Minors Inheriting Property in Iowa

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My daughter Maggie
I recently have had a couple of situations where minor children are heirs of a parent that passed away.  As a result, the minor children are beneficiaries of their parent's estate.  However, in Iowa, it can be a challenge when a minor is inheriting money/assets.

Iowa law provides that if the amount of the inheritance is above $25,000, it is necessary that a conservatorship be opened for the minor.  A conservatorship, while beneficial in handling the assets for a minor that can't handle those assets, can be a challenge and potentially frustrating experience.  Some issues associated with a conservatorship:

  • Annual reporting requirements - each year (or occasionally other periods) a report is filed and review by the court for all income and expenses of the conservatorship.
  • Annual expenses - there are annual court costs and potentially attorney fees to handle those reports.
  • Bonding requirements - a conservator has to post an insurance bond before they can be appointed.  This can be difficult to get for many people.
  • Limitations - Want to change the investments? Need a special disbursement?  You'll have to go to court first.
  • "Handcuffs" off at 18 - When the child turns 18, all of the money is immediately theirs.  Buy a new car with 412 hp? (I love that car.) Purchase a ton of new clothes?  All are options as the child can do anything they want.  Not sure how many 18 year olds could handle that responsibly.
There are ways to avoid a conservatorship when a minor is a beneficiary, but it takes action and planning ahead of time...not from the grave.  
Get a will - and set up a trust for your kids.  

You avoid nearly all of the headaches with a conservatorship.  

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