Probate Track - The Iowa State Bar Association

Probate Track
Tuesday, June 14
Rooms 312-3315
Probate Track
Tuesday, June 14
Rooms 312-315
9:10 a.m. - 10:10 a.m.
My Children are Idiots and 100 Other Reasons
Irrevocable Trusts Remain Irrevocable
Todd Buchanan, Buchanan, Bibler, Gabor & Meis,
Algona, Iowa
10:30 a.m. – 11:15 a.m.
Legislative Update
Susan Pence, Bankers Trust, Cedar Rapids, Iowa
Rule 39.18: Requirement for Death and Disability Plan
Joseph Feller, Koopman, Kennedy & Feller, Sibley, Iowa
11:15 a.m. - 12:00 p.m.
The Uniform Real Property Transfer on Death Deed Act
Kyle Irvin, Corbett Anderson Corbett Vellinga & Irvin, L.L.P., Sioux City, Iowa
1:00 p.m. - 2:00 p.m.
Current Trust and Estate Topics
Paul Morf, Simmons, Perrine, Moyer, Bergman, P.L.C., Cedar Rapids, Iowa
Wayne Reames, Belin McCormick, P.C., Des Moines, Iowa
Michel Nelson, Iowa Savings Bank, Carroll, Iowa
2:00 p.m. - 3:00 p.m.
Guardianship Task Force Update
Prof. Josephine Gittler, University of Iowa, Iowa City, Iowa
Justice Bruce Zager, Iowa Supreme Court, Des Moines, Iowa
3:20 p.m. - 4:20 p.m.
Uncooperative Fiduciaries
Mark Gray, Gray, Thompson & Associates, P.L.C., Ankeny, Iowa
4:20 p.m. - 5:00 p.m.
Iowa Implementation of ABLE Accounts
Jana Weiler, Davis Brown Law Firm, Des Moines, Iowa
2016 Annual Meeting Conference
Probate Track
Rooms 312-315
Legislative Update
10:30 a.m. - 10:55 a.m.
Presented by
Susan Pence
Vice President & Trust Officer
Bankers Trust Company
221 Third Ave. S.E., Suite 150; P.O. Box 69
Cedar Rapids, IA 52406-0069
Phone: 319-866-7232
TUESDAY, JUNE 14
Iowa State Bar Association
ANNUAL MEETING
Probate Track
June 14, 2016
LEGISLATIVE UPDATE:
2016 IOWA PROBATE and TRUST LAW CHANGES
by Sue Pence
Vice President & Trust Officer
Bankers Trust Company, Cedar Rapids, Iowa
Outline Contents:
Pages
Summary of Iowa legislation enacted in 2016
2–3
House File 2266
Unclaimed Cremated Remains
4
House File 2282
Appointment of Guardians ad Litem in Adoptions
4
House File 2335
ISBA Probate, Trust & Estate Planning bill
House File 2344
Written agreements required to terminate farm tenancies
House File 2359
Miscellaneous Changes
7–8
Senate File 2233
Uniform Deployed Parents Custody and Visitation Act
9 – 15
In re Estate of Alvira Tentinger -- Ruling on Motion for Recalculating Court Fees
5–6
6
16 – 22
Legislative information, including copies of legislative bills, can be obtained from Public
Information Office at the State Capitol Building, Des Moines IA 50319, or the internet
at http://www.legis.state.ia.us.
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2016 Iowa Probate, Trust & Related Code Changes
1. Simplify notice requirements for estates selling real estate: Repeals requirement that
notice be provided if all interested persons (defined as estate distributees and persons who
have requested notice under the probate code) are personal representatives of the estate and
have signed the petition to sell real estate. HF 2335 §1 (outline page 5) amends Probate
Code §633.389; effective 7/1/16.
2. Trust notice and document delivery requirements: Establishes requirements for notices
to trust beneficiaries and notices of judicial proceedings relating to trusts. HF 2335 §2
(outline pages 5-6) adds new Trust Code section §633A.1109; applicable to notices and
documents sent on/after 7/1/16.
3. Technical corrections to Iowa Power of Attorney Act: Clarifications to Iowa POA Act:
(a) Persons who refuse to honor acknowledged POA instruments can be held liable for the
principal’s damages and reasonable attorney fees and costs under 633B.120(3)(b);
(b) Agents granted real estate powers can also transfer or release homestead rights under
633B.204(2) and 633B.204(3);
(c) POA instrument must contain express language authorizing agent to disclaim property
and exercise powers of appointment in order for agent to exercise such powers due to repeal
of conflicting subsection 633B.211(2)(h);
(d) Agents given authority regarding benefits from government programs or civil or military
services can now create and fund medical income assistance trusts under 633B.214(2).
HF 2335 §§ 4, 5, 6, 7 & 9 (outline page 6) amend Iowa Uniform Power of Attorney Act
provisions cited above; retroactively applicable to effective date of new POA Act (7/1/14).
4. Farm leases must be in writing: Farm tenancy statute revised to require written document
terminating most leases. HF 2344 amends §562.6 (outline page 6); effective date 7/1/16 (no
special applicability date provision in the bill).
5. Recording requirements for leases and conveyances of agricultural land: New subsection adds definitions of statutory terms regarding requirements for recording conveyances
and leases of agricultural real estate. HF 2359 §161 amends Conveyance §558.44 (outline
pages 7-8); effective date unchanged as 7/1/1979 for all conveyances and leases of
agricultural land made on/after 7/1/1979.
6. Guardians ad litem for minor adoptees: Courts must now include determinations on
whether or not to appoint guardian ad litem in orders setting hearings on petitions to adopt
minor children. HF 2282 amends §600.5 and adds new §600.6 (outline page 4); effective
date 7/1/16 (no special applicability date provision in the bill).
7. Unclaimed cremated remains: Funeral directors may release information to the Iowa
Veteran’s Affairs Dept. concerning the identity of persons whose cremated remains have not
been claimed for 180 days to determine if the decedent qualifies for inurnment at a national
or state veterans cemetery. HF 2266 amends §144.27 (outline page 4); effective date
7/1/16 (no special applicability date provisions in the bill).
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8. Uniform Deployed Parents Custody and Visitation Act: Replaces two statutes regarding
modification of child custody or physical care with Uniform Deployed Parents Custody and
Visitation Act addressing issues of child custody and visitation arising when parents are
deployed in military or national service; this uniform act authorizes, among other things,
military service members to delegate the care of their children to other adults during
deployment. SF 2233 (outline pages 9-15) repeals §598.41C and §598.41D and creates
Chapter 598C; does not affect validity of temporary court orders concerning custodial
responsibility during deployment entered before 7/1/16.
LEGISLATION INTRODUCED BUT NOT ENACTED INCLUDES:
HF 2447 – Court costs for probated estates
SF 2051 – Iowa Death With Dignity Act
SF 2112 – Revised Uniform Fiduciary Access to Digital Assets Act
SF 2117 – Transfer on Death Deeds
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House File 2266
AN ACT CONCERNING UNCLAIMED CREMATED REMAINS.
Section 1. Section 144.27, Code 2016, is amended to read as follows:
144.27 Funeral director’s duty.
1. The funeral director who first assumes custody of a dead body shall file the
death certificate, obtain the personal data from the next of kin or the best qualified
person or source available and obtain the medical certification of cause of death from
the person responsible for completing the certification. When a person other than a
funeral director assumes custody of a dead body, the person shall be responsible for
carrying out the provisions of this section.
2. a. A funeral director responsible for filing a death certificate under this
section may after a period of one hundred eighty days release to the department of
veterans affairs the name of a deceased person whose cremated remains are not claimed
by a person authorized to control the decedent’s remains under section 144C.5, for the
purposes of determining whether the deceased person is a veteran or dependent of a
veteran and is eligible for inurnment at a national or state veterans cemetery. If
obtained pursuant to subsection 1, the funeral director may also release to the
department of veterans affairs documents of identification, including but not limited
to the social security number, military service number, and military separation or
discharge documents, or such similar federal or state documents, of such a person.
b. If the department of veterans affairs determines that the cremated remains
of the deceased person are eligible for inurnment at a national or state veterans
cemetery, the department of veterans affairs shall notify the funeral director of the
determination. If the cremated remains have not been claimed by a person authorized to
control the decedent’s remains under section 144C.5 one hundred eighty days after the
funeral director receives notice under this paragraph “b” , all rights to the cremated
remains shall cease, and the funeral director shall transfer the cremated remains to
an eligible veterans organization if the eligible veterans organization has secured
arrangements for the inurnment of the cremated remains at a national or state veterans
cemetery. For purposes of this subsection, an “eligible veterans organization” means a
veterans service organization organized for the benefit of veterans and chartered by
the United States Congress or a veterans remains organization exempt from federal
income taxes under section 501(c)(3)of the Internal Revenue Code that is recognized by
the department of veterans affairs to inurn unclaimed cremated remains.
c. A funeral director providing information or transferring cremated remains
shall be immune from criminal, civil, or other regulatory liability arising from any
actions in accordance with this subsection. In addition, the department of veterans
affairs, a national or state veterans cemetery, and an eligible veterans organization
shall be immune from criminal, civil, or other regulatory liability arising from any
actions in accordance with this subsection. Such immunity shall not apply to acts or
omissions constituting intentional misconduct.
House File 2282
AN ACT RELATING TO THE APPOINTMENT OF A GUARDIAN AD LITEM IN AN ADOPTION PROCEEDING.
Section 1. Section 600.5, Code 2016, is amended by adding the following new
subsection:
NEW SUBSECTION. 13. Whether or not a guardian ad litem should be appointed for
a minor child to be adopted, and if not, the reasons therefor.
Sec. 2. NEW SECTION. 600.6A Court determination of appointment of guardian ad
litem prior to setting adoption hearing.
Prior to ordering a hearing on the adoption petition, the court shall make a
determination of the need for a guardian ad litem for a minor child to be adopted and
shall, in writing, either appoint or waive the appointment of a guardian ad litem for
purposes of the adoption proceeding in the order setting the adoption hearing.
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House File 2335
AN ACT RELATING TO CIVIL LAW PROVISIONS, INCLUDING NOTICE REQUIREMENTS FOR THE
DISPOSITION OF THE REAL PROPERTY OF AN ESTATE, NOTICE AND DOCUMENT DELIVERY UNDER THE
TRUST CODE, THE POWERS OF AN AGENT UNDER A POWER OF ATTORNEY, AND LIABILITY FOR
REFUSING TO ACCEPT AN ACKNOWLEDGED POWER OF ATTORNEY, AND INCLUDING EFFECTIVE DATE AND
RETROACTIVE AND OTHER APPLICABILITY PROVISIONS
DIVISION I
SALE OF REAL PROPERTY OF AN ESTATE —— NOTICE REQUIREMENTS
Section 1. Section 633.389, Code 2016, is amended to read as follows:
633.389 Notice on sale, mortgage, exchange, pledge, or lease of property.
Upon the filing of the petition, unless notice is waived in writing, or unless
all interested persons are also personal representatives and have signed the petition,
notice in accordance with section 633.40, shall be served on all persons interested in
the property, provided that as to personal property and as to the lease of real
property not specifically devised, for a period not to exceed one year, the court may
hear the petition without notice. When notice is required, the notice shall state
briefly the nature of the application. Upon satisfactory proof, the court may order
the sale, mortgage, exchange, pledge or lease of the property described, or any part
of the property, at a price and upon terms and conditions as the court may authorize.
For the purposes of this section, the term “all persons interested” includes only
distributees in the estate and persons who have requested notice as provided by this
probate code.
DIVISION II
TRUST CODE —— NOTICE AND DOCUMENT DELIVERY REQUIREMENTS
Sec. 2. NEW SECTION. 633A.1109 Methods of notice and document delivery ——
waiver.
Except as otherwise provided by this chapter:
1. Giving notice to a person, including notice of a judicial proceeding, or the
sending of a document to a person under this chapter shall be accomplished in a manner
reasonably suitable under the circumstances and likely to result in receipt of the
notice or document. Permissible methods of giving notice or sending a document include
first-class mail, personal delivery to a person’s last known place of residence or
place of business, or by properly directed electronic mail. When notice in a trust
proceeding is served on an interested party via the United States postal service, the
service is made and completed when the notice being served is enclosed in a sealed
envelope with proper postage paid, is addressed to the interested party at the party’s
last known post office address, and is deposited in a mail receptacle provided by the
United States postal service.
2. In the case of a proceeding against an unknown person whose address or
whereabouts are unknown, the court shall prescribe that notice may be served by
publication within the time and in the manner provided by the rules of civil
procedure.
3. Notice under this chapter or the right to receive a document under this
chapter may be waived by the person to be notified or entitled to receive the
document.
4. For purposes of this section, “properly directed” means directed to an
electronic mail address that the sender reasonably believes is a current electronic
mail address of the recipient.
Sec. 3. APPLICABILITY. This division of this Act applies to notices and
documents sent on or after July 1, 2016, regarding trusts in existence on or created
after July l, 2016.
DIVISION III
POWERS OF ATTORNEY —— POWERS OF AN AGENT —— LIABILITY FOR REFUSAL TO ACCEPT
ACKNOWLEDGED POWER OF ATTORNEY
Sec. 4. Section 633B.120, subsection 3, paragraph b, Code 2016, is amended to
read as follows:
b. Liability for damages sustained by the principal for and reasonable attorney
fees and costs incurred in any action or proceeding that confirms the validity of the
power of attorney or mandates acceptance of the power of attorney, provided that any
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such action must be brought within one year of the initial request for acceptance of
the power of attorney.
Sec. 5. Section 633B.204, subsections 2 and 3, Code 2016, are amended to read
as follows:
2. Sell; exchange; convey with or without covenants, representations, or
warranties; quitclaim; release; surrender; retain title for security; encumber;
partition; consent to partitioning; be subject to an easement or covenant; subdivide;
apply for zoning or other governmental permits; plat or consent to platting; develop;
grant an option concerning; lease; sublease; contribute to an entity in exchange for
an interest in that entity; or otherwise grant or dispose of an interest in real
property or a right incident to real property, including the transfer or release of
any and all of the principal’s homestead rights under section 561.13 and chapter 597.
3. Pledge or mortgage an interest in real property or a right incident to real
property as security to borrow money or pay, renew, or extend the time of payment of a
debt of the principal or a debt guaranteed by the principal, including the transfer or
release of any and all of the principal’s homestead rights under section 561.13 and
chapter 597.
Sec. 6. Section 633B.211, subsection 2, paragraph h, Code 2016, is amended by
striking the paragraph.
Sec. 7. Section 633B.214, subsection 2, Code 2016, is amended by adding the
following new paragraph:
NEW PARAGRAPH. g. Create and fund a medical assistance income trust as defined
in section 633C.1 or a trust or device that meets the criteria of 42 U.S.C.
§1396p(d)(4)(B)(i)-(ii) that is authorized under the applicable law of another
jurisdiction in which the principal is a resident.
Sec. 8. EFFECTIVE UPON ENACTMENT. This division of this Act, being deemed of
immediate importance, takes effect upon enactment.
Sec. 9. RETROACTIVE APPLICABILITY. This division of this Act applies
retroactively to July 1, 2014.
House File 2344
AN ACT REQUIRING THAT AGREEMENTS TO TERMINATE FARM TENANCIES BE IN WRITING.
Section 1. Section 562.6, Code 2016, is amended to read as follows:
562.6 Agreement for termination.
If an a written agreement is made fixing the time of the termination of a
tenancy, whether in writing or not, the tenancy shall terminate at the time agreed
upon, without notice. Except for a farm tenant who is a mere cropper or a person who
holds a farm tenancy with an acreage of less than forty acres where an animal feeding
operation is the primary use of the acreage, a farm tenancy shall continue beyond the
agreed term for the following crop year and otherwise upon the same terms and
conditions as the original lease unless written notice for termination is served upon
either party or a successor of the party in the manner provided in section 562.7,
whereupon the farm tenancy shall terminate March 1 following. However, the tenancy
shall not continue because of an absence of notice if there is default in the
performance of the existing rental agreement.
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House File 2359, Section 161
AN ACT RELATING TO STATUTORY CORRECTIONS WHICH MAY ADJUST LANGUAGE TO REFLECT CURRENT
PRACTICES, INSERT EARLIER OMISSIONS, DELETE REDUNDANCIES AND INACCURACIES, DELETE
TEMPORARY LANGUAGE, RESOLVE INCONSISTENCIES AND CONFLICTS, UPDATE ONGOING PROVISIONS,
OR REMOVE AMBIGUITIES, AND INCLUDING EFFECTIVE DATE PROVISIONS.
Sec. 161. Section 558.44, Code 2016, is amended to read as follows:
558.44 Mandatory recordation of conveyances and leases of agricultural land.
1. As used in this section, unless the context otherwise requires:
a. “Agricultural land” means agricultural land as defined in section 9H.1.
b. “Beneficial ownership” includes interests held by a nonresident alien
individual directly or indirectly holding or acquiring a ten percent or greater share
in the partnership, limited partnership, corporation, or trust, or directly or
indirectly through two or more such entities. In addition, “beneficial ownership”
shall include interests held by all nonresident alien individuals if the nonresident
alien individuals in the aggregate directly or indirectly hold or acquire twenty-five
percent or more of the partnership, limited partnership, corporation, or trust.
c. “Conveyance” means all deeds and all contracts for the conveyance of an
estate in real property except those contracts to be fulfilled within six months from
the date of execution thereof.
d. “Nonresident alien” means:
(1) An individual who is not a citizen of the United States and who is not
domiciled in the United States.
(2) A corporation incorporated under the law of any foreign country.
(3) A corporation organized in the United States, beneficial ownership of which
is held, directly or indirectly, by nonresident alien individuals.
(4) A trust organized in the United States or elsewhere if beneficial ownership
is held, directly or indirectly, by nonresident alien individuals.
(5) A partnership or limited partnership organized in the United States or
elsewhere if beneficial ownership is held, directly or indirectly, by nonresident
alien individuals.
1. 2. Every conveyance or lease of agricultural land, except leases not to
exceed five years in duration with renewals, conveyances or leases made by operation
of law, and distributions made from estates to heirs or devisees shall be recorded by
the grantee or lessee with the county recorder not later than one hundred eighty days
after the date of conveyance or lease.
2. 3. For an instrument of conveyance of agricultural land deposited with an
escrow agent, the fact of deposit of that instrument of conveyance with the escrow
agent as well as the name and address of the grantor and grantee shall be recorded, by
a document executed by the escrow agent, with the county recorder not later than one
hundred eighty days from the date of the deposit with the escrow agent. For an
instrument of conveyance of agricultural land delivered by an escrow agent, that
instrument shall be recorded with the county recorder not later than one hundred
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eighty days from the date of delivery of the instrument of conveyance by the escrow
agent.
3. 4. At the time of recordation of the conveyance or lease of agricultural
land, except a lease not exceeding five years in duration with renewals, conveyances
or leases made by operation of law and distributions made from estates of decedents to
heirs or devisees, to a nonresident alien as grantee or lessee, such conveyance or
lease shall disclose, in an affidavit to be recorded therewith as a precondition to
recordation, the name, address, and citizenship of the nonresident alien. In addition,
if the nonresident alien is a partnership, limited partnership, corporation, or trust,
the affidavit shall also disclose the names, addresses, and citizenship of the
nonresident alien individuals who are the beneficial owners of such entities. However,
any partnership, limited partnership, corporation, or trust which has a class of
equity securities registered with the United States securities and exchange commission
under section 12 of the Securities Exchange Act of 1934 as amended to January 1, 1978,
need only state that fact on the affidavit.
4. 5. Failure to record a conveyance or lease of agricultural land required to
be recorded by this section by the grantee or lessee within the specified time limit
is punishable by a fine not to exceed one hundred dollars per day for each day of
violation. The county recorder shall record a conveyance or lease of agricultural land
presented for recording even though not presented within one hundred eighty days after
the date of conveyance or lease. The county recorder shall forward to the county
attorney a copy of each such conveyance or lease of agricultural land recorded more
than one hundred eighty days from the date of conveyance. The county attorney shall
initiate action in the district court to enforce the provisions of this section.
Failure to timely record shall not invalidate an otherwise valid conveyance or lease.
5. 6. If a real estate contract or lease is required to be recorded under this
section, the requirement is satisfied by recording either the entire real estate
contract or lease or a memorandum of the contract or lease containing at least the
names and addresses of all parties named in the contract or lease, a description of
all real property and interests therein subject to the contract or lease, the length
of the contract or initial term of the lease, and in the case of a lease a statement
as to whether any of the named parties have or are subject to renewal rights, and if
so, the event or condition upon which renewal occurs, the number of renewal terms and
the length of each, and in the case of a real estate contract a statement as to
whether the seller is entitled to the remedy of forfeiture and as to the dates upon
which payments are due. This subsection is effective July 1, 1980, for all contracts
and leases of agricultural land made on or after July 1, 1980.
6. 7. The provisions of this section, except as otherwise provided, are
effective July 1, 1979, for all conveyances and leases of agricultural land made on or
after July 1, 1979.
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Senate File 2233
AN ACT CREATING THE UNIFORM DEPLOYED PARENTS CUSTODY AND VISITATION ACT, AND REPEALING
CURRENT CODE PROVISIONS RELATING TO PARENTS ON ACTIVE MILITARY DUTY.
DIVISION I
ARTICLE I GENERAL PROVISIONS
Section 1. NEW SECTION. 598C.101 Short title.
This chapter shall be known and may be cited as the “Uniform Deployed Parents
Custody and Visitation Act”.
Sec. 2. NEW SECTION. 598C.102 Definitions.
As used in this chapter, unless the context otherwise requires:
1. “Adult” means an individual who has attained eighteen years of age or is an
emancipated minor.
2. “Caretaking authority” means the right to live with and care for a child on
a day-to-day basis. “Caretaking authority” relative to a child includes physical
custody, parenting time, right to access, and visitation.
3. “Child” means any of the following:
a. An unemancipated individual who has not attained eighteen years of age.
b. An adult son or daughter by birth or adoption, or under a law of this state
other than this chapter, who is the subject of a court order concerning custodial
responsibility.
4. “Close and substantial relationship” means a relationship in which a
significant bond exists between a child and a nonparent.
5. “Court” means a tribunal, including an administrative agency, authorized
under a law of this state other than this chapter to make, enforce, or modify a
decision regarding custodial responsibility.
6. “Custodial responsibility” includes all powers and duties relating to
caretaking authority and decision-making authority for a child. “Custodial
responsibility” includes physical custody, legal custody, parenting time, right to
access, visitation, and authority to grant limited contact with a child.
7. “Decision-making authority” means the power to make important decisions
regarding a child, including decisions regarding the child’s education, religious
training, health care, extracurricular activities, and travel. “Decision-making
authority” does not include the power to make decisions that necessarily accompany a
grant of caretaking authority.
8. “Deploying parent” means a service member who is deployed or has been
notified of impending deployment and is any of the following:
a. A parent of a child under a law of this state other than this chapter.
b. An individual who has custodial responsibility for a child under law of this
state other than this chapter.
9. “Deployment” means the movement or mobilization of a service member for more
than ninety days but less than eighteen months pursuant to uniformed service orders
that meet any of the following conditions:
a. Are designated as unaccompanied.
b. Do not authorize dependent travel.
c. Otherwise do not permit the movement of family members to the location to
which the service member is deployed.
10. “Family member” means a sibling, aunt, uncle, cousin, stepparent, or
grandparent of a child or an individual recognized to be in a familial relationship
with a child under a law of this state other than this chapter.
11. “Limited contact” means the authority of a nonparent to visit a child for a
limited time. “Limited contact” includes authority to take the child to a place other
than the residence of the child.
12. “Nonparent” means an individual other than a deploying parent or other
parent.
13. “Other parent” means an individual who, in common with a deploying parent,
is one of the following:
a. A parent of a child under a law of this state other than this chapter.
b. An individual who has custodial responsibility for a child under a law of
this state other than this chapter.
14. “Record” means information that is inscribed on a tangible medium or that
is stored in an electronic or other medium and is retrievable in perceivable form.
9
15. “Return from deployment” means the conclusion of a service member’s
deployment as specified in uniformed service orders, less any terminal, medical, or
annual leave authorized to the service member.
16. “Service member” means a member of a uniformed service.
17. “Sign” means, with present intent to authenticate or adopt a record, to
execute or adopt a tangible symbol or to attach to or logically associate with the
record an electronic symbol, sound, or process.
18. “State” means a state of the United States, the District of Columbia,
Puerto Rico, the United States Virgin Islands, or any territory or insular possession
subject to the jurisdiction of the United States.
19. “Uniformed service” means any of the following:
a. Active and reserve components of the army, navy, air force, marine corps, or
coast guard of the United States; the United States merchant marine; the commissioned
corps of the United States public health service; or the commissioned corps of the
national oceanic and atmospheric administration of the United States.
b. The national guard of a state, whether or not activation or performance of
duties is pursuant to federal or to state authority.
Sec. 3. NEW SECTION. 598C.103 Remedies for noncompliance.
In addition to other remedies under a law of this state other than this
chapter, if a court finds that a party to a proceeding under this chapter has acted in
bad faith or intentionally failed to comply with this chapter or a court order issued
under this chapter, the court may assess reasonable attorney fees and costs against
the party and order other appropriate relief.
Sec. 4. NEW SECTION. 598C.104 Jurisdiction.
1. A court may issue an order regarding custodial responsibility under this
chapter only if the court has jurisdiction under chapter 598B, the uniform childcustody jurisdiction and enforcement Act.
2. If a court has issued a temporary order regarding custodial responsibility
pursuant to article III, the residence of the deploying parent is not changed by
reason of the deployment for the purposes of chapter 598B, the uniform child-custody
jurisdiction and enforcement Act, during the deployment.
3. If a court has issued a permanent order regarding custodial responsibility
before notice of deployment and the parents modify that order temporarily by agreement
pursuant to article II, the residence of the deploying parent is not changed by reason
of the deployment for the purposes of chapter 598B, the uniform child-custody
jurisdiction and enforcement Act.
4. If a court in another state has issued a temporary order regarding custodial
responsibility as a result of impending or current deployment, the residence of the
deploying parent is not changed by reason of the deployment for the purposes of
chapter 598B, the uniform child-custody jurisdiction and enforcement Act.
5. This section does not prevent a court from exercising temporary emergency
jurisdiction under chapter 598B, the uniform child-custody jurisdiction and
enforcement Act.
Sec. 5. NEW SECTION. 598C.105 Notification required of deploying parent.
1. Except as otherwise provided in subsection 4, and subject to subsection 3, a
deploying parent shall notify the other parent, in a record, of a pending deployment,
not later than seven days after receiving notice of deployment, unless reasonably
prevented from doing so by the circumstances of service. If the circumstances of
service prevent giving notification within the seven days, the deploying parent shall
give the notification as soon as reasonably possible.
2. Except as otherwise provided in subsection 4, and subject to subsection 3,
each parent shall provide the other parent with a plan in a record for fulfilling that
parent’s share of custodial responsibility during deployment. Each parent shall
provide the plan as soon as reasonably possible after notification of deployment is
given under subsection 1.
3. If a court order currently in effect prohibits disclosure of the address or
contact information of the other parent, notification of deployment under subsection 1
or notification of a plan for custodial responsibility during deployment under
subsection 2 may be made only to the issuing court. If the address of the other parent
is available to the issuing court, the court shall forward the notification to the
other parent. The court shall keep confidential the address or contact information of
the other parent.
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4. Notification in a record under subsection 1 or 2 is not required if the
parents are living in the same residence and both parents have actual notice of the
deployment or plan.
5. In a proceeding regarding custodial responsibility, a court may consider the
reasonableness of a parent’s efforts to comply with this section.
Sec. 6. NEW SECTION. 598C.106 Duty to notify of change of address.
1. Except as otherwise provided in subsection 2, an individual to whom
custodial responsibility has been granted during deployment pursuant to article II or
III shall notify in a record the deploying parent, and any other individual with
custodial responsibility for a child, of any change of the individual’s mailing
address or residence until the grant is terminated. The individual shall provide the
notice to any court that has issued a custody or child support order concerning the
child which is currently in effect.
2. If a court order currently in effect prohibits disclosure of the address or
contact information of an individual to whom custodial responsibility has been
granted, a notification under subsection 1 may be made only to the court that issued
the order. The court shall keep confidential the mailing address or residence of the
individual to whom custodial responsibility has been granted.
Sec. 7. NEW SECTION. 598C.107 General consideration in custody proceeding of
parent’s military service.
In a proceeding for custodial responsibility of a child of a service member, a
court shall not consider a parent’s past deployment or probable future deployment in
general in determining the best interest of the child.
ARTICLE II
AGREEMENT ADDRESSING CUSTODIAL RESPONSIBILITY DURING DEPLOYMENT
Sec. 8. NEW SECTION. 598C.201 Form of agreement.
1. The parents of a child may enter into a temporary agreement under this
article granting custodial responsibility during deployment.
2. An agreement under subsection 1 shall comply with all of the following:
a. Be in writing.
b. Be signed by both parents and any nonparent to whom custodial responsibility
is granted.
3. Subject to subsection 4, an agreement under subsection 1, if feasible, must
provide all of the following:
a. Identify the destination, duration, and conditions of the deployment that is
the basis for the agreement.
b. Specify the allocation of caretaking authority among the deploying parent,
the other parent, and any nonparent.
c. Specify any decision-making authority that accompanies a grant of caretaking
authority.
d. Specify any grant of limited contact to a nonparent.
e. If under the agreement custodial responsibility is shared by the other
parent and a nonparent, or by other nonparents, provide a process to resolve any
dispute that may arise.
f. Specify the frequency, duration, and means, including electronic means, by
which the deploying parent will have contact with the child, any role to be played by
the other parent in facilitating the contact, and the allocation of any costs of
contact.
g. Specify the contact between the deploying parent and child during the time
the deploying parent is on leave or is otherwise available.
h. Acknowledge that any parent’s child support obligation cannot be modified by
the agreement, and that changing the terms of the child support obligation during
deployment requires modification in the appropriate court.
i. Provide that the agreement will terminate according to the procedures under
article IV after the deploying parent returns from deployment.
j. If the agreement must be filed pursuant to section 598C.205, specify which
parent is required to file the agreement.
4. The omission of any of the items specified in subsection 3 does not
invalidate an agreement under this section.
Sec. 9. NEW SECTION. 598C.202 Nature of authority created by agreement.
