Forget the scariest movies of all time, did you hear the unnerving tale about the will admitted to probate? Frightening stuff!
Some folks are surprised, even shocked, to learn that a will doesn’t avoid probate, but it doesn’t. Whether you die intestate (no will), or even with a will, your estate must pass through Iowa probate court. If you have an estate plan (including a will) this process is much more smooth and simple for your loved ones, because you’ve clearly told them, and the court, how you want your property dispersed. But, even with a basic estate plan, this is still a judicial process. (Plus your will becomes public record when it goes through probate.) The only practical way to avoid probate is through a revocable living trust. The “living”part of this means a trust that is established and funded by you during your lifetime.
A trust can sound somewhat elusive. And you may think it’s reserved just for the very wealthy, like that strange couple that live in the huge, dark mansion on the hill. However, a trust can be an incredibly important tool in many situations and provide multiple advantages.
Save Time & Money
Time
One of the major benefits of a trust is that it enables your loved ones and your favorite charities—your beneficiaries—to avoid the time and financial costs of probating a will. This is because, upon death, the property and assets are already distributed to the trust. Otherwise, the probate process can take anywhere from several months to more than a year to complete.
Fees
Probate can also be expensive considering fees. Fees and costs can reduce your estate by 4%, or even more. Executor’s fees, and attorney’s fees are both authorized by Iowa statute to be as high as 2% each, for a total of 4%, and that doesn’t include court costs. While that may not sound like a lot, it can actually equate to a good chunk of money that you would most certainly rather pass along to your heirs or to your favorite charity. Far more often than not, the cost of creating a trust is considerably less expensive than the cost of probate would be.
The Case of Frank E. Stein
A simple example. Let’s suppose Frank E. Stein’s estate is worth $2 million. This may sound like a lot, and it is, but consider things like a large, expensive house, or a second home, or a vacation home, or a farm, or a family business, can rather easily push an estate into the multi-millions territory. Again, with Frank’s estate worth $2 million, a “shave” of 4% reduces the estate by $80,000. That’s $80,000 that could have gone to Frank’s favorite charity, The Home for Wayward Bats. A revocable living trust, completed by a qualified estate planner, would cost around $2,400.
Privacy
Revocable living trusts offer an additional benefit: privacy. When a will is filed with the Iowa probate court upon death, the will becomes a public record. Trusts, on the other hand, remain private documents. You may not want your friends, neighbors, monsters, and others to know the contents of your will. Like all good mysteries, some things are better left a mystery.
Start a Conversation
Considering all the aspects of a trust doesn’t have to feel like a twisty path through a scary forest straight out of Grimm’s Fairy Tales. I’m more than happy and willing to be your guide. Don’t hesitate to reach out; email me at gordon@gordonfischerlawfirm.com or call at (515) 371-6077.
These are just a few of the adjectives that can be used to describe six of the scariest things your nonprofit can do (or fail to do). As a lawyer who regularly works with nonprofit organizations to help them succeed in pursuing their missions, these six items literally haunt my nightmares.
Failing to have an employee handbook with necessary policies.
Spine chilling!
Seriously? How can you NOT have an employee handbook? An employee handbook (even if you have but a single employee) makes clear the rights and responsibilities of both the employer and employee. So many disputes can be avoided by a clear, easy-to-read, and direct employee handbook. One of your best bets to fight off this spooky scenario is to get my free guide to developing a quality employee handbook!
Merely copying a handbook off the Internet or “borrowing” it from another nonprofit.
Very eerie!
This is about as bad as not having a handbook at all! Just grabbing a random handbook and adopting it as your own makes as much sense as picking up a random hitchhiker on a foggy night. Others’ employee handbooks may have provisions you don’t need, or worse, ones you don’t want.
I once reviewed a handbook for small-but-sincere nonprofit that worked with the homeless. Several times in the handbook, quite specific medical terms came up—there was a HIPPA provision, there was talk about medical certifications, medical training, and proper handling of medical records. I realized, with a shock, this nonprofit had “borrowed” a handbook from a hospital.
