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Estate Planners Alert: Are Your Clauses Coordinated? Are Your Terms Clearly Defined?

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by Carol Warnick

What is the definition of the "residuary" of a trust or a will? Is it clearly defined in all of our documents or do we assume that it will be easy to figure out? Or do we even think about it since we clearly know what the residuary is? I have seen several instances lately where the actual residuary was not well-defined in the document and thus became the subject of very expensive litigation.

It is not just a matter of who gets what assets, but since taxes and administrative costs often come out of the residuary, it is important to make sure it is clear what that means. In one instance I have seen, it was clearly defined where taxes were to be paid from, but very unclear as far as administrative expenses are concerned. In some estates or trusts, that might not be such a big deal because the costs may be fairly nominal. However, there may be unexpected circumstances. (What percentage of our trusts/estates actually don't have something expected arise?) What happens if the trust or estate, through no fault of its own, becomes embroiled in litigation between the beneficiaries or if the fiduciary has to defend the document against an undue influence claim? The allocation of administrative expenses in that situation can create additional litigation even after the first lawsuit has been resolved.

Dangers in Charitable Giving – Colorado’s Attorney General Takes Action Against Charities

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by Kelly Cooper Normally, when the topic of charitable giving comes up with a client, the discussion is a positive one.  The client is excited about the great work being done by a charity, wants to ensure that their charitable work is continued after their death or has a desire to create a legacy.  However, […]

Trying to Do the Right Thing – Ethics and Estate Planning

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by: Kelly Cooper

Many readers of this blog are familiar with (or even attended) the CBA’s Trust and Estate Section’s Estate Planning Retreat two weeks ago in Snowmass Village.  As always, the Retreat was a great time to reconnect or catch up with our colleagues who work in the estate planning and administration areas and attorneys who do estate planning, administration and litigation.  More importantly, each year the Retreat presents an opportunity for attorneys from all over the state to discuss issues and exchange ideas with each other in small groups.  This year, Jean Stewart and I hosted one of those small discussion groups.  Our discussion group focused on ethics and the conflict and confidentiality issues that arise during the course of representing a family – from the initial representation of a couple for estate planning, to representing the family business, pre-nuptial agreements for the couple’s children, divorces, the differing treatment of children (Greedy, Needy and Speedy), and eventually, the disability or death of a client.

Mediator Moment – Finis Origine Pendet

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by C. Jean Stewart

I have spent the last few days at the Straus Institute for Dispute Resolution at Pepperdine University in Malibu, California participating in one of their excellent advanced mediation courses with alternative dispute resolution practitioners from around the world.  We devoted plenty of class time to the discussion and appreciation of designing dispute resolution scenarios that will yield success. 

Spending the time and effort to design an appropriate alternative dispute resolution model can pay handsome dividends. I have always observed that cases that are rushed into mediation, without adequate attention paid to the design and preparation phase, frequently yield dissatisfaction in one or more dimensions. I thought I would report here on a satisfying result that recently came from a thoughtfully planned process.

Practicing Law in Three States

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by Carol Warnick

I practice law in three Rocky Mountain states, Colorado, Utah and Wyoming.  As would be expected, there are significant differences among them, but also significant similarities.  It does provide a useful perspective with regard to the trends in estate, trust and fiduciary law — at least in the western United States.

We were living in Wyoming when my youngest of four children was ready to start school full-day, which was when I finally had the opportunity to go to law school.  Naturally, after graduating from law school, Wyoming was the first state in which I applied for admission to the bar and was admitted in 1990.  After successfully passing the Wyoming bar exam, I was surprised and pleased to be invited to apply for admission in Colorado.  Of course, I did so and waived into Colorado in 1992.  Interestingly enough, about 7 years after waiving into Colorado, we moved to Denver.  I kept some of my Wyoming clients and began building up a new practice in Colorado.  How convenient it was to already be admitted in Colorado!  I happily worked in both states, and for a while we even had a small Holland & Hart office in Casper, WY. 

Payment of College Expenses for Beneficiaries – To Pay or Not to Pay?

