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When you die, what will happen to the things you own? Who will take care of your minor children?
You can answer these questions in a written document called a will. A will is a written direction controlling the disposition of your property at death. In general, in order for a will to be legally valid in Iowa, a will must be (1) in writing, (2) signed by the person making the will, (3) declared by the person making the will to be his or her will, and (4) witnessed by two competent witnesses who must sign in the presence of the person making the will. The formal requirements of making a will must be strictly followed or Iowa courts will not recognize it as valid.
By making a will, you are able to control what persons or organizations will receive the property which you own at the time of your death. Such property would include your clothing, jewelry, ornaments, automobiles, recreational equipment, bank accounts, investments, and any real property. You can also leave particular things to particular people or organizations in your will.
Another important reason to have a will when you die is to state who you prefer to be the guardian of your minor children and the trustee to manage their money. While the same person can be both the children's guardian and trustee, it is frequently in the children's best interests to choose different persons for these roles.
We live in a tax age. The foreseeable future suggests no material change. Many estates may not have to pay federal or state "death taxes" but, depending on the assets, there may be income tax consequences associated with death. After death, little can be done to relieve an estate from adverse tax consequences caused by lack of a will, a trust, or a proper estate plan. Thus, an important purpose of a will can be to reduce the taxes that will have to be paid at your death and at the death of one or more of the beneficiaries of your will.
In your will, you can also choose an executor to wind up your affairs. This person gathers your property, pays your debts and any taxes due, and delivers the balance of your estate to the people or organizations that you have chosen.
You can leave your property to whomever you choose in your will. However, a married person cannot completely exclude a spouse without the spouse's consent. Your surviving spouse may exercise an option to take an elective share in lieu of the provision made in your will. A parent may disinherit a child as long as disinheritance is not due to a mistake. There are certain other restrictions which a lawyer can explain. For example, the law in Iowa does not allow trusts of indefinite duration.
If you die without a will, the court selects an administrator to administrate the estate and distribute your property -- Iowa law determines who gets your property. In Iowa, court and administrative costs, funeral and burial expenses, taxes, expenses of last illness, certain debts, and unpaid child or spousal support are paid before all other allowable claims are paid. After all other claims or debts of the estate are paid, the balance of the estate is divided among the surviving spouse and your children or other heirs as discussed below.
If you do not have a will when you die, your surviving spouse may not receive all of the assets you owned at the time of your death. The share of your estate that your surviving spouse will get upon your death will depend on (1) if you had children and (2) if all of your children were also your surviving spouses children. If you and your spouse either had no children or all of your children are also the children of your surviving spouse, then your spouse will get your entire estate. If, however, you have children who are not also children of your surviving spouse, then your spouse will take the first $50,000 plus one-half of the balance of the remaining property in your estate. The other half is divided among your heirs in equal shares.
If you die without a will and without a surviving spouse, your children will inherit your entire estate -- the heirs of any child that died before you in such event will inherit your deceased child's share. Where no spouse, children, or heirs of children survive you, your net estate goes to your living parents. If neither parent is alive, the estate is divided equally among your brothers and sisters, including the heirs of any deceased brother or sister. If there are no brothers, sisters, nieces or nephews, then your estate goes to your grandparents or their descendants. If there is nobody in any of these categories, Iowa law has further provisions for determining who will receive your remaining estate.
If you have no living relatives and you have not provided otherwise by virtue of a will, your property and possessions will go to the state of Iowa, even if a close friend or companion survives you. Since the provisions described above are rather complex, it is advisable to consult a lawyer when making out your will. You can help ensure that your will is consistent with the current Iowa law and avoid many problems for your heirs if you obtain the advice of a qualified attorney.
Probate is a court-supervised procedure for transferring ownership of someone's assets after he or she dies. When you die owning property, the disposition of your estate must be monitored by a court of law through the probate process. Probate laws are designed to protect the rights of heirs and creditors and to assure the orderly collection, preservation, and transfer of property. If you die with an ownership interest in any property, your estate generally must be probated whether you have a will or not. The court will determine whether your will is valid or determine who is to receive the property if there is no will. Thus, with or without a will you could end up "in court."
The probate process necessarily involves the payment of certain fees. The value of the estates assets will determine the court filing fees. Attorney fees vary depending on the complexity of the estate. Also, fees vary from one attorney to another, depending on experience and other factors. Once an attorney has basic information about the estate, he or she should be able to give you a rough estimate of total fees. Be sure you understand the fee arrangement before retaining the attorney. In addition, the executor or administrator has a right to reimbursement for expenses incurred in managing and settling the estate, and for time spent carrying out those duties. Unless specifically set forth in the decedent's will, Iowa law provides a maximum which may be charged by an attorney or personal representative for fees in any estate.
Probate can take two years or even longer for a large or contested estate. One reason for this is the time allowed for creditors to file claims against the estate. Additionally, the Iowa Department of Revenue and Finance and Internal Revenue Service must approve any state and federal estate tax returns which must be filed within nine months after the date of death. The time needed for probate depends on such factors as estate size, type of assets owned, form of ownership, tax issues, complexity of creditors’ claims, marital property issues, and whether a business is involved.
Iowa law requires that an estate be closed within 3 years after the second publication of the notice to creditors, unless a court grants an extension. Even while the estate is still in probate, however, beneficiaries may be able to receive part of their inheritance. Once the creditors’ claim period is past, the personal representative should make sure the estate has enough funds set aside to cover all expenses and taxes. Then out of remaining funds, the personal representative could make a partial distribution to beneficiaries before probate is complete.
Many people take elaborate steps to avoid probate. While it is true that probate may not be necessary if you own no property or if all of your property is held jointly or in trust, probate avoidance may increase expenses and taxes and may not be desirable. The advice of a lawyer can help you decide the best plan for your individual situation.
Some assets do not pass under your will. For example, life insurance proceeds and retirement funds will go to the beneficiaries you have named in the beneficiary designation with the provider. Additionally, property owned by you as joint tenant with another person (e.g., real estate, automobiles, and bank accounts) will be automatically transferred to that other person at the time of your death. Any property held in a trust will pass to the persons named as beneficiaries of the trust. In each of these cases, the property passes without regard to what your will says.
It is advisable to make a will even if your estate consists of the above kinds of property. For example, if you receive a lottery ticket as a birthday present, your will would cover your unexpected winnings. Or, holding property in joint tenancy may, in some circumstances, actually increase taxes and expenses. A lawyer can design a will and estate plan that will save your heirs time and money later.
If your estate does not exceed a certain value (currently $25,000.00) and consists solely of personal property, a probate proceeding may not be required and the estate can be transferred with an affidavit. Creditor claims must still be paid, however.
A will remains effective until it is changed or revoked. As long as a person is competent, a person may change their will as many times as they desire during their lifetime. An existing will should be reviewed periodically. If your will is not up-to-date when you die, important people in your life may not be provided for. Think about changing your will when you marry or divorce, there is a birth or death in the family, there is a change in the value and/or kind of property you own, or the person you want to be guardian, trustee or executor moves away or dies. Any such change in circumstance requires careful analysis and reconsideration of the provisions of a will.
To find a legal professional to meet your needs, please visit www.iowafindalawyer.com.