House File 799 - Introduced
HOUSE FILE
BY COMMITTEE ON JUDICIARY
(SUCCESSOR TO HSB 240)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to the Iowa probate code, the Iowa trust code,
2 and certain other trusts.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 1076HV 81
5 rh/sh/8
PAG LIN
1 1 Section 1. Section 249A.3, subsection 11, paragraph d,
1 2 Code 2005, is amended to read as follows:
1 3 d. Failure of a surviving spouse to take against a will an
1 4 elective share pursuant to chapter 633, division V,
1 5 constitutes a transfer of assets for the purpose of
1 6 determining eligibility for medical assistance to the extent
1 7 that the value received by taking against the will an elective
1 8 share would have exceeded the value of the inheritance
1 9 received under the will.
1 10 Sec. 2. Section 633.3, subsection 15, Code 2005, is
1 11 amended by striking the subsection and inserting in lieu
1 12 thereof the following:
1 13 15. ESTATE == the real and personal property of either a
1 14 decedent or a ward, and may also refer to the real and
1 15 personal property of a trust as defined in section 633.10.
1 16 Sec. 3. Section 633.3, subsection 17, Code 2005, is
1 17 amended to read as follows:
1 18 17. FIDUCIARY == includes personal representative,
1 19 executor, administrator, guardian, conservator, and the
1 20 trustee of any trust as defined in section 633.10.
1 21 Sec. 4. Section 633.3, subsection 34, Code 2005, is
1 22 amended to read as follows:
1 23 34. TRUSTEE == the person or persons appointed as trustee
1 24 by the instrument creating the trust, or the person or persons
1 25 appointed by the court to administer the trust serving as
1 26 trustee of a trust as defined in section 633.10.
1 27 Sec. 5. Section 633.3, subsection 35, Code 2005, is
1 28 amended by striking the subsection and inserting in lieu
1 29 thereof the following:
1 30 35. TRUSTS == includes only those trusts defined in
1 31 section 633.10.
1 32 Sec. 6. Section 633.10, unnumbered paragraph 1, Code 2005,
1 33 is amended to read as follows:
1 34 The In addition to the jurisdiction granted the district
1 35 court under the trust code or elsewhere, the district court
2 1 sitting in probate shall have jurisdiction of:
2 2 Sec. 7. Section 633.10, subsection 2, Code 2005, is
2 3 amended to read as follows:
2 4 2. CONSTRUCTION OF WILLS AND TRUST INSTRUMENTS.
2 5 The construction of wills and trust instruments during the
2 6 administration of the estate or trust, whether said
2 7 construction be incident to such administration, or as a
2 8 separate proceeding.
2 9 Sec. 8. Section 633.10, subsection 4, Code 2005, is
2 10 amended by striking the subsection and inserting in lieu
2 11 thereof the following:
2 12 4. TRUSTS AND TRUSTEES.
2 13 a. The ongoing administration and supervision, including
2 14 but not limited to the appointment of trustees, the granting
2 15 of letters of trusteeship, trust administration, and trust
2 16 settlement and closing, of the following trusts:
2 17 (1) A trust that was in existence on July 1, 2005, and
2 18 that is subject to continuous court supervision.
2 19 (2) A trust established by court decree that is subject to
2 20 continuous court supervision.
2 21 b. A trust described in paragraph "a" shall be governed by
2 22 this chapter and the provisions of chapter 633A which are not
2 23 inconsistent with the provisions of this chapter.
2 24 c. A trust not described in paragraph "a" shall be
2 25 governed exclusively by chapter 633A and shall be subject to
2 26 the jurisdiction of the district court sitting in probate only
2 27 as provided in section 633.6101.
2 28 d. Upon joint application by all trustees administering a
2 29 trust described in paragraph "a" and following notice to the
2 30 beneficiaries pursuant to section 633.40, the court shall
2 31 release the trust from further jurisdiction unless a
2 32 beneficiary objects. The court whose decree created the trust
2 33 may release the trust from continuous court supervision
2 34 following notice to the beneficiary pursuant to section
2 35 633.40. If such judicial release occurs for a trust
3 1 previously governed by this chapter, such trust shall be
3 2 governed by chapter 633A and the district court sitting in
3 3 probate only as provided in section 633.6101.
3 4 Sec. 9. Section 633.27, subsection 4, Code 2005, is
3 5 amended to read as follows:
3 6 4. The title of each trust where letters of trusteeship
3 7 are issued described in section 633.10 that has not been
3 8 released by the court from continuous court supervision.
3 9 Sec. 10. Section 633.108, Code 2005, is amended to read as
3 10 follows:
3 11 633.108 SMALL DISTRIBUTIONS TO MINORS == PAYMENT.
3 12 Whenever a minor becomes entitled under the terms of a will
3 13 to a bequest or legacy, or to a share of the estate of an
3 14 intestate, or to a beneficial interest in a trust fund upon
3 15 the distribution of the trust fund, and the value of the
3 16 bequest, legacy, or share, or interest does not exceed the sum
3 17 of ten twenty=five thousand dollars, the personal
3 18 representative or trustee may pay the bequest, legacy, or
3 19 share, or interest to a custodian under any uniform transfers
3 20 to minors Act. Receipt by the custodian, when presented to
3 21 the court or filed with the report of distribution of the
3 22 fiduciary, shall have the same force and effect as though the
3 23 payment had been made to a duly appointed and qualified
3 24 conservator for the minor.
