The SENB Bank Ultimate Guide to Estate Planning in Iowa

The Covid-19 pandemic has altered all of our lives in one way or another. Many people who never thought about drafting a Last Will and Testament before now see the importance of estate planning. Ultimately, everyone should have an estate plan, regardless of your age or whether we are living through a pandemic or not. In this article, we’ll walk you through what an estate plan is, the considerations and documents that go into it, and how to get started.

What is an estate plan?

An estate plan is not a single document; it’s the collection of documents such as a Last Will and Testament, Power of Attorney, Health Care Directives, and/or Trusts that provide instructions for how to distribute your assets after your death and how to manage them for you in the event that you become incapacitated. Estate planning can also involve financial management to ensure your assets (retirement accounts, land, personal property, life insurance, and family heirlooms) can provide you with an enjoyable retirement and to minimize the tax burden on your heirs.

Everyone, no matter how young or old, wealthy or not, should have an estate plan. Without at least a Last Will and Testament, you will die intestate, which means the state law where you live will determine how your assets are distributed. The court also appoints an administrator to manage the probate process. 

Instead of letting the state decide for you and your family, take the time to think through your goals and wishes now, have an attorney draw up the paperwork, and appoint an impartial estate administrator like SENB Bank to ease the stress and burden on your family during a difficult time. An experienced, objective estate administrator can more easily navigate the complexities of settling an estate. 

Identify your estate planning goals

Every estate plan is unique and depends on a variety of legal, tax, and other issues such as state laws, number of beneficiaries, family dynamics, your investment strategy, etc. That’s why it’s best to begin the estate planning process by thinking through your goals. You can do this on your own, talk about it with your spouse, or schedule a conversation with a trust and estate expert. Here are the most common considerations:

• How to provide for yourself and your loved ones through and after your death
• Mitigating or avoiding probate altogether through the use of trusts
• Minimizing taxes owed
• Planning for the distribution and stewardship of your assets
• Protecting your assets throughout your lifetime
• Planning for incapacity and medical emergencies

We can help you go through each category to determine how it applies to your own situation and how you’d like to handle it by way of wealth management, insurance policies, trusts, and more. 

The four elements of an estate plan

Now, let’s take a closer look at the four primary parts of an estate plan.

Last Will and Testament

It’s never too early to create a will, and it’s a good thing to have in place as soon as possible. Even having a simple will is better than having no will at all because it makes your intentions clear after you are gone. Writing a will also allows you to choose your own executor instead of having one appointed by the court. You should also appoint a guardian for any minor children. As time passes and your life changes, review your will and make any needed changes.

There is no one right way to compose your will; the purpose of a will is to leave instructions for the court and your heirs to distribute your assets, such as savings and retirement accounts. You can have an attorney draw up your will for you or you can use a free template online. If you go the DIY approach, just make sure you follow state and local laws for signing and notarizing your will. Otherwise it could be declared invalid by the probate court.

Power of Attorney

Like a Last Will and Testament, a Power of Attorney (POA) is a legal document. The purpose of a POA is to appoint someone to act on your behalf, such as with financial and medical decisions, in the event that you become incapacitated. For example, incapacitation could be a short-term condition, such as while in a medically-induced coma, or a long-term condition, such as dementia.

Health Care Directives

Certainly, the Covid-19 pandemic has made us all more aware that advance care planning isn’t just for the over-60 crowd. If you should find yourself dealing with a medical crisis that renders you unable to make your own decisions about care, a Healthcare Directive (also known as an advance directive or living will) states your wishes for end-of-life and emergency care. For example, do you want to be kept alive at all costs via CPR, ventilator use, and/or artificial nutrition and hydration? Or would you rather receive palliative care if doctors run out of treatment options?

Trusts

There are a variety of trust types available, but the most common are irrevocable and revocable trusts. The main difference between the two is whether the terms of the trust can be changed at any time. With an irrevocable trust, terms cannot be modified without the consent of the trust’s beneficiaries. And with a revocable or living trust, terms can be changed at any time.

The benefits of setting up a trust include a lower tax burden, greater privacy, avoidance of probate and more control over how and when your assets are distributed. SENB Bank can serve as a professional trust administrator to oversee and manage the trust on behalf of its beneficiaries. Contact us to learn more!

Gather important documents

Now that you understand the importance of estate planning and what it entails, it’s time to make an appointment and get started by gathering the necessary documents. This includes:

• Healthcare documents such as your advanced healthcare directive
• Tax documents
• Account information for bank and investment accounts
• Insurance policies
• Real estate titles and deeds
• Last will and testament
• Trust papers
• List of outstanding debts
• List of monthly bills
• Vehicle titles
• List of other assets such as jewelry, artwork, and antiques

Finally, keep in mind that not all assets are passed through a Trust or Last Will and Testament. Certain assets, such as retirement accounts and life insurance policies, go to the designated beneficiary regardless of your current situation. So be sure to update your beneficiaries along with your Trust or Will after big life changes like marriage, divorce, death, and the birth of a child.

Partner with us for your Trust and Administration needs!

As a community bank, SENB Bank has built our reputation on responsible trust and estate administration practices in the Quad Cities and Stateline regions. Our Trust team has built hands-on experience with settling trusts and estates of all sizes. We’ll put our experience to work for you to deliver exceptional and realistic estate planning services. Schedule a free estate consultation today!