2014 Nuts & Bolts Seminar Coralville

Transcription

1 2014 Nuts & Bolts Seminar Coralville TRANSACTIONAL TRACK Estate Planning 2:45 p.m.- 3:45 p.m. Presented by Janice Kerkove Bradley & Riley 2007 First Ave. SE Cedar Rapids, IA Phone: THURSDAY, OCTOBER 30, 2014

2 NUTS & BOLTS OF ESTATE PLANNING October 30, 2014 Janice J. Kerkove Copyright 2014 Bradley & Riley PC - All rights reserved.

3 Nuts & Bolts of Estate Planning NUTS & BOLTS OF ESTATE PLANNING October 30, 2014 Janice J. Kerkove Copyright 2014 Bradley & Riley PC - All rights reserved. ESTATE PLANNING IT S MORE THAN JUST A WILL Last Will & Testament Revocable Trust (optional) Asset Titling Beneficiary Designations Financial Power of Attorney Medical Power of Attorney Living Will Declaration re: Last Remains CREATE A GOOD DATA SHEET Personal information for clients & their children Identify any beneficiaries with special issues Identify children vs. step-children Financial information How is the asset titled? Is there a beneficiary designation? Identify who is to fill various fiduciary roles 2014 Bradley & Riley PC 1

4 Nuts & Bolts of Estate Planning CREATE A GOOD DATA SHEET Any obligations under a prenuptial agreement? Any obligations under a dissolution decree? Any significant future inheritances? Is there genetic reproductive material in storage? Do they want to give someone control over their digital assets? FEDERAL ESTATE TAXES FEDERAL ESTATE TAX ISSUES Internal Revenue Code Federal estate taxes based on value of estate 2014 Bradley & Riley PC 2

5 Nuts & Bolts of Estate Planning FEDERAL ESTATE TAX ISSUES Federal estate tax exemption currently $5.34 million (2014) for each taxpayer, indexed for inflation Federal estate tax exemption not used at first death can be transferred to surviving spouse Requires timely filing of Federal 706 Estate Tax Return Large gifts made during lifetime decrease the federal estate tax exemption available at death IOWA INHERITANCE TAXES IOWA INHERITANCE TAX ISSUES Iowa Code Chapter 450 Taxes based on the relationship between decedent & recipient & based on the value of Iowa assets received by the recipient Gross estates of less than $25,000 exempt from Iowa inheritance taxes 2014 Bradley & Riley PC 3

6 Nuts & Bolts of Estate Planning IOWA INHERITANCE TAX ISSUES Lineal descendants & lineal ascendants exempt Brother, sister, daughter-in-law, son-in-law subject to tax starting at 5% and ending at 10% marginal rate Niece, nephew, other relatives, friends subject to tax starting at 10% and ending at 15% marginal rate Step-children are exempt, step-grandchildren are not exempt from Iowa inheritance taxes IOWA INHERITANCE TAX ISSUES Certain assets are exempt from Iowa inheritance tax Life insurance paid to a named beneficiary (not estate) IRA & qualified plan assets paid to a named beneficiary who is subject to income tax Non-Iowa assets IOWA RESIDENT WITH REAL ESTATE HOLDINGS IN OTHER STATES At least 15 states have decoupled from federal estate tax system In those states, the state death tax exemption is fixed at an amount that is lower than the current federal estate tax exemption Minnesota, Illinois, Indiana, New York are a few of the states that have decoupled Iowa and at least 5 other states have inheritance taxes 2014 Bradley & Riley PC 4

7 Nuts & Bolts of Estate Planning WILLS VS. REVOCABLE TRUSTS WHAT TYPE OF DOCUMENT? Should client s primary method of distributing assets be a Will or Revocable Trust? Will administration governed by Iowa Probate Code 633 Trust administration governed by Iowa Trust Code 633A WILL REVOCABLE TRUST Cheaper to draft Probate is required Code establishes 2% Atty/Exec Fees Court Costs Will & Asset information part of public record Bad for businesses that may need to be sold as part of the proceeding Does not take effect until death Need separate POA to deal with incompetency issues Can be difficult to obtain involuntary accounting from POA Court oversees process Extensive case law as precedent More expensive to draft & fund No probate required if all assets in trust or have beneficiary designation at time of grantor s death Code establishes reasonable fee for Atty/Exec No Court Costs Maintains privacy of affairs Easier transition for management of affairs if client becomes incapacitated Easier to obtain involuntary accounting from Trustee than POA Court involvement can be invoked if necessary Limited case law as precedent Still need a Will 2014 Bradley & Riley PC 5

8 Nuts & Bolts of Estate Planning WILL VS. REVOCABLE TRUST Cost Benefit Analysis Will the increased cost of drafting & funding a trust be justified by the decreased costs of administration after the client s death? Probate required in every state client has real estate Timeshares are sometimes treated as real estate interest Mineral interests (oil/gas) usually treated as real estate interest PROVISIONS OF LW&T Revoke prior Wills Identify beneficiaries Outline plan of distribution of assets Outline plan for payment of administration expenses & taxes Designate fiduciaries Draft for proper execution of the document IDENTIFY BENEFICIARIES List next of kin Does the client want the list of beneficiaries to include beneficiaries born after execution? Does the client want the list of beneficiaries to include adopted children? Does the client want to exclude any beneficiaries? If yes, make that clear in the document 2014 Bradley & Riley PC 6

9 Nuts & Bolts of Estate Planning OUTLINE PLAN OF DISTRIBUTION Tangible personal property Include option to leave separate writing Include a plan for resolving disputes Authorize Executor to donate/destroy items Special bequests Charities any limitations on how used? Godchild, Special Friends, Grandchildren Digital assets Genetic materials in storage OUTLINE PLAN OF DISTRIBUTION RESIDUARY ESTATE IF SURV. SPOUSE Distribute outright to surviving spouse? Hold in credit shelter trust for surviving spouse? Who is Trustee? What are distribution standards? Can distributions be made to any other beneficiaries? Hold in marital trust for surviving spouse? Who is Trustee? IRS requires mandatory distribution of net income to spouse IRS requires that spouse be given right to turn non-income producing property into income-producing property Client decides on principal distribution standards for spouse IRS mandates no one else is entitled to principal during spouse s lifetime OUTLINE PLAN OF DISTRIBUTION RESIDUARY ESTATE NO SURV. SPOUSE Distributed equally or some other percentage? What happens if beneficiary dies? Balance to surviving members of group? Balance to lineal descendants? Per stirpes vs. per capita Trust for any beneficiaries who may be minors at the time of inheritance Trusts for any beneficiaries who have special issues 2014 Bradley & Riley PC 7

