Creating a living trust in Iowa can be a useful part of your estate planning. A revocable living trust places your assets into a trust during your life but you maintain control of them. A trust also provides some control of the assets after your death.
Living Trusts in Iowa
An Iowa living trust is created by the grantor. The grantor transfers ownership of his assets into the trust. A trustee must be named, who is responsible for managing the assets for the benefit of the grantor. It is common to name yourself as trustee so you are in complete control. A successor trustee is in place to handle the trust after the grantor dies. The trustee is then responsible for distributing assets to the beneficiaries according to the terms of the trust. A revocable trust can be altered or deleted by the grantor during his lifetime. An irrevocable living trust is permanent.
Assets placed in a living trust pass on to your beneficiaries without going through probate. Iowa has not enacted the Uniform Probate Code, so having your estate go through probate can take many months and involves the expenses of an executor and attorney. There is a simplified probate procedure available for estates worth less than $100,000 and in this instance it may be less expensive to use this procedure than have a trust created.
Do I Need a Living Trust in Iowa?
An Iowa living trust can be a useful tool. One of the many benefits is the control it offers. While you are alive, you continue to maintain complete control over your assets, living in your home and using your money as you wish. The trust can then provide conditions for how your assets are distributed to your beneficiaries after you die, providing for careful management of your family’s assets for years to come. When assets are passed in a will, they are distributed as soon as probate concludes. Trusts are more complex to challenge than wills are, making them more secure.
A living trust in Iowa provides privacy in a way that a will cannot. While it is sometimes necessary in Iowa to file a form indicating the value of the assets in a trust, an itemization is not required. The names of the beneficiaries are not released, nor are the terms of the trust.
A revocable living trust protects you should you become mentally incapacitated. All of your assets are already controlled, owned, and managed by the trust and a conservatorship proceeding is likely unnecessary for you to have your financial life managed for your benefit.
Living Trusts and Estate Taxes in Iowa
Estate taxes cannot be avoided with most living trusts unless you create an AB, marital, or QTIP trust which passes assets directly from a spouse to a surviving spouse. Inheritance taxes in Iowa apply to estates over $25,000 but there is no tax when assets are passed to a spouse, child, grandchild, or charity. Federal estate tax applies to estates in excess of $5 million. A living trust does not protect assets from Medicaid spend down.
How to Create a Living Trust in Iowa
Creating a living trust in Iowa occurs when you create a trust document and sign it in front of a notary public. You then transfer ownership of your assets into the trust to complete the process. A living trust is a useful way to maintain control over your assets and plan for the future.
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