Iowa Lawyer & Attorney : Sullivan & Ward Law Firm : Iowa Law Blog

Following a controversial decision by the Iowa Supreme Court and after some wrangling in the Iowa legislature, Governor Chet Culver signed SF 473 into law on April 11, 2008.  Effective July 1, 2008, this new chapter to the Iowa Code (chapter 144C) authorizes an individual to designate an individual to make decisions over the disposition of their bodily remains following their death. The designation does not indicate how a person wants their body remains to be handled, only who has the authority to make those decisions that are "reasonable under the circumstances".

Now, what is "reasonable under the circumstances"? Under the definitions section, consideration should be given to the deceased's financial situation, religious beliefs and cutural or family customs.

Also, if the designee doesn't promptly step forward and assume their responsibility, they forfeit their rights. In fact, the designee has either 24 hours after notification or 40 hours after death to exercise their authority. Iowa Code section 144C.8 After, that, the power is gone and moves to the next person on the priority list.

This new law also covers situations beyond immediate funeral arrangements. For example, disinterment or decisions about an autopsy.

I imagine most attorneys will begin placing appropriate designations on their medical power of attorney forms. Here is the suggested language to use for the declaration:

I hereby designate ................ as my designee.  My designee shall have the sole
responsibility for making decisions concerning the final disposition of my remains
and the ceremonies to be performed after my death. 

This declaration hereby revokes all prior declarations.  This designation becomes
effective upon my death.  My designee shall act in a manner that is reasonable under
the circumstances.

I may revoke or amend this declaration at any time.  I agree that a third party
(such as a funeral or cremation establishment, funeral director, or cemetery) who
receives a copy of this declaration may act in reliance on it.  Revocation of this
declaration is not effective as to a third party until the third party receives
notice of the revocation.  My estate shall indemnify my designee and any third party
for costs incurred by them or claims arising against them as a result of their good
faith reliance on this declaration.
     
I execute this declaration as my free and voluntary act.

This new chapter is a needed step by the Iowa legislature. Unfortunately, for the Stark family, it is too late. However, like many aspects of an estate plan, the usefulness of this chapter is only beneficial if the plans are communicated to those key individuals. Knowing where the document is, who the designee is and what one's wishes are can be critical to putting your final affairs in order.

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A couple of recent posts here and here serve as good reminders of the importance on open discussions with your parents or grandparents as to their assets and plans.  While it may difficult to bring the topic up, a brief moment of discomfort may help to avoid future headaches and family disputes.  Once you broach the topic, it get becomes easy to cover some of the key points.  Some possible openings to consider:

• "Mom/dad, we just completed our own estate planning and wanted to let you know that we used ******** to help us with our planning in case something happens to me.  Who have you used to handle your affairs?"

• "Isn't that awful about the situation that ********** is in with his parents.  I understand that it has been a  nightmare to get those issues sorted out.   I hope you have taken steps  so that we don't have a similar experience."

• "Mom/dad, you're no longer a spring chicken.  Let's talk about how much money I'm getting when you croak and discuss your spending habits."

And for you parents, don't leave it up to your kids to make that first move.  Take advantage and promote a dialogue.

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Besides taxes, the other sure thing in life is that it comes to an end eventually.  A common question becomes "what's next?"  (I'll skip the whole afterlife heaven and hell discourse and stick to the worldly issues.)  And of course you have the whole "what to do with the body issue".

Depending on the planning that was done beforehand will dictate a lot that will be done afterwards.  For example, if the decedent properly used a revocable trust, it may not be necessary to go through the probate process.  Good planning and organization prior to our "time" is important in helping to alleviate the work that our family and friends are forced to go through.

Transfer of Assets

If all of the assets were held jointly, it may not be necessary to go through the probate process, although there may be some other advantages with going through probate.  Also, if the asset has a named beneficiary (e.g. life insurance, IRA, etc.), that asset will pass automatically and not subject to any will, trust or other dispositive document.  Otherwise, other than joint assets or named beneficiaries, the estate plan of a will, trust, or the state's plan will determine where those assets go. (And it might not matter that you're the child from the first marriage or dad liked you the best.)

Payment of Bills/Claims

Depending on financial situation of the decedent, there may be certain bills and expenses that need to be paid.  Through certain publication processes in the probate process, all potential claims can be "pulled out of the woodwork" in order to determine how much should be paid and whether it is a valid debt or not.   Also, if the decedent was receiving certain public assistance benefits (e.g. Medicaid) during life, of if the decedent's predeceased spouse received such benefits, there may be a lien against any remaining assets that follows those assets.