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By Kelly Cooper

Fiduciary clients regularly ask me what expenses can be paid out of a trust.  Generally, this requires an examination of the terms of the trust and the applicable law.  However, even after considering the terms of the trust and applicable law, trustees are often stuck in this grey area trying to determine what expenses may be paid.  As a result, I am always on the lookout for cases that might provide guidance for trustees in exercising their discretion.  Recently, a case from New York caught my eye.  Matter of McDonald, 100 A.D. 1349 (N.Y. App. Div. 4th Dep’t 2012).

In this case, the grandfather created a trust for his twin granddaughters and appointed his daughter (the twins’ mother) to serve as trustee.  As trustee, the mother refused to pay for the twins’ college expenses and to purchase a car for their use.  The twins filed suit and asked the court to remove their mother as trustee and to award attorney fees.

I’ll Be the Judge of That

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by C. Jean Stewart

I’ve been in San Antonio, Texas attending the Spring Conference of the National College of Probate Judges this week, catching up with old friends and learning about new trends and concerns among probate courts from Alabama to Oregon to Maine.  This has been an outstanding program in a very special setting.  Our thanks to Judge Mike Wood from Harris County Probate Court No. 2 (Houston) and Judge Ponda Caldwell from Spartanburg County Probate Court (Spartanburg, South Carolina) who assembled a group of outstanding judges and speakers to lead our conference. 

Probate judges and their probate court administrators continue to be restricted by severe budget cuts; nevertheless, we all share common concerns about probate court procedures in trust and estate litigation, abuse and financial exploitation of the vulnerable and elderly, and recent developments throughout the country in all areas of the law that impact probate cases.

Mediator’s Moment – Before You Mediate

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By C. Jean Stewart

After serving for 16 years as the Presiding Judge of the Denver Probate Court, I resigned in 2011 to start a private practice providing neutral services to litigants and lawyers who confront conflicts around wealth transfer, fiduciary liability, estate and trust litigation and family dynamics.  My practice here at Holland & Hart’s Fiduciary Solutions practice group includes mediation services.  Some of my experiences in mediation remind me that all processes are only as good as the preparation of the participants. 

I intend to provide a few of these observations in this and future posts as an aid to lawyers and their clients in asking for, preparing for and participating in mediation.  One observation relates to the so-called “style” of the mediator.  In my scheduling letter preliminary to a mediation engagement I advise the parties and their counsel that I have had experience in both evaluative and interest-based mediation.  I think the best mediators can adapt to the facts and circumstances of individual cases in approaching the mediation process and apply one or both styles as appropriate.

Trust Protector As A Fiduciary – To Be Or Not To Be

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by Carol Warnick

As the use of trust protectors has become more and more popular, one issue continues to surface. That is the question of whether or not a trust protector is a fiduciary or can be insulated by the trust language from being a fiduciary. It is an important question because of the duties and potential liability that could be imposed on a trust protector who is considered a fiduciary.

To set the stage, a brief discussion of trust protectors in general is in order. Some trace the beginnings of the concept to the world of off-shore asset protection trusts. Others point to thoughtful estate planners in the early 1980's who were trying to create flexible or "amendable" irrevocable trusts. While its origin is interesting, what a trust protector can and does do is obviously more important. A trust protector is a person who holds a power that when invoked is able to direct the trustee in matters relating to the trust. The power can be either a negative one or a positive one. It would be negative if it was merely the power to stop or veto some proposed action the trustee wanted to take. It would be positive if it allowed the trust protector to take action proactively, such as the power to add beneficiaries, remove or replace trustees, or even amend or terminate the trust.

Civil Unions Legislation Effective May 1, 2013

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by Kelly Cooper 

In 2012, a law that would have permitted same-sex partners to enter into civil unions in Colorado failed.  In this year’s legislative session, advocates for civil unions were successful and on May 1, 2013, the Colorado Civil Union Act will become effective. 

The Act provides same-sex partners the benefits, protections and responsibilities given to spouses under Colorado law if they enter into a civil union.  In addition, the Act provides that civil unions, domestic partnerships and other legal relationships between same-sex partners created in other states will be treated as civil unions in Colorado.