Estate planning is the process of documenting how you want your estate handled after your death, and what types of medical care you want if you become seriously ill. A good estate plan can make it easier for your family to honor your wishes.
Your Last Will and Testament
A last will and testament outlines how your heirs should share your estate. It should also name an executor to handle tasks such as paying your final debts and making the appropriate distributions. If you have children, you can use your will to name a legal guardian.
Dying without a will, or dying intestate, leaves the fate of your estate to Iowa statute. If you're married, your spouse generally inherits the whole estate unless you have children with someone else.
Probating Your Estate
Unless your entire estate qualifies as non-probate assets, some will have to go through the probate process. Probate validates and executes your will or divides your assets based on state law. Non-probate assets include:
- Living trusts: Assets in a living trust are distributed according to the terms of the trust documents when you die.
- Assets with joint ownership and rights of survivorship: Financial accounts and property owned this way automatically pass to the other owners.
Under Iowa's Probate Code, if your estate's value is less than $25,000, your heirs may be able to avoid probate and claim your estate with a simple affidavit.
Durable Power of Attorney
If an accident or illness leaves you unable to make decisions for yourself, you'll need someone to conduct financial transactions for you. A durable power of attorney authorizes someone you trust, called your agent, to do these things. Your agent can only take the actions you specify and cannot make decisions that contradict any instructions you include. You can also limit the conditions under which the powers kick in.
Health Care/End of Life Decisions
You may also want to authorize someone to make medical decisions for you, using a power of attorney for health care. This power only becomes active when you can no longer make your own decisions.
You can document what type of life-sustaining procedures you want, if any, in a living will. Medical personnel should follow this directive if and when you can't communicate your wishes.
Pre-planning your funeral can be a nice final gift to loved ones. Many mortuaries sell prepaid plans, but these can be hard to collect on if the company goes out of business or you move. Consider writing down your wishes and opening a bank account or trust specifically to pay for it.
Other Possible Decisions
Depending on your lifestyle and family considerations, you may also want to think about:
- Reviewing your life Insurance policy to ensure you have enough to take care of your dependents.
- Making sure you have a viable plan for business succession or dissolution.
- Setting up a pet care trust to care for any animals you own at the time of your death. You must name each animal in the trust.
Estate Law is Complicated
This brief overview can't cover all the details of state and federal estate laws. For information specific to your situation, talk with an Iowa estate planning lawyer.