How much faith or confidence will employees have in an employee handbook that’s filled with irrelevant stuff that clearly doesn’t apply to them at all? This is scary stuff, folks, very scary stuff.
Failing to have an appropriate disclaimer in your nonprofit’s employee handbook
Truly frightening!
An employee handbook is just an employee handbook . . . or so you may think. But, what happens when it doesn’t have an appropriate “disclaimer?”
An employee handbook may constitute an employment contract! If you think about it, an employee handbook has all the elements of a contract—it’s written, it’s specific, it “promises” certain things will (or won’t) happen. It’s even “signed” by the nonprofit/company.
So, an employee handbook could actually be considered a unilateral employment contract unless the employer includes an appropriate disclaimer. Make sure you do so.
Job descriptions are so important – for the same or similar reasons that employee handbooks themselves are needed. Job descriptions lay out in writing what is required of employees.
Job descriptions are also helpful in relation to what is now-called the American with Disabilities Act Amendments Act (ADAAA). Job descriptions demonstrate the “essential functions” (as opposed to non-essential) job functions of each position.
Also, strongly consider job descriptions for board members.
Failing to have an acknowledgement page in your nonprofit’s employee handbook
Dreadful!
It is critically important your employee handbook include an acknowledgment page that the employee signs and returns. The acknowledgement page should state that the employee understands it is his or her responsibility to both read and follow the policies. The acknowledgement page should be able to be separated from the handbook, so that it can be signed by the employee and saved in the employee’s personnel file.
Not making absolutely clear that your new employee handbook supersedes other, older policies
Ghastly!
Your nonprofit’s new employee handbook must make clear it trumps other, older policies and provisions. The employee handbook needs a “superseding” provision. This provision must state unambiguously this employee handbook is indeed the most up-to-date guidance on your nonprofit’s policies.
Wow, that was super scary!
After writing this post, I probably won’t sleep well tonight. But, if you follow these six pieces of advice you’ll rest easy knowing that you’re more likely avoid the nonprofit graveyard. If you’re facing these spooky scenarios don’t hesitate to reach out by phone (515-371-6077) or email to schedule a free consultation. You can also
https://www.gordonfischerlawfirm.com/wp-content/uploads/2017/10/Screen-Shot-2017-10-02-at-11.15.41-PM.png6681009Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2019-10-03 00:02:422020-05-18 11:28:446 of the Scariest Things Your Nonprofit Can Do
The Iowa estate planner dutifully gathered information about all of Count Dracula’s many assets. While discussing real estate holdings, however, the Iowa estate planner inexplicably failed to inquire as to whether Dracula owned real estate with his wife, in any other states.
[Blood-curdling screams]
Yes, that’s right: the Iowa estate planner simply forgot to ask about other States, including community property states. This could, unfortunately, impact the effectiveness of the Drac’s will and the dispersion of Drac’s property.
[Angry mob shouts in disbelief]
Iowa is NOT a Community Property State
The majority of states, including Iowa, are not community property states. There are about a dozen states which are community property states. As explained below, whether a state does or does not follow community property laws can have a huge impact on estate planning.
What are Community Property Laws?
Given our limited space I will only provide the most basic of oversimplifications. Simply put, states with community property follow a rule that all assets acquired during marriage are considered “community property.” While each community property state has its own unique and precise set of characterization rules, they all share the general rule that an asset acquired or given during marriage is presumed to be community property, until it is proven to be separate.
Marital property in community property states is owned by both spouses equally (50/50). Marital property includes earnings, all property bought with those earnings, and all debts accrued during the marriage. Community property begins as soon as the couple is married and ends when the couple physically separates with the intention of not continuing the marriage.
Spouses may not transfer, alter, or eliminate any whole piece of community property without the other spouse’s permission. A spouse can manage his or her own half the way he or she wishes, but the whole piece includes the other spouse’s one-half interest. In other words, a spouse cannot be alienated from his or her one half.