10 Nuts & Bolts of Estate Planning OUTLINE PLAN FOR PAYMENT OF ADMINISTRATION EXPENSES Consider liquidity issues Does the probate estate have sufficient liquid assets to pay mortgage, utilities, property taxes, attorney fees, executor fees, appraisal costs, funeral expenses, court costs, and other expenses of administration? Should a portion of life insurance be paid to estate to provide necessary funds? OUTLINE PLAN FOR PAYMENT OF ADMINISTRATION EXPENSES Who should be charged with administration expenses? Default rule is administration expenses paid by residuary unless document states otherwise Residuary share vs. equitable allocation OUTLINE PLAN FOR PAYMENT OF DEATH TAXES Who pays federal estate taxes Default rules is tax paid by residuary share unless document states otherwise Residuary vs. equitable allocation Charities not subject to federal estate tax Surviving spouse usually not subject to federal estate tax (if document properly drafted) 2014 Bradley & Riley PC 8

11 Nuts & Bolts of Estate Planning OUTLINE PLAN FOR PAYMENT OF DEATH TAXES Who pays Iowa inheritance taxes Default rule is beneficiary pays unless document states otherwise If Estate pays, adjustment required to gross up beneficiary s share for inheritance taxes paid by Estate Residuary vs. equitable allocation What if beneficiary receiving non-probate asset? What is beneficiary is receiving non-liquidate asset (real estate)? DESIGNATE FIDUCIARIES Guardians for minor children Special considerations if naming married couples Trustees for any trusts created under LW&T Specify powers granted to Trustees Executor of LW&T Waiver of bond? Power of sale? Authority over digital assets? DRAFT FOR PROPER EXECUTION Client & two disinterested witnesses sign in the presence of each other Client, two disinterested witnesses, and notary sign Self-Proving Affidavit If no self-proving affidavit, must find at least one of the witnesses after date of death If unable to find witnesses, then client died intestate 2014 Bradley & Riley PC 9

12 Nuts & Bolts of Estate Planning WHERE WILL ORIGINAL BE STORED? Very difficult to admit Will to probate if original document cannot be found Law presumes that Will was revoked Can only admit copy if presumption can be overcome Keep record of where client will be storing original Lock box at branch of bank Fireproof safe at office Gun safe at home Generally do not have clients deposit with Clerk of Court TITLING OF ASSETS TITLING ASSETS JOINT TENANCY Joint tenancy with rights of survivorship vs. tenants in common ownership Joint tenancy ownership with rights of survivorship overrides terms of Will or Trust Assets pass directly to the surviving joint tenant and are never under the control of the Executor or Trustee 2014 Bradley & Riley PC 10

13 Nuts & Bolts of Estate Planning TITLING OF ASSETS JOINT TENANCY If married couple has no federal estate tax concerns, assets can be held in joint tenancy to avoid probate at first spouse s death If not a married couple or if there are federal estate tax concerns, joint tenancy ownership is not recommended TITLING OF ASSETS JOINT TENANCY WITH NON-SPOUSE Beware of titling assets jointly with non-spouses Joint owner has immediate access to the joint tenancy accounts does not require client s permission to withdraw funds Asset becomes subject to claims from their creditors, ex-spouse, etc. Asset automatically passes to surviving joint tenant - there is no legal obligation for joint tenant to share proceeds with other intended beneficiaries Can increase income tax liability when assets are sold in the future BENEFICIARY DESIGNATIONS 2014 Bradley & Riley PC 11

14 Nuts & Bolts of Estate Planning BENEFICIARY DESIGNATIONS Typically on Life Insurance, IRA s, 401(k) s, annuities, 403(b) s, etc In Iowa (and most other states), the beneficiary designation overrides terms of Will or Trust Need to look at contract closely to determine what happens if the beneficiary predeceases client Be sure beneficiary designation complements plan of distribution under Will or Trust BENEFICIARY DESIGNATIONS ESTATE AS THE BENEFICIARY Provides liquid assets for payment of debts and expenses Provides funding for credit shelter trust if other assets are not sufficient May allow creditors to access proceeds May subject proceeds to Iowa Inheritance Tax May be included in calculating court costs, attorney fees, etc. May be adverse income tax consequences BENEFICIARY DESIGNATIONS SPOUSE AS BENEFICIARY Under old Iowa law, ex-spouse received proceeds if beneficiary designation was not changed after the divorce Iowa law now nullifies ex-spouse and ex-spouse s family members as beneficiaries after a divorce Only applies to non-erisa assets Must follow the appropriate notification procedures in Iowa Code A before funds are paid out Assets received by spouse under beneficiary designation/joint tenancy do not count against spouse s right to claim 1/3 of estate Iowa Code Bradley & Riley PC 12

15 Nuts & Bolts of Estate Planning BENEFICIARY DESIGNATIONS MULTIPLE CHILDREN AS BENE S Important to determine what happens if a child predeceases the owner Default plan rules usually call for distribution to the surviving children Most clients prefer that lineal descendants of deceased child take which requires adding of per stirpes language to the designation BENEFICIARY DESIGNATIONS TAX DEFERRED ASSETS Beneficiary designations on IRA s or qualified plans should be properly drafted to provide beneficiary with flexibility to obtain maximum deferral/stretch for income tax purposes If client has charitable bequests, consider making the charities the beneficiaries of tax-deferred accounts as the charities will not pay income tax BENEFICIARY DESIGNATIONS POD/TOD POD designations used on bank accounts TOD designations used on brokerage accounts, savings bonds or stock Iowa Code Chapter 633D Cannot be used in Iowa for real estate holdings Designates beneficiary who is to receive asset upon death of owner - designation is revocable Beneficiary has no rights to asset until client s death 2014 Bradley & Riley PC 13

16 Nuts & Bolts of Estate Planning BENEFICIARY DESIGNATIONS POD/TOD Asset passes to designee outside of probate Beneficiary has no obligation to share with other intended beneficiaries Beneficiary may not be required to use funds for funeral, burial, taxes, or other administration expenses If most assets pass by joint tenancy ownership or beneficiary designation, then no assets available for personal representative to pay administration expenses, including carrying costs of real estate, etc. FINANCIAL POWER OF ATTORNEY FINANCIAL POWER OF ATTORNEY Designates Attorney-in-Fact to control assets and pay bills if client becomes incapacitated or needs assistance due to physical limitations. Avoids time and expense of court proceedings to establish and administer conservatorship. Help client choose carefully! Attorney-in-Fact has substantial power and limited supervision Bradley & Riley PC 14

