Tag: small estate

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.