There is an old saying that there are only two things you can be sure of in life; death and taxes. Since you know very early on that someday you will die, it is important to make an estate plan before you die. The level of planning done in advance will dictate what happens afterwards. For example, if you set up a proper revocable trust, then you can avoid probate entirely. It is important to plan well and organize things while we are alive, so that our family and friends are not forced to do it for us when we die.
Assets Will Transfer
In some cases, there are advantages to going through probate, but in many cases, it can be avoided. Assets that are held jointly do not always need to go through probate. Assets with named beneficiaries, like life insurance policies and IRA accounts, will pass automatically to the named beneficiary and will not be subject to any will or trust. Other than joint assets and named beneficiaries, where assets go will be determined by either your will, trust, or state law.
Your Bills Must Be Paid
Depending upon your financial situation at the time of death, there may be some expenses and bills that must be paid. All potential claims can be gathered during the probate process which will allow the executor of your estate to determine whether or not the debt is valid and how much should be paid. Another potential expense can arise through public assistance payments. If you received certain public assistance benefits before you die, such as nursing care through Medicaid, then there could be a lien placed against your remaining assets to satisfy those payments. Proper estate planning can help avoid this outcome.
Taxes May be Due
As this article starts, the only two constants in life are death and taxes, and usually when somebody dies, there are some taxes to be paid. However, Iowa law holds that if the beneficiaries are the surviving spouse, children, parents, grandparents, or other lineal ancestor or descendant, then there is no requirement to file an Iowa inheritance tax return and there is no estate tax. If any large gifts were given in the three years preceding death, they will be examined upon your death. The federal estate tax will not apply to your estate if it is less than $5,450,000.
This is a broad overview of what you can expect when you pass. Basically, your debts will be paid, any owed taxes will be paid, and what remains will be split up between your loved ones. If you leave assets in trust or if they are jointly held, then your heirs may be able to avoid probate. If your assets are distributed in your will, then the will is going to have to be probated. If you fail to leave a will or otherwise disburse your assets, then Iowa state law will divide your assets between your living family members.
Many of the lawyers from Whitaker Hagenow & Gustoff practice trusts and estates in both Des Moines and Cedar Rapids, as we have offices in both. Our experienced estate planning attorneys can help you plan your estate in a cost-effective way, and simplify your estate plan so that your loved ones will not be burdened. Call or email us today for an initial consultation.