17 Nuts & Bolts of Estate Planning FINANCIAL POWER OF ATTORNEY Iowa Uniform Power of Attorney Act (IUPOA) Replaces existing Iowa Code Chapter 633B Enacted as Senate File 2168 Signed by the Governor on April 10, 2014 Effective July 1, 2014 FINANCIAL POWER OF ATTORNEY Purpose of Uniform POA Act Provide comprehensive guidelines for creation and use of Powers of Attorney. Prevent and address potential abuses of Powers of Attorney. Has currently been adopted in 15 states. FINANCIAL POWER OF ATTORNEY Non-Applicability of IUPOA Acts completed by the Agent prior to July 1, Powers of Attorney coupled with an interest of the agent in the transaction that is the subject of the power (i.e. Limited POA given for the benefit of a creditor). Healthcare Power of Attorney. Proxy or other delegation of voting rights or management rights with respect to an entity. Power created on a form prescribed by government, governmental subdivision, governmental agency for a governmental purpose Bradley & Riley PC 15

18 Nuts & Bolts of Estate Planning FINANCIAL POWER OF ATTORNEY Applicability of IUPOA Applies to all Financial POAs created on or after July 1, Applies to all judicial proceedings concerning a power of attorney commenced on or after July 1, FINANCIAL POWER OF ATTORNEY Applicability to prior documents/proceedings Generally applies to POAs created before July 1, 2014, unless otherwise provided in the Act. But see Iowa Code 633B.107, the meaning and effect of a POA created before July 1, 2014, is to be interpreted under the law that was in effect at the time the POA was created Generally applies to judicial proceedings commenced before July 1, 2014, unless court finds that application of the IUPOA would substantially interfere with conducting the proceedings or the rights of interested persons. FINANCIAL POWER OF ATTORNEY Validity of Documents under IUPOA POAs executed on or after July 1, 2014, are valid if executed in compliance with IUPOA. Must be notarized POAs executed before July 1, 2014, are valid if execution complied with state law in effect at the time of execution. Notarization was not required, but commonly practiced 2014 Bradley & Riley PC 16

19 Nuts & Bolts of Estate Planning FINANCIAL POWER OF ATTORNEY Old Iowa POA Law Very little statutory law in Iowa. Agent referred to as Attorney-in-Fact. Document contained a laundry list of transactions Agent was authorized to transact. Notarization was typically used, but not required. Iowa Bar Form was typically used, but not required. Affidavit procedure used for agent to verify their authority. FINANCIAL POWER OF ATTORNEY New Iowa UPOA Law Now have comprehensive statutory law in Iowa. Agent now referred to as Agent. Comments to the Uniform Act and cases decided in other states who have adopted the Uniform Act will be helpful guidance. Laundry list of transactions no longer required, refer to the statute to confirm Agent s authority. Notarization is now required. Certification procedure now used for Agent to verify their authority. FINANCIAL POWER OF ATTORNEY Agent can be granted General Authority by: Granting Agent general authority to do all acts that principal could do pursuant to Iowa Code 633B.201 Incorporating by reference the provisions set forth in 633B B.217 Providing detailed itemization of the authority granted 2014 Bradley & Riley PC 17

20 Nuts & Bolts of Estate Planning FINANCIAL POWER OF ATTORNEY Grant of General Authority includes: 633B.204 Real Property. 633B.205 Tangible Personal Property. 633B.206 Stocks and Bonds. 633B.207 Commodities and Options. 633B.208 Banks & Other Financial Institutions. 633B.209 Operation of Entity or Business. 633B.210 Insurance & Annuities. FINANCIAL POWER OF ATTORNEY Grant of General Authority includes: 633B.211 Estates, Trusts & Other Beneficial Interests. 633B.212 Claims & Litigation. 633B.213 Personal & Family Maintenance. 633B.214 Governmental Benefits, Civil & Military Service Benefits. 633B.215 Retirement Benefits. 633B.216 Taxes. 633B.217 Gifts. FINANCIAL POWER OF ATTORNEY Grant of General Authority not sufficient for all transactions. Agent may not perform certain transactions, as set forth in Iowa Code 633B.201 unless: POA expressly grants the authority Exercise of such authority is not prohibited by another statute, agreement or instrument 2014 Bradley & Riley PC 18

21 Nuts & Bolts of Estate Planning FINANCIAL POWER OF ATTORNEY Specific Authority expressly required for the following: Create, amend, revoke, terminate Revocable Trust. Make a gift in excess of federal annual exclusion amount. Create or change rights of survivorship. Create or change beneficiary designation. Delegate authority granted under POA. Waive principal s right to joint and survivor annuity. Exercise fiduciary powers that principal has authority to delegate. Disclaim property, including a power of appointment. FINANCIAL POWER OF ATTORNEY Even if Specific Authority expressly granted, an agent who is not closely related to the principal may not directly or indirectly create in the agent an interest in the principal s property by gift, right or survivorship, beneficiary designation, disclaimer, or otherwise FINANCIAL POWER OF ATTORNEY Powers of Co-Agents Under old Iowa law, Co-Agents required to act in concert unless document specifically specified otherwise. Under UIPOA, majority of Co-Agents are authorized to act on behalf of principal unless document specifies otherwise 2014 Bradley & Riley PC 19

22 Nuts & Bolts of Estate Planning FINANCIAL POWER OF ATTORNEY Nomination of Guardian & Conservator Under old Iowa law, nomination of Guardian & Conservator was completed through separate standby Petitions. Under new IUPOA, standby Guardians and Conservators may also be nominated in the Financial Power of Attorney document. FINANCIAL POWER OF ATTORNEY Accounting of Agent s Acts Under old Iowa law, accounting could only be obtained by principal, principal s conservator or personal representative. Under IUPOA 633B.114(8), accounting can be requested by principal, principal s conservator, another fiduciary acting for principal, a governmental agency having authority to protect welfare of principal, personal representative of deceased principal. Clients often to choose to name additional parties (i.e. children of principal) who are entitled to request an accounting FINANCIAL POWER OF ATTORNEY Invoking Judicial Intervention Under old Iowa law, judicial intervention could only be obtained by principal, principal s conservator or personal representative. Under IUPOA 633B.116, there is an extensive laundry list of interested persons who have authority to invoke court jurisdiction to construe a power of attorney or review an agent s conduct 2014 Bradley & Riley PC 20

23 Nuts & Bolts of Estate Planning FINANCIAL POWER OF ATTORNEY Iowa Statutory Financial Power of Attorney Form can be found at 633B.301 and on Iowa Docs Statutory form is not popular with practitioners and will likely be revised in the future Statutory form does not lend itself to automated generation of documents Statutory form should only be used in very simple situations Agent s Certification Form can be found at 633B.302. These forms are not mandatory and may be revised as necessary. LIVING WILL LIVING WILL Life-Sustaining Procedures Act Iowa Code Chapter 144A 2014 Bradley & Riley PC 21

