- Ag Docket
Estate planning is an important process that concerns the disposition of one’s property at death as well as by gift (or sale) to specified individuals and organizations during life. It’s an important process to engage in, but it can also be a difficult process to get started and execute properly once it has started. Complicating matters is that estate planning is unique to the individuals involved – there is no such thing as a “one size fits all” estate plan. That means that proper estate planning is tied to the goals and objectives of the parties involved.
More estate planning information can be found on Ag Decision Maker (Iowa State Extension): http://www.extension.iastate.edu/agdm/wdbusiness.html
A Living Will is a person’s stated wishes for end-of-life medical decisions. A Health Care Power of Attorney provides legal authority for a person or persons designated to make medical decisions for you when you are not able to make the decisions yourself. The Health Care Power of Attorney should be someone willing to make decisions in harmony with your Living Will. Having a Health Care Power of Attorney allows medical personnel to know who they need to talk to and can help alleviate legal battles regarding who has authority to make medical decisions for you.
The exemption in 2019 is $11,400,000 per person.
You must be of full age and sound mind. The will should not be the result of undue influence by another person. And the will must be signed by the person making the will (testator) and witnessed by two disinterested witnesses.
If a person dies intestate (without a will), state law specifies how the property will be distributed among the heirs.
The answer to this question will likely be different from person to person. Trusts can be administered without probate, which might provide some level of privacy (probate documents are public documents). There are costs associated with establishing and maintaining a trust and there will be costs for probating an estate. Putting your property in a revocable trust will not avoid estate taxes (if over the exemption). The determination of whether a trust or other estate planning structure is best to meet your individual objectives should be made after discussing the issue with a trusted attorney or other professional.
Unlike an estate tax, which is paid by the estate of the person who died, an inheritance tax is paid by the beneficiary who receives the property. In Iowa, there are many exceptions to the tax depending on the beneficiary's relationship to the person who died.
Joint tenancy with rights of survivorship is a form of co-ownership. During your lives, you and your sister both own the property. The big difference occurs when either you or your sister dies. Unlike other types of co-ownership, the entire interest in the property owned by the deceased person automatically transfers to the surviving co-owner. So, if your sister does before you, you will become the sole owner of the entire 80 acres. You can then devise the land to anyone your desire. Your sister’s heirs would receive no part of the land because all of her interest in the property terminated at the time of her death.
Tenancy in common is a form of co-ownership. As a tenant in common, you have an undivided one-half interest in the entire 80 acres. In other words, you and your brother both own the entire 80 acres together. Your interest can be devised to your heirs, just as his interest survives his death and can be devised to his heirs. Because the property is held as a whole, if a tenant in common wants to sell his interest, the owner may have to file an action for partition for the court to divide the property.
The issue of treating on-farm and off-farm heirs equitably can be tricky, but it is possible to find a solution that works best for the specific individuals and needs of your family. The best thing to do is to work with a trusted attorney or other professional to establish a plan for the transition of the family business in conjunction with estate planning to ensure your family’s objectives can be met.
CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.