Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.
Detailed Answer
When someone dies in Iowa, the personal representative (executor or administrator) must identify, validate, and pay creditor claims before distributing assets to heirs and beneficiaries. Iowa Code Chapter 633 governs this process and sets strict procedures and deadlines. Following these steps will help you manage and prioritize claims effectively:
- Notify Creditors: Within 30 days of appointment, the personal representative must give notice to known creditors and publish a notice in a local newspaper for at least three consecutive weeks. See Iowa Code §633.41 (link).
- Deadline for Filing Claims: Creditors generally have six months from the date of appointment to file a claim against the estate. Late claims can be barred unless the court allows an extension for good cause. See Iowa Code §633.41(2) (link).
- Review and Validate Claims: Collect copies of all bills, invoices, and contracts. Compare each claim to estate records. For secured claims, verify lien documentation.
- Prioritize Payments: Iowa law establishes a hierarchy of claims. You must pay higher-priority debts before lower-priority ones. See the list below for details.
- Payment and Final Accounting: After paying allowed claims in order of priority, the personal representative files a final accounting with the court. Remaining assets are distributed per Iowa Code §633.440 (link).
Statutory Priority of Claims under Iowa Law
- Administrative Expenses: Fees for the personal representative and attorney fees are paid first. Iowa Code §633.367 sets representative compensation (link).
- Funeral Expenses: Reasonable funeral and burial costs (typically capped at $5,000). See Iowa Code §633.460 (link).
- Debts of Last Illness: Hospital and medical bills incurred during the decedent’s last illness, also under §633.460.
- Taxes: Federal estate tax under the Internal Revenue Code (no state estate tax in Iowa) and unpaid income taxes of the decedent.
- Secured Claims: Mortgages, liens, or other claims backed by specific estate property.
- Unsecured Claims: General creditor claims such as credit-card debt or personal loans.
- Subordinated Claims: Claims contractually or statutorily subordinated to other creditors.
Helpful Hints
- Keep a detailed log of notices sent, publication dates, and claim deadlines.
- Use a dedicated estate bank account to track receipts and disbursements.
- Confirm all lien releases for secured claims before sale or transfer of property.
- Verify medical and funeral expenses are reasonable and supported by receipts.
- Communicate regularly with beneficiaries to manage expectations.
- File the final accounting promptly to close the estate without court delay.