Death or Divorce in Community Property States
When one spouse passes away, half of the community property passes to the surviving spouse. Their separate property can be devised to whomever they wish according to their will, or via intestacy statutes without a will. Many community property states offer an interest called “community property with the right of survivorship.” Under this doctrine, if a couple holds title or deed to a piece of property (usually a home), then upon a spouse’s death the title passes automatically to the surviving spouse and avoids probate court proceedings.
If the couple divorces or obtains a legal separation, all of the community property is divided evenly (50/50). The separate property of each spouse is distributed to the spouse who owns it and is not divided according to the 50/50 rule (but, again, there is a presumption that all property is community property, not separate property).
Sometimes, economic circumstances warrant awarding certain assets wholly to one spouse, but each spouse still ends up with 50 percent of all community property in terms of total economic value. This is most common regarding marital homes. Since it is not a practical idea to try to divide a house in half, often the court will award one spouse the house, while the other spouse receives other assets with a value equal to half the value of the home.
There are exceptions to the equal division rule. The most common and well-known, thanks to popular culture, is a prenuptial agreement. Before the marriage, the couple may enter into such an agreement that lays out how the marital property shall be divided upon divorce.
Which States Have Community Property Laws?
Eight states are considered to be the “traditional community property” states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. Wisconsin is the functional equivalent of a community property state when it adopted the Uniform Marital Property Act in the 1980s. Alaska and Tennessee are elective community property states, meaning spouses may create community property by entering into a community property trust or agreement.
What About all the Other States?
The other states, the clear majority of states, are called “common law property” states. “ In this case, “common law” is simply a term used to determine the ownership of property acquired during the marriage. The common law system provides that property acquired by one member of a married couple is owned completely and solely by that person. Of course, if the title or deed to a piece of property is put in the names of both spouses, then that property would belong to both spouses. If both spouses’ names are on the title, each owns a one-half interest.
When one spouse passes away, his or her separate property is distributed according to his or her will, or according to intestacy laws without a will. The distribution of marital property depends on how the spouse’s share ownership—the type of ownership.
If spouses own property in “joint tenancy with the right of survivorship” or “tenancy by the entirety,” the property goes to the surviving spouse. This right is actually independent of what the deceased spouse’s will says. However, if the property was owned as “tenancy in common,” then the property can go to someone other than the surviving spouse, per the deceased spouse’s will. Of course, not all property has a title or deed. In such cases, generally, whoever paid for the property or received it as a gift owns it.
If the couple divorces or obtains a legal separation, the court will decide how the marital property will be divided. Of course, just as in community property states, the prenuptial agreement is an option. The couple can enter into agreement before marriage, providing how to divide marital property upon divorce.
Why did the Iowa Estate Planner Forget to Inquire About Real Estate Located in Other States?
Some say evil men were born that way, while others say monsters learn evil. We can only guess. All we can know for sure is that the Iowa estate planner didn’t ask about real estate in other states. And that was terrible.
You Said Iowa Wasn’t a Community Property State. So, Why Does it Even Matter?
For at least three reasons a lawyer in a common-law state like Iowa needs to have a basic understanding of community property principles.
A client may move to a community property state. Or perhaps there’s a divorce, one party stays in Iowa, the other moves to Washington).
A client may buy property in a community property state. Perhaps the client buys a vacation home in Texas.
The client’s beneficiaries (adult children, for example) may move to a community property state. For example, your daughter marries an Arizonian and they both move to Phoenix.
In all three cases, the distinction between community property and common law states needs to be carefully explained to the client. The estate plan may well need revisions, or even just an extra document or two.
Mob With Pitchforks Goes After Iowa Estate Planner
Ugly! Don’t let this happen to you. Seek an experienced estate planner, who knows the right questions to ask, and be sure to offer them as much information as you possibly can.
Questions or Concerns About Community Property?
Do you have a vacation home in California? Did your son recently elope and the happy couple moved to New Mexico? It may be time to talk about community property and how it impacts YOUR estate plan. Always feel free to email me anytime at gordon@gordonfischerlawfirm.com. Or call my cell at 515-371-6077. I’d be happy to offer you a free one-hour consultation.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2017/10/Screen-Shot-2018-10-03-at-9.42.07-PM.png6611040Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2019-10-01 16:19:352020-05-18 11:28:44Scary Tale of the Estate Planner Who Ignored Community Property Law States
Spooktacular Savings on Probate Fees
Estates & Estate Planning, Trusts, Wills, Trusts & EstatesForget the scariest movies of all time, did you hear the unnerving tale about the will admitted to probate? Frightening stuff!
