Probate avoidance in Iowa is often a goal when estate planning efforts are underway. This is because of the fact that there are some significant pitfalls that come along with the process.
A last will that is being used to distribute personally owned property must be admitted to the probate court by the executor or personal representative. The heirs to the estate will not receive their inheritances immediately. The business of the estate must be handled during probate before the resources are transferred to the heirs.
Creditors have the opportunity to seek satisfaction. If anyone wanted to contest the will they could do so during probate. The executor will have to take stock of the assets and potentially bring in appraisers before liquidating property.
Because this is a legal process an attorney will often be necessary, and the executor may need the services of a tax accountant.
Depending on exactly what takes place during probate the process can take anywhere from months to years. And, the expenses that are incurred invariably erode the value of the estate.
Avoiding Probate in Iowa
From the above you can see why many people avoid probate. This being stated, there is a right and a wrong way to go about it.
There are so-called “easy answers” that some individuals utilize, such as transfer on death accounts. You add someone to your account as a beneficiary and this person assumes ownership of the account after your passing outside of probate.
This may sound like a simple idea, but do you have just one heir? What happens if you become incapacitated? Do you have asset protection concerns? Is the estate tax a factor?
Transfer on death accounts are not a serious estate planning solution.
Some people go a step further and make someone the joint owner of their property or bank accounts. Yes, this person would own the resources after you die, and probate would not be a factor. But he or she would also have access to the property while you are living.
The co-owner could spend (or be bilked out of) the money, and short of this his or her creditors could seek to attach these funds.
These are just a couple of the problems with joint tenancy.
Revocable Living Trusts
If you were to eschew quick fixes and create a revocable living trust with the assistance of a licensed estate planning attorney you have no worries. You retain complete, sole control of the resources that you conveyed into the trust throughout your life.
You name beneficiaries, and you name a trustee. At the time of your death the trustee will be empowered to distribute funds to your beneficiaries according to your wishes as stated in the trust agreement. These distributions would not be subject to the probate process.