About the Firm
Holland & Hart is a full-service law firm with locations in 14 offices. Throughout the Mountain West, from coast to coast and beyond, Holland & Hart provides clients with sharp legal counsel from a vantage like no other. For more information, visit www.hollandhart.com or on Twitter: @HollandHart.
Disclaimer
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.
Privacy Policy
View our privacy policy.
Robin Williams Got It Right
/in Administration Expenses, Administration of Estate, Administration of Trust, Court Procedures, Personal Representative, Trusteeby Kelly Cooper
The popular press is always full of cautionary tales about celebrities and their estate plans (see our previous post on Philip Seymour Hoffman). These stories make it seem that more celebrities get estate planning wrong then get it right. However, it appears that Robin Williams did take several steps to get his estate plan right before his untimely death.
Williams created a revocable living trust. Since trust documents are not part of the public record like a will, we may never know who Williams gave his assets to and how those assets will be handled (in a trust, outright gifts, etc.). The living trust will help protect Williams’ legacy and his family’s privacy (assuming there is no litigation or disclosure by those with knowledge of the plan).
In addition, living trusts help to avoid probate if they are properly funded. In California, where Williams lived, the probate process can be expensive due to fees for the attorney and executor that are based on the value of the assets going through probate in addition to appraisal fees and court costs. If Williams transferred all of his personal assets to the living trust prior to his death, he will have helped to avoid these expenses.
Williams also appears to have created a trust to hold his real estate in California (estimated equity of $25 million) and another trust to benefit his children (value unknown). While it is not known whether Williams created these trusts to help reduce his estate tax costs, it is possible that he did so. This uncertainty is because the terms of these trusts remain private.
I hope that Williams’ family benefits from his planning and foresight and that other celebrities take notice.
Enforcing Mediated Settlement Agreements
/in Mediationby Jean Stewart
Resolution of a family conflict by mediation in trust and estate litigation is satisfying for the mediator but often tiring and less satisfying for the parties in conflict. Inherent in the mediation process is some give and take on all sides. While mediators like to talk about “enlarging the pie” to the end that everyone gets all of their needs met, it is often the case that parties leave the mediation session with less than everything they hoped for or believed they would be awarded by the courts.
This requires that counsel for the litigants, not the mediator, insure that any settlement the parties reach is as enforceable as any contract. While most lawyers learned basic contract law in their first year of law school and confronted a basic contracts question on their admission exam, some lawyers forget basic contract law when drafting their settlement agreements following mediation. A valid, signed contract serves as the first defense to an effort to revoke a settlement agreement by a party who experiences remorse.
Colorado also offers the parties, pursuant to CRS 13-22-308, an opportunity to streamline the enforcement of mediated agreements as court orders. Yaekle v. Andrews, 195 P.3d 1101, 1108 (Colo. 2008). Getting signed settlement agreements approved and adopted as orders of the court is relatively simple in trust and estate litigation. Most attorneys use the Rule 8.8, Colorado Rules of Probate Procedure Non-Appearance Hearing process. Making the settlement contract an order of the court offers a variety of additional mechanisms not only to resist any effort to revoke the settlement itself but also to invoke the court’s inherent authority to enforce its own orders.
Mediation is hard work for the mediator, for the parties and for the lawyers involved. Everyone wants to avoid the consequences resulting from a party changing his or her mind. A successful mediation calls on the best lawyering skills to reduce the terms of the agreement to an enforceable contract. When appropriate, seeking court approval and making the settlement agreement an order of the court further reinforces the agreement and enhances the likelihood that its terms will be carried out.
Forgotten, But Not Lost
/in Administration of Estate, Fiduciary Duties, Personal Representativeby Jody H. Hall, Paralegal
I have been working with a client whose mother passed away more than ten years ago. Due to the passage of time, mergers, corporate name changes and stock splits, and a variety of other circumstances, quite a bit of her property had been turned over to the State of Colorado as unclaimed property. However, contrary to what some may believe, all is not lost! These assets still belong to her, and in this case, to her legal heirs. The claims process is relatively easy and can even be initiated online – you just have to start the search!
The Great Colorado Payback (the “GCP”) is a division of the Colorado State Treasurer. They are charged with “reuniting Coloradoans with their lost or forgotten assets” – what an amazing job description! The GCP regularly receives proceeds of bank accounts, stock certificates and dividends, oil and gas royalty payments, utility refund payments, the contents of safe deposit boxes and more from “holders” (financial institutions or other entities in possession of these assets) that have lost contact with the rightful owner. The current list maintained by the Colorado State Treasurer contains more than 1.7 million names!
