IOWA WILLS AND TRUSTS REQUIREMENTS
Statutory Authority.
Wills:ย Iowa Code, Title XV, Chapter 633, Subchapter VI (Iowa Code ยงยง633.264, et. seq.).
Trusts:ย Iowa Trust Code, Title XV, Chapter 633A (Iowa Code ยงยง633A.1101, et. seq.).
Iowa Will Requirements.
To create a valid will under Iowa law, a testator must be โof sound mindโ and at least 18 years old.ย An Iowa will must be in writing and must be signed by the testator (or by another person for the testator at the testatorโs request). At the time of execution, the testator must declare the instrument to be his or her will.
A valid Iowa will must also bear the signatures of at least two witnesses, who must observe the testatorโs execution of the will and sign the will in the presence of the testator and the other witness. Witnesses to an Iowa will must be at least 16 years of age and must be generally competent to act as a witness under Iowa law.
An Iowa will witnessed by an interested party (i.e., someone who is devised or bequeathed some portion of the testatorโs estate) is not invalid.ย However, a devise to an interested witness is deemed void to the extent, in the aggregate, total devises to the interested witness exceed the share of the estate the interested witness would have received had the testator died intestateโunless there are at least two other witnesses in addition to the interested witness.
Iowa wills need not be notarized, but a will can be made self-proved through execution of a notarized affidavit by the willโs testator and witnesses.ย A self-proved affidavit serves in place of witness testimony required for admission of a will in probate court. Self-proving affidavits can be executed at the same time as the will itself or subsequent to execution.ย Within the affidavit, the testator and witnesses attest that the document was voluntarily created as a will and signed while the testator and witnesses had capacity to create the will and act as witnesses.ย The Iowa legislature provides a sample form for a self-proved affidavit, at Iowa Code ยง633.279(2).ย ย
Iowa law permits testators to incorporate by reference a written list setting forth dispositions of specific items of tangible personal property not otherwise addressed in a will.ย The list or memorandum must be dated and either written in the testatorโs handwriting or signed by the testator.ย The devised items and intended recipients must be identified with reasonable certainty.ย The incorporated list of tangible personal property can be created before or after a will is executed and can be altered by the testator.ย Items within the list are treated as if they had been subject to specific bequests in the will.ย The list cannot include personal property used in trade or business.
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Amendment, Revision, and Revocation of Iowa Wills.
An Iowa will can be amended through execution of a later will or codicil satisfying all formalities for execution of a valid will.ย An Iowa will can be revoked through either cancelation or destruction of the document by the testator (or another person in the testatorโs presence at the testatorโs direction) with the intent of revoking the will.ย When a will is revoked by cancelling, the cancelation must be witnessed under the same standards applying to creation of a new will.
A revoked will cannot be revived except through subsequent re-execution of the document or by validly executing a later will or codicil expressly incorporating by reference the previously revoked will.ย Under Iowa law, a will that was defectively executed initially can also be โcuredโ through the testatorโs proper execution of a subsequent codicil clearly identifying the will that is being cured.
If a testator is divorced after executing an Iowa will, any provisions in favor of the former spouse (or a relative of the former spouse) are deemed to have been revoked unless the will expressly provides otherwise.ย Provisions deemed revoked by a divorce are revived if the testator later remarries the same spouse.ย ย
If a child is born to or adopted by a testator after execution of an Iowa will, the child inherits a share of the estate equal to what the after-born child would have received had the decedent parent been intestateโunless the omission appears to have been intentional.ย ย
Holographic and Oral Wills.
Iowa law does not recognize holographic (or handwritten) wills.ย Subject to the rule allowing a defectively executed will to be โcuredโ through a later codicil, a will written in the testatorโs handwriting must satisfy all other requirements for creation of a valid will to be admissible in probate.
Oral (or โnuncupativeโ) wills are not recognized under Iowa law.
Iowa Trust Requirements.
Iowa trusts are primarily governed by the Iowa Trust Code, enacted by the legislature at Iowa Code, ยงยง633A.1101, et. seq.ย An Iowa trust must serve a private or charitable purpose that is not unlawful or against public policy.ย Private trusts must be administered for the benefit of the trustโs beneficiaries.ย ย ย
To create a valid trust under Iowa law, the settlor must express an intent to create a trust and have adequate capacity (measured under the same standard applying to wills).ย Additionally, Iowa trusts must have a definite beneficiary or beneficiary ascertainable within the relevant time period (subject to exceptions such as for charitable trusts, pet trusts, and honorary trusts) and a trustee with actual duties to perform.ย ย
The sole trustee of an Iowa trust cannot also be the trustโs sole beneficiary.ย However, an Iowa trust in not invalidโand title to assets is not deemed to โmergeโโif a trustโs sole trustee is also its sole present beneficiary, as long as another person has a beneficial interest in the trust (even a contingent or future interest).ย ย
In general, oral trusts are not recognized under Iowa law.ย To be enforceable, an Iowa trust must be evidenced by a written instrument signed by the settlor or trustee.ย ย
Iowa trusts can be created through transfer of property by a settlor to a trustee (either during life or through a will), a settlorโs declaration as the owner of property that the property is held as trustee, by exercising a power of appointment in favor of a trustee, or through a promise to transfer property to a trustee that can be enforced by the trustee.ย If a trust is created through transfer of property, the written trust instrument must be created prior to or at the time of the transfer.
Iowa law assumes that trusts are revocable, and the settlor retains the right to revoke or amend the trust, unless the trust is expressly made irrevocable.ย As long as a settlor remains mentally competent, a settlor can revoke or modify a revocable trust under terms included within the trust instrument or through execution of a signed writing or will.