3 25 Sec. 11. Section 633.197, unnumbered paragraph 1, Code
3 26 2005, is amended to read as follows:
3 27 Personal representatives shall be allowed such reasonable
3 28 fees as may be determined by the court for services rendered,
3 29 but not in excess of the following commissions upon the gross
3 30 assets of the estate listed in the probate inventory for Iowa
3 31 inheritance tax purposes, which shall be received as full
3 32 compensation for all ordinary services:
3 33 Sec. 12. Section 633.236, Code 2005, is amended by
3 34 striking the section and inserting in lieu thereof the
3 35 following:
4 1 633.236 RIGHT OF ELECTIVE SHARE OF SURVIVING SPOUSE.
4 2 When a married person domiciled in Iowa at the time of
4 3 death dies, the surviving spouse shall have the right to take
4 4 an elective share under the provisions of sections 633.237
4 5 through 633.246. If the surviving spouse has a conservator,
4 6 the court may authorize or direct the conservator to elect the
4 7 share as the court deems appropriate under the circumstances.
4 8 Sec. 13. Section 633.237, Code 2005, is amended by
4 9 striking the section and inserting in lieu thereof the
4 10 following:
4 11 633.237 PRESUMPTION AGAINST FILING ELECTIVE SHARE.
4 12 1. Following the appointment of a personal representative
4 13 of the estate of the decedent, who is not the spouse, the
4 14 personal representative shall cause to be served a written
4 15 notice upon the surviving spouse pursuant to section 633.40,
4 16 subsection 5, notifying the surviving spouse that unless,
4 17 within four months after service of the notice, the spouse
4 18 files an election in writing with the clerk of court electing
4 19 the share as set forth in section 633.236, and sections
4 20 633.238 through 633.246, the spouse shall be deemed to take
4 21 under the will or to receive the intestate share. If, within
4 22 the four=month period following service of the notice, an
4 23 affidavit is filed setting forth that the surviving spouse is
4 24 incapable of making the election and does not have a
4 25 conservator, the personal representative shall make
4 26 application to the court for an order pursuant to section
4 27 633.244.
4 28 2. Following the death of a settlor of a revocable trust,
4 29 the trustee of such revocable trust who is not the spouse
4 30 shall cause to be served a written notice upon the surviving
4 31 spouse pursuant to section 633.40, subsection 5, notifying the
4 32 surviving spouse that unless, within four months after service
4 33 of the notice, the spouse files an election with the trustee
4 34 electing the share as set forth in section 633.236, and
4 35 sections 633.238 through 633.246, the spouse shall be deemed
5 1 to take under the terms of the revocable trust. If, within
5 2 the four=month period following service of the notice, an
5 3 affidavit is filed setting forth that the surviving spouse is
5 4 incapable of making the election and does not have a
5 5 conservator, the trustee shall make application to the court
5 6 for an order pursuant to section 633.244.
5 7 3. If the surviving spouse has a conservator, notice shall
5 8 be given to the conservator and the spouse pursuant to
5 9 subsections 1 and 2.
5 10 4. The notice provisions under subsections 1 and 2 are not
5 11 applicable if the surviving spouse is a personal
5 12 representative of the estate or a trustee of a revocable
5 13 trust. If the surviving spouse fails to file an election
5 14 under this section within four months of the decedent's death,
5 15 it shall be conclusively presumed that the surviving spouse
5 16 elects to take under the will, receive the intestate share, or
5 17 take under the revocable trust.
5 18 5. Upon application of the surviving spouse or the
5 19 spouse's conservator filed before the time for making the
5 20 election expires, the court may extend the period in which the
5 21 surviving spouse may make the election.
5 22 Sec. 14. Section 633.238, Code 2005, is amended by
5 23 striking the section and inserting in lieu thereof the
5 24 following:
5 25 633.238 ELECTIVE SHARE OF SURVIVING SPOUSE.
5 26 1. The elective share of the surviving spouse shall be all
5 27 of the following:
5 28 a. One=third in value of all the legal or equitable
5 29 estates in real property possessed by the decedent at any time
5 30 during the marriage which have not been sold on execution or
5 31 other judicial sale, and to which the surviving spouse has
5 32 made no express written relinquishment of right.
5 33 b. All personal property that, at the time of death, was
5 34 in the hands of the decedent as the head of a family, exempt
5 35 from execution.
6 1 c. One=third of all personal property of the decedent that
6 2 is not necessary for the payment of debts and charges.
6 3 d. One=third in value of the property held in trust not
6 4 necessary for the payment of debts and charges over which the
6 5 decedent was a grantor and retained at the time of death the
6 6 power to alter, amend, or revoke the trust, or over which the
6 7 decedent waived or rescinded any such power within one year of
6 8 the date of death, and to which the surviving spouse has not
6 9 made any express written relinquishment.
6 10 2. The elective share described in this section shall be
6 11 in lieu of any property the spouse would otherwise receive
6 12 under the last will and testament of the decedent through
6 13 intestacy or under the terms of a revocable trust.
6 14 Sec. 15. Section 633.239, Code 2005, is amended by
6 15 striking the section and inserting in lieu thereof the
6 16 following:
6 17 633.239 SHARE TO EMBRACE HOMESTEAD.
6 18 The share of the surviving spouse in such real estate shall
6 19 be set off in such manner as to include the homestead, or so
6 20 much thereof as will be equal to the share allotted to the
6 21 spouse pursuant to section 633.238 unless the spouse prefers a
6 22 different arrangement, but no such different arrangement shall
6 23 be allowed unless there is sufficient property remaining to
6 24 pay the claims and charges against the decedent's estate.