1. An agreement under this article is temporary and terminates pursuant to
article IV after the deploying parent returns from deployment, unless the agreement
has been terminated before that time by court order or modification under section
11
598C.203. The agreement does not create an independent, continuing right to caretaking
authority, decision-making authority, or limited contact in an individual to whom
custodial responsibility is given.
2. A nonparent who has caretaking authority, decision-making authority, or
limited contact by an agreement under this article has standing to enforce the
agreement until it has been terminated by court order, by modification under section
598C.203, or under article IV.
Sec. 10. NEW SECTION. 598C.203 Modification of agreement.
1. By mutual consent, the parents of a child may modify an agreement regarding
custodial responsibility made pursuant to this article.
2. If an agreement is modified under subsection 1 before deployment of a
deploying parent, the modification must be in writing and signed by both parents and
any nonparent who will exercise custodial responsibility under the modified agreement.
3. If an agreement is modified under subsection 1 during deployment of a deploying
parent, the modification must be agreed to in a record by both parents and any
nonparent who will exercise custodial responsibility under the modified agreement.
Sec. 11. NEW SECTION. 598C.204 Power of attorney.
A deploying parent, by power of attorney, may delegate all or part of the
deploying parent’s custodial responsibility to an adult nonparent for the period of
deployment if no other parent possesses custodial responsibility under a law of this
state other than this chapter, or if a court order currently in effect prohibits
contact between the child and the other parent. The deploying parent may revoke the
power of attorney by signing a revocation of the power of attorney.
Sec. 12. NEW SECTION. 598C.205 Filing agreement or power of attorney with
court.
An agreement or power of attorney under this article must be filed within a
reasonable time with any court that has entered an order on custodial responsibility
or child support that is in effect concerning the child who is the subject of the
agreement or power of attorney. The case number and heading of the pending case
concerning custodial responsibility or child support must be provided to the court
with the agreement or power of attorney.
ARTICLE III
JUDICIAL PROCEDURE FOR GRANTING CUSTODIAL RESPONSIBILITY DURING DEPLOYMENT
Sec. 13. NEW SECTION. 598C.301 Proceeding for temporary custody order.
1. After a deploying parent receives notice of deployment and until the
deployment terminates, a court may issue a temporary order granting custodial
responsibility unless prohibited by the federal Servicemembers Civil Relief Act, 50
U.S.C. app. §§521 and 522 or the Iowa national guard civil relief provisions contained
in chapter 29A, subchapter VI. A court shall not issue a temporary order granting
custodial responsibility without notice to the deploying parent. A court shall not
issue a permanent order granting custodial responsibility without the consent of the
deploying parent.
2. At any time after a deploying parent receives notice of deployment, either
parent may file a motion regarding custodial responsibility of a child during
deployment. The motion must be filed in a pending proceeding for custodial
responsibility in a court with jurisdiction under section 598C.104 or, if there is no
pending proceeding in a court with jurisdiction under section 598C.104, in a new
action for granting custodial responsibility during deployment.
Sec. 14. NEW SECTION . 598C.302 Expedited hearing.
If a motion to grant custodial responsibility is filed under section 598C.301,
subsection 2, before a deploying parent deploys, the court shall conduct an expedited
hearing.
Sec. 15. NEW SECTION. 598C.303 Testimony by electronic means.
In a proceeding under this article, a party or witness who is not reasonably
available to appear personally may appear, provide testimony, and present evidence by
electronic means unless the court finds good cause to require a personal appearance.
For purposes of this section, “electronic means” includes communication by telephone,
video conference, or the internet.
Sec. 16. NEW SECTION. 598C.304 Effect of prior judicial order or agreement.
In a proceeding for a grant of custodial responsibility pursuant to this
article, the following rules shall apply:
1. A prior judicial order designating custodial responsibility in the event of
deployment is binding on the court unless the circumstances meet the requirements of a
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law of this state other than this chapter for modifying a judicial order regarding
custodial responsibility.
2. The court shall enforce a prior written agreement between the parents for
designating custodial responsibility in the event of deployment, including an
agreement executed under article II, unless the court finds that the agreement is
contrary to the best interest of the child.
Sec. 17. NEW SECTION. 598C.305 Grant of caretaking or decision-making authority
to nonparent.
1. On motion of a deploying parent and in accordance with a law of this state
other than this chapter, if it is in the best interest of the child, a court may grant
caretaking authority to a nonparent who is an adult family member of the child or an
adult with whom the child has a close and substantial relationship.
2. Unless a grant of caretaking authority to a nonparent under subsection 1 is
agreed to by the other parent, the grant is limited to an amount of time not greater
than one of the following:
a. The amount of time granted to the deploying parent under a permanent custody
order, but the court may add unusual travel time necessary to transport the child.
b. In the absence of a permanent custody order that is currently in effect, the
amount of time that the deploying parent habitually cared for the child before being
notified of deployment, but the court may add unusual travel time necessary to
transport the child.
3. A court may grant part of a deploying parent’s decision-making authority, if
the deploying parent is unable to exercise that authority, to a nonparent who is an
adult family member of the child or an adult with whom the child has a close and
substantial relationship. If a court grants the authority to a nonparent, the court
shall specify the decision-making powers granted, including decisions regarding the
child’s education, religious training, health care, extracurricular activities, and
travel.
4. In determining the best interest of the child, the court shall ensure all of
the following:
a. That the specified adult family member or adult with whom the child has a
close and substantial relationship is not a sex offender as defined in section
692A.101.
b. That the specified adult family member or adult with whom the child has a
close and substantial relationship does not have a history of domestic abuse, as
defined in section 236.2. In determining whether a history of domestic abuse exists,
the court’s consideration shall include but is not limited to commencement of an
action pursuant to section 236.3, the issuance of a protective order against the
individual or the issuance of a court order or consent agreement pursuant to section
236.5, the issuance of an emergency order pursuant to section 236.6, the holding of an
individual in contempt pursuant to section 664A.7, the response of a peace officer to
the scene of alleged domestic abuse or the arrest of an individual following response
to a report of alleged domestic abuse, or a conviction for domestic abuse assault
pursuant to section 708.2A.
c. That the specified adult family member or adult with whom the child has a
close and substantial relationship does not have a record of founded child or
dependent adult abuse.
d. That the specified adult family member or adult has established a close and
substantial relationship with the child and that granting caretaking authority or
decision-making authority to the specified individual will provide the child the
opportunity to maintain an ongoing relationship that is important to the child.
e. That the specified adult family member or adult with whom the child has a
close and substantial relationship demonstrates an ability to personally and
financially support the child and will support the child’s relationship with both of
the child’s parents during the grant of caretaking authority or decision-making
authority.
Sec. 18. NEW SECTION. 598C.306 Grant of limited contact.
On motion of a deploying parent, and in accordance with a law of this state
other than this chapter, unless the court finds that the contact would be contrary to
the best interest of the child, a court may grant limited contact to a nonparent who
is a family member of the child or an individual with whom the child has a close and
substantial relationship.
Sec. 19. NEW SECTION. 598C.307 Nature of authority created by temporary custody
order.
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1. A grant of authority under this article is temporary and terminates under
article IV after the return from deployment of the deploying parent, unless the grant
has been terminated before that time by court order. The grant does not create an
independent, continuing right to caretaking authority, decision-making authority, or
limited contact in an individual to whom it is granted.
2. A nonparent granted caretaking authority, decision-making authority, or
limited contact under this article has standing to enforce the grant until it is
terminated by court order or under article IV.
Sec. 20. NEW SECTION. 598C.308 Content of temporary custody order.
1. An order granting custodial responsibility under this article must do all of
the following:
a. Designate the order as temporary.
b. Identify to the extent feasible the destination, duration, and conditions of
the deployment.
2. If applicable, an order for custodial responsibility under this article must
do all of the following:
a. Specify the allocation of caretaking authority, decision-making authority,
or limited contact among the deploying parent, the other parent, and any nonparent.
b. If the order divides caretaking authority or decision-making authority
between individuals, or grants caretaking authority to one individual and limited
contact to another, provide a process to resolve any dispute that may arise.
c. Provide for liberal communication between the deploying parent and the child
during deployment, including through electronic means, unless contrary to the best
interest of the child, and allocate any costs of communications.
d. Provide for liberal contact between the deploying parent and the child
during the time the deploying parent is on leave or otherwise available, unless
contrary to the best interest of the child.
e. Provide for reasonable contact between the deploying parent and the child
after return from deployment until the temporary order is terminated, unless it is
contrary to the best interest of the child, which may include additional contact time
to compensate for contact time lost during deployment.
f. Provide that the order will terminate pursuant to article IV after the
deploying parent returns from deployment.
Sec. 21. NEW SECTION. 598C.309 Order for child support.
If a court has issued an order granting caretaking authority under this
article, or an agreement granting caretaking authority has been executed under article
II, the court may enter a temporary order for child support consistent with a law of
this state other than this chapter if the court has jurisdiction under chapter 252K,
the uniform interstate family support Act.
Sec. 22. NEW SECTION. 598C.310 Modifying or terminating grant of custodial
responsibility to nonparent.
1. Except for an order under section 598C.304, and except as otherwise provided
in subsection 2, and consistent with the federal Servicemembers Civil Relief Act, 50
U.S.C. app. §§521 and 522 and the Iowa national guard civil relief provisions
contained in chapter 29A, subchapter VI, on motion of a deploying or other parent or
any nonparent to whom caretaking authority, decision-making authority, or limited
contact has been granted, the court may modify or terminate the grant if the
modification or termination is consistent with this article and it is in the best
interest of the child. A modification is temporary and terminates pursuant to article
IV after the deploying parent returns from deployment, unless the grant has been
terminated before that time by court order.
2. The court may appoint a guardian ad litem or an attorney to represent the
best interest of the child or may require an appropriate agency to make an
investigation of the parties as provided in section 598.12.
ARTICLE IV
RETURN FROM DEPLOYMENT
Sec. 23. NEW SECTION. 598C.401 Procedure for terminating temporary grant of
custodial responsibility established by agreement.
1. At any time after return from deployment, a temporary agreement granting
custodial responsibility under article II may be terminated by an agreement to
terminate signed by the deploying parent and the other parent.
2. A temporary agreement under article II granting custodial responsibility
terminates on one of the following dates:
14
a. If an agreement to terminate under subsection 1 specifies a date for
termination, on that date.
b. If the agreement to terminate does not specify a date, on the date of the
last signature of the deploying parent or the other parent.
3. In the absence of an agreement under subsection 1 to terminate, a temporary
agreement granting custodial responsibility terminates under article II sixty days
after the deploying parent gives notice in a record to the other parent that the
deploying parent returned from deployment.
4. If a temporary agreement granting custodial responsibility was filed with a
court pursuant to section 598C.205, an agreement to terminate the temporary agreement
also must be filed with that court within a reasonable time after the signing of the
agreement. The case number and heading of the case concerning custodial responsibility
or child support must be provided to the court with the agreement to terminate.
Sec. 24. NEW SECTION. 598C.402 Consent procedure for terminating temporary
grant of custodial responsibility established by court order.
At any time after a deploying parent returns from deployment, the deploying
parent and the other parent may file with the court an agreement to terminate a
temporary order for custodial responsibility issued under article III. After an
agreement to terminate has been filed, the court shall issue an order terminating the
temporary order effective on the date specified in the agreement. If a date is not
specified, the order is effective immediately.
Sec. 25. NEW SECTION. 598C.403 Visitation before termination of temporary grant
of custodial responsibility.
After a deploying parent returns from deployment and until a temporary
agreement or order for custodial responsibility
Senate File 2233, p. 15 established under article II or III is terminated, the court
may issue a temporary order granting the deploying parent reasonable contact with the
child unless it is contrary to the best interest of the child, which may include
additional contact time to compensate for contact time lost during deployment.
Sec. 26. NEW SECTION. 598C.404 Termination by operation of law of temporary
grant of custodial responsibility established by court order.
1. If an agreement between the parties to terminate a temporary order for
custodial responsibility under article III has not been filed, the order terminates
sixty days after the deploying parent gives notice in a record to the other parent and
any nonparent granted custodial responsibility that the deploying parent has returned
from deployment.
2. A proceeding seeking to prevent termination of a temporary order for
custodial responsibility is governed by the law of this state other than this chapter.
ARTICLE V
MISCELLANEOUS PROVISIONS
Sec. 27. NEW SECTION. 598C.501 Uniformity of application and construction.
This chapter shall be applied and construed with consideration given to the
need to promote uniformity of the law with respect to its subject matter among states
that enact the uniform deployed parents custody and visitation Act.
Sec. 28. NEW SECTION. 598C.502 Relation to Electronic Signatures in Global and
National Commerce Act. This chapter modifies, limits, and supersedes the federal
Electronic Signatures in Global and National Commerce Act, 15 U.S.C. §7001 et seq.,
but does not modify, limit, or supersede section 101(c) of that Act, 15 U.S.C.
§7001(c), or authorize electronic delivery of any of the notices described in section
103(b) of that Act, 15 U.S.C. §7003(b).
Sec. 29. NEW SECTION. 598C.503 Applicability.
This chapter does not affect the validity of a temporary court order concerning
custodial responsibility during deployment which was entered before July 1, 2016.
DIVISION II
Sec. 30. REPEAL. Sections 598.41C and 598.41D, Code 2016, are repealed.
15
IN THE IOWA DISTRICT FOR PLYMOUTH COUNTY
IN THE MATTER OF THE ESTATE
PROBATE NO. ESPR 018801
OF
Alvira J. Tentinger
RULING ON MOTION FOR
RECALCULATING COURT FEES
On January 11, 2016, the above entitled matter came on for a hearing before the court.
Petitioner, the estate of Alvira Tentinger, was represented by counsel, Jay Tentinger and Ross
Tentinger. The hearing was reported by Cheryl S. Smith. Attorneys for the Estate offered
Exhibits A-F, and presented argument. Exhibits A-F were admitted by the court, and the matter
was submitted. After reviewing the record, considering the Estate’s arguments, and examining
the applicable law, the court enters the following ruling.
FACTUAL BACKGROUND
Decedent, Alvira J. Tentinger, died in Plymouth County on February 8, 2014. The estate
was probated, and a final report and inventory was filed December 3, 2014. This report listed the
only real estate owned by the decedent at the time of her death as an eighty acre piece of
property in Cherokee County, Iowa, valued at $1,013,200.00. The only other property owned by
Ms. Tentinger listed on the final report was personal property, listed as a bank account, two
vehicles, plus furniture and household items, valued at $53,000.00. All told, the listed value of
personal and real property owned by Ms. Tentinger at the time of her death was $1,066,200.00.
In the years preceding the death of Ms. Tentinger, she saw fit to make inter vivos gifts of
several other pieces of real property owned by her to her children Robert, Sharon and Jay. All of
these transfers took place in 2012 and 2013, prior to Ms. Tentinger’s death in 2014. The total
value of the property transferred inter vivos was listed on the final report as $6,438,600.00. The
16
gross assets of Ms. Tentinger’s estate, including all personal and real property owned by her at
death, as well as all property transferred by her within three years of her death, amounts to
$7,504,800.00.
The clerk of court for Plymouth County, Peggy Frericks, determined that the costs due to
the clerk of court for probating the estate amounted to $15,135.00. This was calculated by using
the fee schedule published in Iowa Code § 633.31(2)(k), and applying it to the gross assets of the
estate.
Under Iowa Code § 633.23, any party aggrieved by any order made or entered by the
clerk of court in a probate action may have such order reviewed by the court. The estate seeks
judicial review of the fees levied by the clerk of court for Plymouth County for services
performed in the settlement of the estate, as authorized by Iowa Code § 633.31(2)(k). It is the
position of the estate that the fees levied by the clerk should not be based on the gross assets of
the estate, but instead only the value of the personal and real property owned by Ms. Tentinger at
the time of her death. As such, the estate argues that the fees claimed by the clerk are excessive.
DISCUSSION
In calculating fees based on the gross value of Alvira Tentinger’s estate, the Plymouth
County clerk of court relies on a directive issued May 13, 2014 by David K. Boyd, Iowa State
Court Administrator (SCA). This directive was published to provide guidance to clerks of court
on what figure should be used in calculating court costs on probate cases under §633.31(2)(k).
Due to some confusion, the SCA felt it was necessary to provide guidance to the clerks of court
to ensure uniform application of § 633.31 across the state. The SCA’s directive instructs clerks
as follows:
All clerks of court shall calculate court costs under Iowa Code section
633.31(2)(k) based on the ‘Gross Assets of the Estate’ as shown on the
Recapitulation page of the revised October 2013 Report and Inventory form.
Clerks of court shall not calculate the costs based on the ‘Total Iowa Gross
Estate.”
Administrative Directive of the State Court Administrator 2014-1.
In reaching this determination, the SCA relies on the 2006 Iowa Supreme Court decision
In re Estate of Martin, 710 N.W.2d 536, 538 (Iowa 2006). In Martin, the court addressed
17
calculation of the maximum fees which can be charged by an executor for an estate and the
executor’s attorney under Iowa Code §§ 633.197 and 633.198. Martin established that estate
executor and attorney fees can be calculated by using the “gross assets of the estate,” including
non-probate assets which, in the case of Martin, consisted of a retirement annuity. It must be
noted that the Martin opinion, on which the State Court Administrator’s directive relies,
addresses only fees authorized under §§ 633.197 and 633.198, and does not address county clerk
of court fees under §633.31. Specifically, the SCA’s Administrative Directive 2014-1 notes that
[i]n 2006 the Iowa Supreme Court held In the Matter of the Estate of Martin, 710.
N.W.2d 536, that joint tenancy property and transfers of property directly to a
beneficiary at death are included in the computation of fees even though the court
was not involved in administering the assets of the probate estate. In addition, the
court indicated that the legislature has shown that, if it wishes to exclude for fee
calculation a type of property in an estate, it will do so with specific legislation as
was done for life insurance proceeds payable to a named beneficiary.
Administrative Directive of the State Court Administrator 2014-1.
In arguing that the clerk of court’s fee determination is erroneous, Ms. Tentinger’s estate
relies heavily on a 1973 advisory opinion published by the Iowa Attorney General, Opinion No.
73-1-8. “The function of an official [Attorney General] opinion is to decide a question of state
law.” Iowa Admin. Code r. 61-1.5(13). 1 The issue addressed in the Attorney General’s 1973
opinion is what property is included for taxation of clerk of court fees in probate by the language
“personal property and real estate” in the context of §633.31(2)(k)? In discussing the rationale
for court clerk fees in a probate matter, the A.G. noted that “[t]his statute and all others relating
to the payment of fees proceed on the theory that such payment is exacted for something actually
done by the officer for the benefit of the litigant[.]” The A.G.’s opinion goes on to state that
since the fees in § 633.31(2)(k) are only for those services rendered in the
settlement of the estate of the decedent involving probate matters it necessarily
follows that those fees should only be based on that part of the property of the
decedent that is subject to the probate jurisdiction of the Iowa courts…
1
Opinions of the Attorney General are not binding on Iowa courts, and it is the duty of the court
to independently inquire as to proper statutory interpretation. A.G. opinions are nonetheless
entitled to respectful judicial consideration. Unification Church v. Clay Central School Dist. 253
N.W.2d 579, 581 (Iowa 1977), Ashby v, Schiool Tp. Of Liberty, in Lucas County, 98 N.W.2d
848, 858 (Iowa 1959).
18
… Insurance proceeds payable to named beneficiaries would not be subject to the
probate jurisdiction of the Iowa court nor property transferred in contemplation of
death and joint tenancy property.
Iowa Attorney General, Opinion No. 73-1-8. This language is in direct conflict with the 2014
opinion of the SCA, relied on by the Plymouth County clerk of court in this case.
The issues decided in Martin and relevant statutes pertaining thereto materially differ
from the issues relevant in this case. Unlike the property at issue in Martin, and discussed in the
SCA’s Directive supra, the assets at issue in Ms. Tentinger’s estate did not transfer directly to a
beneficiary at death. Instead, the property in question was transferred inter vivos in the years
leading up to Ms. Tentinger’s death. At the time Martin was decided, Iowa Code § 633.197 read
as follows:
Personal representatives shall be allowed such reasonable fees as may be
determined by the court for services rendered, but not in excess of the following
commissions upon the gross assets of the estate listed in the probate inventory for
Iowa inheritance tax purposes, which shall be received as full compensation for
all ordinary services:
Iowa Code § 633.197(2005)(Emphasis added). After Martin was decided, the legislature
simplified the language by striking the words “for Iowa inheritance tax purposes” from the
statute, authorizing executor and attorney fees to be calculated from the gross assets of the estate.
Thus, the legislature has explicitly authorized fees based on the gross assets of the estate for fees
enumerated in § 633.197. This is not the case with fees authorized under § 633.31.
The SCA Directive 2014-1 gives instructions that “[a]ll clerks of court shall calculate
court costs under Iowa Code section 633.31(2)(k) based on the ‘Gross Assets of the Estate’ as
shown on the Recapitulation page of the revised October 2013 Report and Inventory form.” In
issuing this directive, it appears the SCA is applying the language of §633.197 used for
calculating executor and attorney fees, to the calculation of clerk of court fees. However,
§633.31, which authorizes clerk of court fees, sets forth an entirely different standard for fee
calculation. § 633.31(2)(k) authorizes court clerks to charge a fee based on the “value of the
personal property and real estate” owned by the decedent. The court in Martin did not rule or
imply that the “gross assets of the estate” standard should be applied to §633.31. As such, this
19
court concludes that the State Court Administrator has misread the holding of the Martin
decision and thus Administrative Directive 2014-1 is not a proper interpretation of the statute.
The court does “not search for meaning beyond the express terms of a statute when the
statute is plain and its meaning is clear.” State v. Albrecht, 657 N.W.2d 474, 479 (Iowa 2003). “If
the language of the statute is clear and unambiguous, we apply a plain and rational meaning
consistent with the subject matter of the statute.” State v. Tague, 676 N.W.2d 197, 201 (Iowa
2004). “The goal in interpreting statutes is to ascertain legislative intent, not to decide what this
court thinks the law should be.” State v. Wagner, 596 N.W.2d 83, 87 (Iowa 1999). Iowa Code
633.31(2)(k) reads, in relevant part,
[f]or other services performed in the settlement of the estate of any decedent,
minor, person with mental illness, or other persons laboring under legal disability,
except where actions are brought by the administrator, guardian, trustee, or person
acting in a representative capacity or against that person, or as may be otherwise
provided herein, where the value of the personal property and real estate of such a
person falls within the following indicated amounts, the fee opposite such amount
shall be charged.
Iowa Code 633.31(2)(k) (2015) 2. The statute then goes on to publish a schedule of appropriate
fees to be charged by the clerk for administering the estate.
Applying a plain and rational meaning to the language of the above statute, the fee
charged by the clerk must be assessed by valuing the personal property and real estate held by
the decedent at death, and entered into probate. The plain meaning of the statute cannot be read
as including real property transferred by the decedent before death in this category, as property
transferred prior to death can no longer logically be considered real estate of the deceased.
The properties at issue in this case are tracts of land which changed title and possession
during the life of Alvira Tentinger. They are listed in the final report and inventory because they
were gifts made within three years of her death, and in excess of the gift exclusions allowable
2
The Iowa Senate has legislation pending before it, 2015 IA S.F. 376, which if enacted, would
alter the language of §633.31 as to explicitly exempt real property transferred during the life of
the decedent from consideration for probate cost purposes. While this pending legislation is
certainly not binding on the court, it does provide some sense of the mood of the legislature
when it comes to this confused issue.
20
under Internal Revenue Code §2503(b) and (e). The purpose of “[t]his statute and all others
relating to the payment of fees proceed on the theory that such payment is exacted for something
actually done[.]”In re Pitt’s Estate, 133 N.W. 660 (1911).
Although the court in Estate of Martin held that the gross estate can be used in calculating
personal representative and attorney fees for an estate, this court does not believe the same rule
should apply to clerks of court in calculating court fees. The ultimate purpose of court costs are
to compensate the clerk for work performed when probating an estate. The property transferred
to Ms. Tentinger’s children during her lifetime did not require work to be performed by the clerk.
The property is listed in the gross assets of the estate for inheritance tax purposes, however,
unlike estate taxes, inheritance tax is charged directly to the individual inheriting property. See
Iowa Code §450.5. The three-year lookback provision which allows inheritance tax to be
imposed on property transferred in contemplation of death serves the purpose of frustrating
attempts to avoid imposition of the inheritance tax on property. This taxation serves a very
different goal from the purpose of taxing assets handled in probate to pay for costs incurred by
the clerk of court during said probate, is outside the jurisdiction of the probate court, and requires
no action to be performed by the clerk. Charging the estate for work not performed is out of
keeping with the purpose of §633.31.
CONCLUSION
The Iowa probate court has jurisdiction over the “settlement and distribution of estates of
decedents and absentees[.]” Iowa Code §633.10 (2015). For these purposes, an estate is defined
as “the real and personal property of either a decedent or a ward, and may also refer to the real
and personal property of a trust described in section 633.10.” Iowa Code 633.3 (2015). In this
case, the real property at issue was transferred prior to the death of the testator, and was thus not
real or personal property of the decedent. As such, the property transferred prior to the death of
Ms. Tentinger never became a part of the estate, and is not within the jurisdiction of the probate
court. Because of this, the property transferred prior to death is not subject to taxation by the
clerk of court under Iowa Code §633.31.
21
ORDER
1. All of the above
2. Executor’s Motion for Recalculating Court Fees is GRANTED
3. The court fees levied by the Clerk of Court in Plymouth County file ESPR018801 are
ordered to be recalculated based on the value of personal property and real estate owned
by the decedent at death and those fees paid by the Estate.
4. Clerk to notify counsel for the Estate and to provide a copy of this ruling to the State
Court Administrator.
IT IS SO ORDERED
[Filed 1/28/16 by Judge Jeffrey A. Neary]
22
2016 Annual Meeting Conference
Probate Track
Rooms 312-315
The Uniform Real Property Transfer
on Death Deed Act
11:15 a.m. - 12:00 p.m.
Presented by
Kyle Irvin
Corbett, Anderson, Corbett, Vellinga & Irvin, L.L.P.
400 Security Bank Building
423 Sixth Street, Suite 400
P.O. Box 3527
Sioux City, IA 51102
Phone: 712-277-1261
TUESDAY, JUNE 14
THE UNIFORM REAL PROPERTY TRANSFER ON DEATH DEED ACT.
IS IT RIGHT FOR IOWA?
By Randy Caldwell
Presented by Kyle S. Irvin
I. PRETEST
A “Transfer on Death Deed” is a Deed; True or False?
Answer on Appendix “A”: “What is a Transfer on Death Deed?”
II. CONTENTS
MAIN OUTLINE: Pgs. 1-16
APPENDIX A: What is a Transfer on Death Deed?
APPENDIX B: Uniform Real Property Transfer on Death Act with Comments.
APPENDIX C: Other Issues (Besides the Big Five) Deserving Consideration
Whenever one considers a uniform act, one must remember that one uniform act often
builds upon other uniform acts. Hence, the Uniform Real Property Transfer on Death Deed Act
builds in many ways upon a basis of the Uniform Probate Code (UPC). As many of you are
aware, Iowa is not a UPC state meaning that there are some very DNA level challenges to
grafting in a uniform act to a non-Uniform Probate Code state like Iowa. The danger when
considering these acts is to overlook these challenges in the name of simplicity. This
presentation will seek to walk through the myriad of challenges that the Uniform Transfer on
Death Deed Act presents to Iowa’s present probate law. As will be shown, there are some very
complex and complicated issues that must be addressed when considering any sort of
fundamental real estate transfer tool.
The opinions expressed herein are Randy Caldwell’s and Kyle Irvin’s only and are not
those of our respective firms, the Iowa Trust and Estate Bar, any committee or organizations I
belong to, their member stations or lackeys. Anyone who says otherwise deserves to take over
this project. This outline is being used with the express written consent of Randy Caldwell, but
not with the express written consent of Major League Baseball. Any emphasis or underlining
reflects the presenter’s emphasis.
I. A BRIEF ANALYSIS OF THE UNIFORM ACT AND SOME MAJOR ISSUES.
(THE BIG FIVE)
I will begin with what I believe are the five most difficult issues (the big five). They are:
A.
B.
C.
D.
E.
The Lapse of the Share of a Predeceased or Afterborn Child.
Cutting out Your Spouse in Iowa, or Avoiding It.
Effect on Creditors.
Fiscal Effect on the State Budget.
Adoption of the Statutory Form and Its Effect on Elders.
1
A. THE LAPSE OF THE SHARE OF A PREDECEASED OR AFTER-BORN CHILD.
1.) Under the definitions of the Uniform Act, “Designated beneficiary” is
someone named in a “TODI” (transfer on death instrument) to receive property in a
TODI. A beneficiary is someone that actually receives property.
2.) If your state’s anti-lapse statute is cited in 13(a) of the Uniform Act AND it
applies to non-probate transfers, then that statute prevails.
3.) In Iowa, where the anti-lapse statutes (633.273, 273A, 274) do not apply to
non-probate transfers, the rule is §13(a)(2) of The Uniform Act.
“The interest of a designated beneficiary is contingent on the designated
beneficiary surviving the transferor. The interest of a designated beneficiary
that fails to survive the transferor lapses.”
4.) e.g. Mother makes and records a TODI leaving all to sons A and B. A
predeceases mom, leaving 9 children. Mom does not make a new TODI prior to death
(perhaps she is disabled with no POA or only B as POA). A’s share lapses and the
property goes to B. If Mother had used a will instead of a TODI, A’s share would have
been protected.
5.) Why is this? The committee commentary suggests states should extend the
rules governing anti-lapse to non-probate mechanisms such as TODI’s. The Uniform
Probate Code does this. If your state doesn’t have the Uniform Probate Code, there isn’t
any anti-lapse protection. Hardly seems like a good reason not to make anti-lapse the
default in this case, but there you are. Also, consistently, whenever The Uniform Act has
a choice between fairness and certainty of title, The Uniform Act always comes down on
the side of certainty of title. Here, if a name does not appear on the TODI, we would
have to refer to extrinsic evidence and there would be a cloud on the title until it is
resolved.
6.) Minnesota has added a rather complicated antilapse statute to its TODI Act.
Compare Minnesota’s statutes §507.071 subd. 11 & 12.
Subd. 11. Antilapse; deceased beneficiary; words of survivorship.
