Archive for category: Fiduciary Duties

Trust Disclosure Requirements and Quiet Trusts

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by Carol Warnick

The Uniform Trust Code and the Restatement (Third) of Trusts both follow the presumption that trust beneficiaries should be generally kept aware of the existence of the trust, their status as beneficiaries, and their right to ask for (and receive) further information about the trust and their rights as beneficiaries of the trust. Both also require accountings, at least upon request.

More than two-thirds (2/3) of states in the United States have adopted some form of the Uniform Trust Code as of this writing, but many states have not adopted the disclosure provisions from the Uniform Act. This reflects the feeling voiced by many trust creators that letting a beneficiary be aware of the wealth in a trust set up for the beneficiary’s benefit can be a disincentive for a beneficiary to make their own way in life. This is especially a concern if the beneficiaries are young, or even older beneficiaries that have proclivities towards spending. Many trust creators are also concerned because the sub-trusts they set up for their children don’t have identical provisions, therefore they don’t want their children to know about the provisions in their siblings’ sub-trusts. Read more

Pitfalls of Naming Minors as Beneficiaries

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by Jody H. Hall

It is natural for clients to want to name their children or grandchildren to receive their assets after their death  However, the naming of a beneficiary directly on an account, especially if they are a minor, can derail an otherwise well-thought out estate plan.

Often clients assume that their estate planning is complete once they have signed their Will and Trust.  Then either immediately or through various changes in their assets, they name the same persons listed in their estate planning documents as the direct beneficiaries on their accounts.  If the designated beneficiary is a minor at the time of the account owner’s death, significant and unintended consequences can, and often do, occur. Read more

Options for Transferring Vehicle Titles – Before or After the Owner’s Death

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by Jody H. Hall

Navigating the DMV can make anyone skittish, but in the specialized area of trusts and estates, it makes people downright nervous.  In addition, the Colorado DMV generally requires their own forms for transfers before or after death.  As with all other assets, the name or names on the actual vehicle title is going to control how we need to dispose of or transfer that vehicle when needed.  Below are a few forms specific to the unique needs of trust and estate practitioners and their clients and links for your convenience. Read more

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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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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Reminder – Mandatory Notice Provisions in CUTC

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by Brooke Simons

As we have just passed the one-year anniversary of the CUTC being signed into law, now seems like an appropriate time to go over a few reminders with regards to its mandatory provisions – in particular the Notice provisions. 

The CUTC is generally considered to be a default statute – that is, a statute that can be overridden by the settlor’s intent as reflected in deliberate drafting of the trust instrument.  However, there are thirteen (13) mandatory provisions in the CUTC that cannot be drafted around, regardless of the settlor’s intent.  Section 15-5-105 lists the thirteen (13) mandatory provisions under the CUTC.  Amongst these thirteen provisions are two “notice” requirements that must be satisfied. 

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Wyoming Creates a New Chancery Court Which Will Hear Trust Cases

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by Carol Warnick

Wyoming has created a chancery court which will be authorized to hear cases in fifteen (15) specific areas, including cases alleging breach of fiduciary duty and transactions governed by the Wyoming Uniform Trust Code, in addition to hearing business disputes.  This represents a significant change in the way many trust disputes, as well as business disputes, will be handled in Wyoming. 

Effective March 15, 2019, the special court of limited jurisdiction, called the Chancery Court of the State of Wyoming, was authorized to assist in the expeditious resolution of disputes involving commercial, business, trust and similar matters.  It is directed “to employ nonjury trials, alternative dispute resolution methods and limited motions practice and shall have broad authority to shape and expedite discovery as provided in the rules adopted by the supreme court to govern chancery courts.”  WYO. STAT § 5-13-115 (a). 

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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

Avoiding Fiduciary Conflicts of Interest

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by Carol Warnick

It is very difficult for a trustee to have conflicts of interest without breaching the duty of loyalty.  We typically think of trustee conflicts as they relate to self-dealing by the trustee, which is almost always a problem and for which the beneficiaries can obtain redress.  But I have seen more conflicts lately in my practice where a trustee is trustee of different trusts that have conflicting interests, or the trustee is serving as trustee of a trust and also as personal representative of an estate whose interests are in direct conflict with each other.

When faced with a conflict situation, a trustee needs to take action before he or she breaches the duty of loyalty, which is a bedrock duty owed by all fiduciaries.  Restatement of Trusts § 78 (1) states that a “trustee has a duty to administer the trust solely in the interest of the beneficiaries . . . .”  That is not possible when the two trusts (or the trust and the estate) have conflicting interests and what the fiduciary does as trustee of one trust would be detrimental to the other.  One example would be engaging in a specific transaction that is beneficial to the beneficiaries of one trust but harmful to the beneficiaries of the other trust or of the estate.  Read more