Taxes

In Iowa, if the only beneficiaries are a surviving spouse, children, grandchildren, parents or other lineal descendant or ascendant, there is no Iowa Inheritance tax and no need to file an  Iowa inheritance tax return.  There are some issues if there have been certain gifts within the past three years which should also be examined.

Federal estate taxes are normally not applicable for estates less than $2,000,000 (for 2008).  If the estate is below that figure, typically it is not necessary to file a federal estate tax return.  Again, gifts during life of the decedent are important to review also.

Summary

This list is not meant to be exhaustive, but mainly as a guide of some items to consider when it becomes necessary, and hopefully help you choose to do some proper planning ahead of time.  You should consult with an experienced attorney when it becomes necessary to sort through all of these items.

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I missed it last week, but April 16th was National Healthcare Decisions Day 2008.  Most people have an opinion on what type of medical treatment they would receive if they had the opportunity to visit with their healthcare provider.  It certainly makes sense that one would want to establish ahead of time what type of medical treatment if they weren't capable of visiting.  Unfortunately, a 2003 article reported that less than 50% of severely or terminally ill had an advanced directive in their medical record.

If you don't have an advanced directive already, take steps to have one signed.  Then, after getting it signed, the next step is to have it included as part of your medical record.

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All of the glamor and attention of Hollywood celebrities provide an effective example of how important proper estate planning can be and how even the rich and famous can fail to properly plan, despite their vast resources.  I've previously mentioned mistakes and oversights by Heath Ledger and Anna Nichole Smith.  As Steve Follet with the Arizona Estate Planning & Probate blog points out in his post, Britney Spears failed to properly fund and maintain her trust that she established.  Now, with the "issues" in her life, court involvement and publicity will continue to provide fodder for entertainment shows...and estate planning attorneys.  You gotta love Hollywood.

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Did you ever want to know how much your neighbor or a family member had when they died?  Were they the "millionaire next door"?  Did so-and-so blow through all that money? Well, in Iowa, as in many states, a complete listing of a deceased person's assets are listed in the public court records.  The Report and Inventory, as it is called in Iowa, is a filing that the personal representative (either the executor or the administrator) is obligated to file with the court which breaks down the assets into real estate, stocks, bank accounts, life insurance, miscellaneous property, and annuities (retirement).  The itemized assets also show the value as of the date of death.

To get this information, all you need to do is go down to the courthouse and look up the file number for the deceased individual, have the courthouse personnel pull the file, and then review the information.  Pretty easy to review someone's financial life!

For most people, keeping financial information confidential is very important.  Now, you might say, "what do I care, I'm dead?'"  True, but as far as your family members are concerned, your financial information soon becomes their financial information.

If your estate does not go through the probate process, then this listing of a report and inventory is not necessary.  To avoid probate in Iowa (& most other states) you can use a revocable trust plan.  A properly created trust, that is properly funded,skips the probate process and helps maintain your privacy.

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Surely celebrities take their estate planning seriously, don't they?  Millions of dollars, easy access to legal advisers.  Well, not Heath Ledger, who recently passed away from an accidental prescription drug overdose.  Unfortunately, after executing his will in 2003 leaving his estate to his sister and parents, he failed to make any updates to his will after the birth of his child in 2005.  When news of his will was made public in a New York filing, Heath's father was quick to note that they would take care of Heath's young daughter (Matilda Rose) and his ex-fiance.

However, recent reports confirm that if there is money involved and poor planning, legal battles will ensue.  It is being reported out of Australia that Heath's uncles are now getting involved in a fight over the inheritance from Heath's estate.  Apparently, brotherly love between Heath's father and Heath's uncles is strained as a result of some alleged improprieties by Heath's father concerning the mismanagement of Heath's grandfather's estate.

This is a simple reminder that it doesn't matter whether you're famous or not, your estate plan is important and should not be overlooked as part of your periodic life review.  Especially as you marry or have young children, it becomes even more significant to get your plan updated and reviewed.

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Medicaid benefit eligibility is based upon the resources and income that an individual has in their own name.  If some has has limited assets and limited income, the Medicaid program covers medical bills and long-term care for older or disabled individuals.  (I'll cover the specifics another day.)

It used to be that the day before someone needed to go to the nursing home, they would transfer their assets to their children or grandchildren and then apply for Medicaid benefits.  The government got wise to this idea and changed the application process to include a list of any transfers of assets for the three prior years.  Specifically, any transfers made for less than fair market value (e.g. gifts).

Now, the law looks at transfers in the past five years in order to determine eligibility.  Again, sales don't affect eligibility, but only transfers for less than fair market value.  But transfers in the past five years will impact one's Medicaid eligibility.

