While Iowa citizens know they should create Wills, the reality is not everyone gets to it before they pass on. If you die and you haven’t made a will yet, the state of Iowa has a plan for distribution of your possessions to your heirs in a process known as intestate succession. How does this work, and what is the impact on your legacy?
How Intestate Succession Works in Iowa
Some assets may not be a part of the probate estate because, before your loved one died, they designated a person to receive the asset. Such assets might include:
- IRA accounts, 403 (b) accounts, 401 (k) accounts, or other retirement accounts
- Life insurance payouts
- Bank accounts or securities marked as payable-on-death
- Property held in joint tenancy or living trust
- Property in trusts
Assets that do not go through intestate pass on to the other named beneficiary or beneficiaries. For instance, if your spouse survives you and they are a named beneficiary on your 401 (k) account, they will receive the funds. If no beneficiary was named in the documents creating these assets, the assets become the property of the probate estate.
The state of Iowa looks to your surviving family relatives — chiefly, your parents, your spouse and your children or other descendants — to determine who receives what property. If you have children, but no spouse, your children inherit everything. If you have a spouse, they inherit everything whether or not you had children together.
The state of Iowa looks to your surviving family relatives — chiefly, your spouse and your children, your parents or other descendants — to determine who receives what property. If your spouse is still living, that spouse will get property subject to one of two rules: 1) if the decedent had no children or the decedent’s only children are also children of the surviving spouse, the surviving spouse gets everything; or 2) If you have a spouse and children from another relationship, your spouse will receive all your exempt personal property and half of all other your assets with the children from a prior relationship(s) with your spouse receiving a minimum payout of $50,000. If a child by another relationship has died, their surviving lineal descendants will receive their share.
These as just some of the basic rules. Other rules apply when a person dies without a spouse and never had children. It is important that an attorney assist the surviving family in working out how property will be divided.
Plan for Your Legacy
The intestacy process can be painful for your loved one. They may wonder if it reflects your wishes or ask themselves why you died without creating a will. Plan for your legacy while you are alive by creating a comprehensive estate plan, including a will. This way, you can specify who receives different assets.
You get to decide, for instance, whether to set up a fund to support your grandchild’s college education, leave a legacy to a charity, or leave money that could help an ailing sibling, who may otherwise not inherit from your estate. Stepchildren do not inherit under intestacy laws, so if you have stepchildren you wish to include in your legacy, you need a will to do so. Likewise, grandchildren only inherit if their parents (your children) have died.
Interested in learning more about creating a will? Contact Daniel.