24 Nuts & Bolts of Estate Planning LIVING WILL Executed at any time by a competent adult. Document must either be notarized or witnessed by two adults. Becomes effective if patient is in terminal condition and is unable to make their own medical decisions. Provides directions on use or withdrawal of lifesustaining procedures. May be revoked at any time, without regard to mental or physical condition. LIVING WILL Definition of Terminal Condition Incurable or irreversible condition that, without administration of life-sustaining procedures, will, in the opinion of the attending physician, result in death within a relatively short period of time. State of permanent unconsciousness from which, to a reasonable degree of medical certainty, there can be no recovery. LIVING WILL Definition of Life-Sustaining Procedures Any medical procedure, treatment, or intervention, including resuscitation, which utilizes mechanical or artificial means to sustain, restore or supplant a spontaneous vital function, and when applied to a patient in a terminal condition, would only serve to prolong the dying process Bradley & Riley PC 22

25 Nuts & Bolts of Estate Planning LIVING WILL Witnesses to Living Will Signed by 2 adult witnesses in the presence of each other and the declarant. At least one witness must be unrelated (not a relative by blood, marriage, or adoption within the third degree of consanguinity). Attending physician and employees of the attending physician cannot serve as witness. Prefer use of notary instead of 2 witnesses to avoid increased chance of litigation. LIVING WILL Applicability of Living Will Attending physician concludes that patient is in a terminal condition. Diagnosis is confirmed by another physician. Notation is made in medical record that Living Will is now applicable. Effectiveness delayed if patient is pregnant with fetus that could develop to point of live birth with continued application of life-sustaining procedures. LIVING WILL Old Living Will Definition of life-sustaining procedures changed on April 23, After that date, definition of life-sustaining procedures includes hydration and nutrition administered through IV or NG tube. Living Will documents signed prior to April 23, 1992, do not allow the withdrawal of food and water provided through artificial means Bradley & Riley PC 23

26 Nuts & Bolts of Estate Planning WHAT IF NO LIVING WILL? No presumption for or against life-sustaining procedures based on failure to execute Living Will. Must be consultation and written agreement between attending physician and alternate decision makers who must be guided by the express or implied intentions of patient. If legal guardian has been appointed for the patient, court order is required prior to withdrawal of lifesustaining procedures. IF NO LIVING WILL ALTERNATE DECISION MAKERS 1 st : Person designated under health care POA. 2 nd : Legal guardian of patient. 3 rd : Spouse of patient. 4 th : Adult children (majority of children who are reasonably available for consultation). 5 th : Parents of patient. 6 th : Adult siblings of patient. MEDICAL POWER OF ATTORNEY DURABLE POA FOR HEALTH CARE 2014 Bradley & Riley PC 24

27 Nuts & Bolts of Estate Planning MEDICAL POWER OF ATTORNEY DURABLE POA FOR HEALTH CARE Iowa Code Chapter 144B MEDICAL POWER OF ATTORNEY Designates another person as agent to make health care decisions when patient is no longer able to make those decisions on their own. Takes effect when patient can no longer make their own medical decisions. Covers more situations than Living Will. Can be revoked at any time, without regard to mental or physical condition. MEDICAL POWER OF ATTORNEY Requirements for Validity: Written designation. Explicitly authorizes agent to make health care decisions. Notarized or signed by 2 witnesses. Same witness limitations as described for Living Will Bradley & Riley PC 25

28 Nuts & Bolts of Estate Planning MEDICAL POWER OF ATTORNEY Ineligible Decision Makers under Medical POA: Attending physician cannot serve as agent. Employee of the attending physician cannot serve as agent, unless the individual is related to patient by blood, marriage, or adoption within the 3 rd degree of consanguinity. MEDICAL POWER OF ATTORNEY Legal Effect of Designation: Designated agent has authority to make decisions if principal is unable, in the judgment of attending physician, to make their own health care decision. Designated agent has duty to act in accordance with desires of the patient as expressed in the Medical POA or otherwise made known to agent at any time. MEDICAL POWER OF ATTORNEY Legal Effect of Designation: If patient s desires are unknown, agent has duty to act in the best interests of the patient, taking into account the patient s overall medical condition and prognosis. Agent can be removed if district court determines that agent is acting contrary to wishes of the patient. If patient has Living Will and Medical POA, provisions of Living Will take priority Bradley & Riley PC 26

29 Nuts & Bolts of Estate Planning RELATED MEDICAL DOCUMENTS MEDICAL DIRECTIVES Optional document that supplements the Medical Power of Attorney and Living Will. Provides specific instructions to Agent regarding medical decisions to be made under specific circumstances. Client should complete with input of personal physician. DNR ORDERS Iowa Code Chapter 144D Do Not Resuscitate Orders (DNR) orders can only be completed by or for individuals who are determined to be near the end of life. DNR Orders must be completed with the assistance of physician. Attorneys cannot draft DNR Orders. Iowa law has provisions allowing DNR Orders to be portable between facilities Bradley & Riley PC 27

30 Nuts & Bolts of Estate Planning DISPOSITION OF LAST REMAINS DISPOSITION OF LAST REMAINS Iowa Code Chapter 144C Iowa Final Disposition Act Applies to all deaths occurring on or after July 1, 2008 and to all declarations executed on or after that date. Gives an individual the ability to designate who will be in charge of making funeral and burial decisions for the individual following his or her death. DISPOSITION OF LAST REMAINS Order of Priority for Decision Makers: Designee (then alternate designee) in declaration; Surviving spouse (provided not legally separated); Surviving adult children (majority rules); Surviving parents; Surviving adult grandchildren (majority rules); Surviving adult siblings (majority rules); 2014 Bradley & Riley PC 28

31 Nuts & Bolts of Estate Planning DISPOSITION OF LAST REMAINS Order of Priority for Decision Makers: Surviving grandparents (majority rules); Persons in next degree of kinship under rules of intestate succession (majority rules); Person who represents that he/she knows the decedent s identity and who signs an affidavit verifying decedent s identity and assuming responsibility/expense; County medical examiner (if responsible for remains). DISPOSITION OF LAST REMAINS Designee(s) jump to front of the line. Designee has obligation to act in good faith and in a manner that is reasonable under the circumstances. Default decision makers apparently have no obligation to act in good faith and in a manner that is reasonable under the circumstances See In re Estate of Whalen, 827 NW2d 184 (Iowa Supreme Court 2013). DISPOSITION OF LAST REMAINS Reasonable under the circumstances means consideration of what is appropriate in relation to the Decedent s: Finances; Cultural or family customs; and Religious or spiritual beliefs. Reasonable under the circumstances also may include, but is not limited to, consideration of the Decedent s: Preneed funeral, burial, or cremation plan; and Known or reasonably ascertainable creditors Bradley & Riley PC 29