The Medicaid eligibility rules and exceptions involved in the Medicaid planning process are complex and involved.  Be sure to work with a knowledgeable advisor.

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Many people may not think much about their bodily remains.  Some people, hopefully my clients, will at least discuss their preferences and express their wishes to family members of what to do with their remains.  Cremation? Bury? Where to bury? With whom? Toss in a ditch?

A recent Iowa Supreme Court case from September 2007 highlighted the issue that can arise.  In the Stark case, a dispute arose over where to bury poor Mr. Stark's body.  Mr. Stark had been buried for some time in a plot with his first wife, when his second wife decided that his particular location wasn't the best.  So Mrs. "Second Wife" has the body disinterred and reburied at another location.  The adult children from the first marriage didn't take kindly to this and objected like any true American...by filing a lawsuit.

The Iowa Supreme Court eventually determined that the statute permitted the surviving spouse the ability to do just that.  As a result, the adult children of Mr. Stark will have to wait until Mrs. "Second Wife" passes, at which time they can disinter poor ole dad-again-and move him back.

The Iowa Legislature is currently debating a change in the law.  Currently, there are two bills under consideration with very different positions.  A Des Moines Register article discusses the two bills, one which is supported by the Iowa State Bar Association and the other by the Iowa Funeral Directors Association.  One bill, Senate File 473, enables the deceased individual to make those decisions for his/her body prior to death.  The other bill, House File 2088, provides for an authorized list of individuals to make the decision for the deceased.  The funeral directors claim that providing for an optional document places too much of a burden on them, as opposed to just applying a list.

While it may make the funeral director's job simpler for the bill backed by the funeral directors, the disposition of one's remains is truly one's final decision for their resting place and an extremely important matter for many people.  Everyone should be entitled to choose what happens to their remains, not which is necessarily the simplest solution.

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"Probate" is a term that is often mentioned (well, maybe not often) but many people don't understand what it really involves. Probate is the legal process where, through a court-supervised system, a deceased individual's assets are transferred to their rightful heirs/beneficiaries; taxes are paid; and debts/claims are handled. The probate process also includes the validation of a will.

It is not necessary to have the attorney who drafted the will handle the process. The "administrator" or "executor" can select whatever attorney they choose.  The administrator or executor is the individual appointed by the court to handle the various steps in probating an estate.

In Iowa, the probate process primarily consists of 5 stages.

1. The filing of the initial set of documents to open the estate.
2. Publication of notice in a newspaper for filing of claims and giving notice to heirs and creditors.
3. Waiting the time period for the filing of any claims or contests to the will.
   
4. Filing of the report and inventory and payment of taxes.
5. Distribution to beneficiaries/heirs and discharge of the executor/administrator.

Every state is different in how the probate process is administered and you should contact a knowledgeable attorney to handle the probate process. Feel free to contact me if you have any questions about the probate process in Iowa.

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MSN Money and Bankrate.com have an excellent article about how to leave a mess for your heirs.  So many of the points ring true with many people.  With as much research people put into buying a toaster, they should do as much research into their estate plan and organizing their affairs.  As the article states, estate planning isn't fun and I can't make fun.  However, unless you truly don't like your family, take some relatively simple steps to get your affairs in order.

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How do you select an attorney to probate an estate? The individual who is nominated as executor under the will or who will serve as the administrator is the one responsible for choosing the attorney. Many people believe that the attorney who drafted the will is expected to handle the probate. While there is no requirement that the drafting attorney handle the probate, it is not uncommon situation as many people may not know an attorney who works in that area of the law and using the same attorney who has the will makes it a simple decision.

Before you do go that route, however, check out the attorney. Be sure to get an understanding, in writing, how attorney fees will be handled; that the attorney is familiar with the probate process; and that you are comfortable working with that attorney. Also, if there is much of a potential of a challenge to the will, the attorney that drafted the will is not able to handle the administration.

While the attorney that drafted the will may have much of the information necessary to handle the probate for the deceased individual, feel free to shop around and find an attorney that you feel comfortable with and that is competent in probating estates.

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Mike Sansone has compiled a list of Iowa bloggers that Drew McLellan has coined the "I List".  (Let's hope we don't see a trademark lawsuit by Apple).   And while this pair of prolific bloggers managed to overlook our relatively new Iowa law blog we hold no grudges.  We have added a few Iowa law blogs to the list originally posted by Mike.

