In March 2018, Governor Reynolds signed HF 2125 into law, with effective date, July 1, 2018. This law increases the limit of personal property that can be transferred after death using an affidavit. Starting July 1, 2018, if an individual dies with less than $50,000 of personal property that would be transferred by a will or by intestate succession (the default rules), the assets can be handled through use of an affidavit. Previously, the limit was $25,000.
Who qualifies and what is the process?
- The assets to be distributed by the affidavit are, or have been, less than $50,000 any time since death.
- The individual either didn’t own real estate, or any real estate was owned jointly with a relative that would be exempt from inheritance tax (such as spouse or child).
- There is no limit to the amount of assets that are passing by beneficiary designation, such as life insurance or retirement accounts.
- The affidavit cannot be used until at least 40 days have passed since death, and you will need to have a copy of the death certificate.
- The person completing the affidavit is certifying under penalty of perjury that the information is correct, and that the persons they have listed as the successor (typically the same person) is the appropriate person that has an interest in the property.
Under the appropriate circumstances, this affidavit is very beneficial. A common example for use of this affidavit is a married individual that owned most assets jointly with a spouse, but after death the spouse discovers one small asset in decedent’s name alone. If the asset is less than $50,000, that asset can be handled with an affidavit.
Another common example is an individual that was living in a rental property or nursing facility, and the only remaining asset is a small bank account. Often such a small asset would not justify the cost of opening a probate estate. The affidavit can be used to handle the property more efficiently.
Additional changes to the law clarify that the person signing the affidavit must certify that any creditors, any debts owing as a result of Medicaid benefits, or any taxes owing, will be paid to the extent of funds received under the affidavit. This affirms that the affidavit procedure is only intended to simplify the formal probate procedure, it is not intended to affect the rights of any creditors.
The increased limit for the affidavit will be beneficial, but is not without its limitations. It cannot be used if the decedent owned real estate in their own name, regardless of the value of the property. (Iowa law typically requires that an estate be opened to transfer title of real estate.) Further, if there are numerous creditors and not enough funds to pay all the creditors in full, it may be more efficient to open an estate to handle the various creditor claims.
Your attorney can assess the situation, determine if an affidavit is appropriate, and assist with distribution of assets.
The new law applies to individuals dying on or after July 1, 2018.
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