Some folks are surprised, even shocked, to learn that a will doesn’t avoid probate, but it doesn’t. Whether you die intestate (no will), or even with a will, your estate must pass through Iowa probate court. If you have an estate plan (including a will) this process is much more smooth and simple for your loved ones, because you’ve clearly told them, and the court, how you want your property dispersed. But, even with a basic estate plan, this is still a judicial process. (Plus your will becomes public record when it goes through probate.) The only practical way to avoid probate is through a revocable living trust. The “living”part of this means a trust that is established and funded by you during your lifetime.
Trust in the Trust
A trust can sound somewhat elusive. And you may think it’s reserved just for the very wealthy, like that strange couple that live in the huge, dark mansion on the hill. However, a trust can be an incredibly important tool in many situations and provide multiple advantages.
Save Time & Money
Time
One of the major benefits of a trust is that it enables your loved ones and your favorite charities—your beneficiaries—to avoid the time and financial costs of probating a will. This is because, upon death, the property and assets are already distributed to the trust. Otherwise, the probate process can take anywhere from several months to more than a year to complete.
Fees
Probate can also be expensive considering fees. Fees and costs can reduce your estate by 4%, or even more. Executor’s fees, and attorney’s fees are both authorized by Iowa statute to be as high as 2% each, for a total of 4%, and that doesn’t include court costs. While that may not sound like a lot, it can actually equate to a good chunk of money that you would most certainly rather pass along to your heirs or to your favorite charity. Far more often than not, the cost of creating a trust is considerably less expensive than the cost of probate would be.
The Case of Frank E. Stein
A simple example. Let’s suppose Frank E. Stein’s estate is worth $2 million. This may sound like a lot, and it is, but consider things like a large, expensive house, or a second home, or a vacation home, or a farm, or a family business, can rather easily push an estate into the multi-millions territory. Again, with Frank’s estate worth $2 million, a “shave” of 4% reduces the estate by $80,000. That’s $80,000 that could have gone to Frank’s favorite charity, The Home for Wayward Bats. A revocable living trust, completed by a qualified estate planner, would cost around $2,400.
Privacy
Revocable living trusts offer an additional benefit: privacy. When a will is filed with the Iowa probate court upon death, the will becomes a public record. Trusts, on the other hand, remain private documents. You may not want your friends, neighbors, monsters, and others to know the contents of your will. Like all good mysteries, some things are better left a mystery.
Start a Conversation
Considering all the aspects of a trust doesn’t have to feel like a twisty path through a scary forest straight out of Grimm’s Fairy Tales. I’m more than happy and willing to be your guide. Don’t hesitate to reach out; email me at gordon@gordonfischerlawfirm.com or call at (515) 371-6077.
6 of the Scariest Things Your Nonprofit Can Do
Employment Law, NonprofitsHorrifying. Blood curdling. Hair raising.
These are just a few of the adjectives that can be used to describe six of the scariest things your nonprofit can do (or fail to do). As a lawyer who regularly works with nonprofit organizations to help them succeed in pursuing their missions, these six items literally haunt my nightmares.
Failing to have an employee handbook with necessary policies.
Spine chilling!
Seriously? How can you NOT have an employee handbook? An employee handbook (even if you have but a single employee) makes clear the rights and responsibilities of both the employer and employee. So many disputes can be avoided by a clear, easy-to-read, and direct employee handbook. One of your best bets to fight off this spooky scenario is to get my free guide to developing a quality employee handbook!
Merely copying a handbook off the Internet or “borrowing” it from another nonprofit.
Very eerie!
This is about as bad as not having a handbook at all! Just grabbing a random handbook and adopting it as your own makes as much sense as picking up a random hitchhiker on a foggy night. Others’ employee handbooks may have provisions you don’t need, or worse, ones you don’t want.