32 Nuts & Bolts of Estate Planning DISPOSITION OF LAST REMAINS Requirements for Valid Designation: Must be in written form that substantially complies with language in Chapter 144C.6; Must be contained in or attached to a durable power of attorney for health care; Must be dated and signed by declarant; and Must be witnessed by 2 individuals or notarized. DISPOSITION OF LAST REMAINS Declaration MAY include The location of an agreement for prearranged funeral services or funeral merchandise; Cemetery lots owned by or reserved for the declarant; and Special instructions regarding organ donation. Declaration CAN NOT include: Directives for final disposition of the declarant s remains (i.e. I want to be cremated and ashes spread in the Pacific Ocean); nor Arrangements for ceremonies planned after the declarant s death. THANK YOU Follow up questions can be directed to Janice Kerkove at jkerkove@bradleyriley.com or (319) Cedar Rapids 2007 First Avenue SE PO Box 2804 Cedar Rapids, Iowa Ph: Fax: Iowa City Tower Place One South Gilbert Iowa City, Iowa Ph: Fax: Bradley & Riley PC 30

33 ESTATE PLANNING IT S MORE THAN JUST A WILL Last Will & Testament Revocable Trust (optional) Asset Titling Beneficiary Designations Financial Power of Attorney Medical Power of Attorney Living Will Declaration re: Last Remains

34 CREATE A GOOD DATA SHEET Personal information for clients & their children Identify any beneficiaries with special issues Identify children vs. step-children Financial information How is the asset titled? Is there a beneficiary designation? Identify who is to fill various fiduciary roles

35 CREATE A GOOD DATA SHEET Any obligations under a prenuptial agreement? Any obligations under a dissolution decree? Any significant future inheritances? Is there genetic reproductive material in storage? Do they want to give someone control over their digital assets?

36 FEDERAL ESTATE TAXES

37 FEDERAL ESTATE TAX ISSUES Internal Revenue Code Federal estate taxes based on value of estate

38 FEDERAL ESTATE TAX ISSUES Federal estate tax exemption currently $5.34 million (2014) for each taxpayer, indexed for inflation Federal estate tax exemption not used at first death can be transferred to surviving spouse Requires timely filing of Federal 706 Estate Tax Return Large gifts made during lifetime decrease the federal estate tax exemption available at death

39 IOWA INHERITANCE TAXES

40 IOWA INHERITANCE TAX ISSUES Iowa Code Chapter 450 Taxes based on the relationship between decedent & recipient & based on the value of Iowa assets received by the recipient Gross estates of less than $25,000 exempt from Iowa inheritance taxes

41 IOWA INHERITANCE TAX ISSUES Lineal descendants & lineal ascendants exempt Brother, sister, daughter-in-law, son-in-law subject to tax starting at 5% and ending at 10% marginal rate Niece, nephew, other relatives, friends subject to tax starting at 10% and ending at 15% marginal rate Step-children are exempt, step-grandchildren are not exempt from Iowa inheritance taxes

42 IOWA INHERITANCE TAX ISSUES Certain assets are exempt from Iowa inheritance tax Life insurance paid to a named beneficiary (not estate) IRA & qualified plan assets paid to a named beneficiary who is subject to income tax Non-Iowa assets

43 IOWA RESIDENT WITH REAL ESTATE HOLDINGS IN OTHER STATES At least 15 states have decoupled from federal estate tax system In those states, the state death tax exemption is fixed at an amount that is lower than the current federal estate tax exemption Minnesota, Illinois, Indiana, New York are a few of the states that have decoupled Iowa and at least 5 other states have inheritance taxes

44 WILLS VS. REVOCABLE TRUSTS

45 WHAT TYPE OF DOCUMENT? Should client s primary method of distributing assets be a Will or Revocable Trust? Will administration governed by Iowa Probate Code 633 Trust administration governed by Iowa Trust Code 633A

46 WILL REVOCABLE TRUST Cheaper to draft Probate is required Code establishes 2% Atty/Exec Fees Court Costs Will & Asset information part of public record Bad for businesses that may need to be sold as part of the proceeding Does not take effect until death Need separate POA to deal with incompetency issues Can be difficult to obtain involuntary accounting from POA Court oversees process Extensive case law as precedent More expensive to draft & fund No probate required if all assets in trust or have beneficiary designation at time of grantor s death Code establishes reasonable fee for Atty/Exec No Court Costs Maintains privacy of affairs Easier transition for management of affairs if client becomes incapacitated Easier to obtain involuntary accounting from Trustee than POA Court involvement can be invoked if necessary Limited case law as precedent Still need a Will

47 WILL VS. REVOCABLE TRUST Cost Benefit Analysis Will the increased cost of drafting & funding a trust be justified by the decreased costs of administration after the client s death? Probate required in every state client has real estate Timeshares are sometimes treated as real estate interest Mineral interests (oil/gas) usually treated as real estate interest

48 PROVISIONS OF LW&T Revoke prior Wills Identify beneficiaries Outline plan of distribution of assets Outline plan for payment of administration expenses & taxes Designate fiduciaries Draft for proper execution of the document

49 IDENTIFY BENEFICIARIES List next of kin Does the client want the list of beneficiaries to include beneficiaries born after execution? Does the client want the list of beneficiaries to include adopted children? Does the client want to exclude any beneficiaries? If yes, make that clear in the document

50 OUTLINE PLAN OF DISTRIBUTION Tangible personal property Include option to leave separate writing Include a plan for resolving disputes Authorize Executor to donate/destroy items Special bequests Charities any limitations on how used? Godchild, Special Friends, Grandchildren Digital assets Genetic materials in storage

51 OUTLINE PLAN OF DISTRIBUTION RESIDUARY ESTATE IF SURV. SPOUSE Distribute outright to surviving spouse? Hold in credit shelter trust for surviving spouse? Who is Trustee? What are distribution standards? Can distributions be made to any other beneficiaries? Hold in marital trust for surviving spouse? Who is Trustee? IRS requires mandatory distribution of net income to spouse IRS requires that spouse be given right to turn non-income producing property into income-producing property Client decides on principal distribution standards for spouse IRS mandates no one else is entitled to principal during spouse s lifetime

52 OUTLINE PLAN OF DISTRIBUTION RESIDUARY ESTATE NO SURV. SPOUSE Distributed equally or some other percentage? What happens if beneficiary dies? Balance to surviving members of group? Balance to lineal descendants? Per stirpes vs. per capita Trust for any beneficiaries who may be minors at the time of inheritance Trusts for any beneficiaries who have special issues

53 OUTLINE PLAN FOR PAYMENT OF ADMINISTRATION EXPENSES Consider liquidity issues Does the probate estate have sufficient liquid assets to pay mortgage, utilities, property taxes, attorney fees, executor fees, appraisal costs, funeral expenses, court costs, and other expenses of administration? Should a portion of life insurance be paid to estate to provide necessary funds?