Our firm routinely recommends that our newly-appointed personal representatives check the state’s website for any unclaimed (sometimes referred to as abandoned) property for recently deceased individuals. A GCP representative recently educated me about the dormancy period, which is 5 years from the last customer-initiated contact. Holders typically do not turn over the accounts to the GCP until the expiration of this dormancy period. Going forward, I will begin to check the GCP list again immediately prior to closing an estate in order to ensure that no assets belonging to the decedent, but not discovered by the personal representative (for example, statements may not be sent to the owner, and therefore received by the PR, if the holder had an old address), have been reported during the pendency of the estate (or trust) administration.
In addition to the Unclaimed Property List, the GCP office maintains an Estate of Deceased Owners and Dissolved Corporations List. Pursuant to escheat law, it is not until twenty-one years after an estate is probated or a corporation dissolved, and their funds are turned over to the State Treasury that those funds become property of the State and are deposited into the Public Education Fund. So even for a probate estate where there are no known heirs at the time of the estate administration, there is still time for the rightful heirs, should any be located, to receive their inheritance. Please note that the proper claim procedure in this instance involves obtaining an order of distribution from the probate court.
For more information or to check to see if a client (deceased or alive), or even YOU, have forgotten assets on the list, go to www.colorado.gov/treasury/gcp/. For links to other states, check out www.MissingMoney.com or www.unclaimed.org.
Be sure to consult the FAQ’s and instructions on the website to include all of the required information for your claim, particularly with assets of deceased individuals. Now that you have found the lost assets, you do not want missing paperwork to delay your receipt even longer.
Happy searching!
Colorado’s New Uniform Premarital and Marital Agreements Act
/in Legislationby Megan Meyers
As of July 1, 2014, a new marital agreement statute with a primary legislative goal of providing greater protection to unrepresented parties will become effective. The new statute, entitled the Uniform Premarital and Marital Agreements Act, Colo. Rev. Stat. §§14-2-301 et seq. (“Colorado’s New Act”) is Colorado’s adapted version of the Uniform Premarital and Marital Agreement Act.
Enforceability Requirements
The following are the most significant requirements under Colorado’s New Act:
Unenforceable Terms
Colorado’s New Act also specifically delineates unenforceable terms in a premarital or marital agreement. Examples of unenforceable terms include, but are not limited to, terms that (i) adversely affect a child’s right to support, (ii) limit remedies available to victims of domestic violence or (iii) penalize a party for initiating a legal proceeding for legal separation or divorce.
Applicability to Prior Agreements
Colorado’s New Act does not affect premarital or marital agreements executed prior to July 1, 2014 and such agreements will continue to be enforceable subject to the laws in place at the time of execution. However, amendments from and after July 1, 2014 to previously executed premarital or marital agreements must comply with Colorado’s New Act. Consistent with existing law, Colorado’s New Act is also applicable to parties to a civil union.
Conclusion
The use of premarital and marital agreements continues to grow for all types of couples as these agreements can be as broad or as narrow as desired by the parties. For younger couples, such agreements can be the best way to ensure that current and future interests in gifts, inheritances and interests in trusts are protected and remain separate. For couples who are marrying later in life or with children from a prior relationship, agreements with a broader scope can ensure that previously created wealth is protected for children, grandchildren and charitable endeavors. Colorado’s New Act enables couples to contract prior to or during their marriage or civil union regarding their property rights in the event of the death of either party or in the event of a legal dissolution of the relationship. In addition to the statutory requirements, practitioners should follow three basic best practice points for a valid premarital or marital agreement: (i) allow sufficient time to review, consider and negotiate the agreement: (ii) provide financial disclosure including all assets, liabilities and income sources; and (iii) obtain independent counsel for each party.
Colorado’s New Law on Mandatory Reporting of Elder Abuse Goes into Effect July 1, 2014
/in Legislationby Elizabeth Meck
Colorado’s new mandatory reporting of elder abuse law will require certain helping professionals to report any suspected or observed abuse or exploitation of an elderly individual to law enforcement within 24 hours. The bill was signed into law on May 16, 2013 and takes effect on July 1, 2014. The bill, as a result of an elder abuse task force established to develop the legislation, makes Colorado the 48th state to have mandatory reporting legislation on the books.