I once reviewed a handbook for small-but-sincere nonprofit that worked with the homeless. Several times in the handbook, quite specific medical terms came up—there was a HIPPA provision, there was talk about medical certifications, medical training, and proper handling of medical records. I realized, with a shock, this nonprofit had “borrowed” a handbook from a hospital.
How much faith or confidence will employees have in an employee handbook that’s filled with irrelevant stuff that clearly doesn’t apply to them at all? This is scary stuff, folks, very scary stuff.
Failing to have an appropriate disclaimer in your nonprofit’s employee handbook
Truly frightening!
An employee handbook is just an employee handbook . . . or so you may think. But, what happens when it doesn’t have an appropriate “disclaimer?”
An employee handbook may constitute an employment contract! If you think about it, an employee handbook has all the elements of a contract—it’s written, it’s specific, it “promises” certain things will (or won’t) happen. It’s even “signed” by the nonprofit/company.
So, an employee handbook could actually be considered a unilateral employment contract unless the employer includes an appropriate disclaimer. Make sure you do so.
Not having adequate job descriptions
Terrifying!
Job descriptions are so important – for the same or similar reasons that employee handbooks themselves are needed. Job descriptions lay out in writing what is required of employees.
Job descriptions are also helpful in relation to what is now-called the American with Disabilities Act Amendments Act (ADAAA). Job descriptions demonstrate the “essential functions” (as opposed to non-essential) job functions of each position.
Also, strongly consider job descriptions for board members.
Failing to have an acknowledgement page in your nonprofit’s employee handbook
Dreadful!
It is critically important your employee handbook include an acknowledgment page that the employee signs and returns. The acknowledgement page should state that the employee understands it is his or her responsibility to both read and follow the policies. The acknowledgement page should be able to be separated from the handbook, so that it can be signed by the employee and saved in the employee’s personnel file.
Not making absolutely clear that your new employee handbook supersedes other, older policies
Ghastly!
Your nonprofit’s new employee handbook must make clear it trumps other, older policies and provisions. The employee handbook needs a “superseding” provision. This provision must state unambiguously this employee handbook is indeed the most up-to-date guidance on your nonprofit’s policies.
Wow, that was super scary!
After writing this post, I probably won’t sleep well tonight. But, if you follow these six pieces of advice you’ll rest easy knowing that you’re more likely avoid the nonprofit graveyard. If you’re facing these spooky scenarios don’t hesitate to reach out by phone (515-371-6077) or email to schedule a free consultation. You can also
Scary Tale of the Estate Planner Who Ignored Community Property Law States
Estates & Estate Planning, Wills, Trusts & EstatesDON’T DARE READ THIS ALONE!
Count Dracula needed a new estate plan. After all, the Count hadn’t updated his last will in 1,400 years. After he got over a few eerie common estate planning excuses, he went to his Iowa estate planner.
The Iowa estate planner dutifully gathered information about all of Count Dracula’s many assets. While discussing real estate holdings, however, the Iowa estate planner inexplicably failed to inquire as to whether Dracula owned real estate with his wife, in any other states.
[Blood-curdling screams]
Yes, that’s right: the Iowa estate planner simply forgot to ask about other States, including community property states. This could, unfortunately, impact the effectiveness of the Drac’s will and the dispersion of Drac’s property.
[Angry mob shouts in disbelief]
Iowa is NOT a Community Property State
What are Community Property Laws?
Given our limited space I will only provide the most basic of oversimplifications. Simply put, states with community property follow a rule that all assets acquired during marriage are considered “community property.” While each community property state has its own unique and precise set of characterization rules, they all share the general rule that an asset acquired or given during marriage is presumed to be community property, until it is proven to be separate.
Marital property in community property states is owned by both spouses equally (50/50). Marital property includes earnings, all property bought with those earnings, and all debts accrued during the marriage. Community property begins as soon as the couple is married and ends when the couple physically separates with the intention of not continuing the marriage.
