Estate planning is a way of relieving everyone’s mind after you are gone. You can make all your property dispositions and bequests ahead of time and give yourself the flexibility to change your mind if you choose.
Estate planning laws are always changing, as the Iowa legislature recognizes that people want to maintain maximum control over their estates. Recently, changes were made in the law allowing settlors (the people who fund trusts) to determine who could manage their trusts.
Iowa’s Directed Trust Statute
Prior to July 1, 2020, Iowa courts would assign corporate trustees to manage family trusts after the death of the settlor. After the passage of the Directed Trust Statute, settlors could assign family members to specific roles within the trust. Of course, not all estates are large or complex enough to need these positions. If your estate includes multiple investments or a great deal of property, and you want to ensure it remains with the family through multiple generations, you need to consider including instructions for these positions when establishing your trust.
- Investment Trust Director. This person is responsible for advising the trustee about what parts of the estate to invest, when to buy and sell, and what assets can be sold or reserved.
- Distribution Trust Director. You may have laid out how you want your property distributed when you die, but family dynamics change, and you may not be privy to everyone’s needs when you write your will. A distribution director can help the trustee in distributing the estate with an eye to the immediate needs of your beneficiaries.
- Trust Protectors. If you intend your trust to last more than one lifetime, then you may want someone within the family to monitor the estate. If your beneficiaries include grandchildren or great-grandchildren yet unborn, you may consider assigning someone to monitor the growth of your estate to ensure that everyone will be taken care of down the line. The trust protector’s powers are defined by the trust code.
The Directed Trust Statute was created to help make sure that your wishes and your beneficiaries will be protected long after you’re gone. This protection is one reason that a carefully written trust is a key part of your estate plan. If you have pressing questions about your plans, contact our legal team today.
Benefits of a Living Trust
Living trusts are important to have in your estate plan for other reasons. In general, a revocable living trust gives you control over your assets even after your death. This control can be important when you have many beneficiaries or want your estate divided in particular ways.
- Distribution can be delayed or made conditional upon events. If you want to wait until a child graduates or resolves credit issues before you give them any of your assets, it can be done with a living trust. Minor children are more easily provided for since the trustee simply carries on with the trust distribution until they reach adulthood.
- Special situations can be provided for. Wills and intestacy cannot always include provisions for unforeseen circumstances, but a trustee can usually be appointed for every situation. For instance, if a settlor dies leaving a seriously impaired spouse, a will would simply give the spouse the inheritance. A trust could provide for a trustee, a guardian, and an income.
- Your heirs can avoid probate. There are pros and cons to this. The costs of setting up a living trust can be high, especially if you have a great deal of property. On the other hand, the benefits will be realized at the other end of the process when there is no probate to cope with. A trust will not spare your heirs all inheritance taxes but can avoid some of the highest ones.
- Trusts are much harder to challenge in court. Iowa courts give great weight to the language and intent of the trust, so unless there is clear evidence of a reason to do so. The courts seldom grant modifications to trusts after the settlor’s death.
When you are deciding how to distribute your estate after your death, a living trust is the most flexible of your alternatives. You should discuss your options carefully with your attorney before making any final decisions about your estate.
You should consult a knowledgeable attorney from Arenson Law Group, PC when considering how best to manage your estate. Our Cedar Rapids estate planning attorneys can help you decide the best way to plan your trust in accordance with Iowa statutes. Call us at (319) 363-8199 for a consultation about your estate plans, or contact us online, and we’ll be in touch right away. Let us help you put your mind at ease.