Wills, Living Wills, Trusts, Estates & Power of Attorney
Fast Facts on Wills, Trusts, Estates and Power of Attorney
- What happens when a person dies without a will?
When a person dies intestate, or without a valid will, state law determines how property is distributed.
- Spouse gets top priority.
- If no spouse, property goes to children.
- If no children, to parents.
- If no parents, to siblings.
- If no siblings, grandparents.
- If no grandparents, all property escheats to state.
- Property only goes to the state as a last resort.
- What “Per Stirpes” Distribution means in Iowa
Spouse takes all as long as all children are with that spouse.
Children from another person:
- Spouse takes half of all real property, all of exempt property, and half of all other personal property.
- Spouse gets at least the first $50,000.00 after all debts are paid.
- Remaining property passes per stirpes, meaning individuals inherit shares based on their position in the family tree.
Example: Spouse survives, along with one child from spouse and one child from another marriage:
If $100,000 estate, wife/husband gets $50K, each child gets $25k.
- What is Exempt Property?
Exempt property is designed to allow a limited number of items necessary to maintaining the household.
Until 1986, Iowa included:
Two cows, two calves, fifty sheep, six stands of bees, poultry to the value of one hundred dollars, five hogs, and all pigs under six months of age, together with the feed for all exempt animals for six months.
If the debtor is engaged in farming, a team consisting of not more than two horses or mules or two yokes of cattle, and the wagon or other vehicle, with the proper harness or tackle, or other necessary husbandry implements, or a combination of these.
Exempt Property in Iowa Today
Now, the list includes a wedding/engagement ring, up to $2,000 in jewelry, a shotgun and either a rifle or a musket, up to $1,000 worth of a private library (family bibles, portraits, books, pictures and paintings), limited farming property if engaged in agriculture, and $7,000 worth of personal effects:
Wearing apparel and the receptacles necessary for the wearing apparel, musical instruments, household furnishings, and household goods which include appliances, radios, television sets, record or tape playing machines, compact disc players, satellite dishes, cable television equipment, computers, software, printers, digital video disc players, video players, and cameras held primarily for the personal, family, or household’s use.
- What are the requirements for executing a valid will?
- The will must be in writing and declared a will.
- Testator must be competent (“sound mind”).
- Witnessed by two persons over age 16.
- Interested witnesses – only allowed per stirpes shares unless there are two disinterested witnesses as well.
Holographic Wills (Written out and signed by testator) are void in Iowa.
Foreign Wills, or wills made outside the state, must comply with laws where the will executed or the home state of the testator. To be recognized in Iowa, foreign wills still must be in writing and subscribed (foot signed) by testator.
- What does it take to amend a will or revoke it?
- Just Canceling (No Replacement): Same process to revoke as to create.
- Destruction of the Will: Physically destroy it with the specific intent to revoke it.
- Executing a new will cancels the old one.
- Amending: Need to execute a “Codicil” referencing the will. Execution is the same as a will.
- Does a spouse or child have an absolute right to a property share?
- Children can be cut out of a will completely.
- Spouse cannot be completely cut out.
- Elective Share: Spouse must get at least 1/3 of real property, all exempt property, and 1/3 of all other personal property.
- Spouse can only be “cut out” if the premarital agreement allows it.
How divorce affects a will:
- If a spouse is named in a will, but after the will has been executed the testator and spouse have divorced, the parts of the will giving property to the ex-spouse are revoked.
- Still a best practice to re-write the will or execute a codicil.
- Why Create a Will?
- Gives you control over where your property goes.
- Allows you to give property to non-family members such as charities, schools, churches, etc.
- Allows you to decide which family members take what property.
- Helps identify your property and assets.
- Can avoid unintended consequences of per stirpes distribution.
- Allow you to set up trusts and other structured means of passing money or property onto others.
Trusts specify how and why money or property is to be accessed, used, and even passed on by others.
Three of the Most Common Trusts:
Spendthrift – A trustee supervises the use of money by a beneficiary who may not otherwise be able to handle the funds responsibly or funds are distributed in small amounts directly to the beneficiary to avoid misuse.
Charitable – Funds or property are used only for certain charitable purposes as authorized by the trustee(s).
Totten – Provides how funds or property are to be administered or used while the beneficiary is a child. The property and decision-making power goes to the beneficiary upon reaching a specified age.
- Dangers of Home Will Kits
- Certain words have specific, and not always obvious, legal meanings. Passing property in “Fee Simple” gives the recipient complete and total title, possession, and use rights. A “Life Estate” is similar, but passes the property on to another named person upon the recipient’s death. Tenants in common versus joint tenants, etc.
- Trusts can be poorly drafted with unfortunate consequences or written in such a way that they cannot be used.
- Violating state law can make the will void or lead to unintended consequences (improper execution, insufficient spousal share).
This is a decision you need to make carefully and get right – we can’t ask you to explain your intent.
- Power of Attorney
A power of attorney provides an individual with the legal authority to act on another’s behalf.
- Power is limited to that which the writing allows.
- Can be a general power of attorney, which gives a person full and unrestricted rights.
- Fiduciary duties apply
- But be careful – it is difficult to “un-do” damage.
Power of Attorney for Health Care Procedures
Special Power of Attorney allows a person to make health care decisions for another.
- Specifically designates who is supposed to make decisions on health care matters if a person is incapacitated.
- Life Sustaining Procedures
Who Makes the Call? Remember the Schiavo Case?
- BEST OPTION: A competent adult may make his or her own decision if he or she is going to be on life support.
- Must be written and signed, with two witnesses, and include the date of execution.
- NEXT BEST THING: A fully executed POA for health care decisions.
- BY DEFAULT: Iowa law sets the priority order.
- 1. Appointed Guardian, 2. Spouse, 3. Adult Child(ren), 4. Parents, 5. Adult Siblings.
- A witness must be present at the time the consultation and decision are made.