Details on the Iowa Inheritance Tax Repeal

iowa inheritance tax repeal

In the past week, the Governor signed Senate File 619 which repeals the Iowa inheritance tax over the next five years.  Numerous attempts have been made over the past decade to eliminate or modify the Iowa inheritance tax.  Pursuant to the bill, for persons dying in the year 2021, the Iowa inheritance tax will be reduced by twenty percent.  For persons dying in the year 2022, the Iowa inheritance tax will be reduced by forty percent.  For persons dying in the year 2023, the Iowa inheritance tax will be reduced by sixty percent.  For persons dying in the year 2024,

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Iowa Court Finds Restraint On Alienation

ia supreme court on alienation of property

On April 30, 2021, the Iowa Supreme Court issued an opinion on In the Matter of the Estate of Vera E. Cawiezell, Deceased, Phyllis Knoche, Terry Brooks, and Jill Brooks, Appellants vs. Tom Coronelli and Beth Coronelli, Appellees.   Vera Cawiezell died testate in April 2018.  Her Will was admitted to probate.  In the Will the decedent devised approximately 150 acres of farm ground to her friends, Tom and Beth Coronelli, subject to certain general restrictions in favor of Terry Brooks, the Tenant, who farmed the ground during the decedent’s life.  Item 3 of the Will provided as follows: I hereby

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Federal and State Income Tax Deadlines Extended

2021 state and federal tax deadlines

The IRS has extended the filing and payment deadline to May 17, 2021 for 2020 Federal income tax returns.  The extension applies to individuals, businesses, trusts and estates.  By extending the deadline to May 17, the IRS is automatically postponing to the same date the time for individuals to make year 2020 contributions to IRAs (Traditional and Roth), health savings accounts, Archer Medical Savings Accounts and Coverdell education savings accounts.  In addition, for tax year 2017 Federal income tax returns, the normal April 15 deadline to claim a refund has been extended to the new date of May 17, 2021. 

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Recent Judgment on Will Challenges During Lifetime

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On January 21, 2021, the Iowa Supreme Court issued an opinion in the case of In The Matter of the Guardianship and Conservatorship of Vernon D. Radda v. Washington State Bank, as Conservator for Vernon D. Radda.  The issue in the case was whether a prospective heir can bring a declaratory judgment action under Section 633.637 (2019) of the Iowa Code, to determine the validity of wills before the testator dies.  The Ward executed wills in 1992 and 2015 while he was under a voluntary Conservatorship and without any judicial determination of his testamentary capacity.  The sister of the Ward

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Lawsuit Arising Out of Gift of LLC Interest

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On February 3, 2021, the Iowa Court of Appeals issued an opinion in the case of Erwin v. Erwin, No. 19-1978 (Iowa Ct. App. Feb. 3, 2021). that involved a dispute between a father and son regarding the operation of their member/managed LLC.  In 2012, the father and his spouse transferred title of farm ground owned by them into a LLC for estate planning purposes.  The property was subject to a mortgage, however, the deed did not state that the transfer was subject to a mortgage.  The father subsequently made a gift to his son of one-half of the membership

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Can Deathbed Instructions Amend a Trust?

inheritance tax code iowa

On October 7, 2020, the Iowa Court of Appeals issued a Ruling in the matter of the Sandahl Trust (2017).  Craig Sandahl executed the Sandahl Trust which was a Revocable Grantor Trust in 1993.  The Trust was funded with substantially all of Craig Sandahl’s assets.  The Trust was last restated by a document dated August 14, 2017, which was two months before Craig Sandahl passed away. The Trust distributed assets to two groups of recipients.  One group was the “Descendant’s Trust” of which Craig’s children’s lineal descendants were the beneficiaries and the other group was given to the Community Foundation

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Insights On The New Stimulus Package

stimulus package ppp questions

The US House and Senate have passed a new stimulus bill which has been signed by the President.  The new stimulus bill is over 5,500 pages in length.  This article will deal with the provisions involving the PPP (Paycheck Protection Plan).  The new bill contains provisions dealing with the deductibility of expenses paid with PPP funds.  There is little coverage in the press regarding such provision.  When the PPP program was first approved, it provided that the loans would be eligible to be forgiven by the SBA and that the forgiveness would not create taxable income.  Soon thereafter, the IRS

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Navigating Probate Cases with Joint Tenancy Bank Accounts

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It is not unusual in probating an estate to find that the decedent’s checking account is held in joint tenancy with one of the decedent’s children. The joint account was usually set up to allow said child to pay the bills of the decedent. The question that arises is whether the funds in said account pass to said child at the time of death due to the joint tenancy ownership of the account. In many cases, said child does not want the account to be transferred to the child and would prefer that the funds be divided among all of

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Final Regulations on Deductibility of Expenses of Estates and Non-Grantor Trusts

business taxes, business tax deductions, deduction limits, business expense threshold limits, De Minimis Safe Harbor Expense Threshold

On September 21, 2020, the Internal Revenue Service issued final regulations in regard to the deductibility of expenses of estates and non-grantor trusts.  The Tax Cuts and Jobs Act (TCJA), which was passed previously, bars individuals from claiming miscellaneous itemized deductions for the years 2018 through 2025.  After the passage of the TCJA, there are questions on how such barred itemized deductions would impact estates and non-grantor trusts. The final regulations state that deductions for costs which were paid or incurred in connection with the administration of an estate or trust and which would not have been incurred if the

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New Iowa Supreme Court Case – Estate Planning & Statute of Limitations

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On June 12, 2020, the Iowa Supreme Court issued a ruling in the case of In The Matter of the Estate of Sandra R. Franken, John E. Rottinghaus and Dessie Rottinghaus vs. Lincoln Savings Bank, Fiduciary of the Estate of Sandra R. Franken.  Said Ruling was amended on August 17, 2020. In 1973 the Rottinghauses sold real property of Dessie to Sandra and James Kipp, as joint tenants with full rights of survivorship.  The deed granted the Rottinghauses a first right of refusal which stated as follows: Grantees hereby agree that they will not sell or otherwise convey the premises

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