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Until Pay-On-Death Do Us Part

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The Nyemaster Tax Law Blog is dedicated to current tax law and employee benefit/ERISA issues impacting individuals and businesses, at both the Iowa and federal levels. We hope you find this resource informative and appreciate your feedback.

Last Friday, the Iowa Supreme Court ruled that a surviving husband who elects against his wife's will is not entitled to any portion of her pay-on-death (POD) assets that pass outside of probate. The case, Estate of Myers, is the Court's first significant foray into elective share issues since deciding in 2006 that elective share rights extend to assets held in a revocable trust, and not just those passing under a will. Sieh v. Sieh, 713 N.W.2d 194.

In an opinion by Justice Waterman, the Court acknowledged that the same rationale for subjecting revocable trust assets to the elective share applies to POD assets as well – in both cases, the decedent has complete control over the assets at all times prior to death. However, the Court ruled that the legislature's 2009 amendment of the elective share statute both codified and limited the holding in Sieh, such that its rationale applies only to revocable trusts and not to other non-probate assets. The Court appeared sympathetic to the public policy arguments of the spouse, but directed him to make those arguments to the legislature. The Myers case is here. Sieh is here.



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