Articles
WHAT IS THE
PROBATING OF AN ESTATE IN IOWA?
Probate is the orderly
process used to transfer a deceased person's
property to the people entitled to it.
The process has three primary goals:
1.
Pay all of the creditors of the
decedent;
2.
Pay all taxes owed by the decedent or
the estate; and
3.
Distribute the property to people
entitled to it.
Fiduciary.
The person responsible
for conducting the probate process is an
"executor" if the decedent had a will or an
"administrator" if the decedent had no will.
The terms "personal representative"
and "fiduciary" are also sometimes used.
This may be one or more individuals
or an institution such as a bank.
The fiduciary is appointed by the
Iowa District Court, which maintains control
and oversight throughout the probate
process.
Creditors.
Notice of probate
proceedings is published twice in the local
newspaper.
Creditors of the decedent have four
months from the date of the second
publication to file claims in the estate for
money the decedent owed them.
If they do not file claims within
that time, the claims are barred forever.
The fiduciary reviews all claims
filed and decides whether they are
legitimate claims that should be paid.
Taxes.
The fiduciary is
responsible for paying all taxes owed by the
decedent or the estate; usually from the
estate property (but not from the
fiduciary's personal assets).
This can include the decedent's final
income tax, the estate's income tax, Iowa inheritance tax, and
Federal estate tax. The
Iowa
inheritance tax liability is determined by
the size of the estate and the identity of
the people who receive the property.
The Federal estate tax liability is
determined by the size of the estate, but
deductions are allowed for bequests to a
surviving spouse or to charity.
Distribution.
When the probate
proceedings are completed, the distribution
of property is made according to the
decedent's will or according to state law if
the decedent had no will.
In some cases, partial distributions
can be made before the probate proceedings
are completed.
The fiduciary must present a final
report to the Court and must file a complete
accounting unless the accounting is waived
by the people who receive the property.
How Long?
The estate must be open
at least four months to allow creditors to
file claims.
Most estates are closed between 6 and
18 months after they are opened, and good
cause must be presented to the District
Court to keep an estate open longer than
three years.
Negotiations with the Iowa Department
of Revenue and Finance and the Internal
Revenue Service concerning tax liability are
the most common reasons for delay in closing
estates.
Fees.
The fiduciary is entitled
to a fee for services rendered in the
probate process.
The Iowa Code provides that this fee
for ordinary services should not exceed $120
plus 2 percent of the value of the estate
property, and the fee must be approved by
the District Court.
The lawyer for the fiduciary is also
entitled to a fee for services rendered, and
this fee is determined on the same basis as
the fiduciary's fee, subject to Court
approval.
Is Probate Necessary?
Probate proceedings are
not always necessary.
In some cases, alternative procedures
may be quicker and less expensive, but this
depends on the nature and value of the
property, how the decedent held title to the
property, and to whom the property is to be
distributed.
The lawyer should always analyze
these matters to determine the most
appropriate procedure to follow.
Is Probate Necessary When the First Spouse
Dies?
Sometimes.
If all property is owned by the
husband and wife as joint tenants with full
rights of survivorship, and if the total
value of the estate is under the amount that
is exempt from the Federal estate tax
($2,000,000 for 2008; $3,500,000
for 2009), usually the probate process can
be avoided.
If the parties own real estate, an
affidavit must be filed in each county where
real estate is owned certifying that all
property was owned in joint tenancy.
Does a Will Help?
Yes, a will makes probate
procedures much simpler.
The will specifies exactly who
receives which property, nominates the
person to serve as executor, waives the
requirement that the executor purchase a
surety bond, and authorizes the executor to
act without having to obtain the Court's
permission at every step (including the sale
of property).
In addition to the will, effective
estate planning can reduce the tax
liability, streamline the ownership of
property, and simplify transfer of the
property at the time of death.
Advance planning and open
communication with your lawyer can make the
probate process much more understandable,
sometimes faster, and sometimes less
expensive.
--June
6, 2008.
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