From a tax and estate planning perspective, we would like to make you aware of the following:
Tax Filing Extensions:
The IRS has extended the filing and payment deadline for all 2019 income tax returns to July 15, 2020. This means that no penalty or interest will be assessed for an individual’s failure to file or pay income taxes, regardless of amount, until after July 15, 2020.
Read moreThere 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.
Read moreby 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.
by Brooke Simons
Anyone who has a pet knows that they are more than just companions, they are members of your family. Often, when people make decisions about their estate plans, they want to take these furry members of their family into consideration – you may remember that Leona Helmsley famously left $12 million to her dog, Trouble. Amount aside, the general concept of pet trusts might be something to consider.
Creating a trust for your pet is not only prudent from a planning perspective, as it provides the person who will be taking care of your furry friend in the future the assets they need to do so, but also comforting to the owner in that they have taken all their loved ones into account in their plan.
Read moreby 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.
Read moreby Brooke Simons
When viewing an estate as a whole, Tangible Personal Property (“TPP”) is not usually the most financially significant component. However, it is often the single most bitterly disputed area in an estate.
Often times, when TPP is being administered under an estate, there are specific provisions in the will as to how the estate should be distributed, but nothing directly addressing specific items of TPP, such as the china collection or Mom’s recipe box. If one spouse dies first, then under C.R.S. § 15-11-805, there is a general presumption that all TPP in the joint possession or control of spouses is held in a joint tenancy with right of survivorship. (“[T]angible personal property in the joint possession or control of the decedent and his or her surviving spouse at the time of the decedent’s death is presumed to be owned by the decedent and the decedent’s spouse in joint tenancy with right of survivorship if ownership is not otherwise evidenced by a certificate of title, bill of sale, or other writing.”). This means that if you are married when you die, then your TPP will go to your spouse, who will then own the TPP outright and be able to dispose of it as they see fit.
Read moreby 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
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
by Jody H. Hall, Paralegal
The terms Beneficiary and Heir both refer to someone who receives an inheritance after someone passes away. However, while the terms are often used interchangeably, they do not always refer to the same individual or set of individuals. Heirs can be beneficiaries but beneficiaries are not always heirs.
In our practice, we often see issues arising when these 2 sets are not identical or are different than the expectations of the parties. Read more
By Chelsea May
In December, President Trump signed into law what is commonly referred to as the Tax Cuts and Jobs Act. This legislation, which is mostly effective as of January 1, 2018, is the first major reform to the federal tax code since 1986 and affects almost every individual and business taxpayers in some way or another. For individuals, the top tax rate has temporarily dropped from 39.6% to 37% and the standard deduction has nearly doubled. Personal exemptions are repealed and the mortgage interest deduction is limited to interest on a mortgage of $750,000 or less per married couple. The AGI limitation for deductions of cash donations to public charities increased from 50% to 60% and the deduction for alimony payments was repealed (for divorces or separations executed after December 31, 2018). Corporate tax rates have dropped from a 35% top rate to a permanent 21% flat rate, a 20% deduction is now available for certain pass through entity income and the corporate AMT has been repealed.
The new tax act also increased the federal estate and gift tax exemption amount. Specifically, for lifetime gifts and the estates of any decedents passing between January 1, 2018 and December 31, 2025, the estate tax and GST tax exemption amounts were increased to $10 million per person, adjusted for inflation occurring after 2011 (expected to be about $11.2 million for 2018). The marginal transfer tax rate remains at 40%. Read more
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This publication is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal or financial advice nor do they necessarily reflect the views of Holland & Hart LLP or any of its attorneys other than the author. This publication is not intended to create an attorney-client relationship between you and Holland & Hart LLP. Substantive changes in the law subsequent to the date of this publication might affect the analysis or commentary. Similarly, the analysis may differ depending on the jurisdiction or circumstances. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.
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