money is considered a gift and not an advancement unless certain conditions apply.
___________________________________________________________________________________________
Disclaimers: Information on this web site can not be construed as legal advice, and you are advised to seek legal counsel and not rely on this or any other website. Use of this web site does not create an attorney/client relationship and should not be viewed as creating such a relationship.
The determination of the need for legal services and the choice of a lawyer are extremely important decisions and should not be based solely upon advertisements or self-proclaimed expertise.
A description or indication of limitation of practice does not mean that any agency or board has certified such lawyer as a specialist or expert in an indicated field of law practice nor does it mean that such lawyer is necessarily any more expert or competent than any other lawyer. All potential clients are urged to make their own independent investigation and evaluation of any lawyer being considered.
"We are a Debt Relief Agency. We Help People File for Bankruptcy Under the Bankruptcy Code."
Contingent fee rates are subject to rule 32:1.5(c) and (d). Percentages are computed after deduction of costs and the public is advised that, in the event of an adverse verdict or decision, the contingent fee litigant could be liable for court costs, expenses of investigation, expenses of medical examinations, and costs of obtaining and presenting evidence. Contingent fee agreements are not available for criminal law cases and most family law cases.
In the event a lawyer’s communication seeks to advise the client of litigation, the client is advised that the filing of a claim or suit solely to coerce a settlement or to harass another could be illegal and could render the person so filing liable for malicious prosecution or abuse of process.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the U.S. Internal Revenue Service, we inform you that any tax advice contained on this website is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding tax-related or other penalties under the U.S. Internal Revenue Code, or (2) promoting, marketing or recommending to another party any tax-related matter addressed herein.