A Last Will and Testament (a "Will") is a document which takes effect after you "pass". It has many purposes, but the most important purpose is to provide the "Testator" (the person issuing the Will) with peace of mind while they are alive that their wishes will be carried out after they pass.
A Will is used to nominate an Executor who will take control of the estate and be accountable to the Probate Court. Although the judge of the probate court ultimately decides who will act as Executor for an Estate, unless good reason is shown, they will normally appoint whoever is nominated in the Will. An Executor is a fiduciary who is charged with the duty of paying the debts and taxes which are a liability of either (or both) the estate or the Testator, as well as carrying out the Testator's wishes as to the distribution of the Testator's assets. Unless bond is waived, either by the terms of the Will itself, or by concurrence of all beneficiaries, the Executor will need to post a bond in an amount determined by the probate court judge.
The provisions of a Will governing the distribution of assets are an important aspect of an estate plan. Who gets assets, how much they get, and how they get them can all have Iowa Inheritance Tax, Federal Estate Tax and income tax (both state and federal) implications.
Unless there is a written agreement entered into before marriage, a surviving spouse cannot be "disinherited". A surviving spouse has a right to one third (1/3) of the Testator's estate, as well as the right to live in the homestead. These rights however, are subordinate to any creditors, and any mortgage on the house must be paid in order for the surviving spouse to keep the house. No amounts passing directly to a surviving spouse are subject to either Iowa Inheritance Tax or Federal Estate Tax.
Commonly, except for estates where the total assets of BOTH spouses (combined) are in excess of Three Million Five Hundred Thousand Dollars ($3,500,000), the estate plan contained in the Will contemplates that the entire Testator's estate goes to the surviving spouse, and upon the passage of the surviving spouse, the estate goes to the children (or grandchildren if a child pre-deceases) and/or to other designated beneficiaries. Although assets passing to children/grandchildren of the Testator are not subject to Iowa Inheritance Tax, if the total of the assets passing to beneficiaries other than a surviving spouse (including life insurance and retirement plans) exceed $3,500,000 then there will be a liability for Federal Estate Tax. A decree of divorce revokes all bequests to a former spouse.
Assets transferred by Will either pass outright (they are given directly) to the named beneficiaries, or the Will can establish a trust (a "testamentary trust") to hold and administer the assets on behalf of the beneficiary until certain ages or conditions are met. If a testamentary trust is established, a trustee must be appointed and the terms and conditions of the trust should be fully spelled out. In order to promote family harmony, and to take advantage of their expertise and access to financial instruments, we normally recommend that a bank serve as trustee of testamentary trusts, rather than an individual (often a family member is proposed to act as trustee). The terms of the testamentary trust should provide guidance to the trustee as to how the funds are to be expended on behalf of the beneficiary (normally for heath, education and to meet their normal living needs), and when the principal will be distributed to the beneficiary. Properly drafted, a testamentary trust should both protect the beneficiary (note that a surviving spouse can be a beneficiary, as can children/grandchildren who survive a Testator) as well as provide directions for using the assets for the beneficiary's welfare.
A Will is also an appropriate place to nominate a guardian for minor children. This is the individual or individuals who will raise a minor child, and is arguably the most important reason for people to have a Will, regardless of the size of their estate. Often this is the most difficult individual (s) to select, and frequently spouses initially disagree as to who should be selected. The difficulty of selecting the guardian should not deter individuals from creating a Will. Although it is not "illegal", we recommend that Testator's do not name multiple people as guardians. As an example we would NOT recommend the following: "I name John and Sandie to be guardian of my son Josh". We recommend that if you really mean John, then John should be named alone. Sandie could be named as the alternate guardian if John is unable or unwilling to serve.
To be admitted to probate, and thereby have its desired effect and use, a will must be signed by a Testator in front of two disinterested witnesses, who must also sign the document. While video taped messages/statements as to distributions of assets may have become popular in the media, these do not constitute a substitute for a written, signed and witnessed document.
A Will is valid unless revoked or superseded. Accordingly, to insure that it properly reflects the wishes of the Testator, we recommend that a will be reviewed:
With offices just west of downtown Des Moines, our offices are open during weekly business hours. Representing families throughout Iowa, we will visit clients who are unable to make it to our office. Contact us today for a free initial consultation.