Iowa Wills vs. Trusts
Estate planning in Iowa can be straightforward and stress-free. Iowa residents benefit from several advantageous estate planning provisions, including inheritance tax exemptions specifically for immediate family members, efficient processes for handling smaller estates, and robust protection measures for spouses. By clearly understanding whether a will or trust better suits your situation, you can help your loved ones avoid unnecessary expenses, complications, and delays while ensuring your wishes are honored and your assets properly distributed.
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US Map For The Different Will and Trust Requirements by State
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Iowa Will Requirements
An Iowa Last Will and Testament should include:
- Age and Capacity: Testator must be “of sound mind” and at least 18 years old
- Format: Must be in writing
- Signature: Must be signed by the testator (or by another person for the testator at the testator’s request)
- Declaration: At the time of execution, the testator must declare the instrument to be his or her will
- Witnesses: Must be signed by at least two witnesses
Witness Requirements
For Iowa wills:
- Witnesses must observe the testator’s execution of the will
- Witnesses must sign the will in the presence of the testator and the other witness
- Witnesses must be at least 16 years of age
- Witnesses must be generally competent to act as a witness under Iowa law
Interested Witnesses
An Iowa will witnessed by an interested party (i.e., someone who is devised or bequeathed some portion of the testator’s estate) is not invalid. 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 intestate
- This limitation does not apply if there are at least two other witnesses in addition to the interested witness
Self-Proved Wills
Though Iowa wills need not be notarized, a will can be made “self-proved” through execution of a notarized affidavit by the testator and witnesses. When a will is self-proved:
- It can be admitted to probate without requiring testimony from witnesses
- The affidavit can be executed at the same time as the will itself or subsequent to execution
- The testator and witnesses attest that the document was voluntarily created as a will and signed while they had capacity
The Iowa legislature provides a sample form for a self-proved affidavit, at Iowa Code §633.279(2).
Personal Property Memorandum
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. For the memorandum to be valid:
- It must be dated
- It must be either written in the testator’s handwriting or signed by the testator
- The devised items and intended recipients must be identified with reasonable certainty
The incorporated list can be created before or after a will is executed and can be altered by the testator. Items within the list are treated as if they had been subject to specific bequests in the will. The list cannot include personal property used in trade or business.
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Amendment, Revision, and Revocation of Iowa Wills
Amending an Iowa Will
An Iowa will can be amended through execution of:
- A later will
- A codicil that satisfies all formalities for execution of a valid will
Revoking an Iowa Will
Iowa wills can be revoked by:
- Cancelation of the document by the testator (or another person in the testator’s presence at the testator’s direction) with the intent of revoking the will
- Destruction of the document by the testator (or another person in the testator’s presence at the testator’s direction) with the intent of revoking the will
When a will is revoked by cancelling, the cancelation must be witnessed under the same standards applying to creation of a new will.
Reviving a Revoked Will
A revoked will cannot be revived except through:
- Subsequent re-execution of the document
- Validly executing a later will or codicil expressly incorporating by reference the previously revoked will
Curing a Defectively Executed Will
Under Iowa law, a will that was defectively executed initially can be “cured” through the testator’s proper execution of a subsequent codicil clearly identifying the will that is being cured.
Automatic Revocation by Divorce
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.
Provisions deemed revoked by a divorce are revived if the testator later remarries the same spouse.
Children Born After Will Execution
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 intestate—unless the omission appears to have been intentional.
Holographic and Oral Wills
Holographic Wills
Iowa law does not recognize holographic (or handwritten) wills. Subject to the rule allowing a defectively executed will to be “cured” through a later codicil, a will written in the testator’s handwriting must satisfy all other requirements for creation of a valid will to be admissible in probate.
Oral Wills
Oral (or “nuncupative”) 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, §§633A.1101, et. seq.
Requirements for a Valid Iowa Trust
For a trust to be valid under Iowa law:
- It must serve a private or charitable purpose that is not unlawful or against public policy
- Private trusts must be administered for the benefit of the trust’s beneficiaries
- The settlor must express an intent to create a trust and have adequate capacity (measured under the same standard applying to wills)
Required Trust Elements
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)
- A trustee with actual duties to perform
Sole Trustee/Beneficiary Rule
The sole trustee of an Iowa trust cannot also be the trust’s sole beneficiary. However, an Iowa trust is not invalid—and title to assets is not deemed to “merge”—if a trust’s 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).
Written Trust Requirement
In general, oral trusts are not recognized under Iowa law. To be enforceable, an Iowa trust must be evidenced by a written instrument signed by the settlor or trustee.
Trust Creation Methods
Iowa trusts can be created through:
- Transfer of property by a settlor to a trustee (either during life or through a will)
- A settlor’s declaration as the owner of property that the property is held as trustee
- Exercising a power of appointment in favor of a trustee
- A promise to transfer property to a trustee that can be enforced by the trustee
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.
Revocability
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.
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.