54 OUTLINE PLAN FOR PAYMENT OF ADMINISTRATION EXPENSES Who should be charged with administration expenses? Default rule is administration expenses paid by residuary unless document states otherwise Residuary share vs. equitable allocation

55 OUTLINE PLAN FOR PAYMENT OF DEATH TAXES Who pays federal estate taxes Default rules is tax paid by residuary share unless document states otherwise Residuary vs. equitable allocation Charities not subject to federal estate tax Surviving spouse usually not subject to federal estate tax (if document properly drafted)

56 OUTLINE PLAN FOR PAYMENT OF DEATH TAXES Who pays Iowa inheritance taxes Default rule is beneficiary pays unless document states otherwise If Estate pays, adjustment required to gross up beneficiary s share for inheritance taxes paid by Estate Residuary vs. equitable allocation What if beneficiary receiving non-probate asset? What is beneficiary is receiving non-liquidate asset (real estate)?

57 DESIGNATE FIDUCIARIES Guardians for minor children Special considerations if naming married couples Trustees for any trusts created under LW&T Specify powers granted to Trustees Executor of LW&T Waiver of bond? Power of sale? Authority over digital assets?

58 DRAFT FOR PROPER EXECUTION Client & two disinterested witnesses sign in the presence of each other Client, two disinterested witnesses, and notary sign Self-Proving Affidavit If no self-proving affidavit, must find at least one of the witnesses after date of death If unable to find witnesses, then client died intestate

59 WHERE WILL ORIGINAL BE STORED? Very difficult to admit Will to probate if original document cannot be found Law presumes that Will was revoked Can only admit copy if presumption can be overcome Keep record of where client will be storing original Lock box at branch of bank Fireproof safe at office Gun safe at home Generally do not have clients deposit with Clerk of Court

60 TITLING OF ASSETS

61 TITLING ASSETS JOINT TENANCY Joint tenancy with rights of survivorship vs. tenants in common ownership Joint tenancy ownership with rights of survivorship overrides terms of Will or Trust Assets pass directly to the surviving joint tenant and are never under the control of the Executor or Trustee

62 TITLING OF ASSETS JOINT TENANCY If married couple has no federal estate tax concerns, assets can be held in joint tenancy to avoid probate at first spouse s death If not a married couple or if there are federal estate tax concerns, joint tenancy ownership is not recommended

63 TITLING OF ASSETS JOINT TENANCY WITH NON-SPOUSE Beware of titling assets jointly with non-spouses Joint owner has immediate access to the joint tenancy accounts does not require client s permission to withdraw funds Asset becomes subject to claims from their creditors, ex-spouse, etc. Asset automatically passes to surviving joint tenant - there is no legal obligation for joint tenant to share proceeds with other intended beneficiaries Can increase income tax liability when assets are sold in the future

64 BENEFICIARY DESIGNATIONS

65 BENEFICIARY DESIGNATIONS Typically on Life Insurance, IRA s, 401(k) s, annuities, 403(b) s, etc In Iowa (and most other states), the beneficiary designation overrides terms of Will or Trust Need to look at contract closely to determine what happens if the beneficiary predeceases client Be sure beneficiary designation complements plan of distribution under Will or Trust

66 BENEFICIARY DESIGNATIONS ESTATE AS THE BENEFICIARY Provides liquid assets for payment of debts and expenses Provides funding for credit shelter trust if other assets are not sufficient May allow creditors to access proceeds May subject proceeds to Iowa Inheritance Tax May be included in calculating court costs, attorney fees, etc. May be adverse income tax consequences

67 BENEFICIARY DESIGNATIONS SPOUSE AS BENEFICIARY Under old Iowa law, ex-spouse received proceeds if beneficiary designation was not changed after the divorce Iowa law now nullifies ex-spouse and ex-spouse s family members as beneficiaries after a divorce Only applies to non-erisa assets Must follow the appropriate notification procedures in Iowa Code A before funds are paid out Assets received by spouse under beneficiary designation/joint tenancy do not count against spouse s right to claim 1/3 of estate Iowa Code

68 BENEFICIARY DESIGNATIONS MULTIPLE CHILDREN AS BENE S Important to determine what happens if a child predeceases the owner Default plan rules usually call for distribution to the surviving children Most clients prefer that lineal descendants of deceased child take which requires adding of per stirpes language to the designation

69 BENEFICIARY DESIGNATIONS TAX DEFERRED ASSETS Beneficiary designations on IRA s or qualified plans should be properly drafted to provide beneficiary with flexibility to obtain maximum deferral/stretch for income tax purposes If client has charitable bequests, consider making the charities the beneficiaries of tax-deferred accounts as the charities will not pay income tax

70 BENEFICIARY DESIGNATIONS POD/TOD POD designations used on bank accounts TOD designations used on brokerage accounts, savings bonds or stock Iowa Code Chapter 633D Cannot be used in Iowa for real estate holdings Designates beneficiary who is to receive asset upon death of owner - designation is revocable Beneficiary has no rights to asset until client s death

71 BENEFICIARY DESIGNATIONS POD/TOD Asset passes to designee outside of probate Beneficiary has no obligation to share with other intended beneficiaries Beneficiary may not be required to use funds for funeral, burial, taxes, or other administration expenses If most assets pass by joint tenancy ownership or beneficiary designation, then no assets available for personal representative to pay administration expenses, including carrying costs of real estate, etc.

72 FINANCIAL POWER OF ATTORNEY

73 FINANCIAL POWER OF ATTORNEY Designates Attorney-in-Fact to control assets and pay bills if client becomes incapacitated or needs assistance due to physical limitations. Avoids time and expense of court proceedings to establish and administer conservatorship. Help client choose carefully! Attorney-in-Fact has substantial power and limited supervision.

74 FINANCIAL POWER OF ATTORNEY Iowa Uniform Power of Attorney Act (IUPOA) Replaces existing Iowa Code Chapter 633B Enacted as Senate File 2168 Signed by the Governor on April 10, 2014 Effective July 1, 2014

75 FINANCIAL POWER OF ATTORNEY Purpose of Uniform POA Act Provide comprehensive guidelines for creation and use of Powers of Attorney. Prevent and address potential abuses of Powers of Attorney. Has currently been adopted in 15 states.

