In more than two decades of practice, I’ve found that there are some frequently asked questions about probate in Iowa. I provided answers to 9 of the most common questions in one of the first posts at my Iowa Planning and Probate blog. Although I didn’t expect it, that blog post has been the one most read so far, so it’s definitely worth sharing here. If these answers about Iowa probate don’t provide the information you need, feel free to contact me to discuss your situation. So without further ado, the questions and answers:
What is probate?
In the strictest sense, “probate” is the process of submitting a dead person’s last will and testament to the Probate Court to prove that it is authentic and valid. Sometimes “probate” is used broadly to mean any of the processes or procedures that must be completed before a dead person’s property is transferred. Usually when lawyers in Iowa and their clients use the term “probate” they are referring to the process of formal administration of the dead person’s estate under the jurisdiction of the probate court. The administration process is typically called “probate” even when the decedent left no will to file with the court.
What is probate court?
In Iowa there is no special probate court. If an Iowa attorney says “probate court” he or she is just referring to Iowa District Court, where a judge will preside over the administration, as governed by Iowa Probate Code, the Rules of Probate Procedure, and related laws. The Probate Code does have provisions for a judicial officer known as the Probate Referee. When I started practicing in Cedar Rapids, there was a part time magistrate who served as Probate Referee. That position was eliminated for budget reasons. In the last several years the only full time Probate Referee in Iowa was Associate Probate Judge Ruth Klotz, serving Polk County in Des Moines. She retired in January, 2013 after a long and distinguished career. The probate court in Iowa also has jurisdiction to establish and administer guardianships and conservatorships, and will hear disputes concerning the creation, interpretation, administration, and revocation of trusts.
What is the purpose of probate administration?
Probate administration is an official process for resolving claims that creditors and others have against the deceased. This allows the people who receive the deceased’s property to have good title to the property, free and clear of claims. The administration process also gives parties who believe they should be beneficiaries of the decedent’s estate an opportunity to have their claims heard.
Can a power of attorney be used during the period between death and the start of probate administration?
I am often asked by family members of a deceased person or potential clients if the person holding a power of attorney from a decedent can use that document to transact business after the death. Technically a power of attorney document is the designation of an agent, and at law the agency ends upon the death of the person who made the designation. So death terminates the agent’s power to act for the deceased. As often happens with the law, there is an exception to this rule for special circumstances. IF the agent does not have actual knowledge of the death, he or she may transact business and bind the estate and heirs by doing so in good faith. The exception doesn’t apply after the agent learns of the death.
How is the probate process started?
The Iowa Code specifies who can ask the court to start the administration. When the deceased leaves a will, the person nominated in it to serve as executor may file the original will with the Clerk of Court, along with a petition asking to have the will be accepted and an executor appointed. If that person does not start the process, then any other interested person may do so. The family members of the deceased, creditors, and anybody else who is a beneficiary or claims to be a beneficiary are all parties with sufficient interest to ask for the start of administration. When there is no will, the surviving spouse may seek administration, as well as heirs, creditors, and others who can show good grounds to do so.
Are probate lawyers necessary?
You can represent yourself in court if accused of a crime, and you can pursue or defend a civil lawsuit without hiring an attorney. So if you are the executor in a probate, you ought to be able take care of the job without hiring an attorney, right? No, not in Iowa. Under Iowa’s Probate Code, the executor or administrator of the estate “shall” file a “designation of the attorney employed by the fiduciary to assist in the administration of the estate“. Why the difference? It’s not spelled out in the Probate Code, but it has to do with the old saying that anybody who represents himself in court has a fool for a client. In other words, self-representation is not considered wise, but it is allowed because if the ‘client’ is being foolish, she is only hurting herself. The executor, on the other hand, is not representing himself or herself. Instead, the executor is a fiduciary, one charged with acting in the most responsible manner to protect the interests of others, in a fair and unbiased way. An executor who makes mistakes because he doesn’t have the advice of counsel could end up harming many people other than himself. If you are going to be the beneficiary of an estate, you might not like the idea of the estate spending money to hire a probate attorney. But ask yourself, do you want or trust your Uncle Charley, who will serve as an executor or administrator, to figure out the 20 divisions and 140 pages of the Probate Code. Would you want to do that if you were an executor? I don’t think so. I think you’d rather have someone with expertise that you trust assisting you. So while the Iowa requirement that a probate lawyer be hired might seem overbearing at first, it actually serves a good purpose.
What are probate assets?
Probate assets are the items of property owned by the deceased that will be subject to administration of the deceased’s estate. In other words, it is the group of property items that is under the jurisdiction of the court and can be used to pay court costs, other administrative expenses, or creditor claims. Assets don’t fit into this class if by law they automatically passed to, or were payable to, another person upon the decedent’s death. This happens if property was co-owned in joint tenancy with rights of survivorship. It also happens when a life insurance policy or investment account designates a beneficiary other than the estate. In Iowa the beneficiary designation takes precedence over the terms of the will. The benefits and perils of using nonprobate assets as part of an estate plan will be the subject of upcoming blog posts.
How long it does probate administration last?
There is no set or standard time for the length of probate administration. It lasts as long as it takes for the executor or administrator to accomplish all of the tasks required by the Probate Code. We can say that administration is guaranteed to take at least 6 months or more. A notice has to be published twice as part of the administration of every estate. Then there is a 4-month period when creditors can file claims and interested parties can challenge the validity of the will. After that period ends, an income tax return has to be filed for the estate, followed by the receipt and filing of a certificate from the Iowa Dept. of Revenue. It usually takes about 6 weeks for the Dept. of Revenue to issue the Certificate. Then the Final Report has to be filed. If waivers cannot be obtained from everybody involved, at least another 20 days must pass to give all interested parties an opportunity to object to the Report. In my experience, a large percentage of estates can be fully administered and closed within a year or slightly longer. The time can be significantly longer when the estate has assets that are difficult to locate or administer, or if there are disputes that require a hearing to be resolved. The Probate Code states that the administration shall be finalized within 3 years of the second publication of the notice of administration, but the court can order an extension of that time.
When do beneficiaries receive their share of the probate assets?
The executor or administrator has a duty to pay valid creditor claims before distributing any nonexempt property to the beneficiaries. The amount to pay for such claims cannot be known with certainty until the 4-month period for filing claims has ended. So it is not prudent for the executor to distribute nonexempt assets to the beneficiaries before the 4-month period expires. Sometimes doubt about the amount of claims exists after the 4-month period ends. This can happen if there is a claim being disputed, or if the estate will have a tax liability and the amount of the tax is not yet known. When this happens, the executor is likely to delay any distributions at least until the tax liability has been determined. Beneficiaries of a specific devise in a will receive slightly more favorable treatment in the Probate Code. Section 633.355 provides that such property is to be delivered to the devisees after 9 months have expired since the time the executor was appointed. (The federal estate tax return and the Iowa inheritance tax, if required, are due 9 months after the death of the decedent). However, that section allows the court to delay the distribution if good cause is shown. The beneficiaries who share the residue of the estate are not entitled to receive their share until the estate is finally settled. A number of times during my career an estate has had assets far in excess of any possible tax liability. In those circumstances, I have advised the executor that partial distributions can be made to the beneficiaries. Making partial distributions results in some more work, but I think that is better than letting significant sums of money sit idle in the estate checking account when the beneficiaries could use the funds in a number of different ways.
Posted by James Radig
Crossposted from Answering Some Basic Questions About Probate In Iowa