Trust Termination
Iowa trusts terminate upon:
- Expiration or revocation under the trust’s own terms
- When the trust’s purpose has been fulfilled
- When the trust’s purpose becomes unlawful or impossible to achieve
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
- Modified or terminated upon the consent of the settlor and all beneficiaries
An Iowa court may also modify a trust to conform to the settlor’s intentions or to achieve the settlor’s tax objectives.
Automatic Trust Provision Revocation
As with wills, a provision in an Iowa revocable trust in favor of the settlor’s spouse (or relative of the spouse) is void if the settlor and spouse are divorced after execution of the trust—unless the trust instrument expressly provides otherwise.
Children Born After Trust Creation
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 intestate—unless the omission appears to have been intentional.
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Special Considerations
Estate and Inheritance Taxes
No Estate Tax, But Inheritance Tax Applies
Iowa does not impose a state-level estate tax on decedent’s estates. Large Iowa estates may still be liable for the federal estate tax.
However, Iowa does impose an inheritance tax on inheritances received from deceased Iowa residents or owners of property located within Iowa. The tax ranges from 5% to 15% depending on the degree of kinship between decedent and beneficiary.
Important Inheritance Tax Exemptions
The inheritance tax is inapplicable if:
- The recipient is the spouse or linear ancestor or descendant (e.g., son, daughter, parent) of the decedent
- The estate has a net value below $25,000
Simplified Probate
Iowa law provides a streamlined probate process for qualifying estates:
Small Estates Probate ($100,000 or less)
- Available for estates valued at $100,000 or less
- Personal representative petitions the probate court for approval
- If approved, the estate can be administered and assets distributed without going through the more burdensome full probate process
Transfer by Affidavit ($50,000 or less)
- Available for estates valued under $50,000 and not including real estate
- Assets can be transferred upon completion of the required affidavit by a representative of the estate
- 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
Along with living trusts, Iowa law offers multiple options for transferring assets outside of probate:
Transfer-on-Death Deeds and Vehicle Titles
Iowa does not currently allow for TOD designations on either real estate deeds or motor vehicle titles.
Spendthrift Trusts
Although the general rule is that creditors of a trust’s beneficiaries may attach a beneficiary’s interest in a trust, Iowa law recognizes “spendthrift provisions,” which prevent beneficiary creditors from attaching trust assets until actually distributed to the relevant beneficiary.
In Iowa, spendthrift provisions do not protect against attachment to satisfy:
- Certain tax claims
- Claims arising from services or supplies for “necessaries” provided to the beneficiary
Spendthrift provisions are also ineffective as to claims asserted against a beneficiary who is also the trust’s settlor.
Creditors of a revocable trust’s settlor can attach trust assets as long as the settlor remains living or through an estate claim upon the settlor’s death. In the case of irrevocable trusts, settlors’ creditors can attach up to the maximum amount of trust assets that could be distributed for the settlor’s benefit.
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Wills vs. Trusts: Comparison
| Feature | Wills | Trusts |
|---|---|---|
| When It Takes Effect | After death | Can be immediate (living trust) or after death (testamentary trust) |
| Probate Process | Requires probate | Assets in trust avoid probate |
| Privacy | Public record | Generally private |
| Challenges | Can be challenged in probate court | More difficult to challenge |
| Cost to Create | Generally less expensive | Usually more expensive |
| Ongoing Administration | None until death | May require ongoing management |
| Protection During Incapacity | None (requires separate power of attorney) | Can provide management if grantor becomes incapacitated |
| Iowa Special Consideration | A defectively executed will can be “cured” by a properly executed codicil | Must be in writing; Iowa does not recognize oral trusts |
Conclusion
Creating a will or trust does not have to be difficult or intimidating for Iowa residents. However, certain circumstances—like second marriages, stepchildren, aging parents, special needs beneficiaries, guardianships, and business interests—can add complexity and result in unforeseen consequences.
Iowa’s unique features like inheritance tax exemptions for direct relatives, simplified probate options for estates under $100,000, and comprehensive spousal protections require careful planning. When any out-of-the-ordinary issues are present, it’s advisable to consult with an experienced attorney familiar with and licensed under Iowa law to ensure your estate plan takes full advantage of the state’s provisions while avoiding potential pitfalls.
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Frequently Asked Questions About Iowa Wills and Trusts
Do I need a lawyer to create a will in Iowa?
While Iowa law doesn’t require an attorney to create a valid will, consulting with an estate planning lawyer is highly recommended, especially for complex situations. Iowa has specific requirements for valid wills, including the need for two witnesses who must observe the testator’s execution of the will and sign in the presence of the testator and each other. At the time of execution, the testator must declare the instrument to be their will. An attorney can help ensure your will is legally sound and properly executed. Additionally, Iowa does not recognize holographic (handwritten) wills unless they meet all formal requirements. Simple mistakes in execution can invalidate your will, so professional guidance can save your family significant complications later.
What happens if I die without a will in Iowa?
