How to Create an Iowa Revocable Living Trust
The primary role of an Iowa living trust is to help you save on time and money spent on probate court proceedings after you die. It also helps to keep your family's privacy intact, as the terms of the trust are not typically for public records.
There are two types of Iowa trusts - revocable and irrevocable. As the names suggest, a revocable trust can be changed or terminated at any time, while an irrevocable trust cannot be altered after it has been created.
Creating an Iowa living trust lets you put your estates into a trust when you are still alive, but you still maintain control over the assets during your lifetime. If you are the trustee of your own Iowa living trust, you can modify it, revoke it or terminate it at any time as long as you are alive and considered sound mind.
Do You Need an Iowa Living Trust?
An Iowa living trust can help you avoid probate. However, if you have a small estate, you may not need a living trust. Iowa has a simplified probate procedure for small estates.
Iowa also has a procedure for transferring real estate to a surviving spouse without going through probate. Here, your beneficiaries can use an affidavit or sworn statement to claim your property if the value of your estate is less than $50,000 (Excluding any real estate).
Also, if your estates are $200,000 or less, you are eligible for summary probate, a faster and less expensive way for inheritors to claim your estate.
How Do You Make a Revocable Living Trust in Iowa?
The person who creates a living trust is the guarantor, and the person who manages the property in the trust is the trustee. So, to make a living trust in Iowa, you'll need to:
Choose a trustee: The trustee can be anyone you trust, including yourself, a family member, or a friend. You may also choose a successor trustee to take over if you can no longer serve.
Choose beneficiaries: A beneficiary can be anyone you choose, including yourself, your spouse, your children, or other relatives.
Decide what property to put into the trust: You can put any property in the trust, including cash, stocks, bonds, life insurance policies, real estate, and personal property.
Sign the trust agreement: The trust agreement is a legal document that legalizes the trust and must be signed by the grantor and notarized.
Do You Need a Will If You Have a Revocable Living Trust?
Iowa law requires you to have a will if you want to leave property to someone outside your immediate family. Iowa intestacy law will determine how your property is distributed if you die without a Will.
If you have a revocable living trust, you can still use a will to name beneficiaries for any property not in the trust. This is called a "pour-over" will. It technically "pours" any assets not initially accounted for into the trust after you pass away. The trustee then distributes the assets according to the terms of the trust agreement.
A will also let you name a guardian for your minor children. So, be sure that Iowa courts will decide who will raise your children if you die without a will.
How Will Living Trust Affect Taxes in Iowa?
The state of Iowa has an inheritance tax for assets above $25,000 (Iowa Code Ann. § 450.4.). The federal estate tax exemption is currently $12.06 million per person (For Deaths in 2022).
To avoid these taxes, you can leverage a QTIP trust, which allows you to pass on your assets to your spouse while still providing for other beneficiaries after your death.
Though advisable, you don’t need an attorney to create an Iowa revocable living trust. Forms.legal offers a free trust template for Iowa that you can use to create your trust online, all by yourself.