76 FINANCIAL POWER OF ATTORNEY Non-Applicability of IUPOA Acts completed by the Agent prior to July 1, Powers of Attorney coupled with an interest of the agent in the transaction that is the subject of the power (i.e. Limited POA given for the benefit of a creditor). Healthcare Power of Attorney. Proxy or other delegation of voting rights or management rights with respect to an entity. Power created on a form prescribed by government, governmental subdivision, governmental agency for a governmental purpose.

77 FINANCIAL POWER OF ATTORNEY Applicability of IUPOA Applies to all Financial POAs created on or after July 1, Applies to all judicial proceedings concerning a power of attorney commenced on or after July 1, 2014.

78 FINANCIAL POWER OF ATTORNEY Applicability to prior documents/proceedings Generally applies to POAs created before July 1, 2014, unless otherwise provided in the Act. But see Iowa Code 633B.107, the meaning and effect of a POA created before July 1, 2014, is to be interpreted under the law that was in effect at the time the POA was created Generally applies to judicial proceedings commenced before July 1, 2014, unless court finds that application of the IUPOA would substantially interfere with conducting the proceedings or the rights of interested persons.

79 FINANCIAL POWER OF ATTORNEY Validity of Documents under IUPOA POAs executed on or after July 1, 2014, are valid if executed in compliance with IUPOA. Must be notarized POAs executed before July 1, 2014, are valid if execution complied with state law in effect at the time of execution. Notarization was not required, but commonly practiced

80 FINANCIAL POWER OF ATTORNEY Old Iowa POA Law Very little statutory law in Iowa. Agent referred to as Attorney-in-Fact. Document contained a laundry list of transactions Agent was authorized to transact. Notarization was typically used, but not required. Iowa Bar Form was typically used, but not required. Affidavit procedure used for agent to verify their authority.

81 FINANCIAL POWER OF ATTORNEY New Iowa UPOA Law Now have comprehensive statutory law in Iowa. Agent now referred to as Agent. Comments to the Uniform Act and cases decided in other states who have adopted the Uniform Act will be helpful guidance. Laundry list of transactions no longer required, refer to the statute to confirm Agent s authority. Notarization is now required. Certification procedure now used for Agent to verify their authority.

82 FINANCIAL POWER OF ATTORNEY Agent can be granted General Authority by: Granting Agent general authority to do all acts that principal could do pursuant to Iowa Code 633B.201 Incorporating by reference the provisions set forth in 633B B.217 Providing detailed itemization of the authority granted

83 FINANCIAL POWER OF ATTORNEY Grant of General Authority includes: 633B.204 Real Property. 633B.205 Tangible Personal Property. 633B.206 Stocks and Bonds. 633B.207 Commodities and Options. 633B.208 Banks & Other Financial Institutions. 633B.209 Operation of Entity or Business. 633B.210 Insurance & Annuities.

84 FINANCIAL POWER OF ATTORNEY Grant of General Authority includes: 633B.211 Estates, Trusts & Other Beneficial Interests. 633B.212 Claims & Litigation. 633B.213 Personal & Family Maintenance. 633B.214 Governmental Benefits, Civil & Military Service Benefits. 633B.215 Retirement Benefits. 633B.216 Taxes. 633B.217 Gifts.

85 FINANCIAL POWER OF ATTORNEY Grant of General Authority not sufficient for all transactions. Agent may not perform certain transactions, as set forth in Iowa Code 633B.201 unless: POA expressly grants the authority Exercise of such authority is not prohibited by another statute, agreement or instrument

86 FINANCIAL POWER OF ATTORNEY Specific Authority expressly required for the following: Create, amend, revoke, terminate Revocable Trust. Make a gift in excess of federal annual exclusion amount. Create or change rights of survivorship. Create or change beneficiary designation. Delegate authority granted under POA. Waive principal s right to joint and survivor annuity. Exercise fiduciary powers that principal has authority to delegate. Disclaim property, including a power of appointment.

87 FINANCIAL POWER OF ATTORNEY Even if Specific Authority expressly granted, an agent who is not closely related to the principal may not directly or indirectly create in the agent an interest in the principal s property by gift, right or survivorship, beneficiary designation, disclaimer, or otherwise

88 FINANCIAL POWER OF ATTORNEY Powers of Co-Agents Under old Iowa law, Co-Agents required to act in concert unless document specifically specified otherwise. Under UIPOA, majority of Co-Agents are authorized to act on behalf of principal unless document specifies otherwise

89 FINANCIAL POWER OF ATTORNEY Nomination of Guardian & Conservator Under old Iowa law, nomination of Guardian & Conservator was completed through separate standby Petitions. Under new IUPOA, standby Guardians and Conservators may also be nominated in the Financial Power of Attorney document.

90 FINANCIAL POWER OF ATTORNEY Accounting of Agent s Acts Under old Iowa law, accounting could only be obtained by principal, principal s conservator or personal representative. Under IUPOA 633B.114(8), accounting can be requested by principal, principal s conservator, another fiduciary acting for principal, a governmental agency having authority to protect welfare of principal, personal representative of deceased principal. Clients often to choose to name additional parties (i.e. children of principal) who are entitled to request an accounting

91 FINANCIAL POWER OF ATTORNEY Invoking Judicial Intervention Under old Iowa law, judicial intervention could only be obtained by principal, principal s conservator or personal representative. Under IUPOA 633B.116, there is an extensive laundry list of interested persons who have authority to invoke court jurisdiction to construe a power of attorney or review an agent s conduct

92 FINANCIAL POWER OF ATTORNEY Iowa Statutory Financial Power of Attorney Form can be found at 633B.301 and on Iowa Docs Statutory form is not popular with practitioners and will likely be revised in the future Statutory form does not lend itself to automated generation of documents Statutory form should only be used in very simple situations Agent s Certification Form can be found at 633B.302. These forms are not mandatory and may be revised as necessary.

93 LIVING WILL

94 LIVING WILL Life-Sustaining Procedures Act Iowa Code Chapter 144A

95 LIVING WILL Executed at any time by a competent adult. Document must either be notarized or witnessed by two adults. Becomes effective if patient is in terminal condition and is unable to make their own medical decisions. Provides directions on use or withdrawal of lifesustaining procedures. May be revoked at any time, without regard to mental or physical condition.

96 LIVING WILL Definition of Terminal Condition Incurable or irreversible condition that, without administration of life-sustaining procedures, will, in the opinion of the attending physician, result in death within a relatively short period of time. State of permanent unconsciousness from which, to a reasonable degree of medical certainty, there can be no recovery.