6 25 Sec. 16. Section 633.240, Code 2005, is amended by
6 26 striking the section and inserting in lieu thereof the
6 27 following:
6 28 633.240 ELECTION TO RECEIVE HOMESTEAD.
6 29 In estates in which the surviving spouse has filed an
6 30 election and in all intestate estates, whether an election is
6 31 filed or not, the surviving spouse or the spouse's
6 32 conservator, if applicable, may, in lieu of the spouse's share
6 33 in the real property possessed by the decedent at any time
6 34 during the marriage, which has not been sold on execution or
6 35 other judicial sale, and to which the surviving spouse has
7 1 made no express written relinquishment of right, elect to
7 2 receive a life estate in the homestead. Such election shall
7 3 be made and entered of record as provided in section 633.245.
7 4 In making such election, the surviving spouse shall have all
7 5 the rights as to the personal property provided in section
7 6 633.238, subsection 1, paragraphs "b", "c", and "d". In case
7 7 of failure to make such election, the right to receive the
7 8 life estate in the homestead shall be waived.
7 9 Sec. 17. Section 633.241, Code 2005, is amended by
7 10 striking the section and inserting in lieu thereof the
7 11 following:
7 12 633.241 TIME FOR ELECTION TO RECEIVE LIFE ESTATE IN
7 13 HOMESTEAD.
7 14 If the surviving spouse does not make an election to
7 15 receive the life estate in the homestead and file it with the
7 16 clerk within four months from the date of second publication
7 17 of notice to creditors, it shall be conclusively presumed that
7 18 the surviving spouse waives the right to make the election.
7 19 The court on application may, prior to the expiration of the
7 20 period of four months, for cause shown, enter an order
7 21 extending the time for making the election.
7 22 Sec. 18. Section 633.242, Code 2005, is amended by
7 23 striking the section and inserting in lieu thereof the
7 24 following:
7 25 633.242 RIGHTS OF ELECTION PERSONAL TO SURVIVING SPOUSE.
7 26 The right of the surviving spouse to take an elective
7 27 share, and the right of the surviving spouse to receive a life
7 28 estate in the homestead, are personal. They are not
7 29 transferable and cannot be exercised for the spouse subsequent
7 30 to the spouse's death. If the surviving spouse dies prior to
7 31 filing an election, it shall be conclusively presumed that the
7 32 surviving spouse does not take such elective share.
7 33 Sec. 19. Section 633.243, Code 2005, is amended by
7 34 striking the section and inserting in lieu thereof the
7 35 following:
8 1 633.243 FILING ELECTIONS.
8 2 The filing of the elective share and the election to
8 3 receive a life estate in the homestead shall be filed in the
8 4 office of the clerk in which the decedent's estate is being
8 5 administered and served on the trustee of the revocable trust.
8 6 The court where the election is filed shall have exclusive
8 7 jurisdiction over all matters regarding elections under this
8 8 chapter.
8 9 Sec. 20. Section 633.244, Code 2005, is amended by
8 10 striking the section and inserting in lieu thereof the
8 11 following:
8 12 633.244 INCOMPETENT SPOUSE == ELECTION BY COURT.
8 13 In case an affidavit is filed that the surviving spouse is
8 14 incapable of determining whether to take the elective share,
8 15 or to elect to receive a life estate in the homestead, and
8 16 does not have a conservator, the court shall fix a time and
8 17 place of hearing on the matter and cause a notice thereof to
8 18 be served upon the surviving spouse in such manner and for
8 19 such time as the court may direct. At the hearing, a guardian
8 20 ad litem shall be appointed to represent the spouse and the
8 21 court shall enter such orders as it deems appropriate under
8 22 the circumstances. The guardian ad litem shall be a
8 23 practicing attorney.
8 24 Sec. 21. Section 633.246A, Code 2005, is amended by
8 25 striking the section and inserting in lieu thereof the
8 26 following:
8 27 633.246A MEDICAL ASSISTANCE ELIGIBILITY.
8 28 Failure of a surviving spouse to make an election under
8 29 this division constitutes a transfer of assets for the purpose
8 30 of determining eligibility for medical assistance pursuant to
8 31 chapter 249A to the extent that the value received by making
8 32 the election would have exceeded the value of property
8 33 received absent the election.
8 34 Sec. 22. Section 633.247, Code 2005, is amended by
8 35 striking the section and inserting in lieu thereof the
9 1 following:
9 2 633.247 SETTING OFF ELECTIVE SHARE OF SURVIVING SPOUSE.
9 3 The share of the surviving spouse under section 633.236 may
9 4 be set off by the mutual consent of all parties in interest,
9 5 or by referees appointed by the court. An application to have
9 6 the share set off by referees shall be made by an interested
9 7 party in writing by filing with the clerk of court. A copy of
9 8 such application shall be sent to all interested parties.
9 9 Sec. 23. Section 633.248, Code 2005, is amended to read as
9 10 follows:
9 11 633.248 REFEREE == NOTICE.
9 12 In the absence of mutual consent of all interested parties
9 13 to the appointment of referees, the court shall fix a time and
9 14 place for hearing upon such application and of the fact that
9 15 referees will be appointed if such application is granted, and
9 16 shall prescribe the time and manner of the service of notice
9 17 of the hearing.
9 18 Sec. 24. Section 633.252, Code 2005, is amended by
9 19 striking the section and inserting in lieu thereof the
9 20 following:
9 21 633.252 CONFIRMATION CONCLUSIVE == POSSESSION.
9 22 An order confirming a report of the referee shall be
9 23 binding and conclusive unless appealed within thirty days and
9 24 the surviving spouse may bring an action to obtain possession
9 25 of any assets set apart to the surviving spouse. Such
9 26 elective share constitutes a judgment lien in favor of such
9 27 surviving spouse against the possessor of such assets.
9 28 Sec. 25. Section 633.264, Code 2005, is amended to read as
9 29 follows:
9 30 633.264 DISPOSAL OF PROPERTY BY WILL.
9 31 Subject to the rights of the surviving spouse to elect to
9 32 take against the will an elective share as provided by section
9 33 633.236, any person of full age and sound mind may dispose by
9 34 will of all the person's property, except sufficient to pay
9 35 the debts and charges against the person's estate.
10 1 Sec. 26. Section 633.271, Code 2005, is amended to read as
10 2 follows:
10 3 633.271 EFFECT OF DIVORCE OR DISSOLUTION.
10 4 1. If after making a will the testator is divorced or the
10 5 testator's marriage is dissolved, all provisions in the will
10 6 in favor of the testator's spouse or of a relative of the
10 7 testator's spouse, including but not limited to dispositions,
10 8 appointments relating to of property, and nominations to serve
10 9 in any fiduciary or representative capacity, are thereby
10 10 revoked by the divorce or dissolution of marriage, unless the
10 11 will provides otherwise.
10 12 2. In Unless the will provides otherwise, in the event the
10 13 testator and spouse remarry each other, the provisions of the
10 14 will revoked by the divorce or dissolution of marriage shall
10 15 be reinstated unless otherwise revoked by the testator, except
10 16 for provisions in favor of a person who died prior to the
10 17 remarriage which shall not be reinstated.
10 18 3. For the purposes of this section, "relative of the
10 19 testator's spouse" means a person who is related to the
10 20 divorced testator's former spouse by blood, adoption, or
10 21 affinity, and who, subsequent to a divorce or annulment,
10 22 ceased to be related to the testator by blood, adoption, or
10 23 annulment.
10 24 Sec. 27. Section 633.477, subsection 10, Code 2005, is
10 25 amended to read as follows:
10 26 10. A statement as to whether or not all statutory
10 27 requirements pertaining to taxes have been complied with and a
10 28 statement as to including whether the federal estate tax due
10 29 has been paid, and whether a lien continues to exist for any
10 30 federal estate tax, and whether inheritance tax was paid or a
10 31 return was filed in this state.
10 32 Sec. 28. Section 633.574, Code 2005, is amended to read as
10 33 follows:
10 34 633.574 PROCEDURE IN LIEU OF CONSERVATORSHIP.
10 35 If a conservator has not been appointed, money due a minor
11 1 or other property to which a minor is entitled, not exceeding
11 2 in the aggregate ten twenty=five thousand dollars in value,
11 3 shall be paid or delivered to a custodian under any uniform
11 4 transfers to minors Act. The written receipt of the custodian
11 5 constitutes an acquittance of the person making the payment of
11 6 money or delivery of property.
11 7 Sec. 29. Section 633.681, Code 2005, is amended to read as
11 8 follows:
11 9 633.681 ASSETS OF MINOR WARD EXHAUSTED.
11 10 When the assets of a minor ward's conservatorship are
11 11 exhausted or consist of personal property only of an aggregate
11 12 value not in excess of ten twenty=five thousand dollars, the
11 13 court, upon application or upon its own motion, may terminate
11 14 the conservatorship. The order for termination shall direct
11 15 the conservator to deliver any property remaining after the
11 16 payment of allowed claims and expenses of administration to a
11 17 custodian under any uniform transfers to minors Act. Such
11 18 delivery shall have the same force and effect as if delivery
11 19 had been made to the ward after attaining majority.
11 20 Sec. 30. Section 633.699, Code 2005, is amended by
11 21 striking the section and inserting in lieu thereof the
11 22 following:
11 23 633.699 POWERS OF TRUSTEES.
11 24 Unless it is otherwise provided by the will creating a
11 25 testamentary trust, the instrument creating an express trust,
11 26 or by an order or decree duly entered by a court of competent
11 27 jurisdiction, a trustee shall have all the powers granted a
11 28 trustee under sections 633.4401 and 633.4402. Documents
11 29 incorporating by reference powers granted a trustee under the
11 30 probate code or under this section shall be interpreted
11 31 accordingly, even if the execution or adoption of the
11 32 instrument creating the trust occurred prior to July 1, 2005.
11 33 Sec. 31. NEW SECTION. 633.699B APPLICABILITY OF LAW.
11 34 The terms of this division, and all other terms of this
11 35 probate code relating to trusts and trustees, shall apply only
12 1 to trusts that remain under continuous court supervision
12 2 pursuant to section 633.10 and to trusts that have not been
12 3 released from such continuous supervision pursuant to section
12 4 633.10. Regarding all such trusts, the terms of this chapter
12 5 shall supersede any inconsistent terms in the trust code and
12 6 such trusts shall be governed by terms of the trust code that
12 7 are not inconsistent with this probate code.
