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Probate is the orderly process used to transfer a deceased person's property to the people entitled to it.  The process has three primary goals:

     1.  Pay all of the creditors of the decedent;

     2.  Pay all taxes owed by the decedent or the estate; and

     3.  Distribute the property to people entitled to it.



The person responsible for conducting the probate process is an "executor" if the decedent had a will or an "administrator" if the decedent had no will.  The terms "personal representative" and "fiduciary" are also sometimes used.  This may be one or more individuals or an institution such as a bank.  The fiduciary is appointed by the Iowa District Court, which maintains control and oversight throughout the probate process.



Notice of probate proceedings is published twice in the local newspaper.  Creditors of the decedent have four months from the date of the second publication to file claims in the estate for money the decedent owed them.  If they do not file claims within that time, the claims are barred forever.  The fiduciary reviews all claims filed and decides whether they are legitimate claims that should be paid.



The fiduciary is responsible for paying all taxes owed by the decedent or the estate; usually from the estate property (but not from the fiduciary's personal assets).  This can include the decedent's final income tax, the estate's income tax, Iowa inheritance tax, and Federal estate tax. The Iowa inheritance tax liability is determined by the size of the estate and the identity of the people who receive the property.  The Federal estate tax liability is determined by the size of the estate, but deductions are allowed for bequests to a surviving spouse or to charity. 



When the probate proceedings are completed, the distribution of property is made according to the decedent's will or according to state law if the decedent had no will.  In some cases, partial distributions can be made before the probate proceedings are completed.  The fiduciary must present a final report to the Court and must file a complete accounting unless the accounting is waived by the people who receive the property.


How Long?

The estate must be open at least four months to allow creditors to file claims.  Most estates are closed between 6 and 18 months after they are opened, and good cause must be presented to the District Court to keep an estate open longer than three years.  Negotiations with the Iowa Department of Revenue and Finance and the Internal Revenue Service concerning tax liability are the most common reasons for delay in closing estates.



The fiduciary is entitled to a fee for services rendered in the probate process.  The Iowa Code provides that this fee for ordinary services should not exceed $120 plus 2 percent of the value of the estate property, and the fee must be approved by the District Court.  The lawyer for the fiduciary is also entitled to a fee for services rendered, and this fee is determined on the same basis as the fiduciary's fee, subject to Court approval.


Is Probate Necessary?

Probate proceedings are not always necessary.  In some cases, alternative procedures may be quicker and less expensive, but this depends on the nature and value of the property, how the decedent held title to the property, and to whom the property is to be distributed.  The lawyer should always analyze these matters to determine the most appropriate procedure to follow.


Is Probate Necessary When the First Spouse Dies?

Sometimes.  If all property is owned by the husband and wife as joint tenants with full rights of survivorship, and if the total value of the estate is under the amount that is exempt from the Federal estate tax ($2,000,000 for 2008; $3,500,000 for 2009), usually the probate process can be avoided.  If the parties own real estate, an affidavit must be filed in each county where real estate is owned certifying that all property was owned in joint tenancy.


Does a Will Help?

Yes, a will makes probate procedures much simpler.  The will specifies exactly who receives which property, nominates the person to serve as executor, waives the requirement that the executor purchase a surety bond, and authorizes the executor to act without having to obtain the Court's permission at every step (including the sale of property).  In addition to the will, effective estate planning can reduce the tax liability, streamline the ownership of property, and simplify transfer of the property at the time of death.


Advance planning and open communication with your lawyer can make the probate process much more understandable, sometimes faster, and sometimes less expensive.


--June 6, 2008.


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