Mom Didn’t Have Very Much When She Died — Do We Need to Go Through Probate in Iowa?

“Small” can mean a lot of different things to people. One man’s small estate might be YUGE to someone else. But Iowa does describe what is a small estate for an Iowa decedent, so it doesn’t really matter what you think “small” means.

IF the deceased person’s remaining assets:

  • Do not consist of real estate (e.g., no house, no land, etc.); AND
  • All of the other property (that doesn’t have a beneficiary) totals less than $50,000.00

then you may not need to go through the probate process and you can access their property by way of an affidavit.

For example, let’s say mom had a checking account with $4,200, a CD worth $25,000, IRA valued at $60,000, and a vehicle worth $5,000. No house/land. And let’s assume that the IRA had a beneficiary listed.

In this example, the vehicle could be transferred by an affidavit supplied to the county treasurer’s office and an “affidavit for distribution of property” via Iowa Code 633.356 could be used to move the checking and CD to the beneficiaries/heirs.

This is a common situation for many families and we can assist in putting the proper documents together for you to get those transfers completed. You can also read a little more here.  Most situations can be handled on a flat fee basis.

However, there are other issues to be aware of, even for small estates. For example, you may have issues with Medicaid recovery (another blog post later) and/or income tax issues.

A Will Means We Don’t Have to Do Probate, Right??

A common question that we get is “Since dad had a will, we don’t have to go through probate.” (I’ve written about this on my sister blog, but read this and save an extra mouse click.)

Not true. In order for a person’s will to “proven” it needs to be admitted to probate court. Once the Will is filed with the court, then the judge will review it to make sure it meets the legal requirements for a valid will. Requirements such as signed and in writing and witnessed by two other individuals.

Once a will is admitted to probate as a valid document, there is also the question if it was the last will of the decedent. For example, you might have a document that satisfies all of the legal requirements of a will, but what if dad signed another will several years later and forgot to tell you? Or what if you grabbed dad’s hand and forced him to sign the will that left everything to you and disinherited your siblings? Those are some examples where the probate process sorts through questions and eventually establishes that a particular will is in fact the last will and testament of the decedent.

Iowa Inheritance Tax

Currently, for Iowa residents, there is an inheritance tax that only certain recipients pay when an Iowa resident dies. Here are a few key points:

The tax is based on the deceased, not the living. Thus, if the beneficiary lives in Texas but the deceased individual lives in Iowa, Iowa law applies.

The tax is based on the relationship to the deceased. If the recipient is a lineal descendant, ascendant, spouse or charity, there is no inheritance tax. Regardless of the amount. But others would be subject to a tax. Siblings are taxed at a different rate than friends, for example.

Currently, however, there is a bill pending in the 2019 Iowa legislature to repeal, in full, the Iowa inheritance tax. While that does come at a $90 million dollar cost to the state, that does remove a frustrating tax for many individuals that choose to leave assets to in-laws, friends, cousins, nephews/nieces, attorneys…