(a) If a grantee beneficiary who is a grandparent or lineal descendant of
a grandparent of the grantor owner fails to survive the grantor owner,
the issue of the deceased grantee beneficiary who survive the grantor
owner take in place of the deceased grantee beneficiary. If they are all
of the same degree of kinship to the deceased grantee beneficiary, they
take equally. If they are of unequal degree, those of more remote
degree take by right of representation.
(b) For the purposes of this subdivision, words of survivorship such as, in
a conveyance to an individual, "if he or she survives me," or, in a class
2
gift, to "my surviving children," are a sufficient indication of intent to
condition the conveyance or transfer upon the beneficiary surviving the
granter owner.
Subd. 12. Lapse. If all beneficiaries and all successor beneficiaries, if
any, designated in a transfer on death deed, and also all successor
beneficiaries who would take under the antilapse provisions of
subdivision 11, fail to survive the grantor owner or the last survivor of
the grantor owners if there are multiple grantor owners, if the
beneficiary is a trust which has been revoked prior to the grantor
owner's death, or if the beneficiary is an entity no longer in existence at
the grantor owner's death, no transfer shall occur and the
transfer on death deed is void.
7.) In Minnesota, the beneficiary must survive the transferor by 120 hours.
§524.2-702. Oh yes, this means there are simultaneous death issues to discuss.
8.) Minnesota’s “cure” does not apply to other kinds of assets so there is an
antilapse for TODI’s but not TOD bank accounts. These are governed by the agreements
with their bank or brokerages which in its “default” provisions may inexplicably (or to
facilitate the transfer agent’s job) cut out people who don’t survive.
9.) Reasonable minds could differ on the exact language of an appropriate “fix”
for Iowa and whether it makes sense to have a TOD antilapse for TODI’s but not for
bank accounts (and there are a lot of reasonable minds in the Iowa Trust and Estate Bar).
10) Minnesota’s Antilapse is to “a grantee beneficiary who is a grandparent or
lineal descendant of a grandparent of the grantor owner”. Why is this? I don’t know.
Iowa’s antilapse statutes (633.273, 633.273A and 633.274) and Trust Code Antilapse
Statute (633A.4701) may be more “inclusive” (while no less complicated).
11) A similar but unrelated issue is after-born children which are excluded from a
TODI because they cannot be named and are not protected by The Probate Code
(§633.267). I stuck this issue here because I just thought of it and it seems important but
I don’t want to go to “The Big Six”. I cannot think of a way to fix this because TODI
legislation, when given a choice between fairness and certainty of title, almost always
goes with certainty of title. This is why, generally speaking, if you are not a “named
beneficiary” you are out of luck. We don’t want title examiners worrying about the afterborn “love child” of a transferor. If you want to figure out a way to fix the after-born
child problem, good luck. . .
3
B. REMOVAL OF ELECTIVE SHARE, OR HOW TO CUT OUT YOUR SPOUSE.
Historically, real estate has been a source of protection for the surviving spouse in estate
situations. Both the Iowa Probate Code and The Iowa Trust Code as well as general Iowa
homestead law make it a keystone principal of Iowa real estate practice that a spouse must sign a
deed releasing dower homestead distributive share etc. unless there is a valid premarital
agreement.
As a TODI is NOT A DEED, The Uniform Act and almost every jurisdiction that has
adopted this does not require a spouse to sign a TODI.
1.) This is another area where The Uniform TOD act assumes you have The Uniform
Probate Code. The Act itself has no provision for spousal protection. The comment to Section
13 says:
“In light of the growing harmonization of the rules governing probate and nonprobate
transfers, states enacting this act should consider extending to nonprobate mechanisms,
such as transfer on death deeds, the probate rules governing antilapse, revocation by
divorce, revocation by homicide, survival and simultaneous death, and the elective share
of a surviving spouse…”
2.) Iowa’s choice then is :
a) Allow people to cut out their spouse with a TODI,
b) Implement an augmented estate OR
c) Require a spouse to sign a TODI (like Minnesota).
a) Allow people to cut out their spouse with a TODI.
This, of course, is the easiest way to proceed and would be consistent with the situation in
TOD and POD bank accounts. Such accounts could currently be used to cut out a spouse
because Iowa’s “augmented estate” extends only to trust assets (§633.238d) and not other
non-probate assets (§633.238). In re Estate of Myers, 825 N.W.2d 1 (Iowa 2012).
Do we want spouses cut out of a share of real property?
cornerstone of spousal protection for a long, long time.
This has been a
b) Iowa could implement an augmented estate including TODI’s. Anyone who
wants to work on this legislation, knock yourselves out (I am NOT volunteering). Here is
a short summary of the UPC provisions:
UPC (§2-201, et. seq.)
• Provides an accrual-type elective share by tying the surviving spouse’s ultimate
entitlement to the length of the marriage (the longer the marriage, the larger the
elective-share percentage), starting with 3% for 1 year of marriage, and increasing
4
•
•
•
each additional year of marriage until it reaches the maximum 50% after 15 years
of marriage.
UPC employs an “augmented estate” concept where percent is applied to sum of
four elements: (1) decedent’s net probate estate (§2-204); (2) decedent’s
nonprobate transfers to other consisting of will-substitute-type intervivos transfers
made by the decedent to others (§2-205); (3) decedent’s nonprobate transfers to
the surviving spouse, consisting of will substitute-type inter-vivos transfers made
by the decedent to the surviving spouse (§2-206); and (4) the surviving spouse’s
net assets at the decedent’s death, plus any property that would have been in the
surviving spouse’s nonprobate transfers to others under §2-205 had the surviving
spouse been the decedent (§2-207).
Petition must be filed with court within the later of 9 months after the date of the
decedent’s death or within 6 months after the probate of the decedent’s will.
Court may extend time for filling petition upon request of spouse during period.
Surviving spouse must be living to exercise right of election. Election can be
exercised by guardian of disabled surviving spouse or agent under durable power
of attorney but not by representative (since spouse is not living).
Of course this also includes TOD and POD Bank accounts over which the Probate
Section nearly came to blows a few years ago. The problem of how to collect on such an
asset if you are a surviving spouse was a major part of the problem. (And I discuss that
problem below in D. Effect on Creditors.)
c) Iowa could require the spouse to sign a TODI like Minnesota Does.
Minnesota Code §507.071
Subd. 2. If a spouse who is neither a grantor owner nor an owner joins in the
execution of, or consents in writing to, the transfer on death deed, such joinder or consent
shall be conclusive proof that upon the transfer becoming effective, the spouse no longer
has or can claim any statutory interest or other marital interest in the interest in real
property transferred by the transfer on death deed. However, such transfer shall remain
an interest as identified in Section 256B.15 for purposes of complying with and satisfying
any claim or lien as authorized by subdivision 3.
Subd. 3. Rights of Creditors. The interest transferred to a beneficiary under a
transfer on death deed after the death of a grantor owner is transferred subject to all
effective conveyances, assignments, contracts, mortgages, deeds of trust, liens, security
pledges, judgments tax liens and any other matters or encumbrances to which the interest
was subject on the date of death of the grantor owner, upon whose death the transfer
becomes effective including, but not limited to, any claim by a surviving spouse who did
not join in the execution of, or consent in writing to, the transfer on death deed.
Does this help the spouse (i.e. cure the problem without going through the pain of
an augmented estate debate?) Not really. Currently the spouse is protected by title
examiners who rely upon Chapter 5 of the Iowa Title Standards to insist upon a spouse’s
signature prior to closing a real estate sale. Here there is no title examination prior to title
5
transferring from transferor to beneficiary on death. This means the spouse loses
priority and is put in the same position as general creditors.
3.) In addition to the elective share, Iowa’s Probate Code includes numerous other
protections, elections and allowances for a surviving spouse. See Division V of The Probate
Code “Rights of Surviving Spouse” and Division VII, Part 5 Allowance for Surviving Spouse
and Minor Children. None of these are available when a TODI is used under The Uniform Act.
So how does a cut-out spouse enforce any kind of protection against a beneficiary? This
leads us to:
C. Effect on Creditors.
1.) Currently in Iowa, creditors are protected by a number of provisions of The Iowa
Probate Code. These provisions include notice provisions, both published and mailed, claims
provisions 633.410-424, denial and contest provisions 633.438-449, classification, allowance and
payment provisions 633.425-633.437. None of these provisions apply to a TODI if Iowa adopts
The Uniform Act.
2.) The Iowa Trust Code provides generally that beneficiary’s interests may be reached
by levy attachment or execution unless subject to spend-thrift provisions. 633A.2301. Even if
there are spend-thrift provisions, an interest of a beneficiary may be reached to satisfy an
enforceable claim against the beneficiary or the beneficiary’s estate for either of the following:
a) Services or supplies for necessaries provided to or for the beneficiary.
b) Tax claims by the United States . . . 633A.2302(3).
Because of the growth in TOD and POD accounts, real estate is the last bastion of
creditor protection in Iowa.
3.) The Uniform Act provides the following with regard to creditors during transferor’s
life. During a transferor’s life, a transfer on death deed does not:
“a) Affect an interest or right of a secured or unsecured creditor or future creditor of the
transferor, even if the creditor has actual or constructive notice of the deed;
b) Subject the property to claim or process of a creditor of the designated beneficiary.”
COMMENTS
(Comment to paragraph 1 of The Uniform Act.) “A transfer on death deed, during the
transferor’s lifetime, does not affect pre-existing or future creditors, secured or unsecured,
whether or not they have an interest in the property or notice of the deed.
6
(Comment to paragraph 6 of The Uniform Act.) “A transfer on death deed, during the
transferor’s lifetime, does not make the property subject to claims or process of the designated
beneficiary’s creditors. The deed has no more effect that a will.”
4.) Section 13 of the Uniform Act provides the effect of transfer on death deed at
transferor’s death.
“a) Subject to [cite state recording act], a beneficiary takes the property subject to all
conveyances, encumbrances, assignments, contracts, mortgages, liens, and other interests
to which the property is subject at the transferor’s death. For purposes of this subsection
and [cite state recording act], the recording of the transfer on death deed is deemed to
have occurred at the transferor’s death.”
(Uniform Act Commissions Comment) “Subsection (b) provides that the beneficiary’s interest is
subject to all conveyances, encumbrances, assignments, contracts, mortgages, liens, and other
interests to which the property is subject at the transferor’s deaths. “Liens” includes liens arising
by operation of law, such as state Medicaid liens.”
5.) What, you might well ask, does “subject to” mean? And what is the procedure to
collect? Section 15 of The Uniform Act provides two options; one for those who have the UPC
(Alternative A) and one for those who don’t.
SECTION 15. LIABILITY FOR CREDITOR’S CLAIMS AND STATUTORY
ALLOWANCES.
Alternative A for UPC states provides that an estate must be opened and the claim
allowed. It is then in the Executor’s hands whether to sue the beneficiary to enforce the claim.
“A beneficiary of a transfer on death deed is liable for an allowed claim against the transferor’s
probate estate and statutory allowances to a surviving spouse and children to the extent provided
in [cite state statute or Section 6-102 of the Uniform Probate Code.]”
“Legislative Note: Alternative A is for a state with an existing statute governing creditors’ rights
in nonprobate transfers, such as Uniform Probate Code Section 6-102. States are encouraged to
enact such statutes, thereby treating nonprobate transfers comprehensively.”
UPC 6-102 provideds procedures regarding collection. What it provides is that an estate
must be opened and a claim allowed. The UPC includes the following comment:
“If there are no probate assets, a creditor or other person seeking to use this Section 6-102
would first need to secure appointment of a personal representative to invoke Code
procedures for establishing a creditor’s claim as “allowed.” The use of probate
proceedings as a prerequisite to gaining rights for creditors against nonprobate transferees
has been a feature of UPC Article VI since originally approved in 1969. It works well in
practice. The Article III procedures for opening estates, satisfying probate exemptions,
and presenting claims are very efficient.”
7
(You’re killing me – If estate procedure is so efficient, why are we here?)
6.) Alternative B, which is what Iowa as a non UPC state would be left with, is hardly
more attractive. The Uniform Act currently describes Alternative B as a “second-best approach,
supplying creditor protection but governing only transfer on death deeds and not other
nonprobate mechanisms”.
“Alternative B
(a) To the extent the transferor’s probate estate is insufficient to satisfy an allowed claim
against the estate or a statutory allowance to a surviving spouse or child, the estate may
enforce the liability against property transferred at the transferor’s death by a transfer on death
deed.”
Again, what the heck does “may enforce the liability against the property transferred”
mean? And since it is not mandatory language (“may”), can’t the executor of the estate, who
presumably may also be the favored beneficiary, decline to enforce the liability without fear?
7.) Because Iowa is not a Uniform Probate Code state, Alternative B is our option for
this particular act with regard to creditors’ claims, and even though I have suggested how
difficult it can be for a creditor to enforce their claim under the UPC, it could be even worse
under this provision because it says the estate may enforce the liability against property
transferred at the transferor’s death by a TODI. That means that the estate does not have to.
That means if the transferee decides to open an estate with no assets in it, he may do so, having
self-appointed as executor, and then be in a position either to disallow a claim or to not enforce it
against the property transferred at the transferor’s death.
The Uniform Act provides 18 months for the enforcement of valid claims under this
section. Perhaps it is so long because the creditor may not receive notice of the transfer. Under
the Iowa Probate Code, all claims would be cut off within 4 months from the date of second
publication or 1 month from mailed notice. Does this make the TODI seem “efficient”?
The real concern is that if the TODI is intended to avoid probate, there will be no probate
and there will not be notices published or sent out to creditors following a debtor’s death.
Affidavits by the TODI beneficiary after the Grantor’s death may indicate, that perhaps, except
for Medicaid confirmation, there are no other known creditors. Obviously, there are no known
creditors because the creditors were not provided notice at the decedent’s death because there
was no probate. Unless creditors are vigilantly reading obituaries in the newspaper, identifying
debtors, and then creditors asking the creditor’s attorney to file for an estate, creditors will not
get paid. Funeral homes and nursing homes are best positioned because of their knowledge of
the death. Other creditors will likely be cut out. Pope case notice concerns arise from such a
system. The state of title may be precariously uncertain for a number of situations.
8.) Because of the lack of specificity and teeth in The Uniform Act, most states that are
not UPC have tried to concoct their own enforcement mechanisms. Colorado’s alternative
process is attempting to provide some teeth, but what a series of hoops it is.
8
Most of the states that have TODI’s use a procedure that requires opening an estate,
approving a claim, then filing suit and executing on a judgment. And this is not only more
complicated than filing a claim in an estate, it is less likely to succeed for three reasons.
a) The property has passed to the beneficiary at death, so the beneficiary’s judgment
lienholder is always in first place.
b) Your priority status is gone. Even if the transferor has no judgment lienholders, it’s a
race to the courthouse to open an estate, another race to get a judgment, and then to
collect before the assets are gone. And if other non-priorities file suit, you take prorata
and your priority is gone.
c) Most states allow a BFP to buy the property free and clear, leaving the transferor’s
creditors with a worthless judgment.
d) As opposed to the claim being settled within an estate, beneficiaries now potentially
necessarily have judgments or lawsuits in their credit history regarding real estate that
presents a picture that might not be accurate. I don’t know the effect on a credit score
when a beneficiary applies for his or her next mortgage after a friendly action by a
personal representative to recover the value of TODI from a beneficiary who sold the
property believing that the estate covered the debts.
9.) Priority Claimants. Let’s remember who we are talking about here. First, we are
talking about the spouse (and possibly child) who was cut out by use of the TODI.
Next, we are talking about the State of Iowa, who may be owed Inheritance tax on the
million dollar farm that was left to a niece or nephew by a TODI.
In addition, there are priority creditors listed in §633.425 the legislation has deemed
worthy of a premier place, including:
•
•
•
•
•
•
•
Reasonable funeral and burial expense,
All debts and taxes having preference under the laws of the United States
Reasonable and necessary medical and hospital expenses of the last illness of the
decedent, including compensation of persons attending at the decedent’s last
illness.
All taxes having preferences under the laws of this state.
Any debt for medical assistance and Estate Recovery.
All debts owing to employees for labor performed during the ninety days next
preceding the death of the decedent.
All unpaid support payments in any dissolution, separate maintenance, uniform
support, or paternity action to the extent that the support, awards, and judgments
have accrued at the time of death of the decedent.
9
There’s a reason we have these priorities. It’s because the legislature has made a policy
decision these claimants should be paid ahead of other claimants. Note there is no statute for
TOD Deeds that protect these claimants the way our estate administration provisions protect
these claimants. None of them. And there is no way to protect them in the same manner.
Because once it gets into the hands of the grantee, you’ve got a whole other level of complexity
and expense. You are shutting the barn door after the horses have escaped.
Is that fair to these creditors?
10.) Fairness again. So TODI’s represent an assault on the last bastion of creditors’
rights in Iowa, real estate.
Much of this presentation has been stating the obvious. For example, if you call
something non-testamentary but it’s a will substitute, what difference is there? Here I feel I must
state the obvious again, that is to say that if claims are not paid, then everybody pays. If taxes
are not paid, then everybody pays. If funeral home bills are not paid, then everybody pays
because the funeral home director is going to pass that through to the next guy who does have his
things in order, who does have an irrevocable burial trust or some agreement or has already made
arrangements to pay. Shouldn’t it be the estate of the person that owes the bill that should pay
the bill?
11.) Estate Recovery and Medicaid. So here we see that Colorado has taken steps to
protect claimants, including the Department of Human Services, and yet it has still come up
short. The reason is that the mechanism is inherently flawed. There is no way to protect priority
claimants in a TODI and for that reason, Colorado’s DHS resisted the enactment of TODI’s until
it got a special provision passed.
The Uniform Act provides that “during the transferor’s life, a transfer on death deed does
not . . . Section 12(4) affect the transferor’s or designated beneficiary’s eligibility for any form of
public assistance”;
And see the comment, paragraph (4): “A transfer on death deed, during the transferor’s
lifetime, does not affect the transferor’s or designated beneficiary’s eligibility for any form of
public assistance, including Medicaid. On this point, the drafting committee specifically
disapproves of the contrary approach of Colo. Rev. Stat. §15-15-403.”
That’s right, in Colorado, you can’t apply for Medicaid if you have this kind of deed.
Any applicant can then revoke it and the department has promulgated a regulation on this point
that the principal place of residence which is subject to estate recovery becomes
a countable resource upon the execution and recording of a beneficiary deed. Note that it says
execution and recording. There is the statute itself that says the mere execution of the deed
causes the property to be considered as countable, so I think this regulation went too far. The
exemption can be regained if a revocation of the beneficiary deed is executed and recorded.
And of course this doesn’t protect any other creditor or any spouse or anybody else. And
is doesn’t fully protect the Department of Human Services in the case where Estate Recovery is
10
owed some money as the result of a claim based on services provided to a predeceased spouse.
Only a “lien” statute would provide this protection. So as much as this provides an intensely
complicated arrangement for creditor protection, it doesn’t do the job.
12.) In Minnesota, once again, DHA was not impressed by the creditor’s protection in
the proposed TODI Act, hence they have an elaborate release procedure that beneficiaries of
TODI’s are to go through before they can pass clear title.
13.) In Nebraska, a UPC state, real property is subject to Estate Recovery even if a TODI
is recorded. Upon death of the transferor, the beneficiary may notify DHS and provide a death
certificate. If there is no recoverable amount, DHS is to so state within 60 days after notice sent
them, otherwise their recovery is waived. If there is a claim, DHS shall record the statement and
if the claim is not paid within 120 days after recording, the Department may foreclose upon the
property in the same manner as provided a mortgage. So much for simplicity.
“If the medical assistance amount has not been paid to the department within one hundred
twenty days after the department has recorded the statement, the department may foreclose upon
the property in the same manner as provided for a mortgage. The amount of the medical
assistance recovery by the department shall be superior to the title of the beneficiary.”
15.) In calendar year 2014, Iowa Estate Recovery recovered over $13 million just from
probate. Ben Chatman says he “is sure” over 90% of this is real estate. Unless Iowa becomes a
lien state (and I’m looking forward to that debate) and DHS can throw other creditors under the
bus, that leads us to . . .
D. An Enormous Fiscal Note!
There must be BEAUCOUP BUCKS lost if people can use TODI and there is no
inheritance tax collected because the Iowa Dept. of Revenue doesn’t go after TOD’s and POD’s
now!
Plus, the income taxes lost because there is no longer collection in the estate as a priority
claim.
Plus, the lost court costs for estates not administered.
Plus, some portion of the 90% of the $13 million Estate Recovery would not be able to
collect unless it got a lien in the deal. I’m just saying! Where are the fiscal notes when you need
them?
E. E is for Elder Law.
1.) It is ironic that at a time when we are becoming more and more cognizant of financial
elder abuse and the need to protect people from their own families and friends, that we provide
11
an instrument that would be a simple way to defraud an individual out of their most significant
asset on death.
The “common questions about the use of this form” appendix from The Uniform Act
addresses this by saying “Common question. I am being pressured to complete this form. What
should I do? Answer: Do not complete this form under pressure. Seek help from a trusted
family member, friend or lawyer.” But . . . (1) Is the person who is presenting this deed going to
actually give them these common questions to review? and (2) Isn’t it likely that the person that
presents this deed is a trusted family member or friend? The next “common question” is “Do I
need to tell the beneficiaries about the TOD deed?” Answer: “No, but it is recommended.
Secrecy can cause later complications and might make it easier for others to commit fraud after
this has already been executed.”
It is for this reason perhaps that only 10 of the 13 states that have adopted The Uniform
Act (doesn’t that leave 37 who haven’t?) have included the form in their act.
2.) Not only has Illinois rejected large parts of The Uniform Act and has declined to call
a TODI a “Deed”, but it also does not have a statutory form.
The capacity section #8 of The Uniform Act states that the capacity required to make or
revoke a transfer on death deed is the same as the capacity required to make a will. But this will
not be enforced because there is no one present at the time of the notarization of this deed to
determine whether the person has capacity (i.e. no attorney looking out after the best interests of
the client).
Illinois was so troubled by this that Illinois’ transfer on death instrument requires the
same procedure for a TODI as it does for a will, that is to say signature before two witnesses who
sign in the presence of each other and in the presence of the person who signs this TODI. It also
rejected the idea of including in the statute a deed form. They may have viewed this clearly as
an attractive nuisance as it seems likely that someone is going to use this form without the
benefit of legal counsel. Would Iowa’s legislature ever consider such a restriction?
3.) Some important Elder Law questions for you:
A. Frances Caldwell has a Durable Power of Attorney naming Randy as attorneyin-fact or agent. Under this Power of Attorney, the attorney-in-fact or agent has the
power to sign a transfer on death deed explicitly (assuming document has been recorded
to allow this). Randy then signs a transfer on death deed after Frances becomes disabled,
and once POA Act has been amended, names himself and his siblings. Has Randy
committed elder abuse at this point even though the siblings were treated equally? Is the
deed fraudulent?
B. Assuming that the answer to the first question was no, assume that one of
Randy’s siblings passes prior to the death of Frances. The children of the deceased child
are cut out because no explicit provision is put in the Power of Attorney, so the children
of the deceased child get nothing (under The Uniform Act) and everything goes to Randy
12
and his living siblings if no subsequent TODI is recorded. Has Randy committed
financial elder abuse and if so, when? As of the date the sibling died and a new transfer
on death deed was not made? Or not until date of death?
4.) Other questions from The Uniform Act form:
“Questions about the use of this form” on page 11 show: “How do I make a
TODD?: Complete this form, have it acknowledged before a Notary Public or
other individual authorized by law to make acknowledgements, record the form in
each county where any part of the property is located. The form has no effect
unless it is acknowledged and recorded before your death.” Then it asks: “How
do I know what the legal description of the property is? “It says, if you are not
absolutely sure, consult your attorney.” So we see what the purpose of an
attorney is here. It’s to give a legal description. At the very end, it says: “If you
have other questions, you are encouraged to consult a lawyer.”
5.) Remember the fun we are having with The Uniform POA form?
6.) At least one state, California, has imposed a higher standard (the standard for
contracts) for a person to have the ability to sign a TODI. (5620)
7.) Some states have included additional bold faced warnings to help older people read
about how they could screw this up.
8.) See e.g. Section 7.2 of the Restatement (Third) of Property (Wills and Other
Donative Transfers) which provides: “Although a will substitute need not be executed in
compliance with the statutory formalities required for a will, such an arrangement is, to
the extent appropriate, subject to substantive restrictions on testation and to rules of
construction and other rules applicable to testamentary dispositions.”
IV. OTHER ISSUES DESERVING DISCUSSION.
Appendix “C”
While not rising to the level of the Big 5, you should check this list out. The issues that
have arisen in states adopting TOD’s represent a myriad of miasmas.
Proponents describe the transfer on death deed as a simple procedure for transferring
property to ones loved ones at death. Indeed the act is only 15 pages long including comments
and such, how complicated could it be? Well, in addition to the previous big five issues, The
Uniform Act is deficient in many respects and these complexities have been raised by those
jurisdictions surrounding Iowa. Those complexities including the following: Title-clearing
issues such as filing of an affidavit and clearance from public assistance claims, apportionment,
ademption by extinction or non-ademption, non-exoneration provisions, after-acquired property,
the effect on other conveyances, revocation by subsequent will, statutes of limitations , the use of
the form, witness requirements, execution by an attorney-in-fact, and others. Nebraska
additionally allows a TODI grantor to split the interest in the growing crops from the underlying
13
agricultural ground. “If the property is agricultural land, the transferor may designate in the transfer
on death deed the disposition of the transferor's interest in growing crops to the transferor's estate or
to one or more of the designated beneficiaries.” Neb. Rev. Stat. 76-3405.
These are not academic questions, but real issues that arise when you adopt a “form” but
have limited guidance as to procedure, i.e., The Probate Code does not apply and we do not have
the Uniform Probate Code.
See Appendix “C” OTHER ISSUES DESERVING
CONSIDERATION.
V. CONCLUSIONS
I really have tried to be fair to The Uniform Act. I have examined The Uniform Act in
some depth and presented some options other states have adopted to try to fix The Uniform Act.
I have also really presented here a sort of “best case scenario”. What would really happen if the
legislature got ahold of this is anybody’s guess. I don’t think many of these most significant
problems can be fixed. State legislatures have tried. The reason they have not succeeded is that,
like Churchill said about golf clubs, TODI’s are “implements ill-suited to the task”.
Review of Proponents Arguments
A. 1. Simple, 2. Fair, and 3. Efficient.
B. Everybody Else is Doing It.
C. Good for Iowans?
A.1 Simple: “Why a four-year-old child could understand this report. Run out
and find me a four-year-old child. I can’t make head nor tail out of it.”
Groucho Marx as Rufus T. Firefly in Duck Soup, 1933
If by simple you mean you can get a form off the internet, fill it in incorrectly and
sign it in front of a notary, “yes”. If you are talking about doing it correctly or referring
to the body of law that must be passed to fill in the gaps created by a Will Substitute
statute where The Iowa Probate Code, The UPC and Probate rules don’t apply, pretty
clearly, “no”.
A.2. Fair: Proponents argue that it is not fair that people who own real estate
are forced to have their wills probated while people who have everything in TOD and
POD accounts do not.
First, this is not true. There are other mechanisms; gift, retained life estates, joint
tenancy and revocable trusts.
Second, isn’t real estate treated differently in a lot of respects, most of them
beneficial?
Homestead exemption
Deductible home mortgage
Home office expense deduction
Special Use valuation
14
Personal residence exclusion
1031 exchange treatment
Various credits and preferential rates
AND it is precisely because people CAN put so much in POD and TOD
accounts that we need to preserve this last bastion of creditor protection.
Are TODI’s more fair? Fair to whom? Certainly not to creditors. And if
creditors pay more, we all pay more.
And what about spouses? Is it fair to allow someone to cut out their spouse?
A.3. Efficient
Proponents seem to suggest that adoption of this act will save Iowans
attorney’s fees. What about this presentation sounds like less work for lawyers?
Granted, it may be different work, but creditors, beneficiaries, and spouses may pay a
lot in attorney’s fees to collect. And if the gaps in The Uniform Act are not filled in
legislatively, they will have to be filled in by the courts.
On Legal Zoom, you can get a valid Iowa will for $69.00. I don’t believe
they offer TODI’s for any state (too complicated?).
If elders are protected with a witnessed TODI like Illinois and Nebraska have,
then it seems likely the costs of a professionally drawn will and TODI will be
similar.
But proponents would resist. As far as the estate administration, if there are
any unpaid claims, you have both a probate procedure under The Uniform Act, plus a
lawsuit. So isn’t that less efficient?
B. Everyone else is doing it.
“If everyone else was jumping off the roof, would you?”
Frances Caldwell, Circa 1963
First of all, it isn’t true if by “doing it”, you mean “adopting The Uniform
Act”. If 13 states have The Uniform Act that means 37 states do not. And of those
13, only 10 have adopted the form.
As for states surrounding Iowa, only Nebraska and South Dakota have The
Uniform Act and they are both UPC states. And Nebraska is significantly different
on several key aspects. The other states have statutes that are almost completely
unique.
15
California’s transfer on death deed statute has a five-year sunset provision
built in (5600), hardly a ringing endorsement of the concept, even when considering
the challenges of California probate. The California act is limited to residential
dwelling units, condos, and parcels of less than 40 acres (5610).
Even if “everyone else is doing it” and you choose to ignore the admonition
of my mother circa 1963, Iowa occasionally takes a contrary position if it is to the
benefit of Iowan’s. Title insurance comes to mind.
C. Good for Iowans?
In summary, here are three reasons “Transfer on Death Deeds” would be bad
for Iowan’s.
1) The following groups would find their historically protected priority claims
difficult or impossible to collect. To the extent they are not collected, we all pay more:
A. Funeral Homes
B. Hospitals (last sickness)
C. Surviving spouse can be cut out without spousal rights
D. Single parents awarded child support but not paid
E. Employees who have not been paid
F. Children of a predeceased child are cut out by default.
G. Afterborn children who are (of course) not named in a TODI.
2) Fiscal impact, millions in lost revenue to the state.
A. There is no method of collecting Iowa Inheritance tax on property passing to
transferee short of lawsuit and IDOR has historically not filed suit.
B. Unless Medicaid is granted a lien, collection of Estate Recovery claims for
Medicaid Reimbursement would be made much more difficult, expensive and
uncertain. 90% of Estate Recovery’s 13 million dollars collected from Iowa
estates last year was from real estate.