97 LIVING WILL Definition of Life-Sustaining Procedures Any medical procedure, treatment, or intervention, including resuscitation, which utilizes mechanical or artificial means to sustain, restore or supplant a spontaneous vital function, and when applied to a patient in a terminal condition, would only serve to prolong the dying process.

98 LIVING WILL Witnesses to Living Will Signed by 2 adult witnesses in the presence of each other and the declarant. At least one witness must be unrelated (not a relative by blood, marriage, or adoption within the third degree of consanguinity). Attending physician and employees of the attending physician cannot serve as witness. Prefer use of notary instead of 2 witnesses to avoid increased chance of litigation.

99 LIVING WILL Applicability of Living Will Attending physician concludes that patient is in a terminal condition. Diagnosis is confirmed by another physician. Notation is made in medical record that Living Will is now applicable. Effectiveness delayed if patient is pregnant with fetus that could develop to point of live birth with continued application of life-sustaining procedures.

100 LIVING WILL Old Living Will Definition of life-sustaining procedures changed on April 23, After that date, definition of life-sustaining procedures includes hydration and nutrition administered through IV or NG tube. Living Will documents signed prior to April 23, 1992, do not allow the withdrawal of food and water provided through artificial means.

101 WHAT IF NO LIVING WILL? No presumption for or against life-sustaining procedures based on failure to execute Living Will. Must be consultation and written agreement between attending physician and alternate decision makers who must be guided by the express or implied intentions of patient. If legal guardian has been appointed for the patient, court order is required prior to withdrawal of lifesustaining procedures.

102 IF NO LIVING WILL ALTERNATE DECISION MAKERS 1 st : Person designated under health care POA. 2 nd : Legal guardian of patient. 3 rd : Spouse of patient. 4 th : Adult children (majority of children who are reasonably available for consultation). 5 th : Parents of patient. 6 th : Adult siblings of patient.

103 MEDICAL POWER OF ATTORNEY DURABLE POA FOR HEALTH CARE

104 MEDICAL POWER OF ATTORNEY DURABLE POA FOR HEALTH CARE Iowa Code Chapter 144B

105 MEDICAL POWER OF ATTORNEY Designates another person as agent to make health care decisions when patient is no longer able to make those decisions on their own. Takes effect when patient can no longer make their own medical decisions. Covers more situations than Living Will. Can be revoked at any time, without regard to mental or physical condition.

106 MEDICAL POWER OF ATTORNEY Requirements for Validity: Written designation. Explicitly authorizes agent to make health care decisions. Notarized or signed by 2 witnesses. Same witness limitations as described for Living Will.

107 MEDICAL POWER OF ATTORNEY Ineligible Decision Makers under Medical POA: Attending physician cannot serve as agent. Employee of the attending physician cannot serve as agent, unless the individual is related to patient by blood, marriage, or adoption within the 3 rd degree of consanguinity.

108 MEDICAL POWER OF ATTORNEY Legal Effect of Designation: Designated agent has authority to make decisions if principal is unable, in the judgment of attending physician, to make their own health care decision. Designated agent has duty to act in accordance with desires of the patient as expressed in the Medical POA or otherwise made known to agent at any time.

109 MEDICAL POWER OF ATTORNEY Legal Effect of Designation: If patient s desires are unknown, agent has duty to act in the best interests of the patient, taking into account the patient s overall medical condition and prognosis. Agent can be removed if district court determines that agent is acting contrary to wishes of the patient. If patient has Living Will and Medical POA, provisions of Living Will take priority.

110 RELATED MEDICAL DOCUMENTS

111 MEDICAL DIRECTIVES Optional document that supplements the Medical Power of Attorney and Living Will. Provides specific instructions to Agent regarding medical decisions to be made under specific circumstances. Client should complete with input of personal physician.

112 DNR ORDERS Iowa Code Chapter 144D Do Not Resuscitate Orders (DNR) orders can only be completed by or for individuals who are determined to be near the end of life. DNR Orders must be completed with the assistance of physician. Attorneys cannot draft DNR Orders. Iowa law has provisions allowing DNR Orders to be portable between facilities.

113 DISPOSITION OF LAST REMAINS

114 DISPOSITION OF LAST REMAINS Iowa Code Chapter 144C Iowa Final Disposition Act Applies to all deaths occurring on or after July 1, 2008 and to all declarations executed on or after that date. Gives an individual the ability to designate who will be in charge of making funeral and burial decisions for the individual following his or her death.

115 DISPOSITION OF LAST REMAINS Order of Priority for Decision Makers: Designee (then alternate designee) in declaration; Surviving spouse (provided not legally separated); Surviving adult children (majority rules); Surviving parents; Surviving adult grandchildren (majority rules); Surviving adult siblings (majority rules);

116 DISPOSITION OF LAST REMAINS Order of Priority for Decision Makers: Surviving grandparents (majority rules); Persons in next degree of kinship under rules of intestate succession (majority rules); Person who represents that he/she knows the decedent s identity and who signs an affidavit verifying decedent s identity and assuming responsibility/expense; County medical examiner (if responsible for remains).

117 DISPOSITION OF LAST REMAINS Designee(s) jump to front of the line. Designee has obligation to act in good faith and in a manner that is reasonable under the circumstances. Default decision makers apparently have no obligation to act in good faith and in a manner that is reasonable under the circumstances See In re Estate of Whalen, 827 NW2d 184 (Iowa Supreme Court 2013).

118 DISPOSITION OF LAST REMAINS Reasonable under the circumstances means consideration of what is appropriate in relation to the Decedent s: Finances; Cultural or family customs; and Religious or spiritual beliefs. Reasonable under the circumstances also may include, but is not limited to, consideration of the Decedent s: Preneed funeral, burial, or cremation plan; and Known or reasonably ascertainable creditors.

119 DISPOSITION OF LAST REMAINS Requirements for Valid Designation: Must be in written form that substantially complies with language in Chapter 144C.6; Must be contained in or attached to a durable power of attorney for health care; Must be dated and signed by declarant; and Must be witnessed by 2 individuals or notarized.

120 DISPOSITION OF LAST REMAINS Declaration MAY include The location of an agreement for prearranged funeral services or funeral merchandise; Cemetery lots owned by or reserved for the declarant; and Special instructions regarding organ donation. Declaration CAN NOT include: Directives for final disposition of the declarant s remains (i.e. I want to be cremated and ashes spread in the Pacific Ocean); nor Arrangements for ceremonies planned after the declarant s death.

121 THANK YOU Follow up questions can be directed to Janice Kerkove at or (319) Cedar Rapids 2007 First Avenue SE PO Box 2804 Cedar Rapids, Iowa Ph: Fax: Iowa City Tower Place One South Gilbert Iowa City, Iowa Ph: Fax: