How to Create a Living Trust in Iowa

A living trust is an estate planning document that allows individuals to transfer ownership of their assets to beneficiaries while minimizing taxes and ensuring their wishes are carried out. In Iowa, several types of trusts are available, including revocable living trusts, irrevocable living trusts and special needs trusts. Each type of trust has its unique characteristics and benefits, and the choice of which type to use will depend on the individual’s specific needs and circumstances.

Consider working with a financial advisor if you have a more complex estate or if you just aren’t sure how to tackle the planning process.

Creating a Living Trust in Iowa

By creating a living trust, individuals can ensure that their assets are distributed according to their wishes after they pass away, without court intervention.

To create a living trust in Iowa, individuals must follow a few steps.

1. Pick the type of trust. If you are single, a single trust is probably the right type of trust for you. Married couples will likely want to create a joint trust. You and your partner can both put property into a joint trust and store jointly held property, such as cars and homes.
2. Take inventory of your property. You need to know exactly what you have and what you want to store in the trust. Most of your property is eligible for the living trust, including stocks and bonds. Gather relevant property documents, such as stock ownership certificates and home deeds.
3. Pick a trustee. You can name yourself as trustee for now, but you’ll need a successor trustee who will take over when you die. This is the person who will ensure the distribution of your property to your beneficiaries in accordance with the trust’s instructions. You should also decide on your beneficiaries.
4. Draw up the trust. You can do this either by yourself using an online program or with the help of an estate planning lawyer.
5. Sign the trust. You must do this in front of a notary.
6. Fund the trust. This means transferring your assets into the trust. You can do this yourself, though it requires some paperwork. Getting a lawyer may be advisable.

What Is a Living Trust?

Essentially, a living trust is a legal framework established by a document that holds property and assets. It has a trustee who manages it and distributes its property to the designated beneficiaries. The person who creates the trust, also known as the grantor or settlor, can also serve as the trustee. They can also appoint someone else to serve as trustee.

Two basic types of living trusts exist: revocable and irrevocable living trusts:

• Revocable living trusts. Revocable living trusts have flexibility, allowing the grantor to change the trust and remove property as needed. That person still owns the property in the trust and thus pays taxes on it as normal.
• Irrevocable living trusts. Irrevocable living trusts are permanent, so the grantor can’t change an irrevocable living trust or remove property without express permission from everyone named in the trust. The trust fully owns its property, and you pay taxes through the trust.

How Much Does It Cost to Create a Living Trust in Iowa?

How much you’ll pay to create a living trust will depend on the method you use.

One option is to write the document yourself using an online program. This will probably cost less than a few hundred dollars. You can also hire an attorney, which will likely cost at least $1,500.

It is cheaper to create a living trust yourself, but DIY estate planning can have pitfalls. You must spend a lot of time and energy sorting all the details. If you don’t think you can do that, you should strongly consider getting a lawyer. Just be sure you hire an attorney who is a trust specialist, not just an estate planner.

Be sure to have a good understanding of your attorney’s fees before you start working together.

Why Get a Living Trust in Iowa?

Generally, Iowans will create a living trust so that their families can avoid probate court once they’ve died.

Probate is a process that most estates go through to establish a will’s validity. However, it can be an invasion of privacy and take a lot of time.

Iowa has not adopted the Uniform Probate Code, which in some states serves to simplify the probate process. For this reason, a living trust may be especially useful in Iowa.

There are other reasons to use a living trust, though. For instance, if you have a minor child you’d like to leave property to, that property can stay in the trust until the child reaches legal age.

Because you’ll appoint a trustee when you create a living trust, it can also help you avoid conservatorship in the event you become incapacitated.

Who Should Get a Living Trust in Iowa?

The common belief is often that living trusts are just for the wealthy. That isn’t true, though. With no Uniform Probate Code, even a relatively small estate may benefit from using a living trust to protect its assets and avoid probate.

However, Iowa does have a simplified probate process for estates of less than $200,000. ¹ If your estate’s value falls below that threshold, a living trust may not be necessary. A living trust does typically cost more to create than a will, though. It also has the potential to cause problems after you’ve died, as it allows a longer window for potential challenges.

Living Trusts vs. Wills

You’ll still need to make a will even if you create a living trust.

A will allows you to provide instructions for any property that’s not placed inside the trust. Additionally, wills have the following capabilities that living trusts do not:

• Naming an executor
• Providing instructions on how to pay taxes and debts
• Establishing guardianship for children who are minors
• Selecting managers for children’s property

This chart compares wills and living trusts to give you a better understanding of the similarities and differences.

Living Trusts vs. Wills

Living Trusts and Taxes in Iowa

A living trust probably won’t impact your tax situation, but as you plan your estate, it is still important to know about the Iowa’s estate tax and inheritance tax. 

There is no estate tax or inheritance tax in Iowa. However, the federal estate tax applies to estates that are worth more than $15 million ($30 million for couples) in 2026.

How a Financial Advisor Can Help You Create a Living Trust in Iowa

A living trust involves legal documents, but the financial decisions that shape those documents carry just as much weight as the legal language itself.

A financial advisor working alongside an estate planning attorney can help you approach the process with a clearer picture of what you own, what you owe and what you want to accomplish before drafting anything.

Inventory

One of the most practical contributions an advisor can make upfront is helping you build a thorough financial inventory.

Knowing which assets are eligible for the trust, how each is currently titled and what paperwork will be required to transfer them provides the attorney with a more complete foundation to work from. Assets accidentally left outside the trust may still end up in probate, defeating much of the purpose of creating the trust in the first place.

Federal Exemption

There are more considerations for Iowans with estates approaching the federal exemption threshold.

An advisor can project where your estate is headed based on current assets and expected growth. They can identify whether any action makes sense before the exemption potentially decreases.

Retirement

Retirement accounts require a separate conversation because you cannot place them directly into a living trust.

An advisor can help you evaluate whether naming the trust as a beneficiary on those accounts makes sense given your family structure and tax situation. They can help you determine whether directing assets to individuals produces a better outcome for the people inheriting them.

An advisor can also help those considering an irrevocable trust structure to protect assets. They can model how much can realistically be moved out of your estate without creating financial risk for yourself down the road.

Committing too much to an irrevocable structure before accounting for potential healthcare costs or changes in income is one of the more consequential mistakes in estate planning. However, it is one that financial projections can help prevent.

Bottom Line

Iowans may want to create a living trust to avoid probate court. This is especially valuable in a state like Iowa that has not adopted the Uniform Probate Code to streamline the probate process. It isn’t difficult to make a living trust, but it does require some attention to detail if you want to do it yourself. For this reason, getting a lawyer to help you through the process may be the best course of action.

Estate Planning Tips

• When you are estate planning, you’re going to want to get the best advice you can. A financial advisor can be hugely helpful in the process, but you want to ensure you find an advisor who suits your needs. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• A 401(k) plan is a great way to save for retirement, but it can’t be placed directly into a living trust. There’s a quick fix, though: name your trust as your account’s beneficiary and after you die your benefits will pay into your trust.
• Don’t make the estate planning mistake of thinking you’re too young to plan your estate. Hopefully, your plan won’t go into effect for a long time, but you’ll feel better knowing things will be taken care of if the worst happens.

Photo credit: ©iStock.com/DNY59, ©iStock.com/dustin77a