Arbitration Clause Held Not Enforceable as to the Validity of the Trust Amendment

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by Carol Warnick

There has been considerable discussion regarding including arbitration clauses in estate planning documents over recent years. Some estate and trust attorneys are actively pushing for the inclusion of such clauses.  Recently, an Arkansas Appellate Court held that an arbitration provision in a trust, if enforceable at all, would not be enforced to determine the validity of a trust document – in this case a trust amendment.[1]

The decedent’s revocable trust already provided an arbitration clause, but just before his death, he signed a trust amendment expanding the arbitration clause to purportedly cover all disputes and be binding on all trustees and beneficiaries. 

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Finding Lost Life Insurance Policies

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by Jody H. Hall

As a probate paralegal, I often assist personal representatives, trustees and family members in collecting information about their loved one’s assets.  Life insurance proceeds can be a blessing to the family to pay for expenses and in relieving the financial burden after a death.  However, while the client may think they remember the deceased person having life insurance, they may not be able to locate any existing policies or have access to related documents.  In addition, the life insurance company may have changed names or merged, many times more than once, since the policy was issued.  If the policy was paid up, no correspondence may have been sent to the insured for literally decades.  A non-family member or professional fiduciary may not have any information about insurance at all.

In 2016, the National Association of Insurance Commissioners (NAIC) created the Life Insurance Policy Locator to help address the growing problem of millions of dollars in unclaimed life insurance proceeds.  The Life Insurance Policy Locator along with Frequently Asked Questions can be found here:  https://eapps.naic.org/life-policy-locator/#/welcome

The client should continue to review the deceased’s important papers, research bank accounts for evidence of premium payments, and search online to find successor companies for old policies.  But when specific information cannot be located, this resource could potentially find those lost benefits for the family.  The requestor should need to be a person authorized to received information (note that the Attorney or Legal Representative for the Deceased is an option on the NAIC request) and will need to provide pertinent details about the deceased.  According to the Colorado Department of Regulatory Agencies, more than $92.5 million in life insurance proceeds was matched with beneficiaries in just the first year of the locator.

I have not yet used the Life Insurance Policy Locator, but I am thankful to have a resource to provide to those clients where that illusive policy just cannot be located.

Trustees Beware: Provide Timely Information to Beneficiaries

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by Carol Warnick

Individual trustees often fail to fulfill the duties imposed on trustees, not only by the trust instrument, by also by the trust statutes applicable in the jurisdiction.  It is often the case that the individual trustee is a member of the family and seems to believe that the rest of the family won’t care if he or she doesn’t follow the applicable statutory and trust requirements.

A recent Nebraska case, In Re Estate of Forgey, 906 N.W. 2d 618, (Neb. 2018), featured a decedent who died in 1993.  By 2013, when one of the family members initiated litigation, the trustee, a son of the decedent, had neither distributed out the property of the trust into the separate shares called for by the trust document, nor had provided annual accountings to the beneficiaries as required by both the Nebraska statutes and the trust document itself.  In addition, he failed to sign and file the timely prepared federal estate tax return, resulting in an IRS assessment of penalties and interest of over $2 million. 

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Safeguarding Estate Planning Documents

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by Carol Warnick

In light of the recent dramatic weather events, including hurricanes and tornadoes, it is a good time to discuss preservation of estate planning documents.  In many instances, people escape from their homes with only the clothes on their back, or even if they do have a bit of time to gather items to take, they may not think about their estate planning documents.

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New IRS Addresses for Filing Estate Tax Returns

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by Jody H. Hall, Paralegal

The Instructions for Form 706 released in November 2018 included new addresses; however, we felt a reminder could be useful since the filing address changed mid-year.  Effective for United States Estate (and Generation-Skipping Transfer) Tax Returns (Form 706) filed after June 30, 2019, Form 706’s should no longer be sent to the Cincinnati campus for filing, but should instead be sent to:

Department of the Treasury
Internal Revenue Service
Kansas City, MO  64999

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Be Wary of Colorado Entity Renewal Notices from Unofficial Sources

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by Jody H. Hall, Paralegal

In the past week, our firm has had several clients receive in the mail, and fortunately ask us about, a form titled “2019 – Period Report Instruction Form (Colorado LLCs)”.  This form purports to advise the client that the annual report or renewal for their entity is now due; however, the form is not from the Colorado Secretary of State but is instead from a non-related company.  The form does list the specific entity name and address information and looks deceptively official; however, it also specifically states “… is not a government agency and does not have a contract with any governmental agency to provide this service.”

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Inheriting Vehicles – Sample Checklist Before You Go to the DMV

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by Jody H. Hall, Paralegal

As a probate paralegal, I spend a decent amount of time helping families transfer assets and completing forms.  One of the more common questions that I get is “What does one need to do and take to the DMV to transfer a vehicle title to the beneficiary?”  I typically go through the steps and let the client know all of the information they should have handy; however recently I discovered an awesome checklist from the Denver DMV.  While they state that this is specific to Denver County and you should check with the specific county, this is a really good starting point for all Colorado titles. Read more

No-Contest Clause Upheld by the Wyoming Supreme Court With No Probable Cause Exception

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by Carol Warnick

No-contest clauses (sometimes called in terrorem clauses) are extremely common in today’s litigious society. A no-contest clause essentially makes all gifts under the will or trust conditional upon not challenging the document. Many clients are concerned about a beneficiary (or a disinherited heir) contesting their estate planning documents, especially if the client wants to hold a beneficiary’s assets in trust or restrict or cut off a potential beneficiary’s idea of what they might inherit.  In my practice, clients are asking for them much more frequently than when I first began doing estate planning in 1990.  This is particularly true with blended families where there may be a greater potential for disagreement among the various beneficiaries or between those who are favored by the plan and those who feel they were wronged by the dispositive terms.  Trust and estate litigation is frequently driven by emotion, and many times the beneficiary’s complaints are not rational, thereby leading to protracted litigation and waste of the trust or estate’s assets.  This is what the settlor is typically trying to avoid by the use of a co-contest clause. Read more

Litigation Victory

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by Carol Warnick

The Holland & Hart Trust and Estate Litigation Group announces a big litigation victory.  After a three-day trial, ruling from the bench, the court upheld our trustee client’s interpretation of a trust in defeating a claim that there was a contract to make a trust.  In addition, we were able to enforce a no contest clause against the beneficiary bringing the claim and prevailed in enforcing a fee-shifting provision contained in the document.  Congratulations to our team of litigators and our Persuasion Strategies consultant who combined to bring home this victory!

Your Secret’s Safe with Your Estate Planning Attorney, Or Is It?

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by Lauren A. Morris

A mother visits her attorney to discuss her estate plan. She expects that the conversations she has with her attorney will be forever confidential and privileged, particularly when she wishes to guard uncomfortable realities from her family members, such as her desire to disinherit her son. Upon the mother’s death, her disinherited son figures out that he is in fact removed from her estate plan. Here we have the classic scenario in which a snubbed child wants to challenge the provisions in the estate plan to prove that the decedent did not intentionally fail to provide for him. But with the mother now deceased, how do we determine her actual intent?

The mother’s estate planning attorney is in the next best position to ascertain her intent, but doesn’t the attorney’s duty of confidentiality to the mother prevent him from disclosing any information he may have regarding her intent, specifically when the mother thought she was speaking in confidence? Read more