Spouses may not transfer, alter, or eliminate any whole piece of community property without the other spouse’s permission. A spouse can manage his or her own half the way he or she wishes, but the whole piece includes the other spouse’s one-half interest. In other words, a spouse cannot be alienated from his or her one half.
Death or Divorce in Community Property States
When one spouse passes away, half of the community property passes to the surviving spouse. Their separate property can be devised to whomever they wish according to their will, or via intestacy statutes without a will. Many community property states offer an interest called “community property with the right of survivorship.” Under this doctrine, if a couple holds title or deed to a piece of property (usually a home), then upon a spouse’s death the title passes automatically to the surviving spouse and avoids probate court proceedings.
If the couple divorces or obtains a legal separation, all of the community property is divided evenly (50/50). The separate property of each spouse is distributed to the spouse who owns it and is not divided according to the 50/50 rule (but, again, there is a presumption that all property is community property, not separate property).
Sometimes, economic circumstances warrant awarding certain assets wholly to one spouse, but each spouse still ends up with 50 percent of all community property in terms of total economic value. This is most common regarding marital homes. Since it is not a practical idea to try to divide a house in half, often the court will award one spouse the house, while the other spouse receives other assets with a value equal to half the value of the home.
There are exceptions to the equal division rule. The most common and well-known, thanks to popular culture, is a prenuptial agreement. Before the marriage, the couple may enter into such an agreement that lays out how the marital property shall be divided upon divorce.
Which States Have Community Property Laws?
Eight states are considered to be the “traditional community property” states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. Wisconsin is the functional equivalent of a community property state when it adopted the Uniform Marital Property Act in the 1980s. Alaska and Tennessee are elective community property states, meaning spouses may create community property by entering into a community property trust or agreement.
What About all the Other States?
The other states, the clear majority of states, are called “common law property” states. “ In this case, “common law” is simply a term used to determine the ownership of property acquired during the marriage. The common law system provides that property acquired by one member of a married couple is owned completely and solely by that person. Of course, if the title or deed to a piece of property is put in the names of both spouses, then that property would belong to both spouses. If both spouses’ names are on the title, each owns a one-half interest.
Death or Divorce in Common Law Property States
When one spouse passes away, his or her separate property is distributed according to his or her will, or according to intestacy laws without a will. The distribution of marital property depends on how the spouse’s share ownership—the type of ownership.
If spouses own property in “joint tenancy with the right of survivorship” or “tenancy by the entirety,” the property goes to the surviving spouse. This right is actually independent of what the deceased spouse’s will says. However, if the property was owned as “tenancy in common,” then the property can go to someone other than the surviving spouse, per the deceased spouse’s will. Of course, not all property has a title or deed. In such cases, generally, whoever paid for the property or received it as a gift owns it.
If the couple divorces or obtains a legal separation, the court will decide how the marital property will be divided. Of course, just as in community property states, the prenuptial agreement is an option. The couple can enter into agreement before marriage, providing how to divide marital property upon divorce.
Why did the Iowa Estate Planner Forget to Inquire About Real Estate Located in Other States?
Some say evil men were born that way, while others say monsters learn evil. We can only guess. All we can know for sure is that the Iowa estate planner didn’t ask about real estate in other states. And that was terrible.
You Said Iowa Wasn’t a Community Property State. So, Why Does it Even Matter?
For at least three reasons a lawyer in a common-law state like Iowa needs to have a basic understanding of community property principles.
In all three cases, the distinction between community property and common law states needs to be carefully explained to the client. The estate plan may well need revisions, or even just an extra document or two.
Mob With Pitchforks Goes After Iowa Estate Planner
Ugly! Don’t let this happen to you. Seek an experienced estate planner, who knows the right questions to ask, and be sure to offer them as much information as you possibly can.
Questions or Concerns About Community Property?
Do you have a vacation home in California? Did your son recently elope and the happy couple moved to New Mexico? It may be time to talk about community property and how it impacts YOUR estate plan. Always feel free to email me anytime at gordon@gordonfischerlawfirm.com. Or call my cell at 515-371-6077. I’d be happy to offer you a free one-hour consultation.