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.
Practicing Law in Three States
/in Court Procedures, Fiduciary Litigationby Carol Warnick
I practice law in three Rocky Mountain states, Colorado, Utah and Wyoming. As would be expected, there are significant differences among them, but also significant similarities. It does provide a useful perspective with regard to the trends in estate, trust and fiduciary law — at least in the western United States.
We were living in Wyoming when my youngest of four children was ready to start school full-day, which was when I finally had the opportunity to go to law school. Naturally, after graduating from law school, Wyoming was the first state in which I applied for admission to the bar and was admitted in 1990. After successfully passing the Wyoming bar exam, I was surprised and pleased to be invited to apply for admission in Colorado. Of course, I did so and waived into Colorado in 1992. Interestingly enough, about 7 years after waiving into Colorado, we moved to Denver. I kept some of my Wyoming clients and began building up a new practice in Colorado. How convenient it was to already be admitted in Colorado! I happily worked in both states, and for a while we even had a small Holland & Hart office in Casper, WY.
After working at Holland & Hart LLP in Denver for several years, it became apparent that there was an unmet demand for an attorney with estate and gift planning expertise, as well as fiduciary litigation expertise, in our Salt Lake City Office. The firm was willing to fly me back and forth to Salt Lake as needed to meet those needs. I was pretty familiar with Utah since I had attended college there, so it seemed to make sense. I actually had 3 children attending college there at the time I applied, and I was allowed to waive into Utah in 2004. Now the stage was set. I found myself with work in all three states and having to learn not only the differences in the law but also the variations in the accepted methods of doing things in all three states.
As I mentioned, there are similarities and differences. Both Colorado and Utah have adopted the Uniform Probate Code, but Wyoming has not. Both Utah and Wyoming have adopted the Uniform Trust Code, but Colorado has not. Colorado has had a beneficiary deed statute for several years, and the Wyoming legislature has just adopted one, but Utah does not have such a statute. Of course, the specifics of these supposedly uniform laws as adopted by these states contain numerous variations.
When going into court in a fiduciary litigation case, I have found the practices in the different states related to filing pleadings, getting courts to act, and what to expect at various court proceedings to be notably different from one another. When I first started practice in Wyoming, I could simply walk over to the courthouse, visit with the judge about an uncontested matter, and get his signature on an order right then and there. I’m not sure that can still be done, even in Wyoming, but it is certainly not an acceptable practice in Denver where we use the nonappearance docket for such uncontested matters, or in the Third District Court in Salt Lake City where the probate docket is heard every Wednesday morning. Of course, there are significant variations in all three states between rural counties and the more populated ones.
It definitely keeps me on my toes to adapt to the setting I am in and go with the flow in the various jurisdictions in which I represent clients. Thankfully, one constant is that there are honest and highly professional lawyers with which I have worked in each jurisdiction.
I keep copies of the court rules and the probate and trust statutes for all three states in my office and I have learned not to rely on my memory. I always look it up, whether it be a variation in a court rule or a difference in one of the provisions of a statute such as the probate code. Even if I think I know, I don’t trust my memory to keep all the nuances straightened out and in the right state box in my mind.
I have heard people say they like the practice of law because it is never the same — the issues are always new. I agree wholeheartedly with that and when you add the complexity of practicing in three states, nothing about such a practice is boring! My knowledge of the laws in the three states has also brought up some interesting issues for my clients who have ties to more than one of my states with regard to where to situs a trust and also possibly changing situs down the road after a trust has been established. It is also an interesting analysis to look at where best to bring an action in those few cases where circumstances would allow them to be brought in a couple of states.
I didn’t start out to be an attorney actively practicing in three states, it just worked out that way. But I wouldn’t change anything about it.
Payment of College Expenses for Beneficiaries – To Pay or Not to Pay?
/in Administration of Estate, Administration of Trust, Fiduciary Discretion, Fiduciary Duties, Fiduciary Litigation, Removal of Fiduciary, Surcharge of Fiduciary, Trustee, Will & Trust ConstructionBy Kelly Cooper
Fiduciary clients regularly ask me what expenses can be paid out of a trust. Generally, this requires an examination of the terms of the trust and the applicable law. However, even after considering the terms of the trust and applicable law, trustees are often stuck in this grey area trying to determine what expenses may be paid. As a result, I am always on the lookout for cases that might provide guidance for trustees in exercising their discretion. Recently, a case from New York caught my eye. Matter of McDonald, 100 A.D. 1349 (N.Y. App. Div. 4th Dep’t 2012).
In this case, the grandfather created a trust for his twin granddaughters and appointed his daughter (the twins’ mother) to serve as trustee. As trustee, the mother refused to pay for the twins’ college expenses and to purchase a car for their use. The twins filed suit and asked the court to remove their mother as trustee and to award attorney fees.
The trial court removed the mother as trustee, bypassed the named successor trustee and appointed an attorney (who was not named in the trust) to serve as successor trustee. The trial court found that the mother had failed to observe the terms of the trusts and had abused her fiduciary responsibilities and awarded attorney fees to the twins. The mother appealed and the trial court was unanimously reversed.
In reversing and finding in favor of the trustee, the appellate court cited to Section 50 of the Restatement of Trusts and identified the following factors:
The terms of the trust. The relevant terms of the trust were stated as follows: “[t]he Trustee shall pay or apply to or for the use of each such living grandchild of mine so much of the income, accumulated income and principal of such share at any time and from time to time as the Trustee deems advisable in [the Trustee’s] sole discretion not subject to judicial review, to provide for such grandchild’s maintenance, support, education, health and welfare, even to the point of exhausting the same.” The trust also provided for fractional distributions to the twins at ages 30 and 32 and termination of the trust at age 35.
Other resources. The court noted that one of the twins’ college expenses were paid in full by public benefits and that the other twin had failed to even complete the necessary applications for public college benefits and tuition assistance. Further, the twins both had New York 529 College Savings accounts and the balances in those accounts were sufficient to pay college expenses.
Friction. The appellate court noted that there was friction between the mother and her teenaged daughters, but found that mere friction or disharmony between a trustee and a beneficiary is not sufficient grounds to remove a trustee. The appellate court quoted another New York case, stating, “If it were, an obstreperous malintentioned beneficiary could cause the removal of a competent trustee through no fault on the latter’s part.”
I’ll Be the Judge of That
/in Conservator, Court Procedures, Guardianby C. Jean Stewart
I’ve been in San Antonio, Texas attending the Spring Conference of the National College of Probate Judges this week, catching up with old friends and learning about new trends and concerns among probate courts from Alabama to Oregon to Maine. This has been an outstanding program in a very special setting. Our thanks to Judge Mike Wood from Harris County Probate Court No. 2 (Houston) and Judge Ponda Caldwell from Spartanburg County Probate Court (Spartanburg, South Carolina) who assembled a group of outstanding judges and speakers to lead our conference.
Probate judges and their probate court administrators continue to be restricted by severe budget cuts; nevertheless, we all share common concerns about probate court procedures in trust and estate litigation, abuse and financial exploitation of the vulnerable and elderly, and recent developments throughout the country in all areas of the law that impact probate cases.
Joanne Woodruff, Elder Fraud Prosecutor in the Bexar County District Attorney’s Office inspired and challenged us with the many accomplishments of her office in gaining convictions and significant sentences against con operators, opportunistic neighbors, greedy relatives, unscrupulous caregivers, and others bent on improperly taking funds from vulnerable elderly citizens. