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Wills and Probate

Nearly everyone should have a will to assure their property is distributed as they wish after they die. A will may also control the way in which heirs receive their bequests to take advantage of substantial tax savings. Proper estate planning may result in a will that can save thousands of dollars in federal estate taxes. Wills should be prepared and reviewed from time to time by an attorney to take into account changes in law as they occur.

What is a will? How is a will different from an estate plan?
A will is a written document that directs the distribution of your property at death, states who will care for and distribute that property, and names someone to care for your minor children. Each state has its own requirements for legal wills. An estate plan is a set of documents that includes your will and any additional documents created to plan for your death or disability. Such documents might include a trust, powers of attorney, a living will, and beneficiary designations on life insurance and retirement accounts.

What happens if I die without a will?
If you die without a valid will, you have no control over the disposition of your probate property. Instead the laws of the State of Iowa make that decision. According to these laws, your property will be distributed to your relatives in a certain manner based upon your relationship (blood or marriage) to those persons.

Who may make a will?
In Iowa, a valid will must comply with these requirements:

  • The maker (testator) must be at least 18 years of age.
  • The maker must be of “sound mind.”
  • The will must be written and must be signed by the maker in the presence of at least two competent witnesses, at least 16 years of age, who also sign the will in the presence of the maker and each other.
  • The maker must declare to the witnesses that it is his or her will.
Although not legally required, the will can be self-proved at the time it is made if the maker and the witnesses sign affidavits describing how the will was executed. Then it will not be necessary to find the witnesses and have them testify about the execution of the will when the will needs to be proven.

Although not legally required, the assistance of an attorney is recommended to ensure that the will is valid and your estate will be distributed as you desire.

What is an executor?
The executor is the person you desire to carry out the provisions of your will. You will need to name the executor of your will. It is also a good idea to name an alternate executor as a substitute in case your first choice is unable to serve. If you do not name a person who is willing and able to serve as executor, the court will appoint an executor for you.

How long is a will valid?
A will that meets all of the requirements described earlier is valid until it is changed or revoked by the maker. Changed circumstances (such as marriage, divorce, birth, adoption, death, or changes in tax laws) may require an addition or correction. These changes may be reflected in a document called a codicil. This allows for the changes without redoing your entire will. The codicil must comply with the same requirements as the original will. However, you may need to completely redo the will if the changes are substantial ones. Wills may be changed as often as their makers wish, as long as they are of sound mind.

How can a will be revoked?
A will can be revoked by being canceled or destroyed by the maker or at the maker’s direction, with the intention of revoking it. A will can also be revoked by executing another will. A will that is revoked by cancellation must be witnessed in the same manner as in the making of a new will. The maker cannot revive a will which has been revoked except by re-executing the will or by executing another will or codicil.

What is probate?
Probate is a formal court procedure that occurs after the death of the maker of a will and serves the following purposes:

  • It allows the transfer of clear title to real estate you owned at your death which was not held in joint tenancy with someone else who had the right of survivorship.
  • It allows your will to be established as your official will in order to dispose of your estate.
  • It allows your estate to be distributed to your intended beneficiaries after the payment of all debts and charges against your estate, and cuts off further claims by your creditors against the property distributed.

It may be possible to avoid probate; however, whether or not the court system is used, certain documents must be filed and taxes paid to properly finalize the deceased’s affairs. For these reasons, a lawyer should be consulted.

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 estate’s 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. 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 the 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.

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.

Does a will create increased estate administration expenses?
No, and it may even save estate administration expense because less court involvement is required (e.g. a will can waive the requirement that a bond be posted, and also provide an executor with a power of sale to avoid the need to obtain certain court approvals). Careful estate planning through a will can save your estate and beneficiaries substantial administration costs and taxes.

What kinds of property are not covered by a will?
Certain assets (non-probate assets) are disposed of outside of a will, including the following:

  • Life insurance. Money from your life insurance policy will go to the people you have named as beneficiaries on the policy, no matter whom you have chosen to receive property in your will, unless you designate your estate as the beneficiary, you fail to name a beneficiary, or in certain cases if the person named does not survive you.
  • Retirement plans. Money from your retirement plan will go to the people you have named in the plan, with or without a will, unless you fail to name anyone or in certain cases if the person named does not survive you.
  • Property owned as joint tenants. You may own real estate, bank accounts, or other property with another person(s) as joint tenants. Your co-owners will inherit your share, no matter whom you have named as heirs in your will.
  • Living trusts. Property you have placed in a living trust during your lifetime will go to the trust’s beneficiary, with or without a will.

It is advisable to make a will even if your estate consists of the above kinds of property. For example, if you later acquire property or assets that are not of one of these types, your will would cover such assets (e.g. inheritance, lottery winnings). Moreover, the only way to appoint a guardian or conservator for your minor children and their inheritance is through a valid will.

Is a will expensive?
The cost of a will can vary depending on the complexity of the will and the extent of your assets. The expense is normally minimal compared to the benefits you and your beneficiaries receive from having a well-devised estate plan.

Adapted from the Iowa State Bar Association – consumer pamphlet series, with permission from the Iowa State Bar Association.

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