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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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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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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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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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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