Kudos to this partial list of the hardest working bloggers in Iowa:

Adam Carroll
Andy Drish
Art Dinkin, CFP, CLU, ChFC
Association of Business & Industry
Babich, Goldman, Cashatt & Renzo
Barry Pace
BeatCanvas

Bill Grell
Blue Frog Arts
Brett Trout
Bridges Financial
Broom Wizards
C Wenger Group
Carpe Factum
Claire Celsi
Cloud Nine Diamonds
Compass Financial Services
Conference Calls Unlimited
ConverStations
Dave Dreeszen
Des Moines Families
Dickinson, Mackaman, Tyler & Hagen
DMWebLife
Do You Q?
Dr U Fantasy Football
DSM Buzz
Dwebware
Employer Ease
Eric Peterson
Focal Point Multimedia

 George Davison
Gift Idea Help
Home Know-it-All
Insight Advertising & Marketing
Iowa Bed & Breakfast Association
Iowa Biz
J. Erik Potter
Jann Freed

Jennifer Jaskolka-Brown
Josh More
Kyle's Cove
Maiers Educational Services
McKee, Vorhees & Sease
McLellan Marketing Group
NCMIC Insurance
Purple Wren
Radio Iowa
REL Productions
Rental Metrics
Rita Perea Consulting
Roth & Company
RSM McGladrey
Ruby's Pub
Runners' Lounge
Rush Nigut
Ryan Rossinick
Simplifive
Snap! Creative Works
Studio 24 Design

Sullivan & Ward's Iowa Law Blog
Swing Station
The Members Group
The Mitchell Group
The Simple Dollar

 The Yin Blog
Transition Capital Management
US Rodeo Supply
Victoria Herring
Wade Den Hartog
Wealth With Mortgage
When Words Matter
White Rabbit Group

Happy New Year everyone!  If you know of an Iowa blog that should be added to this list please let us know.

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While Paris Hilton may not be in the soup line anytime soon, a significant portion of her inheritance has been pledged for better use than her spending sprees:  charity.  Grandpa Hilton recently revised his estate plan to provide 97% of his wealth would go to charity.  Barron Hilton recently placed 97% of his wealth into a charitable trust to eventually pass to the Conrad Hilton Foundation.  The amount is estimated to be around $2.3 billion.

As a result of this estate planning, Barron Hilton dramatically reduced his tax bill.  While the exact structure of his charitable trust is not known, charitable trusts typically provide an immediate income tax deduction, provide a stream of income for the remainder of ones life AND reduce your federal estate taxes at your death, while at the same time benefiting charitable interests.   Doesn't that make it a win-win-win-win solution?  Not a bad idea.

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Joe Kristan notes here that the US Department of Justice has blocked a Las Vegas scammer from selling and promoting "pure trust" schemes which are basically attempts to conceal income.  The scheme was promoted in various states, including Iowa.  The US Department of Justice has requested Mr. James DiLullo, the Las Vegas promoter, to disclose names, addresses and social security numbers of all clients for whom he prepared income tax returns for the past ten years.  Some Iowa customers may be getting a disconcerting letter from the IRS in the near future. 

As Joe so aptly notes:

The Moral: You can't make your taxes go away using "pure" trusts, "constitutional common law trusts," or anything of the sort -- no matter what the salesman says.

Or "if it sounds too good to be true, it probably is".

Trusts can provide a sound estate plan for you, but saving income taxes isn't one of the purposes of trusts.

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I recently had a conversation with the local probate judge for the largest county in Iowa.  She commented that she is seeing more and more litigation involving guardianships.  With second marriages and changing family dynamics, I don't believe it all that unusual to expect these issues to continue to escalate and increase in the coming years.  Unfortunately, whether it is a guardianship for a 2 year old or a 92 year old, there are bound to be issues and potential problems with the various individuals involved.

Michael Bonasera, of the Ohio Trust & Estate Blog noted in a recent article
that less than 1/4 of parents have a will.  That is truly a scary percentage, although the odds of something happening to both parents are not very high.  Michael speculates that more parents aren't going through this process because they have difficulties coming to grips with the realization that they can't trust their friends to raise their kids.  I often see a struggle with parents trying to decide whether a family member should raise their kids or close friends.  Then you throw in issues with the other family member having their own kids, maybe in a different school system, different city, what about excluded family members, which family to choose from -- all this can lead to procrastination.  When it comes down to it, most people feel that no one could raise their kids as well as they could and typically the different choices have different strengths and weaknesses.

I'm currently involved with several different guardianship battles.  They are ugly, nasty battles.  Many of them could have been resolved if the appropriate individuals had taken steps previously to establish their choice of guardians.  Don't make the same mistake.  Execute or update your will and communicate with the proper individuals about your wishes.

Continue Reading...