C. Unpaid taxes that were a priority claim became a general creditor of the
transferee.
D. Fewer court costs in estates.
A.3. There is no procedural safeguard to prevent financial elder abuse. Anyone
with a pen who can get an elderly Iowan to sign in front of a notary can defraud other
potential beneficiaries. Use of the statutory form is an invitation to misuse and abuse.
16
Kyle S. Irvin
Partner since 2009
Location:
423 Sixth St.
Sioux City, Iowa 51101
Phone:
712-277-1261
Fax:
712-277-6631
Email:
[email protected]
Kyle S. Irvin is a partner with the firm. Kyle, a native of College Springs, Iowa, obtained his B.A. in 2002 from Northwestern
College in Orange City, Iowa. He attended law school at the University of Iowa graduating in 2005.
Kyle is engaged in the general practice of law with a large part of his practice devoted to the areas of estate planning,
probate administration, drafting of wills and trusts, real estate, business corporations, and debtor/creditor issues.
Kyle is vice-chairperson of the governing council for the Probate and Trust Section of the Iowa State Bar Association and a
former past president of the Siouxland Estate Planning Council.
Kyle is a member of the Iowa State Bar Association, Nebraska State Bar Association, and South Dakota State Bar
Association. He also serves on the board of directors for the Siouxland Senior Center for Active Generations and Sunrise
Manor Retirement Community in Sioux City, IA.
Past Presentations:
•
•
•
•
•
“Iowa's New Power of Attorney”, University of Iowa College of Law's Spring Tax Institute, Iowa City,
IA, 2015
"Iowa Legislative and Case Law Update for Trusts and Estates", University of Iowa College of Law's Fall
Probate Seminar, Iowa City, IA, 2015
"Iowa's New Power of Attorney Act", 91st Annual Lawyer's Chautauqua Seminar, Okoboji, IA, 2014
"Iowa's New Power of Attorney Act", Siouxland Estate Planning Council, Sioux City, IA, 2014
"Determining if the Spouse's Elective Share is a Reasonable Option", National Business Institute (NBI)
Seminar - The Probate Process from Start to Finish, Sioux City, IA, 2014
17
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
"Putting the Case to Rest: Closing the Estate", National Business Institute (NBI) Seminar - The Probate
Process from Start to Finish, Sioux City, IA, 2014
"Planning for a Gradual Transfer within the Family", National Business Institute Seminar, Sioux City,
IA, 2013
"Estate Planning for Farmers and Ranchers", National Business Institute Seminar, Sioux City, IA, 2013
"Iowa Probate Case Update", Iowa State Bar Association's 2013 Bloethe Tax School, Des Moines, IA,
2013
"The Baur Case and Other Developments of Interest Regarding Estates, Trusts, and Closely-Held
Businesses", University of Iowa College of Law's Fall Probate Seminar, Iowa City, IA., 2013
"Iowa Fiduciary Issues", Iowa State University Center for Agricultural Law and Taxation Farm Estate
and Business Planning Seminar, Ames, IA., 2013
"Iowa Fiduciary Issues & Developments", 90th Annual Lawyer's Chautauqua Seminar, Okoboji, IA.,
2013
"Iowa Fiduciary Issues & Developments", University of Iowa College of Law's Spring Tax Institute,
Iowa City, IA., 2013
"Powers of Attorney, Guardianships, Conservatorships & Trusts", Soup and Seminar Series at Sunrise
Retirement Community in Sioux City, IA., 2012
"Understanding Assets, Medicaid & Title 19", Soup and Seminar Series at Sunrise Retirement
Community in Sioux City, IA., 2011
"Equal v. Fair - Estate Planning When a Child is Involved in the Family Business or Farm", Annual
Meeting of the Iowa State Bar Association, Des Moines, IA., 2011
"Determining if the Spouse's Elective Share is a Reasonable Option", National Business Institute (NBI)
Seminar, in Sioux City, IA., 2010
"Special Needs Trusts", Siouxland Estate Planning Council, 2010
"Putting the Case to Rest: Closing the Estate", National Business Institute (NBI) Seminar, in Sioux
City, IA., 2011
"Wills & Trusts: What's the Difference?", Soup and Seminar Series at Sunrise Retirement Community
in Sioux City, IA., 2010
Bar Admissions
•
•
•
Iowa, 2005
Nebraska, 2006
South Dakota, 2006
Education
•
•
University of Iowa College of Law, Iowa City, Iowa
o J.D. - 2005
o Honors: Willard L. Boyd Honors
o Law Review: Journal of Transnational Law & Contemporary Problems, 2004 - 2005
Northwestern College, Orange City, Iowa
o B.A. magna cum laude - 2002
o Major: History
o Major: Political Science
Representative Cases
•
•
•
Deerfield Apartments, L.L.P. v. Drake, 725 N.W.2d 659, 2006 WL 3313938 (Iowa Ct. App. 2006)
Kettler v. Security Nat. Bank of Sioux City, 805 N.W.2d 817 (Iowa Ct. App. 2011)
In the Matter of Trust #T-1 of Mary Faye Trimble, 86 N.W. 2d 474 (Iowa 2013)
18
Honors and Awards
•
•
•
Van Oosterhout Memorial Moot Court Competition Quarter-Finalist 2004
University of Iowa Moot Court Board, 2004 - 2005
University of Iowa Robert S. Hunt Legal History Award Winner for "The Historical Tide of International Legal
Education at the University of Iowa's College of Law", 2004 - 2005
Professional Associations and Memberships
•
•
•
•
Iowa Academy of Trust and Estate Counsel (IATEC)
Iowa State Bar Association Probate and Trust Governing Council, Member, 2012 - Present
Siouxland Estate Planning Council, President, 2012 – 2013
Siouxland Senior Center, Board Member, 2005 - Present
19
APPENDIX “A”
What is a TOD Deed?
A) The answer is “False”. A transfer on death deed is not a deed. It does involve real
estate and is recorded. There the similarity to a deed ends. No notice, consideration,
delivery, or acceptance is required. It does not convey an interest, legal or equitable,
merely an expectation (like a will) to a beneficiary. It must be recorded to be
effective. It does not diminish transferor’s ownership. It does not make it subject to
transferee’s creditors. Transferee’s interest is not alienable, devisable or descendible.
Illinois does not call it a deed. Ohio uses an “affidavit”. We will do as Illinois does
and call it an “instrument” (TODI). It does not affect transferor’s eligibility for
public assistance except in Colorado and perhaps Nebraska.
B) It is not “testamentary”. The statutes all say this.
C) A TOD deed is, in effect, a “will substitute” with respect to real property.
D) Title passes to beneficiary on transferor’s death without caveat or warranty of title.
E) It remains part of a deceased owner’s taxable estate for Federal estate tax and
inheritance tax purposes.
F) Receives a stepped-up basis.
G) The following is explanatory comment to the Uniform Act.
A fundamental feature of a transfer on death deed under this Act is that it does not
operate until the transferor's death. The transfer occurs at the transferor's death, not before.
A transfer on death deed, during the transferor's lifetime, does not affect the interests or
property rights of the transferor or any other owners. Therefore, the deed does not, among many
other things: affect the transferor's right to transfer or encumber the property inter vivos; sever a
joint tenancy or a joint tenant's right of survivorship; trigger a due-on-sale clause in the
transferor's mortgage; trigger the imposition of real estate transfer tax; or affect the transferor's
homestead or real estate tax exemptions, if any.
A transfer on death deed does not affect transferees, whether or not they have notice of
the deed. Like a will, the transfer on death deed is ambulatory. It has no effect on inter vivos
transfers.
A transfer on death deed, during the transferor's lifetime, does not affect pre-existing or
future creditors, secured or unsecured, whether or not they have an interest in the property or
notice of the deed.
A transfer on death deed, during the transferor's lifetime, does not affect the transferor's
or designated beneficiary's eligibility for any form of public assistance, including Medicaid. On
this point, the drafting committee specifically disapproves of the contrary approach of Colo. Rev.
Stat. §15-15-403.
During the transferor's lifetime, a transfer on death deed does not create a legal or
equitable interest in the designated beneficiary. The beneficiary does not have an interest that can
be assigned or encumbered. Note, however, that this rule would not preclude the doctrine of
after-acquired title. A warranty deed from a designated beneficiary to a third party would operate
to pass the beneficiary's title to the third party after the transferor's death.
A transfer on death deed, during the transferor's lifetime, does not make the property
subject to claims or process of the designated beneficiary's creditors. The deed has no more
effect than a will.
If a transferor combines an inter vivos transfer of an interest in property (such as a
mineral interest) with a transfer on death of the remainder interest, the inter vivos transfer may
have present effect even though the transfer on death does not occur until the transferor's death.
APPENDIX B
UNIFORM REAL PROPERTY
TRANSFER ON DEATH ACT (2009)
Drafted by the
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
and by it
APPROVED AND RECOMMENDED FOR ENACTMENT
IN ALL THE STATES
at its
ANNUAL CONFERENCE
MEETING IN ITS ONE-HUNDRED-AND-EIGHTEENTH YEAR
IN SANTA FE, NEW MEXICO
JULY 9-16, 2009
WITH PREFATORY NOTE AND COMMENTS
COPYRIGHT©2009
By
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
September 10, 2014
ABOUT ULC
The Uniform Law Commission (ULC), also known as National Conference of Commissioners
on Uniform State Laws (NCCUSL), now in its 118th year, provides states with non-partisan,
well-conceived and well-drafted legislation that brings clarity and stability to critical areas of
state statutory law.
ULC members must be lawyers, qualified to practice law. They are practicing lawyers, judges,
legislators and legislative staff and law professors, who have been appointed by state
governments as well as the District of Columbia, Puerto Rico and the U.S. Virgin Islands to
research, draft and promote enactment of uniform state laws in areas of state law where
uniformity is desirable and practical.
•
ULC strengthens the federal system by providing rules and procedures that are consistent
from state to state but that also reflect the diverse experience of the states.
•
ULC statutes are representative of state experience, because the organization is made up
of representatives from each state, appointed by state government.
•
ULC keeps state law up-to-date by addressing important and timely legal issues.
•
ULC’s efforts reduce the need for individuals and businesses to deal with different laws
as they move and do business in different states.
•
ULC’s work facilitates economic development and provides a legal platform for foreign
entities to deal with U.S. citizens and businesses.
•
Uniform Law Commissioners donate thousands of hours of their time and legal and
drafting expertise every year as a public service, and receive no salary or compensation
for their work.
•
ULC’s deliberative and uniquely open drafting process draws on the expertise of
commissioners, but also utilizes input from legal experts, and advisors and observers
representing the views of other legal organizations or interests that will be subject to the
proposed laws.
•
ULC is a state-supported organization that represents true value for the states, providing
services that most states could not otherwise afford or duplicate.
DRAFTING COMMITTEE ON UNIFORM REAL PROPERTY
TRANSFER ON DEATH ACT (2009)
The Committee appointed by and representing the National Conference of Commissioners on
Uniform State Laws in drafting this Act consists of the following individuals:
NATHANIEL STERLING, 4180 Oak Hill Ave., Palo Alto, CA 94306, Chair
TURNEY P. BERRY, 2700 PNC Plaza, Louisville, KY 40202
RHODA B. BILLINGS, 5525 Williams Rd., Lewisville, NC 27023
TOM BOLT, 5600 Royal Dane Mall, St. Thomas, VI 00802-6410
THOMAS L. JONES, University of Alabama School of Law, University Station, P.O. Box
865557, Tuscaloosa, AL 35486-0050
EDWARD F. LOWRY, JR., 4200 N. 82nd St., Suite 2001, Scottsdale, AZ 85251
ROBERT L. MCCURLEY, JR., Alabama Law Institute, P.O. Box 861425, Tuscaloosa, AL
35486
JAMES R. PENDER, 4001 North Rodney Parham Rd., Suite 101, Little Rock, AR 72212
PATRICK A. RANDOLPH, JR., University of Missouri-Kansas City School of Law, 5100
Rockhill Rd., Kansas City, MO 64110
GLEE S. SMITH, P.O. Box 667, Lawrence, KS 66044
MICHAEL P. SULLIVAN, 80 South 8th St., 500 IDS Center, Minneapolis, MN 55402-3796
THOMAS P. GALLANIS, University of Iowa, Boyd Law Building, Iowa City, IA 52242,
Reporter
EX OFFICIO
MARTHA LEE WALTERS, Oregon Supreme Court, 1163 State St., Salem, OR 97301-2563,
President
ANNE L. MCGIHON, 837 Sherman St., Denver, CO 80203, Division Chair
AMERICAN BAR ASSOCIATION ADVISOR
DENNIS M. HORN, 2099 Pennsylvania Ave. NW, Washington, DC 20006, ABA Advisor
SUSAN N. GARY, University of Oregon School of Law, 1515 Agate St., Eugene, OR 97403,
ABA Section Advisor
EXECUTIVE DIRECTOR
JOHN A. SEBERT, 111 N. Wabash Ave., Suite 1010, Chicago, IL 60602, Executive Director
Copies of this Act may be obtained from:
UNIFORM LAW COMMISSION
111 N. Wabash Ave., Suite 1010
Chicago, Illinois 60602
312/450-6600
www.uniformlaws.org
UNIFORM REAL PROPERTY TRANSFER ON DEATH ACT (2009)
TABLE OF CONTENTS
Prefatory Note ................................................................................................................................. 1
SECTION 1. SHORT TITLE ........................................................................................................ 2
SECTION 2. DEFINITIONS ......................................................................................................... 2
SECTION 3. APPLICABILITY .................................................................................................... 3
SECTION 4. NONEXCLUSIVITY............................................................................................... 4
SECTION 5. TRANSFER ON DEATH DEED AUTHORIZED ................................................. 4
SECTION 6. TRANSFER ON DEATH DEED REVOCABLE ................................................... 5
SECTION 7. TRANSFER ON DEATH DEED NONTESTAMENTARY. ................................. 5
SECTION 8. CAPACITY OF TRANSFEROR............................................................................. 6
SECTION 9. REQUIREMENTS ................................................................................................... 6
SECTION 10. NOTICE, DELIVERY, ACCEPTANCE, CONSIDERATION NOT
REQUIRED ........................................................................................................................ 8
SECTION 11. REVOCATION BY INSTRUMENT AUTHORIZED; REVOCATION BY ACT
NOT PERMITTED ............................................................................................................. 8
SECTION 12. EFFECT OF TRANSFER ON DEATH DEED DURING TRANSFEROR’S
LIFE .................................................................................................................................. 12
SECTION 13. EFFECT OF TRANSFER ON DEATH DEED AT TRANSFEROR’S DEATH 14
SECTION 14. DISCLAIMER ..................................................................................................... 18
SECTION 15. LIABILITY FOR CREDITOR CLAIMS AND STATUTORY
ALLOWANCES ............................................................................................................... 21
[SECTION 16. OPTIONAL FORM OF TRANSFER ON DEATH DEED ............................... 23
[SECTION 17. OPTIONAL FORM OF REVOCATION ........................................................... 26
SECTION 18. UNIFORMITY OF APPLICATION AND CONSTRUCTION .......................... 28
SECTION 19. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND
NATIONAL COMMERCE ACT ..................................................................................... 28
SECTION 20. REPEALS ............................................................................................................ 29
SECTION 21. EFFECTIVE DATE ............................................................................................. 29
UNIFORM REAL PROPERTY TRANSFER ON DEATH ACT (2009)
Prefatory Note
One of the main innovations in the property law of the twentieth century has been the
development of asset-specific will substitutes for the transfer of property at death. By these
mechanisms, an owner may designate beneficiaries to receive the property at the owner’s death
without waiting for probate and without the beneficiary designation needing to comply with the
witnessing requirements of wills. Examples of specific assets that today routinely pass outside of
probate include the proceeds of life insurance policies and pension plans, securities registered in
transfer on death (TOD) form, and funds held in pay on death (POD) bank accounts.
Today, nonprobate transfers are widely accepted. The trend has largely focused on assets
that are personal property, such as the assets described in the preceding paragraph. However,
long-standing uniform law speaks more broadly. Section 6-101 of the Uniform Probate Code
(UPC) provides: “A provision for a nonprobate transfer on death in an insurance policy,
contract of employment, bond, mortgage, promissory note, certificated or uncertificated security,
account agreement, custodial agreement, deposit agreement, compensation plan, pension plan,
individual retirement plan, employee benefit plan, trust, conveyance, deed of gift, marital
property agreement, or other written instrument of a similar nature is nontestamentary”
(emphasis supplied).
A small but growing number of jurisdictions have implemented the principle of UPC
Section 6-101 by enacting statutes providing an asset-specific mechanism for the nonprobate
transfer of land. This is done by permitting owners of interests in real property to execute and
record a transfer on death (TOD) deed. By this deed, the owner identifies the beneficiary or
beneficiaries who will succeed to the property at the owner’s death. During the owner’s lifetime,
the beneficiaries have no interest in the property, and the owner retains full power to transfer or
encumber the property or to revoke the TOD deed.
Thirteen states have enacted statutes authorizing TOD deeds. In the chronological order
of the statutes’ enactment, the states are: Missouri (1989), Kansas (1997), Ohio (2000), New
Mexico (2001), Arizona (2002), Nevada (2003), Colorado (2004), Arkansas (2005), Wisconsin
(2006), Montana (2007), Oklahoma (2008), Minnesota (2008), and Indiana (2009).
The time is ripe for a Uniform Act to facilitate this emerging form of nonprobate transfer
and to bring uniformity and clarity to its use and operation.
1
UNIFORM REAL PROPERTY TRANSFER ON DEATH ACT (2009)
SECTION 1. SHORT TITLE. This [act] may be cited as the Uniform Real Property
Transfer on Death Act.
SECTION 2. DEFINITIONS. In this [act]:
(1) “Beneficiary” means a person that receives property under a transfer on death deed.
(2) “Designated beneficiary” means a person designated to receive property in a transfer
on death deed.
(3) “Joint owner” means an individual who owns property concurrently with one or more
other individuals with a right of survivorship. The term includes a joint tenant[,][ and] [owner of
community property with a right of survivorship[,][ and tenant by the entirety]. The term does
not include a tenant in common [or owner of community property without a right of
survivorship].
(4) “Person” means an individual, corporation, business trust, estate, trust, partnership,
limited liability company, association, joint venture, public corporation, government or
governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.
(5) “Property” means an interest in real property located in this state which is transferable
on the death of the owner.
(6) “Transfer on death deed” means a deed authorized under this [act].
(7) “Transferor” means an individual who makes a transfer on death deed.
Comment
Paragraph (1) defines a beneficiary as a person that receives property under a transfer on
death deed. This links the definition of a “beneficiary” to the definition of a “person.” A
beneficiary can be any person, including the trustee of a revocable trust.
Paragraph (2) defines a designated beneficiary as a person designated to receive property
in a transfer on death deed. This links the definition of a “designated beneficiary” to the
2
definition of a “person.” A designated beneficiary can be any person, including a revocable trust.
The distinction between a “beneficiary” and a “designated beneficiary” is easily
illustrated. Section 13 provides that, on the transferor’s death, the property that is the subject of a
transfer on death deed is transferred to the designated beneficiaries who survive the transferor. If
X and Y are the designated beneficiaries but only Y survives the transferor, then Y is a beneficiary
and X is not. A further illustration comes into play if Section 13 is made subject to the state’s
antilapse statute. If X fails to survive the transferor but has a descendant, Z, who survives the
transferor, the antilapse statute may create a substitute gift in favor of Z. In such a case, the
designated beneficiaries are X and Y, but the beneficiaries are Y and Z.
Paragraph (3) provides a definition of a “joint owner” as an individual who owns
property with one or more other individuals with a right of survivorship. The term is used in
Sections 11 and 13.
Paragraph (4) is the standard Uniform Law Commission definition of a “person.”
The effect of paragraph (5) is that the act applies to all interests in real property located in
this state that are transferable at the death of the owner.
Paragraph (6) provides that a “transfer on death deed” is a deed authorized under this act.
In some states with existing transfer on death deed legislation, the legislation has instead used the
term “beneficiary deed.” The term “transfer on death deed” is preferred, to be consistent with the
transfer on death registration of securities. See Article 6, Part 3, of the Uniform Probate Code,
containing the Uniform TOD Security Registration Act.
Paragraph (7) limits the definition of a “transferor” to an individual. The term
“transferor” does not include a corporation, business trust, estate, trust, partnership, limited
liability company, association, joint venture, public corporation, government or governmental
subdivision, agency, or instrumentality, or any legal or commercial entity other than an
individual. The term also does not include an agent or other representative. If a transfer on death
deed is made by an agent on behalf of a principal or by a conservator, guardian, or judge on
behalf of a ward, the principal or ward is the transferor. By way of analogy, see Uniform Trust
Code (2000/2005) Section 103(15) (defining “settlor”) and the accompanying Comment
(excluding an individual “acting as the agent for the person who will be funding the trust”). The
power of an agent to make or revoke a transfer on death deed on behalf of a principal is
determined by other law, such as the Uniform Power of Attorney Act (2006) (UPC Article 5B),
as indicated in the Comments to Sections 9 and 11 (UPC Sections 6-409 and 6-411).
SECTION 3. APPLICABILITY. This [act] applies to a transfer on death deed made
before, on, or after [the effective date of this [act]] by a transferor dying on or after [the effective
date of this [act]].
3
Comment
This section provides that the act applies to a transfer on death deed made before, on, or
after the effective date of the act by a transferor dying on or after the effective date of the act.
This section is consistent with the Uniform Probate Code’s provisions governing transfer on
death registration of securities. Those provisions “appl[y] to registrations of securities in
beneficiary form made before or after [effective date], by decedents dying on or after [effective
date].” UPC Section 6-311.
SECTION 4. NONEXCLUSIVITY. This [act] does not affect any method of
transferring property otherwise permitted under the law of this state.
Comment
This section provides that the act is nonexclusive. The act does not affect any method of
transferring property otherwise permitted under state law.
One such method is a present transfer with a retained legal life estate. Consider the
following examples:
Example 1. A conveys Blackacre to B while reserving A’s right to remain in possession
until A’s death. By this conveyance, A has made a present transfer of a future interest to B. The
transfer is irrevocable. The future interest will ripen into possession at A’s death, even if B fails
to survive A.
Example 2. A executes, acknowledges, and records a transfer on death deed for
Blackacre, naming B as the designated beneficiary. During A’s lifetime, no interest passes to B,
and A may revoke the deed. If unrevoked, the deed will transfer possession to B at A’s death only
if B survives A.
As illustrated in these examples, the two methods of transfer have different effects and
are governed by different rules.
SECTION 5. TRANSFER ON DEATH DEED AUTHORIZED. An individual may
transfer property to one or more beneficiaries effective at the transferor’s death by a transfer on
death deed.
Comment
This section authorizes a transfer on death deed and makes it clear that the transfer is not
an inter vivos transfer. The transfer occurs at the transferor’s death.
The transferor is an individual, but the singular includes the plural. Multiple individuals
4
can readily act together to transfer property by a transfer on death deed, as in the common case
of a husband and wife who own the property as joint tenants or as tenants by the entirety. On the
effect of a transfer on death deed made by joint owners, see Section 13(c) and the accompanying
Comment.
The transferor may select any form of ownership, concurrent or successive, absolute or
conditional, contingent or vested, valid under state law. Among many other things, this permits
the transferor to reserve interests for his estate (e.g., mineral interests); to specify the nature and
extent of the beneficiary’s interest; and to designate one or more primary beneficiaries and one
or more alternate beneficiaries to take in the event the primary beneficiaries fail to survive the
transferor. This freedom to specify the form and terms of the transferee’s interest comports with
the fundamental principle of American law recognized by the Restatement (Third) of Property
(Wills and Other Donative Transfers) §10.1 that the donor’s intention should be “given effect to
the maximum extent allowed by law.” As the Restatement explains in Comment c to §10.1,
“American law curtails freedom of disposition only to the extent that the donor attempts to make
a disposition or achieve a purpose that is prohibited or restricted by an overriding rule of law.”
Notwithstanding this freedom of disposition, transferors are encouraged as a practical
matter to avoid formulating dispositions that would complicate title. Dispositions containing
conditions or class gifts, for example, may require a court proceeding to sort out the
beneficiaries’ interests. Other estate planning mechanisms, such as trusts, may be more
appropriate in such cases.
SECTION 6. TRANSFER ON DEATH DEED REVOCABLE. A transfer on death
deed is revocable even if the deed or another instrument contains a contrary provision.
Comment
A fundamental feature of a transfer on death deed under this Act is that the transferor
retains the power to revoke the deed. Section 6 is framed as a mandatory rule, for two reasons.
First, the rule prevents an off-record instrument from affecting the revocability of a transfer on
death deed. Second, the rule protects the transferor who may wish later to revoke the deed.
If the transferor promises to make the deed irrevocable or not to revoke the deed, the
promisee may have a remedy under other law if the promise is broken. The deed remains
revocable despite the promise.
SECTION 7. TRANSFER ON DEATH DEED NONTESTAMENTARY. A transfer
on death deed is nontestamentary.
Comment
This section is consistent with Uniform Probate Code Section 6-101(a), which provides:
“A provision for a nonprobate transfer on death in an insurance policy, contract of employment,
5
bond, mortgage, promissory note, certificated or uncertificated security, account agreement,
custodial agreement, deposit agreement, compensation plan, pension plan, individual retirement
plan, employee benefit plan, trust, conveyance, deed of gift, marital property agreement, or other
written instrument of a similar nature is nontestamentary.”
As the Comment to Uniform Probate Code Section 6-101 explains, because the mode of
transfer is declared to be nontestamentary, the instrument of transfer is not a will and does not
have to be executed in compliance with the formalities for wills, nor does the instrument need to
be probated.
Whether a document that is ineffective as a transfer on death deed (e.g., because it has
not been recorded before the transferor’s death) should be given effect as a testamentary
instrument will depend on the applicable facts and on the wills law of the jurisdiction. Section 2503 of the Uniform Probate Code provides in pertinent part: “Although a document ... was not
executed in compliance with Section 2-502, the document ... is treated as if it had been executed
in compliance with that section if the proponent of the document ... establishes by clear and
convincing evidence that the decedent intended the document ... to constitute ... (iii) an addition
to or alteration of the [decedent’s] will ....”
SECTION 8. CAPACITY OF TRANSFEROR. The capacity required to make or
revoke a transfer on death deed is the same as the capacity required to make a will.
Comment
This section provides that the capacity required to make or revoke a transfer on death
deed, which is a revocable will substitute, is the same as the capacity required to make a will. It
is appropriate that a will and a transfer on death deed require the same level of capacity, for both
mechanisms are revocable and ambulatory, the latter term meaning that they do not operate
before the grantor’s death. This approach is consistent with the Restatement (Third) of Property
(Wills and Other Donative Transfers) §8.1(b), which applies the standard of testamentary
capacity, and not the standard of capacity for inter vivos gifts, to revocable will substitutes: “If
the donative transfer is in the form of a will, a revocable will substitute, or a revocable gift, the
testator or donor must be capable of knowing and understanding in a general way the nature and
extent of his or her property, the natural objects of his or her bounty, and the disposition that he
or she is making of that property, and must also be capable of relating these elements to one
another and forming an orderly desire regarding the disposition of the property.” This section is
also consistent with Uniform Trust Code Section 601: “The capacity required to create, amend,
revoke, or add property to a revocable trust, or to direct the actions of the trustee of a revocable
trust, is the same as that required to make a will.”
A transfer on death deed is not affected if the transferor subsequently loses capacity. On
the ability of an agent under a power of attorney to make or revoke a transfer on death deed, see
the Comments to Sections 9 and 11.
SECTION 9. REQUIREMENTS. A transfer on death deed:
6
(1) except as otherwise provided in paragraph (2), must contain the essential elements
and formalities of a properly recordable inter vivos deed;
(2) must state that the transfer to the designated beneficiary is to occur at the transferor’s
death; and
(3) must be recorded before the transferor’s death in the public records in [the office of
the county recorder of deeds] of the [county] where the property is located.
Legislative Note: Because a transfer on death deed does not have present effect and is
revocable, it may be useful to title searchers and insurers if the recording or indexing of the deed
identifies it as a transfer on death deed. Information about how a recorder of deeds should
record and index a transfer on death deed is available from the recorders of deeds in states
having experience with such deeds. By way of example, the recorder of deeds of Clay County,
Missouri, uses a grantor-grantee index that is fully searchable online, at
http://recorder.claycogov.com/pages/online_access.asp.
Comment
Paragraph (1) requires a transfer on death deed to contain the same essential elements and
formalities, other than a present intention to convey, as are required for a properly recordable
inter vivos deed under state law. “Essential elements” is a term with a long usage in the law of
deeds of real property. The essential elements of a deed vary from one state to another but
commonly include the names of the grantor and grantee, a clause transferring title, a description
of the property transferred, and the grantor’s signature. In all states, the essential elements of a
properly recordable deed include the requirement that the deed be acknowledged by the grantor
before a notary public or other individual authorized by law to take acknowledgments. See
Thompson on Real Property §92.04(c) (observing that a “certificate of acknowledgment or
attestation is universally required to qualify an instrument for recordation”). In the context of
transfer on death deeds, the requirement of acknowledgment fulfills at least four functions. First,
it cautions a transferor that he or she is performing an act with legal consequences. Such caution
is important where, as here, the transferor does not experience the wrench of delivery because
the transfer occurs at death. Second, acknowledgment helps to prevent fraud. Third,
acknowledgment facilitates the recording of the deed. Fourth, acknowledgment enables the rule
in Section 11 that a later acknowledged deed prevails over an earlier acknowledged deed.
Paragraph (2) emphasizes an important distinction between an inter vivos transfer and a
transfer on death. An inter vivos transfer reflects an intention to transfer, at the time of the
conveyance, an interest in property, either a present interest or a future interest. In contrast, a
transfer on death reflects an intention that the transfer occur at the transferor’s death. Under no
circumstances should a transfer on death be given effect inter vivos; to do so would violate the
transferor’s intention that the transfer occur at the transferor’s death.
7
Paragraph (3) requires a transfer on death deed to be recorded before the transferor’s
death in the county (or other appropriate administrative division of a state, such as a parish)
where the land is located. If the property described in the deed is in more than one county, the
deed is effective only with respect to the property in the county or counties where the deed is
recorded. The requirement of recordation before death helps to prevent fraud by ensuring that all
steps necessary to the effective transfer on death deed are completed during the transferor’s
lifetime. The requirement of recordation before death also enables all parties to rely on the
recording system.
An individual’s agent may execute a transfer on death deed on the individual’s behalf to
the extent permitted by other law, such as the Uniform Power of Attorney Act (2006). This act
does not define, but instead relies on other law to determine, the authority of an agent.
SECTION 10. NOTICE, DELIVERY, ACCEPTANCE, CONSIDERATION NOT
REQUIRED. A transfer on death deed is effective without:
(1) notice or delivery to or acceptance by the designated beneficiary during the
transferor’s life; or
(2) consideration.
Comment
This section makes it clear that a transfer on death deed is effective without notice or
delivery to or acceptance by the beneficiary during the transferor’s lifetime (paragraph (1)) and
without consideration (paragraph (2)).
Paragraph (1) is consistent with the fundamental distinction under this Act between a
transfer on death deed and an inter vivos deed. Under the former, but not under the latter, the
transfer occurs at the transferor’s death. Therefore, there is no requirement of notice, delivery, or
acceptance during the transferor’s life. This does not mean that the beneficiary is required to
accept the property. The beneficiary may disclaim the property, as explained in Section 14 and
the accompanying Comment.
Paragraph (2) is consistent with the law of donative transfers. A deed need not be
supported by consideration.
SECTION 11. REVOCATION BY INSTRUMENT AUTHORIZED;
REVOCATION BY ACT NOT PERMITTED.
(a) Subject to subsection (b), an instrument is effective to revoke a recorded transfer on
death deed, or any part of it, only if the instrument:
8
(1) is one of the following:
(A) a transfer on death deed that revokes the deed or part of the deed
expressly or by inconsistency;
(B) an instrument of revocation that expressly revokes the deed or part of
the deed; or
(C) an inter vivos deed that expressly revokes the transfer on death deed or
part of the deed; and
(2) is acknowledged by the transferor after the acknowledgment of the deed being
revoked and recorded before the transferor’s death in the public records in [the office of the
county recorder of deeds] of the [county] where the deed is recorded.
(b) If a transfer on death deed is made by more than one transferor:
(1) revocation by a transferor does not affect the deed as to the interest of another
transferor; and
(2) a deed of joint owners is revoked only if it is revoked by all of the living joint
owners.
(c) After a transfer on death deed is recorded, it may not be revoked by a revocatory act
on the deed.
(d) This section does not limit the effect of an inter vivos transfer of the property.
Comment
This section concerns revocation by instrument and revocation by act. On revocation by
change of circumstances, such as by divorce or homicide, see Section 13 and the accompanying
Comment.
Subsection (a) provides the exclusive methods of revoking, in whole or in part, a
recorded transfer on death deed by a subsequent instrument. Revocation by an instrument not
specified, such as the transferor’s will, is not permitted.
9
The rule that a transfer on death deed may not be revoked by the transferor’s subsequent
will is a departure from the Restatement (Third) of Property (Wills and Other Donative
Transfers) §7.2 comment e (see also the corresponding Reporter’s Note), which encourages the
revocability of will substitutes by will. However, there is a sound reason for the departure in the
specific case of a transfer on death deed. A transfer on death deed operates on real property, for
which certainty of title is essential. This certainty would be difficult, and in many cases
impossible, to achieve if an off-record instrument, such as the grantor’s will, could revoke a
recorded transfer on death deed. The rule in this Act against revocation by will is also consistent
with the uniform acts governing multiple-party bank accounts. See Uniform Probate Code
Section 6-213(b) (“A right of survivorship arising from the express terms of the account, Section
6-212, or a POD designation, may not be altered by will.”)
A recorded transfer on death deed may be revoked by instrument only by (1) a
subsequently acknowledged transfer on death deed, (2) a subsequently acknowledged instrument
of revocation, such as the form in Section 17, or (3) a subsequently acknowledged inter vivos
deed containing an express revocation clause. Consider the following examples:
Example 1. T executes, acknowledges, and records a transfer on death deed for
Blackacre. Later, T executes, acknowledges, and records a second transfer on death deed for
Blackacre, containing an express revocation clause revoking “all my prior transfer on death
deeds concerning this property.” The second deed revokes the first deed. The revocation occurs
when the second deed is recorded. (For the result if the second deed had not contained the
express revocation clause, see Example 5.)
Example 2. T executes, acknowledges, and records two transfer on death deeds for
Blackacre. Both deeds expressly revoke “all my prior transfer on death deeds concerning this
property.” The dates of acknowledgment determine which deed revoked the other. The first deed
is acknowledged November 1; the second deed is acknowledged December 15. The second deed
is the later acknowledged, so it revokes the first deed. The revocation occurs when the second
deed is recorded.
Example 3. T executes and acknowledges a transfer on death deed for Blackacre. T later
executes and acknowledges a revocation form. Both instruments are recorded. Because the
revocation form is acknowledged later than the deed, the form revokes the deed. The revocation
occurs when the form is recorded.
Example 4. T executes and acknowledges a transfer on death deed for Blackacre. T later
executes and acknowledges an inter vivos deed conveying Blackacre and expressly revoking the
transfer on death deed. Both instruments are recorded. Because the inter vivos deed contains an
express revocation provision and is acknowledged later than the transfer on death deed, the inter
vivos deed revokes the transfer on death deed. The revocation occurs when the inter vivos deed
is recorded. (For the result if the inter vivos deed had not contained an express revocation clause,
see the discussion below on “ademption by extinction.”)
The same rules apply whether the revocation is total or partial. In the previous examples,
suppose instead that the initial transfer on death deed provides for the transfer of two parcels,
10
Blackacre and Whiteacre, and that the subsequent instrument revokes the transfer on death deed
as to Blackacre. The subsequent instrument revokes the transfer on death deed in part.
If the property described in the original deed is in more than one county, the revocation is
effective only with respect to the property in the county or counties where the revoking deed or
instrument is recorded.
Subsection (a)(1)(A) speaks of revocation “expressly or by inconsistency.” This
provision references the well-established law of revocation by inconsistency of wills. Consider
the following examples:
Example 5. T executes, acknowledges, and records a transfer on death deed for Blackacre
naming X as the designated beneficiary. Later, T executes, acknowledges, and records a transfer
on death deed for the same property, Blackacre, containing no express revocation of the earlier
deed but naming Y as the designated beneficiary. Later, T dies. The recording of the deed in
favor of Y revokes the deed in favor of X by inconsistency. At T’s death, Y is the owner of
Blackacre.
Example 6. T, the owner of Blackacre in fee simple absolute, executes, acknowledges,
and records a transfer on death deed for Blackacre naming X as the designated beneficiary. Later,
T executes, acknowledges, and records a transfer on death deed containing no express revocation
of the earlier deed but naming Y as the designated beneficiary of a life estate (or a mineral
interest) in Blackacre. Later, T dies. The recording of the deed in favor of Y partially revokes the
deed in favor of X by inconsistency. At T’s death, Y is the owner of a life estate (or a mineral
interest) in Blackacre, and X is the owner of the remainder.
The question is sometimes raised whether a recorded inter vivos deed without an express
revocation clause operates as a revocation of an earlier transfer on death deed. The answer
highlights the important distinction between “revocation” and “ademption by extinction.” See
Atkinson on Wills §134. Revocation means that the instrument is rendered void. Ademption by
extinction means that the transfer of the property cannot occur because the property is not owned
by the transferor at death. The doctrines are different.
In some instances, revocation and ademption have the same practical effect: the
designated beneficiary of the property receives nothing. Nothing in this section changes that fact,
as indicated in subsection (d). However, there are other instances where the doctrines have
differing effects. Consider the following illustration, drawn from the law of wills.
Example 7. T executes a will devising Blackacre to A. Later, T becomes legally
incompetent, and G is appointed as T’s conservator. G, acting within the scope of his authority,
sells Blackacre to B for $100,000. Later, T dies.
The law of wills provides that the devise to A is adeemed rather than revoked. This means
that A is not entitled to Blackacre but is entitled to a pecuniary devise in the amount of $100,000.
See UPC Section 2-606(b); Atkinson on Wills §134; Wasserman v. Cohen, 606 N.E.2d 901, 903
(Mass. 1993). The result is designed to effectuate T’s presumed intention.
11
The Joint Editorial Board for Uniform Trust and Estate Acts has begun a conversation on
whether the Uniform Probate Code’s provisions on ademption should be extended to nonprobate
transfers, thus harmonizing the treatment of wills and will substitutes on this aspect of the law.
This act accepts the well recognized distinction between revocation and ademption in order to
leave the door open for such future harmonization, which would effectuate the presumed
intention of nonprobate grantors.
Subsection (b) supplies rules governing revocation by instrument in the event of a
transfer on death deed made by multiple owners. Subsection (b)(1) provides that revocation by a
transferor does not affect a transfer on death deed as to the interest of another transferor.
Subsection (b)(2) provides that a transfer on death deed of joint owners is revoked only if it is
revoked by all of the living joint owners. This rule is consistent with Uniform Probate Code
Section 6-306, which provides in pertinent part: “A registration of a security in beneficiary form
may be canceled or changed at any time by the sole owner or all then surviving owners without
the consent of the beneficiary.” Subsection (b)(2) applies only to a deed of joint owners. A joint
tenant who severs the joint tenancy, thereby destroying the right of survivorship, is no longer a
joint owner.
Subsection (c) provides that a recorded transfer on death deed may not be revoked by a
revocatory act performed on the deed. Such an act includes burning, tearing, canceling,
obliterating, or destroying the deed or any part of it.
This act does not define, but instead looks to other law to determine, the authority of an
agent. An individual’s agent may revoke a transfer on death deed on the individual’s behalf to
the extent permitted by other law, such as the Uniform Power of Attorney Act (2006).
SECTION 12. EFFECT OF TRANSFER ON DEATH DEED DURING
TRANSFEROR’S LIFE. During a transferor’s life, a transfer on death deed does not:
(1) affect an interest or right of the transferor or any other owner, including the right to
transfer or encumber the property;
(2) affect an interest or right of a transferee, even if the transferee has actual or
constructive notice of the deed;
(3) affect an interest or right of a secured or unsecured creditor or future creditor of the
transferor, even if the creditor has actual or constructive notice of the deed;
(4) affect the transferor’s or designated beneficiary’s eligibility for any form of public
assistance;
12
(5) create a legal or equitable interest in favor of the designated beneficiary; or
(6) subject the property to claims or process of a creditor of the designated beneficiary.
Comment
A fundamental feature of a transfer on death deed under this Act is that it does not
operate until the transferor’s death. The transfer occurs at the transferor’s death, not before.
Paragraph (1): A transfer on death deed, during the transferor’s lifetime, does not affect
the interests or property rights of the transferor or any other owners. Therefore, the deed does
not, among many other things: affect the transferor’s right to transfer or encumber the property
inter vivos; sever a joint tenancy or a joint tenant’s right of survivorship; trigger a due-on-sale
clause in the transferor’s mortgage; trigger the imposition of real estate transfer tax; or affect the
transferor’s homestead or real estate tax exemptions, if any.
Paragraph (2): A transfer on death deed does not affect transferees, whether or not they
have notice of the deed. Like a will, the transfer on death deed is ambulatory. It has no effect on
inter vivos transfers.
Paragraph (3): A transfer on death deed, during the transferor’s lifetime, does not affect
pre-existing or future creditors, secured or unsecured, whether or not they have an interest in the
property or notice of the deed.
Paragraph (4): A transfer on death deed, during the transferor’s lifetime, does not affect
the transferor’s or designated beneficiary’s eligibility for any form of public assistance, including
Medicaid. On this point, the drafting committee specifically disapproves of the contrary
approach of Colo. Rev. Stat. §15-15-403.
Paragraph (5): During the transferor’s lifetime, a transfer on death deed does not create a
legal or equitable interest in the designated beneficiary. The beneficiary does not have an interest
that can be assigned or encumbered. Note, however, that this rule would not preclude the
doctrine of after-acquired title. A warranty deed from a designated beneficiary to a third party
would operate to pass the beneficiary’s title to the third party after the transferor’s death.
Paragraph (6): A transfer on death deed, during the transferor’s lifetime, does not make
the property subject to claims or process of the designated beneficiary’s creditors. The deed has
no more effect than a will.
If a transferor combines an inter vivos transfer of an interest in property (such as a
mineral interest) with a transfer on death of the remainder interest, the inter vivos transfer may
have present effect even though the transfer on death does not occur until the transferor’s death.
13
SECTION 13. EFFECT OF TRANSFER ON DEATH DEED AT TRANSFEROR’S
DEATH.
(a) Except as otherwise provided in the transfer on death deed[,][ or] in this section[,][ or
in [cite state statutes on antilapse, revocation by divorce or homicide, survival and simultaneous
death, and elective share, if applicable to nonprobate transfers]], on the death of the transferor,
the following rules apply to property that is the subject of a transfer on death deed and owned by
the transferor at death:
(1) Subject to paragraph (2), the interest in the property is transferred to the
designated beneficiary in accordance with the deed.
(2) The interest of a designated beneficiary is contingent on the designated
beneficiary surviving the transferor. The interest of a designated beneficiary that fails to survive
the transferor lapses.
(3) Subject to paragraph (4), concurrent interests are transferred to the
beneficiaries in equal and undivided shares with no right of survivorship.
(4) If the transferor has identified two or more designated beneficiaries to receive
concurrent interests in the property, the share of one which lapses or fails for any reason is
transferred to the other, or to the others in proportion to the interest of each in the remaining part
of the property held concurrently.
(b) Subject to [cite state recording act], a beneficiary takes the property subject to all
conveyances, encumbrances, assignments, contracts, mortgages, liens, and other interests to
which the property is subject at the transferor’s death. For purposes of this subsection and [cite
state recording act], the recording of the transfer on death deed is deemed to have occurred at the
transferor’s death.
14
(c) If a transferor is a joint owner and is:
(1) survived by one or more other joint owners, the property that is the subject of
a transfer on death deed belongs to the surviving joint owner or owners with right of
survivorship; or
(2) the last surviving joint owner, the transfer on death deed is effective.
(d) A transfer on death deed transfers property without covenant or warranty of title even
if the deed contains a contrary provision.
Legislative Note: In light of the growing harmonization of the rules governing probate and
nonprobate transfers, states enacting this act should consider extending to nonprobate
mechanisms, such as transfer on death deeds, the probate rules governing antilapse, revocation
by divorce, revocation by homicide, survival and simultaneous death, and the elective share of a
surviving spouse.
One of the significant trends in the law of property in the twentieth century has been the growing
harmonization of the constructional and substantive rules governing deathtime transfers,
whether the transfers occur in or outside of the probate process. Section 7.2 of the Restatement
(Third) of Property (Wills and Other Donative Transfers) provides: “Although a will substitute
need not be executed in compliance with the statutory formalities required for a will, such an
arrangement is, to the extent appropriate, subject to substantive restrictions on testation and to
rules of construction and other rules applicable to testamentary dispositions.”
The Uniform Probate Code contains statutory provisions treating wills and will substitutes alike
for many purposes, including (1) antilapse; (2) revocation by divorce; (3) revocation by
homicide (the “slayer rule”); (4) survival and simultaneous death; and (5) the elective share of a
surviving spouse.
In some cases, the harmonization is achieved by applying the relevant rule to any “governing
instrument,” which is defined in Uniform Probate Code Section 1-201(18) as “a deed, will, trust,
insurance or annuity policy, account with POD designation, security registered in beneficiary
form (TOD), pension, profitsharing, retirement, or similar benefit plan, instrument creating or
exercising a power of appointment or a power of attorney, or a dispositive, appointive, or
nominative instrument of any similar type.” The Uniform Probate Code’s rules on revocation by
divorce, revocation by homicide, and survival and simultaneous death apply to any governing
instrument. See Uniform Probate Code Sections 2-702 (survival and simultaneous death), 2-803
(revocation by homicide), and 2-804 (revocation by divorce).
For the elective share, the Uniform Probate Code treats wills and will substitutes alike by
defining the decedent’s “augmented estate” to include both probate and nonprobate transfers.
See Uniform Probate Code Section 2-203(a).
15
For antilapse, the Uniform Probate Code has separate sections treating wills (Section 2-603)
and will substitutes (Sections 2-706 and 2-707), but the latter are modeled on the former.
See also the Legislative Note to Section 14 on disclaimers.
Comment
Subsection (a) states four default rules, except as otherwise provided by the transfer on
death deed, by this section, or by other provisions of state law governing nonprobate transfers.
On this last, and the desirability of extending the probate rules governing antilapse, revocation on
divorce or homicide, survival and simultaneous death, and the elective share of the surviving
spouse to nonprobate instruments such as transfer on death deeds, see the Legislative Note.
The four default rules established by subsection (a) are these. First, the property that is
the subject of an effective transfer on death deed and owned by the transferor at death is
transferred at the transferor’s death to the designated beneficiaries as provided in the deed. The
rule implements the transferor’s intention as described in the deed. Consider the following
example:
Example 1. A executes, acknowledges, and records a transfer on death deed for Blackacre
naming X as the primary beneficiary and Y as the alternate beneficiary if X fails to survive A.
Both X and Y survive A. Blackacre is transferred to X at A’s death in accordance with the
provisions of the deed.
This default rule implements the fundamental principle that the provisions of the deed
control the disposition of the property, unless otherwise provided by state law.
The drafting committee approves of the result in In re Estate of Roloff, 143 P.3d 406
(Kan. Ct. App. 2006) (holding that crops should be transferred with the land under a transfer on
death deed because this result would be reached on the same facts with any other deed).
The bracketed language at the beginning of subsection (a) enables a state to make the
default rules subject to other statutes, such as an antilapse statute or a statute providing for
revocation on divorce. Consider the following examples:
Example 2. A executes, acknowledges, and records a transfer on death deed for Blackacre
naming X as the primary beneficiary and Y as the alternate beneficiary if X fails to survive A. In
fact, X and Y fail to survive A, who is survived only by X’s child, Z. Assume that the state’s
antilapse statute applies to transfer on death deeds and creates a substitute gift in Z. (For such a
statute, see Uniform Probate Code Section 2-706.) Blackacre is transferred to Z at A’s death in
accordance with the provisions of the deed as modified by the antilapse statute.
Example 3. A executes, acknowledges, and records a transfer on death deed for Blackacre
naming her spouse, X, as the primary beneficiary and Y as the alternate beneficiary if X fails to
survive A. Later, A and X divorce. Assume that the state’s statute on revocation by divorce
applies to transfer on death deeds and revokes the designation in favor of X, with the effect that
16
the provisions of the transfer on death deed are given effect as if X had disclaimed. (For such a
statute, see Uniform Probate Code Section 2-804.) Assume further that the effect of the putative
disclaimer is that X is treated as having failed to survive A. (See the Uniform Disclaimer of
Property Interests Act (1999/2006) Section 6(a)(3)(B) (UPC Section 2-1106(a)(3)(B).) Blackacre
is transferred to Y at A’s death in accordance with the provisions of the deed as modified by the
revocation on divorce and disclaimer statutes.
Note that the property must be owned by the transferor at death. Property no longer
owned by the transferor at death cannot be transferred by a transfer on death deed, just as it
cannot be transferred by a will. This is the principle of ademption by extinction, discussed in the
Comment to Section 11.
In almost every instance, the transferor will own the property not only at death but also
when the transfer on death deed is executed, but the latter is not imperative. Consider the
following example. H and W, a married couple, hold Blackacre as tenants by the entirety. H
executes, acknowledges, and records a transfer on death deed for Blackacre in favor of X. W later
dies, at which point H owns Blackacre in fee simple absolute. Later, H dies. Under the law of
some states, there may be a question whether the transfer on death deed is effective, given that H
executed it when Blackacre was owned, not by H and W, but by the marital entity. The correct
answer is that the transfer on death deed is effective at H’s death because Blackacre is owned by
H at H’s death. See, e.g., Mitchell v. Wilmington Trust Co., 449 A.2d 1055 (Del. Ch. 1982)
(mortgage granted by one tenant by the entirety is not void upon execution but remains inchoate
during the lives of both spouses, and becomes a valid lien if the spouse who executed the
mortgage survives the other spouse or if the spouses get divorced).
The second default rule established by subsection (a) is that the interest of a designated
beneficiary is contingent on surviving the transferor. This default rule treats wills and will
substitutes alike. The interest of a designated beneficiary who fails to survive the transferor
lapses. On the desirability of extending statutory antilapse protection to will substitutes such as
transfer on death deeds, see the Legislative Note.
The third default rule established by subsection (a) is that concurrent beneficiaries receive
equal and undivided interests with no right of survivorship among them. This default rule is
consistent with the general presumption in favor of tenancy in common. See Powell on Real
Property §51.02. The rule is also consistent with Uniform Probate Code Section 6-212 governing
multiple-party accounts and Section 6-307 governing the transfer on death registration of
securities.
The fourth and last default rule established by subsection (a) is that, in the event of the
lapse or failure of an interest to be held concurrently, the share that lapses or fails passes
proportionately to the surviving concurrent beneficiaries. Consider the following example:
Example 4. A executes, acknowledges, and records a transfer on death deed for
Blackacre naming X, Y, and Z as the designated beneficiaries. X and Y survive A, but Z fails to
survive A. The transfer on death deed is effective and, in the absence of an antilapse statute,
transfers Blackacre to X and Y. This default rule is consistent with the transferor’s probable
17
intention in the absence of an antilapse statute and also with Uniform Probate Code Section 2604(b) on the lapse of a residuary devise. On the desirability of extending statutory antilapse
protection to will substitutes such as transfer on death deeds, see the Legislative Note.
Subsection (b) concerns the effect of transactions during the transferor’s life. The
subsection states an intermediate rule between two extremes. One extreme would provide that
transactions during the transferor’s life affect the beneficiary only if the transactions are recorded
before the transferor’s death. This would unfairly disadvantage the transferor’s creditors and
inter vivos transferees. The other extreme would provide that transactions during the transferor’s
life always supersede the beneficiary’s interest, even if the recording act would provide
otherwise. Between these two positions is the rule of subsection (b).
Subsection (b) provides that the beneficiary’s interest is subject to all conveyances,
encumbrances, assignments, contracts, mortgages, liens, and other interests to which the property
is subject at the transferor’s death. “Liens” includes liens arising by operation of law, such as
state Medicaid liens.
The only exception to this rule arises when the state recording act so provides. The state
recording act will so provide only when two conditions are met: (1) the inter vivos conveyance
or encumbrance is unrecorded throughout the transferor’s life (the legal fiction in this subsection
protects persons who transact with the transferor and record any time before the transferor’s
death); and (2) the beneficiary is protected by the recording act. These two conditions will be
met only in rare instances. Most beneficiaries of transfer on death deeds are gratuitous, whereas
state recording acts typically protect only purchasers for value. See Powell on Real Property
§82.02.
Subsection (c) provides that the survivorship right of a joint owner takes precedence over
the transfer on death deed. This rule is consistent with the law of joint tenancy and wills: the
right of survivorship takes precedence over a provision in a joint tenant’s will.
Subsection (d) states the mandatory rule that a transfer on death deed transfers the
property without covenant or warranty of title. The rule is mandatory for two reasons: first, to
prevent mishaps by uninformed grantors; and second, to recognize that a transfer on death deed
is a will substitute. The rule of this section is consistent with the longstanding law of wills. As
stated by Sir Edward Coke, “an express warranty cannot be created by will.” Coke on Littleton
386a.
SECTION 14. DISCLAIMER. A beneficiary may disclaim all or part of the
beneficiary’s interest as provided by [cite state statute or the Uniform Disclaimer of Property
Interests Act (1999/2006) (UPC Article II, Part 11)].
Legislative Note: States should check their disclaimer statutes for any necessary amendments.
The following are conforming amendments to the Uniform Disclaimer of Property Interests Act
(1999/2006):
18
SECTION 12. DELIVERY OR FILING.
(a) In this section, “beneficiary designation” means an instrument, other
than an instrument creating a trust, naming the beneficiary of:
(1) an annuity or insurance policy;
(2) an account with a designation for payment on death;
(3) a security registered in beneficiary form;
(4) a pension, profit-sharing, retirement, or other employment-related
benefit plan; or
(5) any other nonprobate transfer at death.
(b) Subject to subsections (c) through (l), delivery of a disclaimer may be
effected by personal delivery, first-class mail, or any other method likely to result
in its receipt.
(c) In the case of an interest created under the law of intestate succession
or an interest created by will, other than an interest in a testamentary trust:
(1) a disclaimer must be delivered to the personal representative of
the decedent’s estate; or
(2) if no personal representative is then serving, it must be filed with a
court having jurisdiction to appoint the personal representative.
(d) In the case of an interest in a testamentary trust:
(1) a disclaimer must be delivered to the trustee then serving, or if no
trustee is then serving, to the personal representative of the decedent’s estate; or
(2) if no personal representative is then serving, it must be filed with a
court having jurisdiction to enforce the trust.
(e) In the case of an interest in an inter vivos trust :
(1) a disclaimer must be delivered to the trustee then serving;
(2) if no trustee is then serving, it must be filed with a court having
jurisdiction to enforce the trust; or
(3) if the disclaimer is made before the time the instrument creating
the trust becomes irrevocable, it must be delivered to the settlor of a revocable
trust or the transferor of the interest.
(f) In the case of an interest created by a beneficiary designation which is
disclaimed made before the time the designation becomes irrevocable, a the
disclaimer must be delivered to the person making the beneficiary designation.
(g) In the case of an interest created by a beneficiary designation which is
disclaimed made after the time the designation becomes irrevocable,:
(1) a the disclaimer of an interest in personal property must be
delivered to the person obligated to distribute the interest.; and
(2) the disclaimer of an interest in real property must be recorded
in [the office of the county recorder of deeds] of the [county] where the real
property that is the subject of the disclaimer is located.
(h) In the case of a disclaimer by a surviving holder of jointly held
property, the disclaimer must be delivered to the person to whom the disclaimed
interest passes.
(i) In the case of a disclaimer by an object or taker in default of exercise
of a power of appointment at any time after the power was created:
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(1) the disclaimer must be delivered to the holder of the power or to
the fiduciary acting under the instrument that created the power; or
(2) if no fiduciary is then serving, it must be filed with a court having
authority to appoint the fiduciary.
(j) In the case of a disclaimer by an appointee of a nonfiduciary power of
appointment:
(1) the disclaimer must be delivered to the holder, the personal
representative of the holder's estate or to the fiduciary under the instrument that
created the power ; or
(2) if no fiduciary is then serving, it must be filed with a court having
authority to appoint the fiduciary.
(k) In the case of a disclaimer by a fiduciary of a power over a trust or
estate, the disclaimer must be delivered as provided in subsection (c), (d), or (e),
as if the power disclaimed were an interest in property.
(l) In the case of a disclaimer of a power by an agent, the disclaimer must
be delivered to the principal or the principal’s representative.
Comment
The rules set forth in Section 12 are designed so that anyone who has the
duty to distribute the disclaimed interest will be notified to provide notice of the
disclaimer. For example, a disclaimer of an interest in a decedent’s estate must
be delivered to the personal representative of the estate. A disclaimer is required
to be filed in court only when there is no one person or entity to whom delivery
can be made in very limited circumstances.
SECTION 15. RECORDING OF DISCLAIMER. If an instrument
transferring an interest in or power over property subject to a disclaimer is
required or permitted by law to be filed, recorded, or registered, the disclaimer
may be so filed, recorded, or registered. Except as otherwise provided in Section
12(g)(2), Ffailure to file, record, or register the disclaimer does not affect its
validity as between the disclaimant and persons to whom the property interest or
power passes by reason of the disclaimer.
Comment
This section permits the recordation of a disclaimer of an interest in
property ownership of or title to which is the subject of a recording system. This
section expands on the corresponding provision of previous Uniform Acts which
only referred to permissive recording of a disclaimer of an interest in real
property. While local practice may vary, disclaimants should realize that in order
to establish the chain of title to real property, and to ward off creditors and bona
fide purchasers, the disclaimer may have to be recorded. This section does not
change the law of the state governing notice. The reference to Section 12(g)(2)
concerns the disclaimer of an interest in real property created by a “beneficiary
designation” as that term is defined in Section 12(a). Such a disclaimer must be
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recorded.
Comment
A beneficiary of a transfer on death deed may disclaim the property interest the deed
attempts to transfer. While this section relies on other law, such as the Uniform Disclaimer of
Property Interests Act (1999/2006), to govern the disclaimer, two general principles should be
noted.
First, there is no need under the law of disclaimers to execute a disclaimer in advance.
During the transferor’s life, a designated beneficiary has no interest in the property. See Section
12. Nothing passes to the designated beneficiary while the transferor is alive, hence there is no
need to execute a disclaimer during that time.
Second, an effective disclaimer executed after the testator’s death “relates back” to the
moment of the attempted transfer, here the death of the transferor. Because the disclaimer
“relates back,” the beneficiary is regarded as never having had an interest in the disclaimed
property. The Uniform Disclaimer of Property Interests Act (1999/2006) (UPC Article II, Part
11) reaches this result, without using the language of relation back, in UDPIA Section 6(b)(1):
“The disclaimer takes effect as of the time the instrument creating the interest becomes
irrevocable ....” As the Comment to UDPIA Section 6 explains, “This Act continues the effect of
the relation back doctrine, not by using the specific words, but by directly stating what the
relation back doctrine has been interpreted to mean.”
SECTION 15. LIABILITY FOR CREDITOR CLAIMS AND STATUTORY
ALLOWANCES .
Alternative A
A beneficiary of a transfer on death deed is liable for an allowed claim against the
transferor’s probate estate and statutory allowances to a surviving spouse and children to the
extent provided in [cite state statute or Section 6-102 of the Uniform Probate Code].
Alternative B
(a) To the extent the transferor’s probate estate is insufficient to satisfy an allowed claim
against the estate or a statutory allowance to a surviving spouse or child, the estate may enforce
the liability against property transferred at the transferor’s death by a transfer on death deed.
(b) If more than one property is transferred by one or more transfer on death deeds, the
21
liability under subsection (a) is apportioned among the properties in proportion to their net values
at the transferor’s death.
(c) A proceeding to enforce the liability under this section must be commenced not later
than [18 months] after the transferor’s death.
End of Alternatives
Legislative Note: Alternative A is for a state with an existing statute governing creditors’ rights
in nonprobate transfers, such as Uniform Probate Code Section 6-102. States are encouraged to
enact such statutes, thereby treating nonprobate transfers comprehensively. Alternative B is a
second-best approach, supplying creditor protection but governing only transfer on death deeds
and not other nonprobate mechanisms.
Comment
Alternative A defers to other law, such as Uniform Probate Code Section 6-102, to
establish the liability of a beneficiary of a transfer on death deed for creditor claims and statutory
allowances.
Uniform Probate Code (UPC) Section 6-102 was added in 1998 to establish the principle
that recipients of nonprobate transfers can be required to contribute to pay allowed claims and
statutory allowances to the extent the probate estate is insufficient. The fundamental rule of
liability is contained in UPC Section 6-102(b): “Except as otherwise provided by statute, a
transferee of a nonprobate transfer is subject to liability to any probate estate of the decedent for
allowed claims against the decedent’s probate estate and statutory allowances to the decedent’s
spouse and children to the extent the estate is insufficient to satisfy those claims and allowances.
The liability of a nonprobate transferee may not exceed the value of nonprobate transfers
received or controlled by that transferee.” The other provisions of UPC Section 6-102 implement
this liability rule.
For states not favoring the comprehensive approach of UPC Section 6-102(b) or the
equivalent, Alternative B provides an in rem liability rule applying to transfer on death deeds.
The property transferred under a transfer on death deed is liable to the transferor’s probate estate
for properly allowed claims and statutory allowances to the extent the estate is insufficient.
One of the functions of probate is creditor protection. UPC Section 6-102, referenced in
Alternative A, attempts to provide comprehensive creditor protection within the realm of
nonprobate transfers. In addition, this Act in Alternative B provides more creditor protection
than is typically available under current law. For many transferors, the transfer on death deed
will be used in lieu of joint tenancy with right of survivorship. Under the usual law of joint
tenancy, the unsecured creditors of a deceased joint tenant have no recourse against the property
or against the other joint tenant. Instead, the property passes automatically to the survivor, free of
the decedent’s debts. See Comment 5 to UPC Section 6-102. If the debts cannot be paid from the
22
probate estate, the creditor is out of luck. Under Alternative B, in contrast, the property
transferred under a transfer on death deed is liable to the probate estate for properly allowed
claims and statutory allowances to the extent the estate is insufficient.
[SECTION 16. OPTIONAL FORM OF TRANSFER ON DEATH DEED. The
following form may be used to create a transfer on death deed. The other sections of this [act]
govern the effect of this or any other instrument used to create a transfer on death deed:
(front of form)
REVOCABLE TRANSFER ON DEATH DEED
NOTICE TO OWNER
You should carefully read all information on the other side of this form. You May Want
to Consult a Lawyer Before Using This Form.
This form must be recorded before your death, or it will not be effective.
IDENTIFYING INFORMATION
Owner or Owners Making This Deed:
___________________________
Printed name
______________________________
Mailing address
___________________________
Printed name
______________________________
Mailing address
Legal description of the property:
____________________________________________________________
PRIMARY BENEFICIARY
I designate the following beneficiary if the beneficiary survives me.
____________________
Printed name
________________________
Mailing address, if available
23
ALTERNATE BENEFICIARY – Optional
If my primary beneficiary does not survive me, I designate the following alternate
beneficiary if that beneficiary survives me.
____________________
Printed name
________________________
Mailing address, if available
TRANSFER ON DEATH
At my death, I transfer my interest in the described property to the beneficiaries as
designated above.
Before my death, I have the right to revoke this deed.
SIGNATURE OF OWNER OR OWNERS MAKING THIS DEED
_______________________________
Signature
[(SEAL)]_________________
Date
_______________________________
Signature
[(SEAL)]_________________
Date
ACKNOWLEDGMENT
(insert acknowledgment for deed here)
(back of form)
COMMON QUESTIONS ABOUT THE USE OF THIS FORM
What does the Transfer on Death (TOD) deed do? When you die, this deed transfers the
described property, subject to any liens or mortgages (or other encumbrances) on the property at
your death. Probate is not required. The TOD deed has no effect until you die. You can revoke it
at any time. You are also free to transfer the property to someone else during your lifetime. If
you do not own any interest in the property when you die, this deed will have no effect.
24
How do I make a TOD deed? Complete this form. Have it acknowledged before a notary
public or other individual authorized by law to take acknowledgments. Record the form in each
[county] where any part of the property is located. The form has no effect unless it is
acknowledged and recorded before your death.
Is the “legal description” of the property necessary? Yes.
How do I find the “legal description” of the property? This information may be on the
deed you received when you became an owner of the property. This information may also be
available in [the office of the county recorder of deeds] for the [county] where the property is
located. If you are not absolutely sure, consult a lawyer.
Can I change my mind before I record the TOD deed? Yes. If you have not yet recorded
the deed and want to change your mind, simply tear up or otherwise destroy the deed.
How do I “record” the TOD deed? Take the completed and acknowledged form to [the
office of the county recorder of deeds] of the [county] where the property is located. Follow the
instructions given by the [county recorder] to make the form part of the official property records.
If the property is in more than one [county], you should record the deed in each [county].
Can I later revoke the TOD deed if I change my mind? Yes. You can revoke the TOD
deed. No one, including the beneficiaries, can prevent you from revoking the deed.
How do I revoke the TOD deed after it is recorded? There are three ways to revoke a
recorded TOD deed: (1) Complete and acknowledge a revocation form, and record it in each
[county] where the property is located. (2) Complete and acknowledge a new TOD deed that
disposes of the same property, and record it in each [county] where the property is located. (3)
Transfer the property to someone else during your lifetime by a recorded deed that expressly
revokes the TOD deed. You may not revoke the TOD deed by will.
25
I am being pressured to complete this form. What should I do? Do not complete this form
under pressure. Seek help from a trusted family member, friend, or lawyer.
Do I need to tell the beneficiaries about the TOD deed? No, but it is recommended.
Secrecy can cause later complications and might make it easier for others to commit fraud.
I have other questions about this form. What should I do? This form is designed to fit
some but not all situations. If you have other questions, you are encouraged to consult a lawyer.]
Legislative Note: This section and the next section are bracketed for states wishing to provide
optional statutory forms. An enacting jurisdiction should review its statutory requirements for
deeds and for acknowledgments and amend the statutory forms provided in Sections 16 and 17
where necessary for conformity with those requirements. If an enacting jurisdiction changes the
act, the jurisdiction should review the answers to the common questions in Sections 16 and 17 to
ensure the answers remain accurate.
Comment
The form in this section is optional. The section is based on Section 4 of the Uniform
Health-Care Decisions Act (1993).
The transfer on death deed is likely to be used by consumers for whom the
preparation of a tailored inter vivos revocable trust is too costly. The form in this section is
designed to be understandable and consumer friendly.
For examples of statutory forms containing answers to questions likely to be asked by
consumers, see the Illinois statutory forms for powers of attorney. 755 Ill. Comp. Stat. 45/3-3
(power of attorney for property); 755 Ill. Comp. Stat. 45/4-10 (power of attorney for health care).
[SECTION 17. OPTIONAL FORM OF REVOCATION. The following form may
be used to create an instrument of revocation under this [act]. The other sections of this [act]
govern the effect of this or any other instrument used to revoke a transfer on death deed.
(front of form)
REVOCATION OF TRANSFER ON DEATH DEED
NOTICE TO OWNER
This revocation must be recorded before you die or it will not be effective. This
26
revocation is effective only as to the interests in the property of owners who sign this revocation.
IDENTIFYING INFORMATION
Owner or Owners of Property Making This Revocation:
___________________________
______________________________
Printed name
Mailing address
___________________________
Printed name
______________________________
Mailing address
Legal description of the property:
____________________________________________________________
REVOCATION
I revoke all my previous transfers of this property by transfer on death deed.
SIGNATURE OF OWNER OR OWNERS MAKING THIS REVOCATION
_______________________________
Signature
[(SEAL)]_________________
Date
_______________________________
Signature
[(SEAL)]_________________
Date
ACKNOWLEDGMENT
(insert acknowledgment here)
(back of form)
COMMON QUESTIONS ABOUT THE USE OF THIS FORM
How do I use this form to revoke a Transfer on Death (TOD) deed? Complete this form.
Have it acknowledged before a notary public or other individual authorized to take
acknowledgments. Record the form in the public records in [the office of the county recorder of
deeds] of each [county] where the property is located. The form must be acknowledged and
27
recorded before your death or it has no effect.
How do I find the “legal description” of the property? This information may be on the
TOD deed. It may also be available in [the office of the county recorder of deeds] for the
[county] where the property is located. If you are not absolutely sure, consult a lawyer.
How do I “record” the form? Take the completed and acknowledged form to [the office
of the county recorder of deeds] of the [county] where the property is located. Follow the
instructions given by the [county recorder] to make the form part of the official property records.
If the property is located in more than one [county], you should record the form in each of those
[counties].
I am being pressured to complete this form. What should I do? Do not complete this form
under pressure. Seek help from a trusted family member, friend, or lawyer.
I have other questions about this form. What should I do? This form is designed to fit
some but not all situations. If you have other questions, consult a lawyer.]
Comment
The form in this section is optional. The section is based on Section 4 of the Uniform
Health-Care Decisions Act (1993).
The aim of the form in this section is to be understandable and consumer friendly.
SECTION 18. UNIFORMITY OF APPLICATION AND CONSTRUCTION. In
applying and construing this uniform act, consideration must be given to the need to promote
uniformity of the law with respect to its subject matter among the states that enact it.
SECTION 19. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND
NATIONAL COMMERCE ACT. This [act] modifies, limits, and supersedes the federal
Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001, et seq.,
but does not modify, limit, or supersede Section 101(c) of that act, 15 U.S.C. Section 7001(c), or
28
authorize electronic delivery of any of the notices described in Section 103(b) of that act, 15
U.S.C. Section 7003(b).
SECTION 20. REPEALS. The following are repealed:
Legislative Note: This section is for states wishing to replace their transfer on death deed
statutes with this Act.
SECTION 21. EFFECTIVE DATE. This [act] takes effect ....
29
APPENDIX “C”
Other Issues Deserving Consideration
WHY ARE THERE SO MANY ISSUES?
Imagine you had a statute that said “with regard to real estate, all you have to do is sign a
will, with real estate described, and have it notarized. Then record it and on your death, it would
pass by operation of law to the person you named. None of the Probate Code applies.”
You would have to address many of the issues the Probate Code addresses and more.
In addition, The Uniform Acts Committee did not want to revisit issues they had covered
comprehensively in other acts (Uniform Probate Code, Uniform Disclaimer of Property Act, etc.)
These issues include spousal rights, augmented estate, antilapse, disclaimer, etc. So much of that
is missing from this act. You are instructed to adopt the UPC or write your own gap-fillers.
SOME ISSUES
Should D.H.S. be granted a lien to preserve their claim for unreimbursed Medicaid? If
so, should they be granted a right to “foreclose” as Nebraska has done?
All jurisdictions provide that a TODI is always revocable. But is a contract not to revoke
a TODI or a contract to make a TODI enforceable (as it is in Nebraska)? If so, what are the
formal requirements of such an agreement? (Written? Signed and date? Notarized? Same as a
TODI?) Also, what is the remedy? Does this make it possible to have a (gasp!) post-marital
agreement with regard to real property?
Should there be restrictions on any type of real estate transferred (confined like
Illinois and California to residential dwelling units, not less than one nor more than 4,
including condos and coops and ag land of 40 acres or less with a dwelling) or should it apply
to all forms of real estate?
Should this be restricted to a certain size of estate? (as this is often sold as a method
for people of modest means to pass property with limited expense) and if so, how would that
be enforced as property might increase in value between the time the TODI is executed and
the date of death? Any special provisions for a multi-million dollar TODI?
Transfer tax exclusion.
Interaction with the Uniform Disclaimer of Property Interest Act (incorporated by
reference in the Uniform TOD act).
Disclaimer issues, relation back, notice issue. Can Trustee and fiduciary disclaim as
they can in The Uniform Disclaimer Act?
Uniform Disclaimer Act §2-1108 – permits trustee to disclaim (comments provide
that disclaimer by a trustee must be compatible with the trustee’s fiduciary obligations) §2-
1111 – permits fiduciary to disclaim a power held in a fiduciary capacity which has been
exercised (comments provide that disclaimer of fiduciary powers must be compatible with
the fiduciary’s duties).
In most jurisdictions, the instrument is called a “transfer on death deed” (Uniform Act) or
“beneficiary deed” (Missouri). It is not a deed as there are many of the elements of a deed
missing and it does not transfer interest until death. (It is a will substitute.) Illinois calls this a
“transfer on death instrument” (TODI) to avoid confusion. Ohio used to have a “transfer on
death deed” statute but has replaced it with a “transfer on death affidavit” because the Real
Property Committee of the Ohio Bar complained about the confusion caused by inaccurate
nomenclature. What should it be called in Iowa?
Can a beneficiary be a corporate LLC or trust?
Should a TODI be deemed a transfer “by operation of law” such that it succeeds to the
position of an insured grantee/owner in an existing ALTA title insurance policy?
Does dower need to be addressed in a TODI statute? “No”, because a TODI involves no
present conveyance of an interest in property until the death of the grantee/owner, OR “yes”,
because it is safer to require the spouse of a married grantor to subordinate his or her dower
interest in the TODI in favor of the beneficiaries.
Revocation Issues:
Date Effective
Revocation by subsequent will not allowed (despite Restatement 3rd of Property issue)
Revocation by intervivos deed (2 types) Would Iowa be “a revocation” or an “ademption
by extinction” state?
Mental state required for revocation. Can an agent under a power of attorney revise a
will? No. Can an agent amend a Trust under a power of attorney in Iowa? Only if both the Trust
and the power of attorney document indicate that the agent can. Can an agent revoke a TODI?
This would have to be answered.
Express (where revocation voids the TODI)
Ademption by Extinction (where previous sale prohibits TODI transferee from
getting property (see example 7 in the comments which states the adeemed TODI
represents a pecuniary devise to the transferee and hence requires a probate of the estate.)
Joint Tenancy issues e.g.
ii.a.b.2. A deed of joint owners is revoked only if revoked by all living joint
owners. A and B own in joint tenancy. A and B sign a transfer on death deed to C. A
revokes transfer on death deed, B signs a revocation but does not get his recorded before
his sudden untimely death. A dies thinking he has revoked the transfer and leaves to B in
his will. Property passes to C as the revocation was ineffective.
Conveyance to an entity. Are these allowed? Do they provide additional creditor
protection? Conveyance from an entity. Are these allowed from a trust or an LLC or corp?
Revocation issues.
Can a TOD deed be revoked or modified by a subsequent will if the TODI expressly
permits it? Uniform Act says “No”. (Comes down on the side of certainty of title) Missouri
says “yes” §461.033(4). 3 states are silent on the question.
Date effective
How is after acquired property treated? Is it included in the TODI if you executed a
TODI owning an undivided ½ interest, but at the time of your death you owned 100%?
This is not addressed in Uniform Act. It is optional, check the box in Minnesota.
Anticipatory Alienation (spendthrift provisions).
Clearance for public assistance claims and liens (Minnesota).
Execution issues
Signed and dated and notarized (Uniform Act)
Witness issues, executed like a will (Illinois)
Statutory forms? Warnings?
Title clearing issues such as Affidavit of Death and clearance from public assistance
claims. Or does subsequent purchaser take free and clear regardless? (as in some states)
Apportionment issues.
How does a TODI interact with a trust document and deed to a trust?
Joint Tenancy.
Most states and Uniform Act provide that TODI is effective only if the grantor is the last
surviving co-owner. Ohio limited to Grantors who own as sole owner or tenants in common
§5302.22B.
Joint Tenancy trumps TODI. TODI trumps will. This seems contrary to traditional joint
tenancy law because it seems like the TODI should sever the joint tenancy. What should the
Iowa rule be?
Spousal rights issues.
The Uniform Act allows someone to cut out their spouse in an estate without an
augmented estate. Some states require spouse to sign a TODI.
Medicaid and Estate Recovery issues
No priority claim. Need a Medicaid lien statute to enforce.
Does this suffice? Should one prohibit application for Title 19 where one has a TODI?
(like Colorado does.)
Preventing fraudulent TODI and financial elder abuse
Signed, dated, notarized and recorded Uniform Act.
Require same execution as a will? (Like Illinois & Nebraska)
Not provide a statutory form? (Like Illinois)
Can a power of attorney sign a TODI with the POA as a designated beneficiary?
Non-exoneration provision
Procedure to collect claims
None in Uniform Act. See Colorado procedure in Appendix “D”
Statute of Limitations for claims
One year general creditors
Two years for Estate Recovery
Is the date of recording essential to the TOD deed being effective? Wisconsin and Ohio
statutes did not require recording prior to grantor’s death. Uniform Act came down on the side
of certainty of titles and therefore required recording prior to death. This could have the
unsettling effect of having an individual who has a TOD deed to A and then prior to death makes
a TOD deed to B that is acknowledged but not recorded prior to their death. If this had been a
will, it would have been effective as it was the more recent document and clearly shows the
testator’s intent. As it is an unrecorded TOD deed, it has no effect.
States have debated and the Uniform Act has asked about the standard of capacity
required of a grant of TOD deed. Should it be the lower standard for wills or should it be the
higher standard for inter vivos transfers? This is something that deserves debate. As a will
substitute, should it be the lower standard or because it involves real estate, why should it be
lower than the standards for contracts generally?
One of the areas that has caused the most debate is the question of the battle of the
subsequent deeds. Three states, Arkansas, California and Colorado, state that the last
executed, not the last recorded deed, prevails. In Arizona, Nevada and Wisconsin, the last
recorded deed prevails. Four other states are ambiguous and the Uniform Act states that it is the
last acknowledged deed that prevails. This again is an area that deserves some discussion.
There are no restrictions on who may be designated as beneficiary of a TOD deed. In
other words, an irrevocable trust may be a designated beneficiary as may an LLC or corporation,
even a foreign LLC or corporation. This means that if an individual is not satisfied with the fact
that he is going to receive a property that does not have liens or encumbrances as a result of
death and is trying to avoid paying certain creditors, he can add another layer of protection
because the creditor protection provided in TOD statutes only indicate that the transferee is
personally liable. If the transferee is the nephew’s solely owned LLC in South Dakota, that adds
another layer of protection. What about Iowa inheritance tax implications on this?
Who can be a transferor of a transfer on death instrument? In all of the jurisdictions I
have examined, including the uniform act, only an individual may transfer property by way of a
TOD deed. Plus the titleholder must be a natural person. It cannot be a corporation, trust, or
other business entity. So revocable trusts may be a designated beneficiary under a TOD deed,
but it may not be a transferor.
As a result of this, you have a situation where say two moms with identical dispositive
provisions in their respective instruments, one with a revocable trust and one with a will, are
treated differently. Say mom has dispositive provisions that provide for all of the property to be
divided equally between four children. And then say the mom decides “Well, I really think we
need to treat the boys better because they’re working on the farm, so I’m going to make a TOD
instrument and it’s going to leave the farm to the two boys.” On her death, does the farm go to
the boys or does it go four ways. The answer is different depending on whether she had a will or
a trust. If she had a will, the TOD deed is effective and it passes to the two boys and the other
two are out of luck. If she had a revocable trust and she put the farm into the trust and then did
the TOD deed, the TOD deed is ineffective and it’s split 4 ways. The case on this is a Colorado
case, Fischbach v. Holzberlein, Colorado Court of Appeals, 2009. Although this is the law in
Colorado, one commentator said Nebraska might not be equally harsh in disallowing reformation
of TOD deeds. This is because of revised statute 76-3403.
So you have a situation where the end result may be different whether they started with a
will or trust, and the end result may be different from jurisdiction to jurisdiction.
There are also joint tenancy questions that are raised by this act. Joint tenancy, in
general, trumps a TOD deed, even a subsequently filed one. That is to say, if A and B hold in
joint tenancy and then A makes a TOD deed to C, the property goes to B even if the deed was
recorded after the joint tenancy deed. This is because the joint tenant cannot affect the share of
the other joint tenant. A and B as joint tenants could make a subsequent TOD deed to C that
would be effective on the death of the survivor.
In the event of revocation, a joint tenancy TOD deed is revoked only if revoked by all
living joint owners. This makes for some complication in some circumstances, for example, A
and B own a property in joint tenancy. A and B sign a TOD deed to C. A revokes his transfer
on death deed but B, although he signs a TOD revocation, does not get his recorded before his
sudden and untimely death. A then dies thinking he has revoked the transfer and leaving it to B
in his Will. The property, however, passes to C as the revocation was ineffective because it was
not revoked by all living joint tenants.
One of the best parts of this act is the revocation part which has clearly been thought out
in great detail and I refer you to the comment on revocation. The rule that a transfer on death
deed may not be revoked by the transferor’s subsequent will is different than the restatement
third rule of property that basically encourages revocability of will substitutes by a will. So this
is something that should deserve some conversation.
The revocation is based on the acknowledgment date that determines which deed is
revoked and the examples there show that. If there are two counties and it is recorded in one
county but not another, the revocation is only effective with regard to the one that it is recorded
in. There is a provision for revocation expressly or by inconsistency and this provision
references the well-established law, revocation by inconsistency of wills, and some examples are
shown there.
If A has a transfer on death deed to B, and decides to revoke by later will, at this point in
this Uniform Act it is not revoked. If, during their lifetime, however, instead of making a will he
simply sells the property to a third party, that does not revoke the transfer on death either, but
results in something called ademption by extinction. It means the transfer can’t occur. And as a
result, unless it is expressly stated in that deed that, “Oh by the way, I also revoke the previously
made transfer on death deed”, and in some jurisdictions that would have to be done in front of
two witnesses who sign in the presence of one another like in Illinois, and other jurisdictions it’s
done simply by acknowledgment of the deed, then if the transfer on death deed was to B and
then the sale was to C, C gets the property free and clear in most jurisdictions from B’s interest.
However, B is left with a pecuniary devise in the amount of the consideration paid. If it was
$100,000.00, B gets a $100,000.00 devise. And guess what? You’ve got an estate again.
After a TOD death deed is recorded, it may not be revoked by a revocatory act on the
deed. That is to say burning, tearing, cancelling, obliterating or destroying the deed after it has
been recorded, does not affect it. However, unlike a will, an unrecorded TOD instrument can be
so revoked.
Drafting Notes
The following issues were raised in the Notes for the Drafting Committee of The
Uniform Act dated 2-14-2006. These are presented with few comments of my own. I have not
reviewed the statutes cited for changes since 2007. They are presented here to show the variety
of ways these important issues could be addressed in any act Iowa considered.
Proceedings to contest the transfer.
Only four states (California, Colorado, Missouri and Wisconsin) address any part of the
proceedings to contest a transfer on death deed. California provides the most extensive
treatment of the proceedings, including requirements for notice and recording of a lis pendens.
Colorado addresses the requirements for the beneficiary of an unrecorded TOD deed to assert an
interest. Missouri law provides that a party can petition to contest but does not define the
logistics of the process. Wisconsin addresses the enforceability of penalty clauses for contests.
What rules should govern the revocation of a TOD deed when the property has multiple
owners?
The Arizona and Nevada statutes provide that if the property is held by multiple owners
without a right of survivorship, one co-owner can revoke the TOD deed. However, if the
property is held with a right of survivorship (e.g., joint tenancy or community property with right
of survivorship), the revocation is effective only if executed by all co-owners or the last to die of
the co-owners. The Arkansas statute seems to reach the same result but is not worded as clearly.
Only two states, California and Missouri, address the authority of an agent to revoke a
TOD deed. Both states provide that the agent does not have the authority to revoke the deed
unless explicitly authorized in the power of attorney. This is consistent with the position taken
in the new Uniform Power of Attorney Act (2006).
California Probate §4624, as amended by the California Law Revision Commission
proposal: “A power of attorney may not be construed to grant authority to an attorney-in-fact to
perform any of the following acts unless expressly authorized in the power of attorney: ... (c)
Make or revoke a gift of the principal’s property in trust, by revocable transfer on death deed, or
otherwise.”
Missouri §461.035(1): “An attorney in fact, custodian, conservator or other agent may
not make, revoke or change a beneficiary designation unless the document establishing the
agent’s right to act, or a court order, expressly authorizes such action and such action complies
with the terms of the governing instrument, the rules of the transferring entity and applicable
law.”
Compare Uniform Power of Attorney Act §201(a) (2006): “An agent under a power of
attorney may do the following on behalf of the principal or with the principal’s property only if
the power of attorney expressly grants the agent the authority and exercise of the authority is not
otherwise prohibited by another agreement or instrument to which the authority or property is
subject: ... (4) create or change a beneficiary designation. ...”
If Iowa wants this rule, Iowa will need to amend the Power of attorney act to provide
revocation and/or execution of a new TODI or everyone with a POA will need to sign a new one
granting this specific authority. Otherwise the TODI becomes irrevocable on disability. This
would be a Serious Problem if to satisfy DHS Iowa did as Colorado did and disqualified from
Medicaid anyone who has a TODI!
Can the grantor convey less than his or her entire interest in the property? California
provides that the answer is no; the deed must convey the transferor’s interest.
Ohio does not answer directly but provides that “any fractional interest” may be
transferred.
All other states are silent on the question.
A grantor who owns in fee simple can execute a TODI. What about owner of a legal life
estate, easement, license permit or some other interest less than fee. The states are divided.
What happens if the TOD deed names the grantor’s spouse (or a relative of the grantor’s
spouse) as a beneficiary, and the grantor and spouse become divorced?
The Uniform Probate Code handles this situation in Article 2, not in Article 6. UPC §2804 provides that the divorce revokes a revocable beneficiary designation naming the spouse or
a relative of the spouse, and the instrument takes effect as if the spouse or relative had
disclaimed the interest. Arizona, Colorado, and New Mexico have adopted the UPC’s approach
and language.
UPC
Deed restrictions and conditions.
Can the TOD deed contain restrictions or conditions on the beneficiary’s interest?
The California Law Revision Commission’s position is that deeds with restrictions or
conditions should be discouraged, because “[a] conditional grant would complicate interpretation
of the instrument, require reference to off-record information, and cause a title company to
refuse to issue title insurance absent a court determination of ownership” (p. 174).
Missouri’s statute is silent on the issue, but a Court of Appeals decision illustrates the use
of conditions in a TOD deed. See Bolz v. Hatfield, 41 S.W.3d 566, 569 (Mo. App. 2001)
(grantor declared TOD deed to be irrevocable unless the beneficiary failed to pay the property
taxes or unless the grantor suffered a financial emergency requiring the sale of the land).
Two states (Arizona and Arkansas) mention conditions in their TOD deed statutes, but
only about the interest of a successor beneficiary.
Multiple beneficiaries.
What happens if the grantor wishes to name multiple beneficiaries? The answer depends
on what is meant by ‘multiple beneficiaries.’ We need to consider four separate aspects of this
question: (a) primary and alternate beneficiaries, (b) concurrent beneficiaries, (c) present and
future beneficial interests, and (d) beneficiaries designated not by name but rather by class.
a. Primary and alternate beneficiaries
Eight states (Arizona, Arkansas, California, Colorado, Kansas, Missouri, New Mexico,
and Ohio) expressly authorize an alternate beneficiary to be named in case the primary
beneficiary fails to survive the grantor. Wisconsin impliedly recognizes an alternate
beneficiary by providing in the general non-probate transfers law that anti-lapse
protection will not apply if there is a named alternate beneficiary who survives the
grantor. Nevada’s TOD deed statute is silent on the issue.
Concurrent beneficiaries.
Can the grantor name multiple beneficiaries to take the property concurrently? If so, is
there a presumption that the beneficiaries hold as tenants in common, or as co-owners with right
of survivorship? Additionally, are the shares of the concurrent beneficiaries presumed to be
equal?
All ten states permit multiple beneficiaries to hold the property concurrently. Arizona,
Arkansas, and Nevada expressly authorize the grantor to use any form of co-tenancy permitted
by state law. California provides a rebuttable presumption that the co-tenancy is tenancy in
common. Ohio seems to mandate the use of tenancy in common. California and Missouri
provide a rebuttable presumption that the shares of co-tenants are equal.
Present and future beneficial interests.
Can a grantor use the TOD deed to divide the property into present and future beneficial
interests? The only statute to address this question is California’s, which permits the grantor to
divide the property into a life estate and a remainder.
Class gifts.
Must the beneficiaries be named individuals, or can the grantor create beneficial interests
in a class (e.g., “children” or “descendants”)?
Only four state statutes address this question. The TOD deed statutes in California, Ohio,
and Wisconsin are limited to beneficiaries identified by name. In contrast, Missouri’s
non-probate transfer statute refers to, hence authorizes, class gifts in favor of a named person’s
children and in favor of the lineal descendants per stirpes of a named primary beneficiary; but
whether other class gifts are permitted under Missouri’s statute is unclear.
Covenants and warranties.
Only two state statutes address the topic of covenants and warranties in TOD deeds.
California law provides that there is never a covenant or warranty while Colorado provides that
there is one if the language of the deed so provides.
California Recommended §5652(d): “Notwithstanding a contrary provision in the deed, a
revocable transfer on death deed transfers the property without covenant or warranty of title.”
Colorado §15-15-404(2): “Unless the owner designates otherwise in a beneficiary deed,
a beneficiary deed shall not be deemed to contain any warranties of title and shall have the same
force and effect as a conveyance made using a bargain and sale deed.”
Homestead.
How does a TOD deed interact with provisions of a state’s probate code granting the
surviving spouse or minor children rights in the homestead? Sometimes homestead rights are
framed in terms of a right of occupancy for a specified period; however, in states adopting the
Uniform Probate Code, the homestead allowance is a right to a specified sum of money. (See
UPC §2-402.)
The California Law Revision Commission report concludes that, because the homestead
right is limited to the probate estate, it should not apply to property passing under a TOD deed
(see pages 181-182).
It must be noted that the Uniform Nonprobate Transfers on Death Act (Uniform Probate
Code, Article 6) establishes the rule that nonprobate transfers are liable for probate exemptions
and allowances to the extent that the probate estate is insufficient. The general laws of Arizona,
Colorado, Missouri, and New Mexico follow this rule.
Contest Provisions:
The Uniform Act contains no guidance as to contest provisions.
