Updated July 03, 2023
An Iowa living trust is used when a person (the Grantor) wishes to establish how their personal property will be handled when they die. The benefit of this arrangement over a Will is that the Grantor’s assets are not subject to the court-supervised probate process, meaning the Beneficiaries of the trust will immediately receive their allotted assets when the Grantor dies. The Grantor may set up the trust so that he or she is still able to benefit from the income generated from their assets (with a Revocable Trust). Otherwise, the Grantor may name another person as Trustee and relinquish control over their property.
Laws – Chapter 633A (Iowa Trust Code) – PDF Version
Will (Last Will and Testament) – Distributes to the Heirs all property and assets not listed in the trust. The items placed in a Will are subject to the probate process.
Types
Irrevocable Living Trust – The Grantor is not permitted to alter the trust after its initial creation. Any asset designated to an Irrevocable Trust cannot be taxed by the IRS or accessed by creditors.
Revocable Living Trust – If the Grantor wishes, he or she may elect to act as Trustee of a Revocable Trust and manage their assets during their lifetime. This trust offers no tax advantages, however, it can easily be modified by the Grantor.
Individual Roles
The four (4) roles of a Living Trust are as follows:
Grantor (or “Settlor”) – Creator of the trust and the person transferring ownership of their property.
Trustee – The Trustee is required to manage the trust during the Grantor’s lifetime. If the Grantor is not acting as Trustee, the Trustee must execute the Grantor’s instructions, as described in the trust, when the Grantor dies.
Successor Trustee – Individual who assumes control of the trust when the initial Trustee dies.
Beneficiaries – Inheritor(s) of the assets designated to the trust.
How to Make a Living Trust in Iowa
According to § 633A.2101, a trust can be created by the authorization of a Revocable or Irrevocable Trust. With respect to the State Statutes, the trust is only valid if the Grantor is competent and indicates clearly their intent to establish the entity. Your preferred form (Irrevocable or Revocable) should then be filled in with the mention of the Grantor, Trustee, Successor Trustee, and Beneficiaries. The form also allows for the naming of an individual who is to care for the Grantor’s pet(s) after the Grantor dies. This individual (the Pet Caretaker) may be given funding for his/her duties if the Grantor so desires; the amount of funding he/she receives must be defined within the form. Once the form has been filled in correctly, all property and real estate must be transferred to the name of the trust (see below for more information). Having a notary public present during the signing of the Trust document will help protect it from future challenges of authenticity.
Motor Vehicles – Use an Iowa Bill of Sale to prove that the vehicle’s ownership has been transferred. The vehicle must also be registered with the Iowa County Treasurer’s Office.
Real Estate – If placing real estate in a trust, you must complete an Iowa Deed and file it in the County Recording Office located in the property’s jurisdiction.
Websites – The domain’s registration information must be modified to indicate the change of ownership. To do this, contact your registrar and notify them of the transfer of ownership.
Do I Need a Living Trust?
As stated in § 633.356, a document called a Small Estate Affidavit may be used by the Heirs of an estate of less than twenty-five thousand dollars ($25,000) in value to avoid probate. Unlike a trust, the property and assets of the estate will be transferred equally to all applicable Heirs. Therefore, if the estate is valued at more than $25,000, or if an individual wants their property to go to specific individuals, it is recommended that a trust be created.