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If your health were to deteriorate to a point where you could not communicate with your caregivers, how would you feel?  Wouldn't you want to be able to tell your friends and family your final wishes?  Wouldn't you want to tell your doctors what type of medical treatment that you want?  Or how about what treatment you don't want?  Unfortunately, no one is able to read your mind as to what you were thinking.  For some people, they may not even consider some of these issues or know where to start.

Aging With Dignity - Five Wishes provides the easy support and documents to assist you with sorting through these tough issues.  Communication on what your wishes are is critical in being treated the way you want to be treated should you be in that situation.  I stress to all of my clients the importance of communicating with family members as to these issues, but I question how many actually take that difficult step.  Five Wishes provides a simple aid for getting that process started in a simple, respectable and professional manner.

The ABA has another good resource dispelling some common myths on living wills that is quite helpful.  You should review this brochure as well.

Make your plans now.  As I posted previously, this time of the year is a convenient time of year when family members are together.  It might not be the best topic for the holidays, but after you get over the initial hurdle, everyone will likely feel better knowing what you want and you'll feel better knowing that you communicated your wishes.

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LWBJ Premier Wealth of West Des Moines, Iowa continues to expand its private office clientele list by recently adding some impressive clients to its resume.  LWBJ Premier, under the direction of President Benjamin Renzo, manages tax, accounting, business development, insurance, risk-planning, non-profit and estate planning services for high net-worth individuals.  LWBJ Premier and Sullivan & Ward, P.C. frequently work together on providing services to clients. 

Being able to provide such a high level of service to such professional athletes as Eric Steinbach, George Foster and Derrick Brooks out of their central Iowa office speaks volumes as to the credibility and traction they are getting in the market.  Way to go Ben. 

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A recent article and analysis of a Florida case by Juan Antunez emphasizes the need to funding a revocable trust and what can happen if you skip that step of the plan. As this case illustrates, the best drafted trust may not handle the disposition of your assets as you anticipate if you don't properly fund the trust and the ruling from this case illustrates one of the pitfalls of failing to do just that.

In the Florida case, certain real property was never conveyed to the trust during the life of the individual who established the trust. As a result, despite specific provisions in the trust on who and how the property was to be conveyed, the property went to another individual. This resulted in the second wife getting all of this real property, which was intended to pass to the adult children from the first marriage. This was the important second step of the estate plan which the client failed or refused to follow, despite warnings by his estate planning lawyer. As a result, families were forced to litigate the issues and spend attorney fees for a determination of the matter. I doubt that the children from the prior marriage will entertain their step-mother during the holiday season.

If you're going to spend the money on establishing a revocable trust, do it right: transfer your assets to the trust.

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Not everyone has an idyllic marriage, and some have much less.  One issue to keep in mind as you plan your estate is that in Iowa, you can't entirely cut your surviving spouse out of an inheritance, unless they consent to it.  The Iowa Code provides surviving spouse with many rights which are not affected by the testamentary documents.

For example, if you execute a will that leaves all of your assets to your secret lover, your spouse can "elect against the will" and receive basically one-third of your probate assets.  Iowa Code § 633.238 (2007).  It doesn't matter if you've been married one day or ten thousand days.  It doesn't matter if the surviving spouse is a billionaire and you're just trying to leave your small estate to your children.  The result is the same - the surviving spouse can elect out of the disinheritance under your will.

Leaving your spouse out of your will doesn't invalidate the will, but don't expect it to be binding.  You might think you got the last laugh, but your spouse will be laughing last.  If you have any concerns or special matters, you should contact your legal advisor. 

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The Iowa Supreme Court recently issued a ruling granting the surviving spouse the right to disinter and reinterr her deceased husband's remains.  It seems that the widow of Joseph Stark wasn't real happy that her husband was buried next to his first wife.  After thinking a few months about it, she decided to have him dug up and moved to a new cemetery to be buried with his parents.  The kids from the first marriage did not take too kindly to having dad and mom separated, so the battle was on.

Based on Iowa Code § 144.34, the Court found that if the state issues the permit with the consent of the surviving spouse, a court cannot override that permit.  The procedure to get a permit only requires that a spouse, or the next of kin if there is no surviving spouse, apply for a permit for purposes of autopsy or reburial.

All the Stark children need to do now is wait until step-mom passes, then go back to the State of Iowa for a permit to dig dad up again and move him back.  This sounds like a good process to keep grave diggers in business.

A better approach would be to enact legislation enabling an individual to select their designee to make the decision over disposition of their body remains.  This allows the individual to make the decision over what happens to their body by choosing who makes that decision.  Until then, communicate with ALL of your family as to your wishes and hopefully they will honor your intentions.

Is there is no peace in death?

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