The California act provides the following:
§ 5690. Contest of transfer
5690. (a) The transferor’s personal representative or an interested person may, under Part
19 (commencing with Section 850) of Division 2, contest the validity of a transfer of
property by a revocable transfer on death deed.
(b) The proper county for a contest proceeding is the proper county for
proceedings concerning administration of the transferor’s estate, whether or not
proceedings concerning administration of the transferor’s estate have been commenced at
the time of the contest.
(c) On commencement of a contest proceeding, the contestant may record a lis
pendens in the county in which the revocable transfer on death deed is recorded.
Comment. Section 5690 incorporates the procedure of Sections 850-859, relating to a conveyance or
transfer of property claimed to belong to a decedent or other person. A person adversely affected by a revocable
TOD deed has standing to contest the transfer. Cf. Section 48 (“interested person” defined).
Grounds for contest may include but are not limited to lack of capacity of the transferor (Section 5620),
improper execution or recordation (Sections 5622-5624), invalidating cause for consent to a transfer of community
property (Section 5015), and transfer to a disqualified person (Section 21350). See also Section 5696 (fraud, undue
influence, duress, mistake, or other invalidating cause).
The proper county for proceedings for administration of a decedent’s estate is the county of the decedent’s
domicile or, in the case of a nondomiciliary, the county of the decedent’s death or, if the decedent died outside the
state, where property of the decedent is located. Prob. Code §§ 7051, 7052.
Recordation of a lis pendens within 90 days after the transferor’s death preserves remedies for the
contestant. See Section 5694 (remedies).
§ 5692. Time for contest
5692. (a) A contest proceeding may not be commenced before the transferor’s death.
(b) A contest proceeding shall be commenced within the earlier of the following
times:
(1) Three years after the transferor’s death.
(2) One year after the beneficiary establishes the fact of the transferor’s
death under the procedure provided in Chapter 2 (commencing with Section 210)
of Part 4 of Division 2.
Comment. Section 5692 limits the contest of a revocable TOD deed to a post death challenge. A challenge
before the transferor’s death would be premature since a revocable TOD deed may be revoked at any time before the
transfer occurs by reason of the transferor’s death. However, the transferor’s conservator may seek to revoke a
revocable TOD deed pursuant to substituted judgment principles. See Section 5630 (revocability) & Comment; see
also Sections 2580-2586 (substituted judgment).
§ 5694. Remedies
5694. If the court in a contest proceeding determines that a transfer of property by a
revocable transfer on death deed is invalid, the court shall order the following relief:
(a) If the proceeding was commenced and a lis pendens was recorded within 90 days
after the transferor’s death, the court shall void the deed and order transfer of the property
to the person entitled to it.
(b) If the proceeding was not commenced and a lis pendens was not recorded within 90
days after the transferor’s death, the court shall grant appropriate relief but the court order
shall not affect the rights in the property of a purchaser or encumbrancer for value and in
good faith acquired before commencement of the proceeding and recordation of a lis
pendens.
Comment. The 90 day period under Section 5694 represents a balance between the 40 day period
applicable to disposition of an estate without administration under Sections 13100 (affidavit procedure for collection
or transfer of personal property) and 13151 (court order determining succession to property), and the six month
period applicable to the affidavit procedure for real property of small value under Section 13200.
§ 5696. Fraud, undue influence, duress, mistake, or other invalidating cause
5696. Nothing in this chapter limits the application of principles of fraud, undue
influence, duress, mistake, or other invalidating cause to a transfer of property by a revocable
transfer on death deed.
Comment. Section 5696 is drawn from Section 5015 (nonprobate transfer of community property).
Disclaimer issues.
Can Trustee and fiduciary disclaim as they can in Uniform Disclaimer Act?
Relation back and notice issues.
Uniform Disclaimer Act §2-1108 – permits trustee to disclaim (comments provide that
disclaimer by a trustee must be compatible with the trustee’s fiduciary obligations) §2-1111 –
permits fiduciary to disclaim a power held in a fiduciary capacity which has been exercised
(comments provide that disclaimer of fiduciary powers must be compatible with the fiduciary’s
duties.)
2016 Annual Meeting Conference
Probate Track
Rooms 312-315
Current Trust and Estate Panel
1:00 p.m. - 2:00 p.m.
Presented by
Wayne Reames
Belin McCormick PC
666 Walnut St, Ste 2000
Des Moines, IA 50309
Phone: 515-283-4660
Michel Nelson
Iowa Savings Bank
PO Box 967
Carroll, IA 51401
Phone: 712-792-9772
Paul Morf
Simmons Perrine Moyer
Bergman PLC
115 3rd St SE, Ste 1200
Cedar Rapids, IA 52401
Phone: 319-366-7641
TUESDAY, JUNE 14
2016 Annual Meeting Conference
Probate Track
Rooms 312-315
Guardianship Task Force Update
2:00 p.m. - 3:00 p.m.
Presented by
Prof. Josephine Gittler
University of Iowa
412 Boyd Law Building
Iowa City, IA 52242
Phone: 319-335-9046
Justice Bruce Zager
Iowa Supreme Court
Judicial Branch Building
1111 East Court Avenue
Des Moines, IA 50319
TUESDAY, JUNE 14
Iowa Guardianship and Conservatorship Reform Task Force Work Groups
Descriptions
and
Assignments
Iowa Guardianship and Conservatorship Reform Task Force WORK GROUP ONE
Description of Work Group One - Establishment of Adult Guardianships and Conservatorships
The purpose of this Work Group is to identify issues and develop proposals with respect to the
establishment of adult guardianships and conservatorships. Topics to be covered include statutory
criteria for guardianship and conservatorship, capacity assessments of proposed wards, the
appointment of public guardians and conservators for wards lacking someone to serve in such
capacity, the appointment and role of attorney and guardian ad litem for proposed wards, probate
and use of limited and voluntary guardianships and conservatorships.
Chair
Honorable Stuart Werling, Tipton, District Court Judge, District 7
Steering Committee Co - Coordinators and Co - Reporters
Professor Josephine Gittler, Iowa City, Steering Committee Member, Coordinator and Reporter
Professor Jerry Foxhoven, Des Moines, Steering Committee Member, Co-Coordinator and Co-
Reporter
Kathleen Buckwalter, Iowa City, Co-Director, National Health Law and Policy Resource Center;
Professor Emerita, University of Iowa College of Nursing
Anthony Carroll, Des Moines, Associate State Director for Advocacy, AARP IOWA
Tyler Eason, Des Moines, Director, Office of Substitute Decision Maker Department of Aging
Jane Hudson, Des Moines, Executive Director, Disability Rights IOWA
Gregory Kenyon, Des Moines, Shareholder, Bradshaw, Fowler, Proctor & Fairgrave, Steering
Committee Member
Tom Lawler, Parkersburg, Partner, Lawler & Swanson
Honorable John Linn, Burlington, District Court Judge, District 8B
D.J. Mason, Waterloo, Assistant County Attorney
Wendy Rickman, Des Moines, Administrator, Division of Adult, Children and Family Services,
Iowa Department of Human Services
Chantelle Smith, Des Moines, Assistant Attorney General
Frank Tenuta, Sioux City, Managing Attorney, Iowa Legal Aid
Honorable Patrick Tott, Sioux City, District Court Judge, District 3
2 Iowa Guardianship and Conservatorship Reform Task Force WORK GROUP TWO
Description of Work Group Two - Qualifications and Responsibilities of Guardians and
Conservators of Adult Wards
The purpose of this Work Group is to identify issues and develop proposals with respect to
qualifications and responsibilities of guardians and conservators of adult wards. Topics to be
covered include screening of proposed guardians and conservators (e.g., criminal background
checks and credit checks), bonds requirements for conservators and alternatives to bonding, and
educational/certification/licensure programs for guardians and conservators. National standards
and guidelines for guardians/conservators will be reviewed and evaluated.
Membership
Chair
Honorable Myron Gookin, Fairfield, Judge, District Court Judge, District 8
Steering Committee Co - Coordinators and Co - Reporters
Professor Josephine Gittler, Iowa City, Steering Committee Member, Coordinator and Reporter
Professor Jerry Foxhoven, Des Moines, Steering Committee Member, Co-Coordinator and Co-
Reporter
Chris Even, Dubuque, Senior Vice President & Trust Officer, American Trust & Savings Bank
Jim Holter, Des Moines, Vice-President Commercial Surety Merchants Bonding Company
Lee Ann Logan, Coralville, NAMI (National Alliance on Mental Illness) IOWA trainer
Janet Martinson, Waterloo, Blackhawk County Conservator, Office of Blackhawk County
Conservator
Michel Nelson, Carroll, Senior Vice-President and Senior Trust Officer, Iowa Savings Bank
Honorable David Odekirk, Waterloo, District Court Judge, District 1B
Barbara Orzechowski, Sioux City, Partner, Klass Law Firm; Director
Honorable Tom Reidel, Muscatine, District Court Judge, District 7
Philip Seidl, Cedar Rapids, Partner, Seidl & Seidl
D. Thomas Smith, Des Moines, Guardian/Conservator
Tony Vola, Des Moines, Former President, AARP IOWA
Suzanne Watson, Council Bluffs, CEO, Southwest Iowa MHDS Region, Director; Pottawattamie
County Community Services
3 Iowa Guardianship and Conservatorship Reform Task Force WORK GROUP THREE
Description of Work Group Three - Court Monitoring of Guardianship and Conservatorships
The purpose of this Work Group is to identify issues and develop proposals for ongoing court
monitoring of established adult guardianships and conservatorships to assure that wards are
receiving appropriate care and protection and to provide needed assistance to guardians and
conservators in carrying out their responsibilities. Existing reporting requirements for guardians
and conservators and promising practices in other jurisdictions will be reviewed and evaluated.
Chair
Honorable Kellyann Lekar, Waterloo, Chief District Court Judge, Judicial District 1
Steering Committee Co - Coordinators and Co - Reporters
Professor Josephine Gittler, Iowa City, Steering Committee Member, Coordinator and Reporter
Professor Jerry Foxhoven, Des Moines, Steering Committee Member, Co-Coordinator, and Co-
Reporter
Rhonda Bentley, Burlington, Judicial Specialist, District 8
Teresa Bomhoff, Des Moines, President, NAMI (National Alliance on Mental Illness) Greater Des
Moines
Honorable Craig Block, Des Moines, District Associate Probate Judge, Steering Committee Member
Kathy Good, Cedar Rapids, Director, Family Caregivers Center of Mercy, Mercy Medical Center,
Former Board Member, Alzheimer's Association East Central Iowa Chapter
Carroll Edmondson, Cedar Rapids, District Court Administrator, District 6
Honorable Marlita Greve, Bettendorf, Chief District Court Judge, District 7
Geoffrey Lauer, Iowa City, Executive Director, Brian Injury Alliance; Member, Iowa Mental Health
and Disability Services Commission
Honorable, Jeffrey Neary, Merrill, District Court Judge, Judicial District 3A
Roxanne Repstien, Amana, Clerk of Court, District 6
Honorable Richard Davidson, Audubon, District Court Judge, District 4
Honorable Joel Swanson, Carroll, Senior District Court Judge, District 2B
Margaret Van Houten, Des Moines, Senior Shareholder, Davis Brown Law Firm
4 Iowa Guardianship and Conservatorship Reform Task Force WORK GROUP FOUR
Description of Work Group Four - Guardianship and Conservatorship System Administration:
Staffing, Education and Training, Caseload Management Resources
The purpose of this Work Group is to identify and develop proposals with respect to administration
of the guardianship and conservatorship system, including staffing of the system, education of
judges and other system personnel, caseload management and resources for the system.
Chair
Honorable Jeffrey Larson, Harlan, Chief District Court Judge, District 4, Steering Committee
Member
Steering Committee Co - Coordinators and Co - Reporters
Professor Josephine Gittler, Iowa City, Steering Committee Member, Coordinator and Reporter
Professor Jerry Foxhoven, Des Moines, Steering Committee Member, Co-Coordinator, and Co-
Reporter
Honorable Steve Andreasen, Sioux City, District Court Judge, District 3B
Honorable Cynthia Danielson, Fairfield, District Court Judge, District 8B, Steering Committee
Member
Kathy Gaylord, Davenport, District Court Administrator, District 7
Honorable Pat Grady, Cedar Rapids, Chief District Court Judge, District 6
Josh Miller, Des Moines, Polk County Clerk of Court, District 5
Judge Kurt Stoebe, Humboldt, District Court Judge, District 2B
Rebecca Zoll, Gilbertville, Judicial Clerk, District 1
Jennifer Webster, Ankeny, Judicial Specialist, District 5
5 Iowa Guardianship and Conservatorship Reform Task Force WORK GROUP FIVE
Description of Work Group Five – Minor Guardianships and Conservatorships
The purpose of this Work Group is to identify issues and develop proposals with respect to
qualifications and responsibilities of guardians and conservators of minor wards. Topics to be
covered include screening of proposed guardians and conservators (e.g., criminal background
checks and credit checks), bonds requirements for conservators and alternatives to bonding, and
educational/certification/licensure programs for guardians and conservators. National standards
and guidelines for guardians/conservators of minors will be reviewed and evaluated.
Membership
Chair
Honorable Kathleen Kilnoski, Council Bluffs, District Court Judge, District 4
Steering Committee Co - Coordinators and Co - Reporters
Professor Josephine Gittler, Iowa City, Steering Committee Member, Coordinator and Reporter
Professor Jerry Foxhoven, Des Moines, Steering Committee Member, Co-Coordinator and Co-
Reporter
Honorable Susan Christensen, Harlan, District Associate Judge, District 4
Sara Haas, Burlington, Partner, Aspelmeier Fisch Power Engberg & Helling
Jim Hennessey, Des Moines, Iowa Child Advocacy Board Administrator
Mary Hodapp, Woodward, Director of Social Services, Woodward Resource Center
Kelli Johnson, Burlington, Trust Officer, Farmers & Merchants Bank & Trust
Evelyn Ocheltree, Mason City, Senior Staff Attorney Partner, Iowa Legal Aid
Wendy Rickman, Des Moines, Administrator, Division of Adult, Children and Family Services, Iowa
Department of Human Services
Honorable Colin Witt, Des Moines, District Associate Judge, District 5C
Breanna Young, Earlham, Partner, Nelson Young & Braland
6 Iowa
Guardianship
and
Conservatorship
Summit
Sponsored by:
Iowa Supreme Court
Guardianship and Conservatorship Reform Task Force
Co-Sponsored by:
University of Iowa College of Law and
Drake University Law School
October 29, 2015
9:00 am - 4:10 pm
and
October 30, 2015
8:30 am - 12:30 pm
Drake University Law School
Legal Clinic Building
University and 24th Street
Des Moines, IA
Iowa Guardianship and
Conservatorship Reform
Task Force and Summit
One of the most important functions of Iowa’s
judicial branch of government is the guardianship
and conservatorship system. The courts appoint
guardians and conservators to make decisions on
behalf of a highly vulnerable population of adults with
diminished capacity and children, and the courts have
an ongoing responsibility to monitor guardianships and
conservatorships to assure these adults and children
receive proper care and protection. Today, in Iowa there
are over 22,000 adults and children under guardianship
and conservatorship.
The Iowa Supreme Court’s order establishing the
Guardianship and Conservatorship Reform Task Force
states that its mandate is “to review Iowa’s guardianship
and conservatorship laws and procedures to ensure the
system is efficient and responsive to the needs
of Iowans.”
The Supreme Court has appointed members of a
Steering Committee to oversee the work of the Task
Force and members of Work Groups to identify issues
and problems with respect to the existing guardianship
and conservatorship system and to develop proposals
and recommendations for improving this system.
1
The purpose of the Iowa Guardianship and
Conservatorship Summit is to provide a context and
foundation for the work of the members of the Iowa
Guardianship and Conservatorship Reform Task Force.
The Summit is the first plenary session of the Task Force
Steering Committee and Work Groups. It will feature
national experts and individuals from other states who
have played leadership roles in the reform of state court
guardianship and conservatorship systems.
Program Schedule
(All plenary sessions will be held in the Legal Clinic
Courtroom.)
October 29, 2015
7:45 am - 9:00 am
Registration
9:00 am - 9:15 am
Greetings
Chief Justice Mark Cady, Iowa Supreme Court
Governor Terry Branstad (invited)
Pam Jochum, President, Iowa Senate
Chris Hagenow, Majority Leader, Iowa House
Gail Agrawal, Dean, University of Iowa Law School
Ben Ullem, Dean, Drake University School of Law
9:15 am - 9:25 am
Opening Remarks
Justice Bruce Zager, Iowa Supreme Court;
Chair, Steering Committee, Iowa Guardianship and
Conservatorship Reform Task Force
(continued )
October 29 Program
2
9:25 am - 10:15 am
The Iowa Guardianship and Conservatorship System: A
Portrait
Josephine Gittler, Wiley B. Rutledge Professor of
Law, University of Iowa College of Law; Member and
Coordinator, Steering Committee, Iowa Guardianship
and Conservatorship Reform Task Force
10:15 am - 11:05 am
Past and Current Paths to Guardianship and
Conservatorship Reforms
Erica Wood, Assistant Director, Commission on Law
and Aging, American Bar Association
11:05 am - 11:25 am
Break
11:25 am - 12:25 pm
Workshops: Model Laws and Standards
Workshop 1 (Library): National Probate Court Standards
Brenda Uekert, Principal Court Researcher,
National Center on State Courts
Workshop 2 (Courtroom): Third National Guardianship
Summit–Standards and Recommendations
Linda Whitton, Professor Emerita, Valparaiso
University Law School; Delegate, Third National
Guardianship Summit
October 29 Program
3
Workshop 3 (Room 123): Revision of Uniform Guardianship
and Protective Proceedings Act
David English, William Franklin Fratcher Missouri
Endowed Professor of Law, University of Missouri
School of Law; Chair, Drafting Committee Uniform
Guardianship and Protective Proceedings Act
12:25 pm - 1:10 pm
Lunch
1:10 pm - 2:00 pm
Planning, Developing and Sustaining a Comprehensive
Court Guardianship and Conservatorship Program
Brenda Uekert, Principal Court Researcher, National
Center on State Courts
2:00 pm - 2:50 pm
Best Practices and Innovations: Screening of and
Qualifications for Guardians and Conservators
Sally Hurme, Member, Board of Directors, Center for
Guardianship Certification
David Byers, Director, Administrative Office of the Courts,
Arizona Judicial Branch
2:50 pm - 3:10 pm
Break
(continued )
4
October 30 Program
3:10 pm – 4:10 pm
Best Practices and Innovations: Court Monitoring of
Conservatorships
Jeffrey Shorba, State Court Administrator, Minnesota
Judicial Branch
Cate Boyko, Manager, Conservator Account Auditing
Program, Minnesota Judicial Branch
4:10 pm – 5:00 pm
Demonstration (optional): My Minnesota Conservator
This optional demonstration is recommended for members
of Work Groups 3 and 4.
October 30, 2015
8:30 am - 9:30 am Guardianship and Conservatorship Reform:
The Nebraska Experience
Chief Justice Michael Heavican, Nebraska
Supreme Court
9:30 am - 10:30 am
Guardianship and Conservatorship Reform:
The Arizona Experience
Justice Ann Timmer, Arizona Supreme Court
Edward Bassett, Probate Associate Presiding Judge,
Arizona Superior Court of Maricopa County
David Byers, Director, Administrative Office of
the Courts, Arizona Judicial Branch
October 30 Program
10:30 am - 10:50 am
Break 10:50 am - 11:50 am
Guardianship and Conservatorship Reform:
The Texas Experience
David Slayton, Administrative Director,
Texas Office of Court Administration
11:50 am - 12:30 pm
Work Group Assignments and Next Steps
Justice Bruce Zager, Iowa Supreme Court
Josephine Gittler, Wiley B. Rutledge Professor
of Law, University of Iowa College of Law
Professor Jerry Foxhoven, Professor of Law and
Director of Clinical Programs, Drake University
Law School; Member and Coordinator, Steering
Committee, Iowa Guardianship and Conservatorship
Reform Task Force
Work Groups will meet to discuss assignments
and next steps.
Mandatory Continuing Legal Education:
The Iowa Guardianship and Conservatorship Summit
is an accredited program under the regulations of
the Supreme Court Commission on Continuing
Legal Education. The Summit program will provide a
maximum of 9.5 hours of regulator credit toward the
mandatory continuing legal education requirements
under the Iowa Rule. (Activity ID Number 201430).
5
For further information, please contact:
Professor Josephine Gittler
E-mail: [email protected];
Phone 319-335-9046; Fax: 319-335-9019
Support from the University of Iowa College of Law
made possible the preparation and printing of this
program.
2016 Annual Meeting Conference
Probate Track
Rooms 312-315
Uncooperative Fiduciaries
3:20 p.m. - 4:20 p.m.
Presented by
Mark Gray
Gray, Thompson & Associates, PLC
213 N Ankeny Blvd, Ste 100
Ankeny, IA 50023
Phone: 515-964-3633
TUESDAY, JUNE 14
[BY HAND DELIVERY]
[Name]
[Address]
In Re Estate of FULL NAME
Dear [Name]:
Pursuant to my meeting with NAME on DATE, I have prepared the necessary
documentation to open an estate on behalf of FULL NAME. Please contact me upon your
receipt of this letter to schedule a mutually convenient date for you to come in and review these
documents before signing them. [I have begun preparation of the necessary documentation to
open an estate on behalf of FULL NAME. We will be in contact with you in the near future to
schedule a mutually convenient date for you to come in and review these documents before
signing them.]
I estimate fees to represent the estate through this process will be [in the $______ range]
[approximately 2% of the gross estate,] plus any extraordinary issues that may arise during my
representation. A copy of my standard Attorney-Client Agreement [is enclosed for your
information and review.][was provided to you at the time of our meeting.] Please be aware that
the Court must approve my fees before you will be required to pay them.
Also, pursuant to our meeting on DATE, please provide me with the following
information; if you have not already done so:
a)
Original Will;
b)
Any and all year-end, and most recent statements, for all assets such as bank
accounts, certificates of deposit, stocks, bonds, etc. Please be aware that any
transfer on death or payment on death accounts should not be transferred to any
beneficiary until we instruct you to do so. These accounts are subject to the use
of the personal representative of the estate if there are insufficient funds to
otherwise cover debts and costs. These funds may also be subject to federal
estate and/or Iowa Inheritance tax.
c)
Any and all information regarding life insurance, annuities, IRA's, pension
plans, 401(k)s, or other income contracts. IF you request or requested payment of
proceeds on a Life Insurance policy, you must provide me with IRS Form 712 for
each policy. IF FIRST NAME was receiving or entitled to receive present or
future payments under an annuity, IRA, 401(k), pension, or other income
contract, and payments were or will be made in the future to a survivor, I require
specific policy information;
d)
Any and all bills or notices regarding the funeral, burial, debts or liabilities of
FIRST NAME; including any possible insurance coverage on such debts;
e)
Any and all income tax returns, W-2 forms, 1099 forms, or related information
for the past three years;
f)
Any 709(s) (Gift Tax Return) or deceased spouse’s 706(s) (Estate Tax Return);
g)
The deed, abstract, and any real estate tax notices regarding any real estate in
which the decedent owned an interest;
h)
Death certificate[s];
i)
Motor vehicle title certificates;
j)
Safety deposit inventories, or contents;
k)
Any other asset or debt information of which you are uncertain;
l)
Names, addresses, telephone numbers, dates of birth, and social security numbers
of FIRST NAME’s spouse, all children, heirs, distributees (persons listed as
beneficiaries under the Will), persons or entities receiving any annuities or other
assets by beneficiary designation, and surviving joint tenants under FIRST
NAME=s estate;
m)
Proof of liability and casualty insurance covering all vehicles, real estate, etc.
In most cases, we will obtain a Federal Tax Identification number for the estate as soon
as Letters of Appointment are issued. You will need this number in many circumstances, such as
opening the estate account, applying for insurance benefits, and transferring certain types of
personal property.
Any funds coming into your hands, made payable to FIRST NAME or [his/her] estate,
should be deposited in a checking or money market account in the name of, “Estate of FULL
NAME.” Only after receiving instructions from me to do so, any debts on FIRST NAME's
estate should be paid out of this account.
As executor of FIRST NAME's estate, it is your duty to assure [his/her] [20__] and 20__
income tax returns are filed in a timely manner. Although I will arrange for the preparation of
all tax returns for the estate, income earned by FIRST NAME in [20__] and 20__ must be
reported by you. Generally, any deductible expense will be deducted from estate's tax returns or
from FIRST NAME's final income tax return. Please coordinate the filing of these returns. If
you need assistance in this regard, please contact me.
In general, you will be required to invest, preserve and manage assets under the “Prudent
Investor Rule” and make mandatory distributions for special bequests or family allowance. You
need to keep future expenses, income taxes, and mandatory distributions in mind when managing
and investing estate assets. You will likely want to distribute income to beneficiaries (subject to
expenses and claims of creditors) and report it pursuant to IRS Form K-1.
You should change the post office mailing address for FIRST NAME to your own
address. Steps should be taken to notify persons with whom FIRST NAME has done business of
[his/her] demise. Other than joint assets, you should attempt to transfer ownership of non-jointly
owned bank accounts, certificates of deposit, IRAs, insurance, annuity benefits, and etc. into the
name of the estate. Items such as savings or checking accounts can simply be transferred into
the account you open on behalf of the estate. Items such as certificates of deposit, IRAs, and
related assets may need to be individually evaluated to obtain the greatest possible tax and
interest rate advantage.
Likewise, you need to cancel or terminate non-essential services such as cable or satellite
TV, cell phones and computer services, utilities (unless needed to preserve the condition of the
real estate), garbage service, certain insurances (except those needed to preserve estate assets),
magazine and news subscriptions, medical devices and medications, credit or debit cards, clubs
and memberships, and related items. Due consideration should be given to ACH accounts
(automatic withdrawal), and you may need to cancel the ACH before closing the account from
which they are drawn. Please contact us if you have any questions.
You should especially be sure to notify the Social Security Administration; Veterans
Administration; Railroad Retirement Board; Federal, State, Local, or private pension
administrators regarding FIRST NAME’s demise. You should be aware that you may have
received benefits payable to FIRST NAME to which [he/she] was entitled to prior to [his/her]
demise. However, any payment received after the date of [his/her] death may have to be
returned to the governmental or private organization.
[Name] may have had computer and online assets or information, such as photographs,
media, electronic tax returns and records, E-bank accounts, Pay Pal accounts, etc. You should
secure passwords and/or access to these records and accounts and make arrangements to stop any
and all recurring automatic payments.
{Name’s} {Declaration of Trust Ownership} refers to a list of specific personal effects or
property. If such a list exists, please provide us with the original. We will instruct you as to
when to distribute any such property to the identified beneficiary and will provide you with a
receipt to have them sign. The original receipt(s) will be returned to us. Please provide us with
a copy of any such receipt(s).]
Although hired by you, as fiduciary, the Rules of Professional Conduct for Iowa lawyers
require that I inform you that I represent the estate, not you as an individual. Please be aware
that I may have a duty to report any breaches of your fiduciary duty to the court and/or heirs and
beneficiaries.
Cell phones, cordless phones, facsimile machines and “e-mail” are methods of
convenient communication, but could cause you to lose your attorney-client privilege. Please
inform us at the beginning of your use of any of these devices.
For your convenience, I have enclosed a chart of your duties as personal representative of
FIRST NAME's estate. Also enclosed is a sample Probate Inventory. Please complete the
Inventory to the best of your ability, and provide me with copies of any documents (statements,
policy declarations pages, etc.) supporting your notes. We will put your information in final
form for filing with the court; but need the information from you as soon as possible so that we
can file that document within 90 days of opening the estate.
If you have any questions regarding these matters, please contact me.
Very truly yours,
Mark R. Gray
MRG:
Encl.
2016 Annual Meeting Conference
Probate Track
Rooms 312-315
Uncooperative Fiduciaries
3:20 p.m. - 4:20 p.m.
Presented by
Mark Gray
Gray, Thompson & Associates, PLC
213 N Ankeny Blvd, Ste 100
Ankeny, IA 50023
Phone: 515-964-3633
TUESDAY, JUNE 14
[BY HAND DELIVERY]
[Name]
[Address]
In Re Estate of FULL NAME
Dear [Name]:
Pursuant to my meeting with NAME on DATE, I have prepared the necessary
documentation to open an estate on behalf of FULL NAME. Please contact me upon your
receipt of this letter to schedule a mutually convenient date for you to come in and review these
documents before signing them. [I have begun preparation of the necessary documentation to
open an estate on behalf of FULL NAME. We will be in contact with you in the near future to
schedule a mutually convenient date for you to come in and review these documents before
signing them.]
I estimate fees to represent the estate through this process will be [in the $______ range]
[approximately 2% of the gross estate,] plus any extraordinary issues that may arise during my
representation. A copy of my standard Attorney-Client Agreement [is enclosed for your
information and review.][was provided to you at the time of our meeting.] Please be aware that
the Court must approve my fees before you will be required to pay them.
Also, pursuant to our meeting on DATE, please provide me with the following
information; if you have not already done so:
a)
Original Will;
b)
Any and all year-end, and most recent statements, for all assets such as bank
accounts, certificates of deposit, stocks, bonds, etc. Please be aware that any
transfer on death or payment on death accounts should not be transferred to any
beneficiary until we instruct you to do so. These accounts are subject to the use
of the personal representative of the estate if there are insufficient funds to
otherwise cover debts and costs. These funds may also be subject to federal
estate and/or Iowa Inheritance tax.
c)
Any and all information regarding life insurance, annuities, IRA's, pension
plans, 401(k)s, or other income contracts. IF you request or requested payment of
proceeds on a Life Insurance policy, you must provide me with IRS Form 712 for
each policy. IF FIRST NAME was receiving or entitled to receive present or
future payments under an annuity, IRA, 401(k), pension, or other income
contract, and payments were or will be made in the future to a survivor, I require
specific policy information;
d)
Any and all bills or notices regarding the funeral, burial, debts or liabilities of
FIRST NAME; including any possible insurance coverage on such debts;
e)
Any and all income tax returns, W-2 forms, 1099 forms, or related information
for the past three years;
f)
Any 709(s) (Gift Tax Return) or deceased spouse’s 706(s) (Estate Tax Return);
g)
The deed, abstract, and any real estate tax notices regarding any real estate in
which the decedent owned an interest;
h)
Death certificate[s];
i)
Motor vehicle title certificates;
j)
Safety deposit inventories, or contents;
k)
Any other asset or debt information of which you are uncertain;
l)
Names, addresses, telephone numbers, dates of birth, and social security numbers
of FIRST NAME’s spouse, all children, heirs, distributees (persons listed as
beneficiaries under the Will), persons or entities receiving any annuities or other
assets by beneficiary designation, and surviving joint tenants under FIRST
NAME=s estate;
m)
Proof of liability and casualty insurance covering all vehicles, real estate, etc.