Under prior law, certain professionals were encouraged to make reports of any suspected or known abuse of an at-risk adult, defined as a vulnerable individual due to mental or physical disability or aged 60 years or older. The new law incorporates several modifications and additions to the existing law. Specifically, it adds the definition of an at-risk elder as an individual over the age of 70 and increases the age of an at-risk adult to 70 years or older. Colo. Rev. Stat. §§ 18-6.5-102(2)-(3). It also clarifies the definitions of crimes against at-risk adults or elders to include undue influence resulting in conversion and caretaker neglect. Colo. Rev. Stat. §§ 18-6.5-103(6), (7.5). Further, the new law sets forth the reporting and response requirements, mandating that not only must the initial report be filed within 24 hours of the suspected abuse, but also that the law enforcement agency must provide notice of the report to the appropriate county agency within 24 hours of the report. Colo. Rev. Stat. § 18-6.5-108(2)(b).
The exhaustive list of helping professionals mandated to report under the new law includes a wide variety of professions such as health care professionals, pharmacists, psychologists and mental health care providers, social workers, long-term care providers, clergy members, law enforcement officials and personnel, court-appointed guardians and conservators, and certain financial professionals. See Colo. Rev. Stat. § 18-6.5-108(1)(b)(I)-(XVIII). An individual who fails to report under the statute or one who knowingly files a false report commits a Class 3 misdemeanor. Colo. Rev. Stat. §§ 18-6.5-108(1)(c), (4). Upon filing a good faith report, a reporting individual is immune from any related civil action, unless he or she is the alleged perpetrator of the abuse or exploitation. Colo. Rev. Stat. § 18-6.5-108(c)(3).
In order to raise awareness among the public and the reporting professionals, the Colorado Department of Human Services was required to implement an awareness program by January 1, 2014. Colo. Rev. Stat. § 26-1-105. Further, to prepare law enforcement officers to recognize and respond to incidents of elder abuse and exploitation, the Department of Law’s Peace Officer Standards Training board (“P.O.S.T.”) was required to implement training standards and programs by January 1, 2014; and, as of January 1, 2015, local law enforcement agencies will be required to employ at least one peace officer who has completed the training. Colo. Rev. Stat. § 24-31-313. No later than December 31, 2016, the Colorado Department of Human Services shall prepare a comprehensive report to assess implementation of the new law. Colo. Rev. Stat. § 26-3.1-110.
While attorneys are not on the list of professionals mandated to report, they will certainly come into contact with individuals who meet the definition of at-risk elders as well as professionals required to report. This should cause us all to be increasingly alert and mindful of the provisions set forth in the new law.
Should an undue influencer be responsible for paying the legal fees incurred to rectify the undue influence?
/in Administration of Trust, Conservator, Court Procedures, Fees, Fiduciary Duties, Fiduciary Litigation, Powers of Attorney, Surcharge of Fiduciary, Trustee, Undue Influenceby Kelly Cooper
In a recent unpublished decision, the Colorado Court of Appeals held that a niece who unduly influenced her uncle was not responsible for the payment of the uncle's legal fees, which were required to rectify the undue influence and return the property to the uncle.
Specifically, the niece was accused of unduly influencing her uncle to give her pieces of real estate during his life. A jury found that the niece did unduly influence her uncle and that she breached her fiduciary duty to her uncle. As a result, the court ordered that the real estate be transferred back to the uncle. In addition, the jury awarded $315,000 in legal fees against the niece to make the uncle whole.
On appeal, the niece argued that she should not be responsible for the payment of attorney's fees because Colorado follows the American rule that parties in a dispute must pay their own legal fees. The uncle, through his conservator, argued that an award of legal fees was appropriate in this case under the breach of fiduciary duty/trust exception to the American rule. This exception was first recognized by the Colorado Court of Appeals in 1982. See Heller v. First Nat'l Bank of Denver, 657 P.2d 992 (Colo. App. 1982). The Colorado Supreme Court recognized the exception in 1989. See Buder v. Satore, 774 P.2d 1383 (Colo. 1989).
Despite the recognition of this exception, the Colorado Court of Appeals found that the Colorado Supreme Court has cautioned it against liberally construing any of the exceptions to the American rule.
In finding that the exception did not apply to this case of undue influence, the Colorado Court of Appeals held that the niece's breach of fiduciary duty did not closely resemble a breach of trust. In addition, the Court of Appeals found that the niece breached her duty as an individual, rather than any fiduciary duty to manage property, and that abusing personal influence is not similar to mismanaging property as a fiduciary.
The citation for the case is: In the Interest of Phillip Delluomo, Protected Person, 2012CA2513.