Wills, Living Wills, Trusts, Estates And Power Of Attorney
Laws governing wills or written statements specify the transfer of property after an individual’s death. A power of attorney grants the authority to another to act on one’s behalf regarding legal and business matters. At Hedberg & Boulton, P.C., we know that when it comes to estate planning, there can be a lot of questions. Here, our attorneys answer some of the more commonly asked questions about wills, trusts and powers 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, the property goes to the children.
- If no children, to parents.
- If no parents, to siblings.
- If no siblings, grandparents.
- If no grandparents, all property escheats to the state.
- Property only goes to the state as a last resort.
Our estate planning attorneys encourage everyone to have a will.
What does “per stirpes” distribution mean in Iowa?
The spouse will inherit everything, as long as all of the children are with that spouse.
When there are children from another person:
- The spouse takes half of all real property, all of the exempt property and half of all other personal property.
- The spouse gets at least the first $50,000.00 after all debts are paid.
- The remaining property passes per stirpes, meaning individuals inherit shares based on their position in the family tree.
For example, if a spouse survives, along with one child from the spouse and one child from another marriage and the estate totals $100,000, the spouse will get $50,000, and each child inherits $25,000.
What is exempt property?
Exempt property is designed to allow a limited number of items necessary to maintain 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 of 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?
To execute a valid will,
- The will must be in writing and declared a will.
- The testator must be competent (“sound mind”).
- Witnessed by two persons over the age of 16.
In addition, if one of the witnesses has an interest in the estate, they will only be allowed to inherit per stirpes shares. Therefore, it is best to use witnesses who do not have an interest in the estate.
Holographic wills, or a will that is written out and signed by the testator, are void and not recognized as valid in Iowa.
Foreign wills or wills made outside the state must comply with laws where the will is executed or in the home state of the testator. To be recognized in Iowa, foreign wills still must be in writing and subscribed (foot-signed) by the testator.
What does it take to amend a will or revoke it?
To cancel a will without a replacement, the testator must follow the same process to revoke the will as they used to create it.
When a will is destroyed, it is physically destroyed with the specific intent to revoke it.
Executing a new will cancels the old one. To amend a will, a testator must execute a codicil referencing the will. To execute a valid amendment, the testator must follow the same process they used to execute a will.
Does a spouse or child have an absolute right to a property share?
Children can be cut out of a will completely. However, a spouse cannot be completely cut out unless a premarital agreement provides for it. At the very least, a spouse is entitled to an elective share, which means that the spouse must get at least 1/3 of real property, all of the exempt property and 1/3 of all other personal property.
When two parties get divorced, if a spouse is named in a will and a previous will has been executed, the parts of the will giving property to the ex-spouse are revoked. However, it is still a good idea to rewrite the will or execute a codicil to clarify the testator’s intent.
Why should I create a will?
A will gives you control over where your property goes. It also allows you to give property to nonfamily members, such as charities, schools or churches. A will allows you to decide which family members will take what property.
A will also helps to identify your property and assets. Having a will can avoid the unintended consequences of per stirpes distribution. It also allows you to set up trusts and other structured means of passing money or property onto others.
What are the different kinds of trusts?
Trusts specify how and why money or property is to be accessed, used and even passed on by others.
Three of the most common types of trusts include:
- 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 go to the beneficiary upon reaching a specified age.
An experienced wills and trusts attorney can help you identify what types of trusts are best for your estate planning needs.
What are the dangers of do-it-yourself will kits?
In a do-it-yourself will, certain words have specific and not always obvious legal meanings. For example, 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.
Standardized documents like wills and trusts can be poorly drafted and that can lead to unfortunate consequences. They can also be written in such a way that they cannot be used.
Violating any state law can make the entire will void or lead to unintended consequences (improper execution, insufficient spousal share).
Creating a will and preparing your estate planning documents have important legal consequences. You have to make careful choices and get it right. You won’t be able to explain your intent at the point where your estate documents are needed.
What is a power of attorney?
A power of attorney provides an individual with the legal authority to act on another’s behalf.
That power is limited to that which the writing allows. You can have a general power of attorney, which gives a person full and unrestricted rights.
Fiduciary duties apply to a power of attorney. But choosing who to designate as a power of attorney is important; it is difficult to “undo” damage.
Power Of Attorney For Health Care Procedures
A special power of attorney allows a person to make health care decisions for another. Specifically, it designates who is supposed to make decisions on health care matters if a person is incapacitated.
Who makes decisions about life sustaining procedures?
Deciding who makes life support decisions on your behalf is important. A competent adult may make his or her own decision if he or she is going to be on life support.
This decision must be written and signed, with two witnesses and include the date of execution.
When this is not possible, a fully executed power of attorney (POA) for health care decisions is the next best thing.
By default, Iowa law sets the priority order for making decisions as follows:
- An appointed guardian
- A spouse
- An adult child
- Adult siblings
In addition, a witness must be present at the time the consultation and decision are made.