Probate And Non-Probate Estate Administration

What Is Probate Administration?

Estate administration involves the gathering of a decedent's assets, paying creditors and distributing the remaining assets according to the decedent's wishes. This process is often referred to as probate. Probate is the court supervised procedure for transferring ownership of an individual's assets after death.

What Is Probate Court?

In Iowa there is no special probate court. Estate administration occurs in the District Court in the jurisdiction in which the decedent last lived. There a judge will preside over the administration, as governed by the Iowa Probate Code, the Rules of Probate Procedure, and other related laws. The Probate Code does have provisions for a judicial officer known as the Probate Referee.

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 may have against the deceased. This allows the people who receive the deceased's property to have good title, free and clear of claims. The administration process gives parties who believe they should be beneficiaries of the decedent's estate or parties that believe that they have claims against the deceased an opportunity to have their claims heard.

How Is The Probate Process Started?

The Iowa Code specifies who can ask the court to start the administration. An individual typically designates in his or her Will someone with the responsibility to administer the estate. This person in known as the executor of the estate. So 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 accepted and an executor appointed. If that person does not start the process, then any other interested person may do so. For example, the family members of the deceased, creditors, and anybody else who is a beneficiary or claims to be a beneficiary, and all parties with sufficient interest to ask for the start of administration.

If the decedent does not have a Will, the assets are distributed according to the Iowa laws of intestacy, and the person appointed with the responsibility to administer the estate is known as the administrator of the estate. When there is no will, the surviving spouse may ask for administration, as well as heirs, creditors, and others who can show good grounds to do so.

What Are The Qualifications For Serving As An Iowa Fiduciary?

One of the most important reasons to make a Will is to name your executor. After your death, your executor's primary job is to protect your property until any debts and taxes have been paid, and then transfer what's left to those who are entitled to it. If the deceased person does not have a Will, the assets are distributed according to the Iowa laws of intestacy, and the person appointed with the responsibility to administer the estate is known as the administrator of the estate. Both the executor and administrator are fiduciaries, a person charged with the acting in the most responsible manner to protect the interests of others, in a fair and unbiased way.

Under the Iowa Code Section 633.63, the qualifications of a fiduciary are as follows: Any natural person of full age, who is a resident of this state, is qualified to serve as a fiduciary, except (a) one who is under legal incompetency or is a chronic alcoholic or a spendthrift, or (b) any other person whom the court determines to be unsuitable.

Many states prohibit people who have felony convictions from serving as an executor or administrator. In Iowa, however, there is no statute prohibiting you from naming an executor or administrator who has been convicted of a felony. It's highly unlikely, but if a question arises about the qualifications of a person you've named as your executor or administrator, the court will hold a formal hearing in front of everyone with an interest in your estate – such as your spouse, heirs, creditors, and other interested parties. At the hearing, a judge will determine who is best suited to serve as executor or administrator and terminate any appointment found to be improper.

Rules for corporate fiduciaries. While you can name a corporation as your executor or administrator, it must be authorized to act as fiduciary in Iowa. That said, think carefully before appointing a bank or trust company to represent your estate. It's almost always best to name an individual. Consider an institution only if you don't know anyone you trust enough to serve or your estate is very large and complex.

Restrictions on out-of-state fiduciaries. For practical reasons, it's smart to name an executor or administrator who lives within the state. The fiduciary may have to handle day-to-day matters for weeks, months, or sometimes longer. If you must appoint a fiduciary who lives out-of-state, you should know the requirements Iowa imposes on out-of-state fiduciaries. In Iowa, a non-resident can serve as your fiduciary only if you appoint an in-state co-fiduciary. There are rare circumstances where the court may permit a non-resident to serve alone.

Do You Need An Attorney To Administer An Estate?

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." In other civil lawsuits or criminal matters, you can proceed without hiring an attorney. Self-representation is not considered wise, but it is allowed because if the 'client' is being foolish, he/she is only hurting himself/herself. The executor or administrator, on the other hand, is not representing himself or herself. Instead, the executor or administrator 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 or administrator who makes mistakes because he doesn't have the advice of counsel could end up harming many people other than himself/herself.

However, even an estate with modest assets can be challenging to executor or administer. There are specific pleadings to be filed in the estate, certain procedures to be followed and deadlines that the Court expects to be met. If there are disputes over how the estate is being administered, the executor or administrator may face legal challenges. I think you'd rather have someone with expertise that you trust assisting you. So while the Iowa requirement that a probate attorney be hired might seem overbearing at first, it actually serves a good purpose.

At Janssen Law, PLC in Des Moines, we assist clients with all phases of estate administration, including:

  • Filing of estate pleadings with the Court on behalf of the Executor or Administrator
  • Appearing on Court on behalf of the Executor or Administrator
  • Assist the estate in collecting the decedent's asset and paying creditors
  • Assist in obtaining accurate appraisals and values on assets of the estate
  • Assist in maintaining the decedent's assets until the estate is settled
  • Assist in paying any taxes due by the estate
  • Distributing the remaining assets of the estate, either by the terms of the will or according to the Iowa laws of intestacy.

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.

How Long 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 six (6) months or more. A notice has to be published in a local newspaper 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, a fiduciary income tax return has to be filed for the estate, followed by the receipt and filing of an Income Tax Certificate of Acquittance from the Iowa Department of Revenue. I can take six (6) weeks for the Department of Revenue to issue the Certificate. Then the Final Report has to be filed. If waivers cannot be obtained from everyone involved, at least another twenty (20) days must pass to give all interested parties an opportunity to object to the Final Report.

In my experience, a large majority of estates can be fully administered and closed within a year. 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 three (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 non-exempt 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 or administrator to distribute non-exempt 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 or administrator 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 nine (9) months have expired since the time the executor or administrator was appointed. The federal estate tax return and the Iowa inheritance tax, if required, are due nine (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.

If an estate has assets far in excess of any possible tax liability, then I may advise the executor or administrator that partial distributions can be made to beneficiaries. Making partial distributions results in some additional 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.

How To Avoid Probate

You can avoid probate on most of your assets by having jointly owned property, by adding beneficiaries to your life insurance policies, annuities, 401(k)s and IRAs, and by making your bank accounts Payable on Death and your investment accounts Transfer on Death.

However, for real estate, there is no way to list beneficiaries. A trust will need to be established and your real estate transferred to the trust, in order to avoid probate.

There are different types of trusts. You need to see an attorney, preferably one specializing in estate planning, for legal advice on what type of trust, who should be the trustee, who should be the successor trustee, who are the beneficiaries, what if a beneficiary dies before you, and other issues. Then the assets need to be moved to the trust in order for the estate plan of avoiding probate to work.

We Tailor Our Strategy To Suit Your Needs

My experience allows me to provide effective, efficient services in probate and non-probate estate administration. For many people, probate is a necessary process that must be dealt with in order to wrap up the final affairs of an estate.

However, some people may be able to avoid the probate process. I can analyze your specific situation before and after the death of a family member and advise you on the possibility of transferring property, assets and ownership through non-probate administration. With my knowledge, I can efficiently explore if non-probate options exist. Whenever possible, I strive to simplify and expedite the administration process.

A Trusted Advisor For Estate Administration

Every estate administration situation is unique. We will carefully review your case and help you determine how much assistance is necessary. We welcome the opportunity to answer your questions and recommend an effective course of action during a free consultation. Call 515-421-9068 or use our online contact form to schedule a consultation.