If you die without a will in Iowa (intestate), state laws determine how your assets are distributed. Your surviving spouse would receive your entire estate if you have no children or if all your children are also your spouse’s children. If you have children from a previous relationship, your spouse receives $50,000 plus half the balance of your estate, with the remainder going to your children. If you have no spouse, assets go to descendants, then parents, then siblings, and so on according to Iowa’s intestacy laws. Additionally, the probate court would appoint an administrator for your estate and guardians for minor children without considering your preferences. This “one-size-fits-all” approach often doesn’t align with what many people would choose if they created their own estate plan.
How does Iowa’s inheritance tax work?
Iowa is one of only six states that still imposes an inheritance tax, but it provides generous exemptions for close relatives. The tax is paid by the person who inherits property, not by the estate itself. The rates range from 5% to 15% depending on the relationship between the decedent and the heir. However, you don’t need to worry about the tax if you’re leaving assets to your spouse, children, grandchildren, parents, or grandparents – these relatives are completely exempt from the inheritance tax. Siblings, nieces, nephews, and more distant relatives will pay the tax at varying rates. The tax also doesn’t apply to estates with a total net value under $25,000. Unlike estate taxes, which are based on the total estate value, inheritance taxes are calculated based on each beneficiary’s individual inheritance.
Can I create a handwritten will in Iowa?
No, Iowa law does not recognize holographic (handwritten) wills. Even if a will is entirely in your handwriting and signed by you, it will not be valid in Iowa unless it also meets all the other requirements for a valid will, including being witnessed by at least two competent witnesses who sign the will in your presence and in the presence of each other. The one exception is that if you have a defectively executed will (including a handwritten one that lacks proper witnesses), Iowa has a unique provision that allows the will to be “cured” through the proper execution of a subsequent codicil (an amendment to a will) that clearly identifies the will being cured. This is why it’s important to consult with an estate planning attorney who understands Iowa’s specific requirements rather than attempting to create a homemade will.
What is Iowa’s spousal elective share?
Iowa provides strong protections for surviving spouses through its elective share laws. If you try to disinherit your spouse in your will, Iowa law allows your spouse to reject the will’s terms and instead claim an “elective share” of your estate. In Iowa, this elective share includes one-third of your real property, one-third of your personal property not needed to pay estate claims, one-third of assets held in any revocable trust you created, and all exempt property you held as head of household. Alternatively, your spouse can choose to take what was provided in your will, inherit under intestate succession rules if advantageous, or elect a life estate in your homestead. The spouse can also apply for a support allowance during estate administration. These protections reflect Iowa’s policy of ensuring spouses are not left destitute, regardless of what a will might specify. It’s important to consider these protections when creating your estate plan, especially in second marriages.
How does Iowa’s simplified probate process work?
Iowa offers two simplified probate options depending on the estate size. For estates valued at $100,000 or less, Iowa provides a streamlined “small estates” probate process. The personal representative petitions the court for approval, and if granted, the estate can be administered and assets distributed without the more extensive procedures required in full probate. For even smaller estates valued under $50,000 that don’t include real estate, Iowa allows for transfer of assets completely outside of probate through a simple affidavit. The representative completes an affidavit attesting to the estate’s value and confirming that debts and taxes have been or will be paid. This affidavit can then be presented to banks, financial institutions, and other asset holders to transfer the deceased person’s property to the rightful heirs without court involvement. These simplified procedures can save considerable time, money, and paperwork compared to traditional probate.
Does Iowa recognize transfer-on-death deeds for real estate?
No, Iowa currently does not allow for transfer-on-death (TOD) designations on real estate deeds or motor vehicle titles. This differs from many states that have adopted the Uniform Real Property Transfer on Death Act or similar legislation. Without TOD deed options, Iowa property owners need to consider other methods to avoid probate for real estate, such as placing property in a revocable living trust, owning property as joint tenants with right of survivorship, or using other estate planning strategies. For personal property, Iowa does recognize payable-on-death (POD) designations for bank accounts and transfer-on-death registrations for securities and brokerage accounts, which provide alternative ways to avoid probate for those assets. If avoiding probate for real estate is important to your estate planning goals, consulting with an Iowa estate planning attorney about creating a revocable living trust may be your best option.
What are the requirements for creating a valid trust in Iowa?
To create a valid trust in Iowa, several requirements must be met. First, the trust must serve a private or charitable purpose that is lawful and not against public policy. Private trusts must be administered for the benefit of the trust’s beneficiaries. The settlor (person creating the trust) must express an intent to create a trust and have adequate capacity (the same standard as for creating a will). The trust must have a definite beneficiary or one that can be ascertained within the relevant time period, with exceptions for charitable trusts, pet trusts, and honorary trusts. A trustee with actual duties must be appointed. Unlike some states, Iowa requires trusts to be evidenced by a written instrument signed by the settlor or trustee – oral trusts are not recognized. If the trust is created through transfer of property, the written trust instrument must be created prior to or at the time of the transfer. Iowa trusts are assumed to be revocable unless expressly made irrevocable. These specific requirements highlight the importance of working with an experienced Iowa attorney when creating a trust.