12 8 Sec. 32. Section 633.705, Code 2005, is amended by adding
12 9 the following new subsections:
12 10 NEW SUBSECTION. 3. Receipt of the affidavit described in
12 11 subsection 2 by the holder of the principal's property
12 12 constitutes sufficient acquittance for the payment of money,
12 13 delivery of property, or transfer of a registered ownership of
12 14 property as directed by the attorney in fact or agent and
12 15 discharges the holder from further liability with respect to
12 16 the money or property, if the holder has taken reasonable
12 17 steps to verify that the person acting as attorney in fact or
12 18 agent is the person to whom the principal has delegated the
12 19 authority to act as shown on the power of attorney document.
12 20 The holder of the principal's property may rely in good faith
12 21 on the statements contained in the affidavit and has no duty
12 22 to inquire into the truth of any statements in the affidavit.
12 23 NEW SUBSECTION. 4. If an attorney in fact or agent has
12 24 provided the affidavit described in subsection 2 and the
12 25 holder of the principal's property refuses to pay, deliver, or
12 26 transfer any property or evidence thereof within a reasonable
12 27 amount of time, the principal, acting through the attorney in
12 28 fact or agent, may recover the property or compel its payment,
12 29 delivery, or transfer in an action brought for that purpose
12 30 against the holder of the property.
12 31 a. If an action is brought against the holder under this
12 32 subsection and the court finds that the holder of the
12 33 principal's property acted unreasonably in refusing to pay,
12 34 deliver, or transfer the property as directed by the attorney
12 35 in fact, the court may award any or all of the following to
13 1 the principal:
13 2 (1) Damages sustained by the principal.
13 3 (2) Costs of the action.
13 4 (3) A penalty in an amount determined by the court, not
13 5 less than five hundred dollars or more than one thousand
13 6 dollars.
13 7 (4) Reasonable attorney fees, as determined by the court,
13 8 based on the value of the time reasonably expended by the
13 9 attorney and not by the amount of the recovery on behalf of
13 10 the principal.
13 11 b. No action shall be brought pursuant to this section
13 12 more than one year after the date of the occurrence of the
13 13 violation.
13 14 Sec. 33. Section 633.706, Code 2005, is amended by adding
13 15 the following new subsections:
13 16 NEW SUBSECTION. 4. Receipt, by the holder of the
13 17 principal's property, of the affidavit described in subsection
13 18 2 constitutes sufficient acquittance for the payment of money,
13 19 delivery of property, or transfer of the registered ownership
13 20 of property as directed by the attorney in fact or agent and
13 21 discharges the holder from any further liability to any person
13 22 with respect to the money or the property, if the holder has
13 23 taken reasonable steps to verify that the person acting as
13 24 attorney in fact or agent is the person to whom the principal
13 25 has delegated the authority to act as shown on the power of
13 26 attorney document. The holder of the principal's property may
13 27 rely in good faith on the statements in the affidavit and has
13 28 no duty to inquire into the truth of any of the statements in
13 29 the affidavit.
13 30 NEW SUBSECTION. 5. If an attorney in fact or agent has
13 31 provided the affidavit described in subsection 2 and the
13 32 holder of the principal's property refuses to pay, deliver, or
13 33 transfer any property or evidence thereof within a reasonable
13 34 amount of time, the principal, acting through the attorney in
13 35 fact may recover the property or compel its payment, delivery,
14 1 or transfer in an action brought for that purpose against the
14 2 holder of the property.
14 3 a. If an action is brought against the holder under this
14 4 subsection and the court finds that the holder of the
14 5 principal's property acted unreasonably in refusing to pay,
14 6 deliver, or transfer the property as directed by the attorney
14 7 in fact, the court may award any or all of the following to
14 8 the principal:
14 9 (1) Damages sustained by the principal.
14 10 (2) Costs of the action.
14 11 (3) A penalty in an amount determined by the court, not
14 12 less than five hundred dollars or more than one thousand
14 13 dollars.
14 14 (4) Reasonable attorney fees, as determined by the court,
14 15 based on the value of the time reasonably expended by the
14 16 attorney and not by the amount of the recovery on behalf of
14 17 the principal.
14 18 b. No action shall be brought pursuant to this section
14 19 more than one year after the date of the occurrence of the
14 20 violation.
14 21 Sec. 34. Section 633.1102, Code 2005, is amended by adding
14 22 the following new subsection:
14 23 NEW SUBSECTION. 0A. "Adjusted gross estate", as it
14 24 relates to a trust, means the same as defined in section
14 25 633.266.
14 26 Sec. 35. Section 633.1107, Code 2005, is amended to read
14 27 as follows:
14 28 633.1107 SCOPE OF TRUST CODE.
14 29 1. This Except as otherwise provided in subsection 2, this
14 30 trust code is intended to shall apply to trusts, as defined in
14 31 section 633.1102, subsection 17, that are intentionally
14 32 created, or deemed to be intentionally created, by individuals
14 33 and other entities.
14 34 2. With regard to trusts described in section 633.10, that
14 35 have not been judicially released from continuous court
15 1 supervision, this trust code shall apply only to the extent
15 2 not inconsistent with the relevant provisions of chapter 633.
15 3 With regard to all other trusts defined in section 633.1102,
15 4 the terms of chapter 633 shall be inapplicable, and the terms
15 5 of this trust code shall prevail over any inconsistent
15 6 provisions of Iowa law.