In most cases, we will obtain a Federal Tax Identification number for the estate as soon
as Letters of Appointment are issued. You will need this number in many circumstances, such as
opening the estate account, applying for insurance benefits, and transferring certain types of
personal property.
Any funds coming into your hands, made payable to FIRST NAME or [his/her] estate,
should be deposited in a checking or money market account in the name of, “Estate of FULL
NAME.” Only after receiving instructions from me to do so, any debts on FIRST NAME's
estate should be paid out of this account.
As executor of FIRST NAME's estate, it is your duty to assure [his/her] [20__] and 20__
income tax returns are filed in a timely manner. Although I will arrange for the preparation of
all tax returns for the estate, income earned by FIRST NAME in [20__] and 20__ must be
reported by you. Generally, any deductible expense will be deducted from estate's tax returns or
from FIRST NAME's final income tax return. Please coordinate the filing of these returns. If
you need assistance in this regard, please contact me.
In general, you will be required to invest, preserve and manage assets under the “Prudent
Investor Rule” and make mandatory distributions for special bequests or family allowance. You
need to keep future expenses, income taxes, and mandatory distributions in mind when managing
and investing estate assets. You will likely want to distribute income to beneficiaries (subject to
expenses and claims of creditors) and report it pursuant to IRS Form K-1.
You should change the post office mailing address for FIRST NAME to your own
address. Steps should be taken to notify persons with whom FIRST NAME has done business of
[his/her] demise. Other than joint assets, you should attempt to transfer ownership of non-jointly
owned bank accounts, certificates of deposit, IRAs, insurance, annuity benefits, and etc. into the
name of the estate. Items such as savings or checking accounts can simply be transferred into
the account you open on behalf of the estate. Items such as certificates of deposit, IRAs, and
related assets may need to be individually evaluated to obtain the greatest possible tax and
interest rate advantage.
Likewise, you need to cancel or terminate non-essential services such as cable or satellite
TV, cell phones and computer services, utilities (unless needed to preserve the condition of the
real estate), garbage service, certain insurances (except those needed to preserve estate assets),
magazine and news subscriptions, medical devices and medications, credit or debit cards, clubs
and memberships, and related items. Due consideration should be given to ACH accounts
(automatic withdrawal), and you may need to cancel the ACH before closing the account from
which they are drawn. Please contact us if you have any questions.
You should especially be sure to notify the Social Security Administration; Veterans
Administration; Railroad Retirement Board; Federal, State, Local, or private pension
administrators regarding FIRST NAME’s demise. You should be aware that you may have
received benefits payable to FIRST NAME to which [he/she] was entitled to prior to [his/her]
demise. However, any payment received after the date of [his/her] death may have to be
returned to the governmental or private organization.
[Name] may have had computer and online assets or information, such as photographs,
media, electronic tax returns and records, E-bank accounts, Pay Pal accounts, etc. You should
secure passwords and/or access to these records and accounts and make arrangements to stop any
and all recurring automatic payments.
{Name’s} {Declaration of Trust Ownership} refers to a list of specific personal effects or
property. If such a list exists, please provide us with the original. We will instruct you as to
when to distribute any such property to the identified beneficiary and will provide you with a
receipt to have them sign. The original receipt(s) will be returned to us. Please provide us with
a copy of any such receipt(s).]
Although hired by you, as fiduciary, the Rules of Professional Conduct for Iowa lawyers
require that I inform you that I represent the estate, not you as an individual. Please be aware
that I may have a duty to report any breaches of your fiduciary duty to the court and/or heirs and
beneficiaries.
Cell phones, cordless phones, facsimile machines and “e-mail” are methods of
convenient communication, but could cause you to lose your attorney-client privilege. Please
inform us at the beginning of your use of any of these devices.
For your convenience, I have enclosed a chart of your duties as personal representative of
FIRST NAME's estate. Also enclosed is a sample Probate Inventory. Please complete the
Inventory to the best of your ability, and provide me with copies of any documents (statements,
policy declarations pages, etc.) supporting your notes. We will put your information in final
form for filing with the court; but need the information from you as soon as possible so that we
can file that document within 90 days of opening the estate.
If you have any questions regarding these matters, please contact me.
Very truly yours,
Mark R. Gray
MRG:
Encl.
2016 Annual Meeting Conference
Probate Track
Rooms 312-315
Iowa Implementation of ABLE Accounts
4:20 p.m. - 5:00 p.m.
Presented by
Jana Weiler
Davis Brown Law Firm
215 10th St , Ste 1300
Des Moines, IA 50309
Phone: 515-288-2500
TUESDAY, JUNE 14
IOWA IMPLEMENTATION OF ABLE ACCOUNTS
Jana Weiler
Davis Brown Law Firm
The Achieving a Better Life Experience Act (better known as the ABLE Act) became law on
December 19, 2014. 26 U.S.C. § 529A. The purpose of the ABLE Act is to encourage and create
new ways for people with disabilities and their families to save for their future, while protecting
eligibility for public benefits. There are various federal programs encouraging Americans to
save, including Individual Retirement Accounts (IRAs); medical savings accounts (HSAs),
employer savings accounts such as 401(k)s and 403(b)s; and education savings accounts like
Section 529 plans.
The ABLE accounts are intended to be similar to the 529 college savings accounts adopted by
numerous states. Section 529 Plans are used only for higher education expenses, but the funds in
an ABLE Account can be used not only for education, but also for health, independence, and
quality of life. As medical advancements are made, people with various forms of disability are
living longer, healthier, and more productive lives. The income and asset restrictions on
government benefits can cause some individuals to live close to poverty. ABLE accounts are
intended to enhance the quality of life of those individuals, and promote independence and selfsufficiency. The ABLE act was pushed primarily by the National Down Syndrome Society and
Autism Speaks.
I.
Achieving a Better Life Experience (ABLE) Act
A.
History of the ABLE Act
Bills similar to the ABLE Act were introduced starting in 2006, all with the goal of providing
financial assistance to disabled individuals. After numerous variations and name changes, the
ABLE Act was signed into federal law on December 18, 2014. Similar to Section 529 college
savings accounts, the federal act doesn’t create the program, rather allows states to create
programs. The IRS issued Notice 2015-18 in March of 2015, authorizing states to establish
ABLE programs prior to the issuance of regulations by the IRS, assuring states that programs
adopted prior to the regulations would be allowed transitional relief if their programs did not
meet the requirements. The thought at that time was the ABLE plans would be similar to the
college savings plans already adopted in all states.
In June of 2015, the federal proposed regulations were released. The regulations raised a lot of
concerns. States were concerned with the administrative hurdles that would require them to
distinguish between the types of distributions made (whether for qualified or unqualified
expenses); to obtain and maintain the social security number for contributors; and determine and
document the disability determination for beneficiaries. Many groups responded to the
regulations, including the National Down Syndrome Society, various other disability
organizations, and College Savings Plan Network.
#2723902
Many of the issues raised were addressed at the end of 2015. In November, the IRS issued
Notice 2015-81 simplifying administration of the ABLE programs by eliminating the
requirement for states to determine whether distributions were for qualified expenses;
eliminating the requirement to obtain social security numbers for donors; and allowing
beneficiaries to certify they have a qualifying disability and placing the burden on the beneficiary
(not the state) to retain the medical records as evidence if ever questioned by the state or the IRS.
Iowa adopted an ABLE bill on July 2, 2015, generally referring to the federal law for the details
and to the State Treasurer’s Office to put together the program. The legislation adopted in 2015
authorized the Iowa ABLE Savings Plan Trust to go into effect as early as July 1, 2016.
Considering the delay by the IRS in issuing final regulations, and the actions of states to figure
the details, it is likely to be delayed at least a few months in Iowa.
B.
ABLE Accounts
The ABLE Act allows individuals with disabilities to open a tax-free savings account that is
structured similarly to 529 college savings plans. College savings plans are authorized by
section 529 of the Internal Revenue Code. ABLE accounts are authorized by section 529A of
the Internal Revenue Code. The key differences between ABLE accounts and college savings
plans are the assets in an ABLE account would not be counted as resources in determining
eligibility for means tested benefits, and the funds are not restricted to higher education
expenses. Most government benefits require a recipient to have $2,000 or less in resources to
qualify. The ABLE account allows the beneficiary to increase his or her assets (to a limit) while
still remaining eligible for government benefits.
ABLE accounts are considered established by, and owned by, the eligible individual. IRC §
529A(e)(6); Iowa Code § 12I.1(b). Another individual, such as a legal guardian, may be
designated as custodian for the account if the beneficiary is a minor or lacks capacity to enter
into the agreement. Id. Unlike college savings plans, each disabled individual is limited to one
ABLE account. IRC § 529A(b)(1); Iowa Code § 12I.1(a).
The key definitions and terms of art used for ABLE accounts are:




Designated Beneficiary: The eligible individual who established and owns the ABLE
account.
Contributions: Deposit of funds by any person into an ABLE account. Contributions
from all sources to any one account are limited to the per-donee gift tax exclusion.
($14,000 for 2016).
Distributions: Withdrawal or issuance of funds, as decided by the designated beneficiary
(or a person with signature authority). Distributions must be to or for the benefit of the
designated beneficiary.
Qualified Disability Expense: Expenses related to the blindness or disability of the
designated beneficiary, and for the benefit of the designated beneficiary. This includes,
but is not limited to, education, housing, transportation, health, assistive technology,
financial management, legal fees, and basic living expenses.
2

Person with Signature Authority: Someone other than a designated beneficiary can
establish and control an ABLE account for a designated beneficiary who is a minor or is
otherwise incapable of managing the account. Only a beneficiary’s parent, legal guardian,
or agent acting under power of attorney can have signature authority. Regardless of who
has signature authority, the designated beneficiary is still considered the owner.
C.
Designated Beneficiary (Eligible Individual)
An ABLE account must be for the benefit of an “eligible individual” under the Act. A person
meets the definition of an eligible individual if:
(A) the individual is entitled to benefits based on blindness or disability under Social
Security, and the blindness or disability occurred before the individual turned 26, or
(B) a disability certification is filed with the Secretary of the Treasury certifying the
individual has a medically determinable physical or mental impairment resulting in a
sever functional limitation expected to last not less than 12 months, and such disability
occurred before the individual turned age 26.
IRC § 529A(e)(1), (2).
Qualification for social security disability benefits is an automatic qualification for use of an
ABLE account (if the disability occurred before age 26), but is not a requirement. The current
age of the eligible individual is irrelevant, the only age restriction is the disability had to occur
prior to age 26.
D.
Use of Funds - Qualified Disability Expenses
Funds in an ABLE account may be used for “qualified disability expenses.” The term “qualified
disability expenses” means:
Any expenses related to the eligible individual’s blindness or disability which are
made for the benefit of an eligible individual who is the designated beneficiary,
including the following expenses: education, housing, transportation, employment
training and support, assistive technology and personal support services, health,
prevention and wellness, financial management and administrative services, legal
fees, expenses for oversight and monitoring, funeral and burial expenses, and
other expenses, which are approved by the Secretary under regulations and
consistent with the purposes of this section.
IRC § 529A(e)(5)
This list of qualified expenses under the ABLE account is significantly more generous than a
first party special needs trusts created under 42 U.S.C. § 1396b(d)(4)(A) and Iowa Code 633C.
Initially, states were concerned with the administrative hassle of making the determination
whether a distribution was for a “qualified disability expense.” The states were concerned this
would be too burdensome and difficult to predict when it is possible the particular use of a
distribution would not be known when the distribution was made (or that the beneficiary would
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change the use). The IRS clarified in Notice 2015-81 that individual states will not be required to
establish safeguards to distinguish between qualified and non-qualified expenses. The
beneficiary will be required to categorize the distributions at the time of making the distribution,
as this will determine their income tax obligations, if any. The responsibility is only on the
beneficiary. The State will collect the information, but will not be required to make any sort of
classification or determination.
E.
Impact on Other Benefits
Federally, there is no maximum account balance for the ABLE account. (States typically do set
maximum balances.) However, a key benefit for many individuals establishing an ABLE
account is the ability for the account to be excluded from resources for Social Security benefits.
The account is ONLY excluded only up to $100,000. Any funds in the account over $100,000,
including if the account balance increases due to interest, will be counted as a resource for
purposes of SSI qualification. (In most situations, funds in an ABLE account in excess of
$100,000 will cause SSI payments to be suspended until the account gets back to $100,000.
However, the beneficiary would remain eligible for Medicaid benefits, as discussed in Section
III).
The contribution limit for the ABLE accounts is higher than the resource/income restrictions for
Medicaid and other government aid. Therefore, any third party looking to make a donation to an
ABLE account should make the donation directly to the account, and not to the individual. For
example, if Mom is the only individual making a donation in 2016 to Son’s account, Mom can
contribute $14,000. However, if Mom gives the funds directly to Son, he may be disqualified for
Medicaid purposes for having income and/or resources in excess of the limits. Alternatively, if
Mom contributes directly to the ABLE account, so long as the total balance remains under
$100,000, the contribution will not affect Son’s other government benefits.
F.
Tax Implications
1.
Donations
Contributions to the account are not considered income to the beneficiary. Earnings on the
account are exempt from income tax, both at the federal and state level, so long as the funds are
used for qualified expenses.
Contributions can be made only by cash. Iowa Code § 12I.4(1)(c). Total annual donations are
restricted to the amount of the annual federal gift tax exclusion amount set forth in IRC §
2053(b). For 2016, that amount is $14,000. It is not the limit per donor, which is what we
typically consider for gift tax purposes; this is the total amount the account can receive from any
source. Any person can make donations on behalf of a designated beneficiary. Iowa Code §
12I.1(f).
Donations or contributions to an ABLE account are not deductible for income tax purposes at the
federal level, but are deductible in Iowa. Iowa Code § 422.7(34). Any amounts that are refunded
or withdrawn for purposes other than payment of qualified disability expenses are taxed as
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income to the account owner. Iowa Code § 422.7(34). In Iowa, the maximum amount that can
be deducted per year is the same as for contributions to college savings plans. In 2016, up to
$3,188 in donation are deductible for Iowa income tax purposes.
Each state will set its own maximum account balance, which will typically be tied to the same
maximum account as college savings plans. In Iowa, the maximum about is currently $320,000.
Keep in mind, only the first $100,000 of resources is excluded as a resource for SSI qualification
purposes.
Contributions to the account can be made by anyone, including by will or trust. However, unlike
for college savings plans, each beneficiary is limited to only one ABLE account. Once an
account is created, all contributions for the benefit of that individual must go to that one account.
This is different than for college savings plans, where separate family members could create
separate accounts and could maintain some oversight over the donations made.
With the current $14,000 annual contribution limit, the use of an ABLE account in a family
member’s estate planning is pretty limited. Alternatively, a third-party special needs trust,
discussed below, may be a better alternative.
2.
Distributions
A distribution or withdrawal of funds is excluded from income so long as it is for qualified
disability expenses. Non-qualified withdrawals from an ABLE account are subject to a 10%
penalty and will also be subject to tax as ordinary income.
3.
Transfers and Death of Beneficiary
College savings accounts are typically created for one individual. If that one individual does not
use all of the funds for college (if for example, the student received a scholarship or decided on a
school with lower than anticipated tuition), the funds can be transferred to certain other family
members, including a spouse, sibling, or even cousins. IRC § 529(e)(2). Similarly, unused funds
in an ABLE account can be rolled over to another member of the family, or the beneficiary
designation on the account can be changed without penalty. IRC § 529A(c)(1)(C). Qualifying
family member includes the spouse of the beneficiary, descendants, siblings, ancestors.
However, keep in mind for the other family member to be an eligible beneficiary of an ABLE
account, he or she would likewise have to meet the eligibility requirements relating to age and
disability. If the ABLE account does get transferred to a family member, the funds are excluded
from Iowa inheritance tax. Iowa Code § 450.4(9). (Funds in a qualified savings plan are also
exempt from inheritance tax. Id. at § 450.4(8)).
Unlike college savings accounts, is there is no clear determination of when the funds in an ABLE
account would no longer be needed. College savings accounts must be used for higher education
expenses; once the beneficiary has completed his or her education, the account owner typically
feels comfortable transferring the funds to another family member for use. Graduating or
deciding not to complete an education sets a relatively clear cut end-date for needing the funds.
For a disabled individual, the need for financial assistance is likely to continue until death. As a
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result, transferring unused funds in an ABLE account to another eligible individual seems less
likely; it would be difficult to predict when the funds were no longer needed.
To the extent the eligible individual was receiving medical assistance, the account is subject to
Estate Recovery upon his or her death. IRC §529A(f). If there were excess funds after estate
recovery, I would anticipate the funds would pass through the beneficiary’s estate. If the funds
do not go to another disabled individual, the funds would be subject to income tax and
presumably the 10% penalty also.
II.
State Level Implementation
The federal Act allows states to create programs, similar to Section 529 college savings accounts.
Initially, a beneficiary could only establish an account in his or her state of residence. A few
changes were made to ABLE legislation as part of the tax extenders passed in December 2015.
One of the changes is to allow individuals to create an account in any state. The beneficiary is no
longer restricted to only their home state. However, keep in mind the legislation still only allows
one account per beneficiary.
Each state will vary a bit in the legislation being adopted. For example, Iowa is one of only a
handful of states offering a state tax deduction for contributions. On July 2, 2015, the governor
signed a bill creating the Iowa ABLE Savings Plan Trust. Iowa Code Chapter 12I designates the
State Treasurer as the ABLE program administrator. The majority of states are designating the
state treasurer or the state’s college savings plan administrator as the administrator of the ABLE
program. A few states are having government departments like Health and Human Services run
the program.
Since ABLE accounts are modeled after college savings plans, people assume the accounts can
quickly be implemented. However, there are a handful of differences. Though a majority of
states have adopted ABLE legislation, most of those states do not have the programs up and
running. Adding to the delay, the IRS has not issued its final regulations. Some states are
waiting for the final regulations to finalize their own state’s plans.
A.
Iowa Code Chapter 12I
Iowa has adopted a new Chapter 12I entitled Disabilities Expenses Savings Plan Trust. The
legislation in Iowa determined:
…A vital public purpose is served by the creation and implementation of
programs that encourage and make possible savings to secure funding for
disability-related expenses on behalf of individuals with disabilities that will
supplement, but not supplant, other benefits provided by various federal, state,
and private sources. The creation of the means of encouragement for citizens to
invest in such a program represents the carrying out of a vital and valid public
purpose.
Iowa Code § 12I.1(1).
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Section 12I.2 creates the Iowa ABLE savings plan trust and allows the trust to enter into
participation agreements with account owners on or after July 1, 2016. As the Treasurer’s office
explores joining a possible consortium of states, it is likely the State will not be ready start
contracting July 1, 2016.
B.
Contracting With Other States
The original plan when adopting Iowa Code Chapter 12I was for the Treasurer of the State of
Iowa to implement its own plan and trust, similarly to how Iowa has College Savings Iowa. Even
so, Iowa Code section 12I.10 specifically provides that Iowa can defer implementing an ABLE
program in Iowa and cause the state to enter into an agreement with another state to be a
contracting state, allowing Iowa residents to join the other state’s program. Iowa Code § 12I.10.
Initially, a disabled individual could only establish an account in his or her state of residence.
There was no ability to compare options between states. Part of the tax extenders passed in
December 2015 allows individuals to now create an account in any state. The benefits of this to
the beneficiaries of the account are two-fold. First, an individual can create an account as soon as
any state is ready to do so, and not have to wait until his or her home state adopts an ABLE
program. Second, this presumably will increase competition, resulting in a wider variety of
investment options, and possibly reduced fees. This could also incentive some states to adopt
programs more quickly, to prevent their residents from seeking out programs of other states.
If a beneficiary chooses to use a plan from a state other than Iowa, the contributors to the plan
likely lose their ability to deduct their donations on their state income tax return. It may not be
easy to compare plans from multiple states since the costs could vary significantly in the first
handful of years. .
C.
Joining a Multi-State Consortium
The State of Iowa is currently exploring joining a consortium of other states to pool funds in an
attempt to reduce costs. Though the accounts are similar to college savings plans, there are a few
key differences that may cause higher expenses in the ABLE accounts. As a result of the higher
expenses, states are exploring whether it would be feasible to pool the funds from the various
states and have the accounts all managed collectively to achieve economies of scale and reduce
investment costs.
1.
Frequency of Use
College savings plans are often established when a child is young, resulting in almost 18 years of
contributions or growth, but distributions are made over only a handful of years while the child is
in college. Even then, those distributions for tuition and college expenses are likely twice a year,
once each semester. An ABLE account is expected to be quite different. Contributions are
similarly expected to be made over just as many, if not more, years. However, distributions are
expected to be more frequent, and for a longer period of years. An ABLE account is essentially
used as a checking account, paying for ongoing disability related expenses. There are likely to be
numerous transactions in a month, unlike a college savings plan. Additionally, the account is
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likely to be used over the beneficiary’s lifetime, not just a handful of years in college. As a
result, there is likely to be many more transactions in an ABLE account, creating a lot more
administrative work for the program administrator.
2.
Account Balances
Another issue is the account balances in the ABLE account are likely to be lower than for college
savings plans, due to the limitations of other federal programs, and the restrictions on transfer of
funds not used by the beneficiary. Generally speaking the maximum account balance for a
college savings plan and an ABLE account set by the state will be similar. However, there is no
front-loading of contributions in an ABLE account like there is for college savings plans.
(College savings plans allow contributions in excess of the annual exclusion amount to be
stretched over five years for gift tax purposes). ABLE accounts do not have a similar frontloading ability, and in fact, are even more limited in that only $14,000 in total can be added to
the account per year, regardless of the number of donors.
Another key difference is the $100,000 cap on ABLE accounts for purposes of exclusion from
government benefits. Only the first $100,000 is excluded for purposes of determining eligibility
for government assistance such as Social Security Income (SSI) and Medicaid. As a result, it is
likely most accounts will have $100,000 or less. The result is the administrative costs per
account will likely be a higher percentage of the balance, and with a more limited return on
investment.
D.
Estate Recovery
Assets in an ABLE account are subject to estate recovery at the account owner/beneficiary’s
death. Iowa Code § 12I.4(3); IRC § 529A(f). Keep in mind that the disabled individual is
considered the account owner, so these are his or her assets, regardless of who contributed to the
account, whether given by gift or earned directly by the beneficiary. Therefore, estate recovery
claim can reach the assets.
It is unclear if the Medicaid payback provision will apply to all accounts in Iowa, or only the
accounts of individuals who would otherwise be subject to estate recovery. In Iowa, estate
recovery does not apply to everyone. Estate recovery affects recipients of Title XIX medical
assistance who are:
a) Age 55 or older at the time of receiving medical assistance; or
b) Under the age of 55 and a resident of a care facility who cannot reasonably expect
to return home.
Iowa Code § 249A.53(2).
ABLE accounts can be created only for an individual who was disabled prior to age 26. It is
certainly possible the beneficiary of an ABLE account could die before reaching age 55. In that
case, Iowa Code 249A would not typically reach the beneficiary’s assets. However, it appears
the ABLE accounts would be reachable. Though most states have adopted legislation, very few
have the ABLE programs up and running, and likely no beneficiary has passed away with
sufficient funds for this to be an issue.
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It also remains unclear at this point whether the ABLE account would allow for a beneficiary
designation if funds were in excess of medical assistance received. Without a beneficiary
designation, funds in excess of $25,000 would require a small estate to be opened to handle
transfer of the funds in Iowa.
E.
Comparison to Special Needs Trusts (Supplemental Needs Trust)
Prior to the ABLE Act, a special needs trust was the most common mechanism to provide
financial resources to individuals with special needs receiving government benefits. The term
“Special Needs Trust” has a variety of meanings, and the differences can be significant.
A true special needs trust, as created by 42 USC § 1396p(d)(4)(A), has certain requirements for
the trust not to affect the beneficiary’s eligibility for government assistance. The use of these
funds is limited, and any remaining funds must be paid back to the state to the extent of medical
assistance benefits received. Iowa Code Chapter 633C calls these Medical Assistance Special
Needs Trusts. Typically, because of the requirement that trusts name the State as the remainder
beneficiary, this type of trust is only used for self-settled trusts, for example when the individual
is a beneficiary of a settlement relating to the disability.
More commonly, third parties create a different kind of trust for the benefit for an individual to
avoid the payback provisions. Often these third-party trusts are called “Special Needs Trusts,”
and this causes confusion (sometimes issues) with DHS and ongoing eligibility issues. These
trusts would more appropriately be called “Discretionary Trusts.” This type of trust is typically
completely discretionary, with the intent of allowing the beneficiary to continue to receive
government assistance. A third party trust does not have the Medicaid payback provisions, and
allows the settler of the trust to designate the remainder beneficiaries who will receive any
remaining assets after the disabled beneficiary’s death.
An ABLE account could be an alternative to a self-settled special needs trust for inheritance or a
personal injury award for certain individuals. The ABLE account provides more flexibility and
independence, would have lower administrative fees to not require a separate trust tax return, and
the beneficiary can make some of the management decisions in appropriate situations. However,
with only $100,000 excluded for Medicaid qualification purposes, the use for third-party
situations may be limited. Similarly, in a third-party situation, the ABLE account remains
subject to estate recovery, whereas a third-party discretionary trust is not subject to estate
recovery and would be directed to the beneficiaries chosen by the settlor. As a result, the ABLE
account likely will not replace the use of discretionary trusts, but may be a good alternative for
someone that could not afford to establish a discretionary trust.
III.
Other Government Programs
Federal agencies are slowly issuing guidance on the connection between various programs and
ABLE accounts. The Social Security Administration issued its Program Operations Manual in
March 2016 (SI 01130.740). Below are some of the most commonly thought of government
assistance programs. Only some of the programs are actually based on financial need such that
the ABLE account would impact eligibility. Individuals (with a qualifying disability) who are not
9
receiving government assistance could of course use ABLE accounts (without concern for the
$100,000 exclusion limit) as a means to collect funds from various individuals. It can be an
alternative to a trust (though with less protections since the beneficiary has direct access to the
funds).
A.
Social Security Disability Income (SSDI)
This benefit is based upon age and a finding that the person is unable to work on a regular basis
after having already paid taxes into the Social Security System prior to becoming disabled. SSDI
is not based on financial need.
B.
Social Security Retirement Benefits
Retirement benefits are not based on financial need. Eligibility is based on age and paying into
the social security system by the recipient (or certain family members).
C.
Social Security Supplemental Income (SSI)
SSI is available to persons under 65 and disabled, and unlike SSDI, is based on financial need.
An individual can have no more than $2,000 in countable resources, and is also limited in the
amount of income per month. Certain assets are not counted as a resource, including the
person’s residence, household goods and personal effects, a vehicle, and prepaid burial expenses.
Retaining assets in a bank account over $2,000 would typically disqualify the individual from
receiving SSI. Any attempt at “saving” funds over $2,000 from month to month to allow a bigger
purchase would disqualify the recipient. Once the ABLE account is established, up to $100,000
in an ABLE account will not be counted as a resource for eligibility for SSI. Those funds can
then be used for qualified disability expenses.
For Purposes of SSI, the Social Security Administration determines resources based on a
snapshot on the first of each month. Any funds in excess of $100,000 on the first of the month
will be counted as a resource, and if total resources (excluding the $100,000) exceed $2,000,
benefits are suspended until the countable assets get below $2,000. (A presentation put on by the
Social Security Administration discussed a five day grace period surrounding when funds are
deposited, but this was not specifically mentioned in the operations manual).
Example C1: If Jane has an ABLE account has $100,500, and Jane has other countable
resources of $1,000, Jane remains eligible for SSI because her countable assets are
$1,500 ($1,000 of countable, and $500 in excess in the ABLE account).
Social Security will also exclude assets withdrawn from the ABLE account intended to be used
for a qualified disability expense, even if retained beyond the month received.
Example C2: Jane withdraws $3,000 from her ABLE account to purchase a wheelchair
in May 2016. The bill doesn’t come due until July 2016, so Jane puts the assets into her
checking account. So long as the funds remain identifiable, and Jane intends to use the
funds on a qualified health expense, the funds are excluded from her countable resources
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for May, June, and July. The funds withdrawn are not counted as income or resources for
Jane.
D.
Medicare
Typically, Medicare provides health insurance only for individuals over age 65. This benefit is
not based on financial need.
E.
Medicaid (Title XIX)
Medicaid provides health coverage based on financial need, with specific limitations on both
income and resources. The income and resource limits are typically the same as for SSI.
However, the Social Security Administration has stated that though excess resources due to an
ABLE account balance over $100,000 in an ABLE account will disqualify the beneficiary from
SSI benefits, such excess resources will not disqualify the beneficiary from Medicaid benefits.
This rule applies only if the suspension of SSI benefits is to due excess funds in the ABLE
account.
Example E1: If John has resources of $2,000, and an ABLE account with $100,500,
John exceeds the resource limit by $500. ($100,000 of the ABLE account is excluded,
resulting in $2,500 of countable resources). As a result, he is ineligible for SSI, but since
his ineligibility results from funds in the ABLE account, he retains his Medicaid benefits.
Example E2: If John has resources of $2,500, and an ABLE Account with $100,000, he
has exceeded the resource limit by $500. ($100,000 in the ABLE account is excluded, but
he still has $2,500 in countable resources). Since the ineligibility is not due to funds in
the ABLE account, he is ineligible both for Medicaid and SSI.
IV.
Conclusion
Many organizations for disabled individuals, such as the National Down Syndrome Society and
Autism Speaks are very optimistic about ABLE accounts. While states certainly have some
administrative tasks to work through and sort out, the accounts have the potential to make a big
difference in the lives of many disabled individuals that previously had more limited options. As
states, including Iowa, work together with other states to figure out how to administer the plans,
there are likely to be more changes in the road ahead. Iowa it seems intentionally adopted a
rather broad Chapter 12I such that changes to the law should not be necessary as the route of the
program changes.
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