Iowa trusts terminate upon expiration or revocation under the trustโs own terms, when the trustโs purpose has been fulfilled, or when the trustโs purpose becomes unlawful or impossible to achieve.ย Under appropriate circumstances, an Iowa irrevocable trust may be modified or terminated by a court upon the petition of the settlor, trustee, and/or beneficiaries, and modification or termination may sometimes be accomplished upon the consent of the settlor and all beneficiaries.ย An Iowa court may also modify a trust to conform to the settlorโs intentions or to achieve the settlorโs tax objectives.
As with wills, a provision in an Iowa revocable trust in favor of the settlorโs spouse (or relative of the spouse) is void if the settlor and spouse are divorced after execution of the trustโunless the trust instrument expressly provides otherwise.ย A child born to a settlor after creation of a trust and not provided for within the trust is entitled to a share in trust assets equal to the estate share the after-born child would have received had the decedent died intestateโunless the omission appears to have been intentional.
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Estate Taxes: Iowa does not impose a state-level estate tax on decedentโs estates.ย Large Iowa estates may still be liable for the federal estate tax.ย Iowa does, though, impose an inheritance tax on inheritances received from deceased Iowa residents or owners of property located within Iowa.ย Iowaโs inheritance tax is inapplicable if the recipient of the inheritance is the spouse or linear ancestor or descendant (e.g., son, daughter, parent) of the decedent.ย The tax is also inapplicable to estates with a net value below $25,000.ย When the inheritance tax applies, the tax rate varies from 5% to 15% depending on the degree of kinship between decedent and beneficiary.
Simplified Probate:ย Iowa law provides a streamlined probate process for qualifying โsmall estatesโ (defined as $100,000 or less in value).ย When small estates probate applies, a personal representative of the estate can petition the probate court for approval of simplified probate.ย If approved, the estate can be administered and assets distributed without going through the more burdensome full probate process.
For estates valued under $50,000 and not including real estate, Iowa allows for transfer of assets outside of probate.ย Qualifying assets can be transferred upon completion of the required affidavit by a representative of the estate.ย The affidavit attests to the value of the estate and declares that relevant estate debts and taxes have been or will be paid.
Non-Probate Transfers:ย Along with living trusts, Iowa law offers multiple other options for transfer of assets outside of probate.ย POD (payable-on-death) and TOD (transfer-on-death) designations, which provide for automatic transfer of an asset to a beneficiary upon an ownerโs death, can be used in Iowa for a variety of assets.ย For instance, POD designations can be added to financial accounts and CDs, and TOD designations can be used with assets like registered securities and brokerage accounts.ย ย
Similarly, some assetsโlike retirement accounts and life insuranceโallow owners to name a beneficiary who automatically takes ownership of the asset upon the original ownerโs death.
Assets co-owned as joint tenants with a right of survivorship automatically transfer to a surviving owner upon the other ownerโs death, with no need for probate.ย Joint tenancy can be used for co-ownership of most assets in Iowa.ย Iowa law does not recognize tenancy by the entireties, another form of joint ownership with a right of survivorship that can (where recognized) only be used for co-ownership of assets by two spouses.ย ย
Transfer-on-Death (TOD) Deeds and Vehicle Titles:ย Iowa does not currently allow for TOD designations on either real estate deeds or motor vehicle titles.
Spousal Shares: Iowa law protects surviving spouses from disinheritance by guarantying a surviving spouse an elective share in a decedent spouseโs estate.ย The elective share includes one-third of the real property in the estate, one-third of personal property not necessary for payment of estate claims, one-third of assets held in a revocable trust created by the decedent, and all exempt property held by the decedent as a head of household.
A surviving spouse can forego the elective share and opt instead to inherit under the provisions of a decedent spouseโs will or under intestate succession rules.ย A surviving spouse can relinquish rights to property which would otherwise be part of the elective share and can elect a life estate in a homestead owned by the decedent spouse. Spouses and minor children may also apply for a support allowance paid from assets included within a decedentโs estate or trust.
In intestate estates, the surviving spouse of an Iowa resident receives the entire estate of a decedent spouse if the decedent leaves no children or only children who are also the children of the surviving spouse.ย If the decedent leaves at least one child who is not the child of the surviving spouse, the spouseโs intestate share is $50,000 plus one-half the remainder.ย ย
Iowa Spendthrift Trusts:ย Although the general rule is that creditors of a trustโs beneficiaries may attach a beneficiaryโs interest in a trust, Iowa law recognizes โspendthrift provisions,โ which prevent beneficiary creditors from attaching trust assets until actually distributed to the relevant beneficiary.ย In Iowa, spendthrift provisions do not protect against attachment to satisfy certain tax claims or claims arising from services or supplies for โnecessariesโ provided to the beneficiary.ย Spendthrift provisions are also ineffective as to claims asserted against a beneficiary who is also the trustโs settlor.
Creditors of a revocable trustโs settlor can attach trust assets as long as the settlor remains living or through an estate claim upon the settlorโs death.ย In the case of irrevocable trusts, settlorsโ creditors can attach up to the maximum amount of trust assets that could be distributed for the settlorโs benefit.ย ย
Creating a will or trust does not have to be difficult or intimidating.ย However, certain circumstancesโlike second marriages, stepchildren, aging parents, special needs beneficiaries, guardianships, and business interests (to name a few)โcan add a layer of complexity and result in unforeseen long-term consequences.ย Whenever any out-of-the-ordinary issues are present, itโs a good idea to consult with an experienced attorney familiar with and licensed under the laws of the relevant jurisdiction.
