iowa probate – Probate in Iowa

What is Probate?

Probate is the legal process of administering the estate of a deceased person. In Iowa, the person responsible for administering the probate is the executor or administrator of the estate. This individual is appointed by the court and has several important responsibilities, including:

Collecting and preserving the assets of the estate: The executor or administrator must locate and gather all of the assets of the deceased person, including property, bank accounts, and other financial assets. They are also responsible for preserving these assets and ensuring that they are not wasted or misused.
Paying debts and taxes: The executor or administrator is responsible for paying off any debts that the deceased person had at the time of their death, as well as any taxes that are owed. This includes funeral expenses, medical bills, and mortgages, among others.
Notifying creditors and other interested parties: The executor or administrator must notify all creditors of the deceased person and provide them with an opportunity to make claims against the estate. They must also notify other interested parties, such as beneficiaries, and provide them with information about the estate.
Filing court documents: The executor or administrator is responsible for filing all of the necessary court documents to open the probate and to obtain the court’s approval of the distribution of the assets.
Distributing assets to beneficiaries: Once all debts and taxes have been paid, the executor or administrator is responsible for distributing the remaining assets of the estate to the beneficiaries.

It’s important to note that the Executor or Administrator may also have a fiduciary duty to act in the best interest of the estate and its beneficiaries. An Executor or Administrator who mismanages or steals from the estate may be held liable for their actions.

Administering an Iowa probate can be a complex and time-consuming process. It is important for the executor or administrator to be organized and to have a thorough understanding of the laws and procedures involved. They may also benefit from seeking the advice of an attorney to ensure that they are fulfilling their responsibilities correctly. (I know one or two that could help out.)

Selling Real Estate During Probate

When I’m discussing the probate process with a client, the discussion will get to a point where we talk about how the process may take a year or so before it is completed. And then I get the question:

You mean I can’t sell the house for a year?!?

Not exactly. Potentially as soon as we have a personal representative appointed by the court we are able to sell the real estate and other property.

There is an exception to that statement, however. That is only permissible if there is a will and if the will has the “magic language” that permits the executor to sell property without court approval.

If: (1) there is no will or (2) the will does not have the “magic language”, the the personal representative will need to apply to the court for approval to sell the real estate. That means you will need to give notice to the beneficiaries/heirs and either get their written consent, or set it for a court hearing and give the beneficiaries/heirs 20 days notice of the hearing and potentially have a court hearing for approval of the sale.

Moral of the story: Have the will drafted that gives that authority or plan appropriately to get the consents of the beneficiaries/heirs.

New Law for Iowa Small Estates Starting July 1, 2020

For deaths of Iowa residents that occur after July 1, 2020, Iowa law now permits estates up to $200,000 in total “probate” value to use Iowa’s small estate chapter (Iowa Code chapter 635). So–as I typically ask–what does that mean?

Iowa’s small estate proceedings provide a few minor procedural differences than a “regular estate” under Iowa Code 633. Principally, the closing process is a different procedure, although most clients won’t realize the difference in procedure.

However, the main difference to clients involves court costs savings. Court costs in a small estate proceeding are significantly less than a regular estate. For example, “regular” estate court costs are approximately .2% of the size of the gross estate. Conversely, small estate court costs will typically be around $35.00. That results in an approximate savings of $365 for a $200,000 estate, or the equivalent of 60 Big Mac meals.

This also helps the situation where an individual has established a revocable trust as their estate plan structure but failed to get an asset properly titled. If the asset that wasn’t properly titled is (now) less than $200,000, the small estate proceeding can be used even if the total estate is substantially more than $200,000. Again, conversely, if you are using the regular probate proceedings and calculating court costs, the court costs would be .2% of ALL assets. So if you have a $1,750,000 estate, just the court costs to deal with a $150,000 probate asset would be approximately $3,500.00. Or 583 Big Mac meals.

Now, with typing this post, I realize I need to have a better blog post explaining revocable trusts in Iowa at Iowa Estate Plan. But, its late now so that will be another rainy day post.

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.