15 7 Sec. 36. Section 633.2208, Code 2005, is amended by adding
15 8 the following new subsection:
15 9 NEW SUBSECTION. 3. By way of illustration and without
15 10 limitation, a trust may be divided pursuant to this section to
15 11 allow a trust to qualify as a marital deduction trust for tax
15 12 purposes, as a qualified subchapter S trust for federal income
15 13 tax purposes, as a separate trust for federal generation
15 14 skipping tax purposes, or for any other federal or state
15 15 income, estate, excise, or inheritance tax benefit, or to
15 16 facilitate the administration of a trust.
15 17 Sec. 37. Section 633.2301, subsection 4, unnumbered
15 18 paragraph 1, Code 2005, is amended to read as follows:
15 19 A creditor or assignee of a beneficiary of a spendthrift
15 20 trust shall may not compel a distribution that is subject to
15 21 the trustee's discretion if any of the following apply despite
15 22 the fact that:
15 23 Sec. 38. Section 633.2303, Code 2005, is amended by adding
15 24 the following new subsection:
15 25 NEW SUBSECTION. 3. The assets of an irrevocable trust
15 26 shall not become subject to the claims of creditors of the
15 27 settlor of a trust solely due to a provision in the trust that
15 28 allows a trustee of the trust to reimburse the settlor for
15 29 income taxes payable on the income of the trust. This
15 30 subsection shall not limit the rights of a creditor of the
15 31 settlor to assert a claim against the assets of the trust due
15 32 to the retention or grant of any rights to the settlor under
15 33 the trust instrument or any other beneficial interest of the
15 34 settlor other than as specifically set forth in this
15 35 subsection.
16 1 Sec. 39. Section 633.3107, Code 2005, is amended to read
16 2 as follows:
16 3 633.3107 EFFECT OF DIVORCE OR DISSOLUTION.
16 4 1. If, after executing a revocable trust, the settlor is
16 5 divorced or the settlor's marriage is dissolved, all
16 6 provisions in the trust in favor of the settlor's spouse or of
16 7 a relative of the settlor's spouse, including, but not limited
16 8 to, dispositions, appointments of property, and nominations to
16 9 serve in any fiduciary or representative capacity are revoked
16 10 by divorce or dissolution of marriage unless the trust
16 11 instrument provides otherwise.
16 12 2. In Unless the trust instrument provides otherwise, in
16 13 the event the settlor and spouse remarry each other, the
16 14 provisions of the revocable trust revoked by the divorce or
16 15 dissolution of marriage shall be reinstated unless otherwise
16 16 modified by the settlor, except for provisions in favor of a
16 17 person who died prior to the remarriage which shall not be
16 18 reinstated.
16 19 For the purposes of this section, "relative of the
16 20 settlor's spouse" means a person who is related to the
16 21 divorced settlor's former spouse by blood, adoption, or
16 22 affinity, or who, subsequent to the divorce or annulment,
16 23 ceased to be related to the settlor by blood, adoption, or
16 24 affinity.
16 25 Sec. 40. NEW SECTION. 633.3112 CLASSIFICATION OF DEBTS
16 26 AND CHARGES.
16 27 If a revocable trust becomes subject to the claims of a
16 28 settlor's creditors and the costs of administration of the
16 29 settlor's estate pursuant to section 633.3104, following the
16 30 payment of the proper costs of administration of the trust and
16 31 any claims against the trust, the debts and charges of the
16 32 settlor's estate payable by the trust shall be classified
16 33 pursuant to sections 633.425 and 633.426 as such sections
16 34 exist on the date of the settlor's death.
16 35 Sec. 41. Section 633.4701, Code 2005, is amended by adding
17 1 the following new subsection:
17 2 NEW SUBSECTION. 8A. For the purposes of this section, a
17 3 term of the trust requiring that a beneficiary survive a
17 4 person whose death does not make the beneficiary entitled to
17 5 possession or enjoyment of the beneficiary's interest in the
17 6 trust shall not be considered as "otherwise specifically
17 7 stated by the terms of the trust" nor as an "express condition
17 8 of survivorship imposed by the terms of the trust".
17 9 Sec. 42. Section 633.4701, subsection 9, Code 2005, is
17 10 amended to read as follows:
17 11 9. If an interest to which this section applies is given
17 12 to a class, other than a class described as "issue",
17 13 "descendants", "heirs of the body", "heirs", "next of kin",
17 14 "relatives", or "family", or a class described by language of
17 15 similar import, the members of the class who are living on the
17 16 date on which the class becomes entitled to possession or
17 17 enjoyment of the interest shall be considered as alternate
17 18 beneficiaries under this section. However, neither the
17 19 residuary beneficiaries under the settlor's will nor the
17 20 settlor's heirs shall be considered as alternate beneficiaries
17 21 for the purposes of this section.
17 22 Sec. 43. NEW SECTION. 633.4703 GENERAL ORDER FOR
17 23 ABATEMENT.
17 24 Except as otherwise provided by the governing instrument,
17 25 where necessary to abate shares of the beneficiaries of a
17 26 trust for the payment of debts and charges, federal and state
17 27 estate taxes, bequests, and the shares of children born or
17 28 adopted after the execution of the trust, abatement shall
17 29 occur in the following order:
17 30 1. Shares allocated to the residuary beneficiaries of the
17 31 trust shall be abated first, on a pro rata basis.
17 32 2. Shares defined by a dollar amount, on a pro rata basis.
17 33 3. Shares described as specific items of property whether
17 34 tangible or intangible shall be abated last, and such
17 35 abatement shall be done as equitably by the trustee among the
18 1 various beneficiaries as circumstances reasonably allow.
