Probate and Trust Issues in Colorado’s Upcoming Legislative Session

/in , , , , , , , , , , , , , , , , , , ,

by Kelly Cooper

Colorado’s General Assembly will reconvene on January 8, 2014.  At this time, it appears that at least two probate and trust related issues will be the subject of debate by the Assembly.

The first is a proposed change to the Colorado Civil Unions Act that would permit partners to a civil union to file joint income tax returns if they are permitted to do so by federal law.  Under the current proposal being considered by the Colorado Bar Association, there would be changes to both the Civil Unions Act and Colorado’s income tax statutes.  This is partly in response to the issuance of Revenue Ruling 2013-17 by the Internal Revenue Service, which permits married same sex couples to file joint federal income tax returns. 

The second is a proposal to codify a testamentary exception to Colorado’s attorney-client privilege.  The necessity and proposed scope of the testamentary exception are currently being discussed by a subcommittee of the Statutory Revisions Committee of the Trust & Estate Section of the Colorado Bar Association and will likely be discussed later this week at Super Thursday meetings.

The Colorado Supreme Court has previously recognized that the attorney-client privilege generally survives the death of the client to further one of the policies of the attorney-client privilege – to encourage clients to communicate fully and frankly with counsel.  The Colorado Supreme Court has also held that a “testamentary exception” to the privilege exists, which permits an attorney to reveal certain types of communications when there is dispute among the heirs, devisees or other parties who claim by succession from a decedent so that the intent of the decedent can be upheld.

Contest A Trust While The Grantor Is Alive

/in , ,

by Carol Warnick

How many times have we been told by our clients that their dad would be having a fit if he knew that one of the children was contesting his estate plan?  Or how often have we heard that mom knew there was likely to be a problem at her death, and she tried to make her trust as bullet-proof as possible, but now that she is dead some child is trying to contest it anyway? 

Wyoming and several other states across the country are amending their trust code to allow the validity of a revocable trust to be contested while the grantor is still alive.  Wyoming’s statute is found at § 4-10-604, in the middle of Wyoming’s Uniform Trust Code.  It states that a proceeding to contest the validity of the revocable trust (or an amendment thereto) can only be brought the earlier of two (2) years after the settlor’s death or one hundred twenty (120) days after the trustee sent that person a copy of the trust and a notice informing of the trust’s existence, the trustee’s name and address, and the time allowed for commencing a proceeding.  For purposes of the 120 days, notice is deemed to have been given when received by the person to whom it is given.  Absent evidence to the contrary, it is presumed that delivery to the last known address of that person constitutes receipt by that person. 

The statute makes it clear that a person failing to commence a judicial proceeding contesting the validity of the trust within the time frames listed in the statute is forever prohibited from commencing any judicial proceeding contesting the validity of the trust.

The Wyoming legislature has now given Wyoming settlors the opportunity to make sure their estate plan can’t be contested by a disgruntled child after their death.  Instead, the settlor can have the trustee send copies of the trust and the notice described above out to their beneficiaries while the settlor is still alive.  It is much less likely that the would-be-disgruntled child will decide to bring a contest while their parent is still alive and can testify about intent.  However, the settlor will have to be willing to let the children see their estate plan in order to bring this about.  Dad won’t be able to hide behind the fact that he will be dead when the kids see how dad distributed his assets among the children. 

It will be interesting to see what happens in Wyoming over the next few years and see who takes advantage of this statute to be proactive and to preclude having their revocable trust challenged after death.  Stay tuned….