Wills Trusts & Estate Planning
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Estate planning, which includes legal documents like wills, trusts, and powers of attorney, is the process of preparing instructions on how to manage your assets after your death. State and federal laws apply to estate planning as do taxes. It is vital to consult an experienced attorney in order to protect your assets and meet the goals of your estate planning process.
Estate planning allows you to decide what will happen to your assets after your death. It allows you and your loved ones to save time and legal costs, and avoid financial and administrative hassles. Your estate plan should include at least three vital documents: 1) a will, 2) a statutory power of attorney, and 3) a medical power of attorney. It may also include a revocable trust depending on your specific financial situation.
A will is a legal document which controls who receives your property after your death, a statutory power of attorney is a legal document by which you appoint another person to make legally binding decisions for you regarding your business affairs, and a medical power of attorney is a legal document by which you appoint another person to make legally binding decisions for you regarding your medical affairs. In addition, other legal documents such as a living will and a revocable (or “living”) trust can help with decisions should you become incapacitated.
The basic purpose of estate planning is not simply to distribute property after death, but to reduce inefficiency and taxes throughout the probate process. This is especially true when it comes to federal estate tax and inheritance tax.
Most estates are free of federal estate taxes, and a spouse can leave a surviving spouse an unlimited amount of money free of taxes. Federal estate taxes may apply if the assets in your estate exceed your personal federal estate tax exemption amount. These exemption amounts vary from year to year so it is best to routinely review your estate planning with your attorney.
Iowa has an inheritance tax. Any property passing to a surviving spouse is free of Iowa inheritance tax. Likewise, property passing to parents, grandparents, great grandparents, children, stepchildren, grandchildren, great grandchildren, and any other lineal ascendants or lineal descendants is exempt from Iowa inheritance tax. Inheritance tax applies to any other beneficiaries with rates between 5% and 15%.
Estate planning is vital to work towards security and peace of mind for yourself and your family. If you require assistance at any stage in the estate planning process, please contact one of our attorneys to insure that your needs are met and your estate is protected.