18 2 4. Notwithstanding subsections 1, 2, or 3, a disposition
18 3 in favor of the grantor's surviving spouse shall not be abated
18 4 where such abatement would have the effect of increasing the
18 5 amount of federal estate or federal gift taxes payable by a
18 6 person or an entity.
18 7 Sec. 44. NEW SECTION. 633.4704 SIMULTANEOUS DEATH.
18 8 If the determination of the successor of a beneficial
18 9 interest in a trust is dependent upon whether a beneficiary
18 10 has survived the death of a settlor, of another beneficiary,
18 11 or of any other person, the uniform simultaneous death Act,
18 12 sections 633.523 through 633.528, shall govern the
18 13 determination of who shall be considered to have died first.
18 14 Sec. 45. NEW SECTION. 633.4705 PRINCIPAL AND INCOME.
18 15 Chapter 637 shall apply to trusts subject to this chapter.
18 16 Sec. 46. NEW SECTION. 633.4706 SMALL DISTRIBUTIONS TO
18 17 MINORS == PAYMENT.
18 18 When a minor becomes entitled under the terms of the trust
18 19 to a beneficial interest in the trust upon the distribution of
18 20 the trust fund and the value of the interest does not exceed
18 21 the sum of twenty=five thousand dollars, the trustee may pay
18 22 the interest to a custodian under any uniform transfers to
18 23 minors Act. Receipt by the custodian shall have the same
18 24 force and effect as though payment had been made to a duly
18 25 appointed and qualified conservator for the minor.
18 26 Sec. 47. NEW SECTION. 633.5105 CHARITABLE TRUSTS.
18 27 In addition to the provisions of this chapter, a charitable
18 28 trust that is a private foundation shall be governed by the
18 29 provisions of chapter 634.
18 30 Sec. 48. Section 633.6101, Code 2005, is amended to read
18 31 as follows:
18 32 633.6101 SUBJECT MATTER JURISDICTION.
18 33 The district court sitting in probate has exclusive
18 34 jurisdiction of proceedings concerning the internal affairs of
18 35 a trust and of actions and proceedings to determine the
19 1 existence of a trust, actions and proceedings by or against
19 2 creditors or debtors of a trust, and other actions and
19 3 proceedings involving a trust and third persons. Such
19 4 jurisdiction may be invoked by any interested party at any
19 5 time.
19 6 Sec. 49. Sections 633.28, 633.699A, 633.703A, 633.703B,
19 7 633.7101, 636.60, 636.60A, 636.61, Code 2005, are repealed.
19 8 Sec. 50. Sections 633.2; 633.3, unnumbered paragraph 1;
19 9 633.3, subsections 7 and 20; 633.22, subsection 4; 633.34;
19 10 633.38; 633.40, subsection 1; 633.44; 633.46; 633.47; 633.71;
19 11 633.88; 633.118; 633.160; 633.162; 633.350; 633.365; 633.389;
19 12 633.433; 633.434; 633.500; 633.502; 633.597; 633.633;
19 13 633.633A; and 633.652, Code 2005, are amended by striking from
19 14 the applicable section, paragraph, or subsection the word
19 15 "Code" and inserting in lieu thereof the following: "probate
19 16 code".
19 17 Sec. 51. CODE EDITOR DIRECTIVE. Sections 633.707,
19 18 unnumbered paragraph 1; 633.711, subsection 2; 633.800;
19 19 633.801, unnumbered paragraph 1; 633.803; 633.807, subsections
19 20 2 and 7; 633.808; 633.809; 633.810; 633.901; 633.902,
19 21 unnumbered paragraph 1; 633.903; 633.904; 633.905, subsection
19 22 6; 633.913, subsections 5 and 6; 633.914; 633.915; 633.916;
19 23 633.917; 633.1101; 633.1102, unnumbered paragraph 1; and
19 24 633.1104; Code 2005, are amended by striking from the
19 25 applicable section, paragraph, or subsection the word
19 26 "division" and inserting in lieu thereof the following:
19 27 "chapter".
19 28 Sec. 52. CODE EDITOR DIRECTIVE. The Code editor is
19 29 directed to transfer from chapter 633, division XVII (sections
19 30 633.705 and 633.706), division XVIII (633.707 through
19 31 633.711), division XIX (633.800 through 633.811), and division
19 32 XX (633.901 through 633.917), as amended in this Act, to new
19 33 chapters 633B, 633C, 633D, and 633E, respectively.
19 34 Sec. 53. CODE EDITOR DIRECTIVE. The Code editor is
19 35 directed to transfer from chapter 633, sections 633.1101
20 1 through 633.1108, 633.2101 through 633.2107, 633.2201 through
20 2 633.2208, 633.2301 through 633.2303, 633.3101 through
20 3 633.3111, 633.4101 through 633.4111, 633.4201 through
20 4 633.4214, 633.4301 through 633.4309, 633.4401 and 633.4402,
20 5 633.4501 through 633.4507, 633.4601 through 633.4605, 633.4701
20 6 and 633.4702, 633.5101 through 633.5104, 633.6101 through
20 7 633.6105, 633.6201 and 633.6202, and 633.6301 through
20 8 633.6308, as amended in this Act, to new chapter 633A and to
20 9 retain the same section number designations.
20 10 Sec. 54. CODE EDITOR DIRECTIVE. The Code editor is
20 11 directed to correct internal references in the Code as
20 12 necessary due to the enactment of this Act.
20 13 EXPLANATION
20 14 This bill amends various provisions in the probate code,
20 15 and transfers certain divisions currently located in the
20 16 probate code (Code chapter 633) relating to trusts (division
20 17 XXI, also known as the Iowa trust code), powers of attorney
20 18 (division XVII), medical assistance trusts (division XVIII),
20 19 transfers on death security registration (division XIX), and
20 20 uniform disclaimer of property interest Act (division XX) from
20 21 the probate code to Code chapters 633A, 633B, 633C, 633D, and
20 22 633E, respectively. The bill also consolidates certain
20 23 provisions relating to trusts into the trust code.
20 24 The bill amends the definition of a trust subject to the
20 25 ongoing administration and supervision of the probate code to
20 26 specifically include a trust in existence on July 1, 2005, and
20 27 that is subject to continuous court supervision and a trust
20 28 established by court decree that is subject to continuous
20 29 court supervision. Such a trust shall be governed by both the
20 30 probate code and the trust code, as amended, where the
20 31 provisions of the trust code do not conflict with the
20 32 provisions of the probate code. Upon joint application by the
20 33 trustee administering a trust that is in existence on July 1,
20 34 2005, and subject to continuous court supervision, and
20 35 following notice to the appropriate beneficiaries, the court
21 1 shall release the trust from further jurisdiction of the
21 2 probate court unless a beneficiary objects. Conforming
21 3 amendments in both the probate code and the trust code
21 4 emphasize that all court proceedings regarding trusts shall be
21 5 governed by the district court sitting in probate.
21 6 The bill makes conforming Code changes, including repeals,
21 7 to sections of the probate code related to the amended
21 8 definition of a trust and the administration of the probate
21 9 docket.
21 10 The bill amends sections in the probate code relating to
21 11 small distributions of money to minors under the terms of a
21 12 will to a bequest or legacy or to a share of the estate of an
21 13 intestate, by increasing the size of the interest from $10,000
21 14 to $25,000. The bill creates a similar provision in the trust
21 15 code, as amended, relating to small distributions of money to
21 16 minors in regard to a beneficial interest in a trust fund.
21 17 The bill amends and repeals sections in the probate code
21 18 that were enacted prior to the creation of the trust code
21 19 relating to general default powers of a trustee, modification
21 20 or termination of uneconomical testamentary trusts, and the
21 21 creation and establishment of separate trusts.
21 22 The bill amends sections of the probate code relating to
21 23 the right of a surviving spouse to take an elective share of
21 24 the deceased spouse's estate including the right to receive a
21 25 share of the deceased spouse's revocable trust assets and the
21 26 right to elect a life estate in the homestead. Current law
21 27 provides that a surviving spouse may elect against the will of
21 28 a deceased spouse and claim a statutory share that does not
21 29 include property held in trust by the deceased spouse or the
21 30 right to elect a life estate in the homestead.
21 31 The bill amends sections of the probate code relating to
21 32 the revocation of spousal benefits in a testator's will upon
21 33 divorce or dissolution of the testator's marriage to include
21 34 relatives of the spouse who, after the divorce, are not
21 35 relatives of the testator, and duplicates the same amendments
22 1 relating to a settlor's revocable trust upon divorce or
22 2 dissolution of the settlor's marriage in the trust code, as
22 3 amended.
22 4 The bill amends a section of the probate code relating to a
22 5 personal representative's final report and fees paid to a
22 6 personal representative for services rendered.
22 7 The bill amends a section of the probate code relating to
22 8 the appointment of a probate referee.
22 9 The bill removes divisions in the probate code related to
22 10 powers of attorney (division XVII), medical assistance trusts
22 11 (division XVIII), transfers on death security registration
22 12 (division XIX), and uniform disclaimer of property interest
22 13 (division XX), from the probate code and creates separate Code
22 14 chapters 633B, 633C, 633D, and 633E, respectively. The bill
22 15 amends power of attorney provisions relating to the validity
22 16 of power of attorney instruments and financial institutions.
22 17 The bill removes the trust code (division XXI) from the
22 18 probate code, amends certain sections, and creates a separate
22 19 Code chapter (633A) for the trust code.
22 20 The bill amends sections of the trust code relating to the
22 21 scope of the trust code and trusts governed by the probate
22 22 code, parallel to the amended provisions regarding the
22 23 distinction between trusts subject to continuous court
22 24 supervision and trusts not subject to continuous court
22 25 supervision in the probate code. The bill also amends
22 26 sections of the trust code relating to the division of a trust
22 27 for tax purposes, the rights of creditors or transferees to
22 28 obtain trust assets, the effect of a divorce or dissolution on
22 29 a settlor's revocable trust, and trust construction provisions
22 30 relating to rights of survivorship and future interests.
22 31 The bill creates new sections in the trust code applying
22 32 the uniform simultaneous death Act and the uniform principal
22 33 and income Act to trusts subject to the trust code.
22 34 The bill repeals certain sections in Code chapter 636
22 35 relating to powers and duties of trustees of trusts not
23 1 subject to court administration, the validity of voluntary
23 2 trusts, and the definition of an adjusted gross estate in an
23 3 express trust not subject to probate court administration.
23 4 The bill directs the Code editor to transfer and recodify
23 5 the appropriate divisions and to make conforming internal
23 6 reference changes, as necessary.
23 7 LSB 1076HV 81
23 8 rh:rj/sh/8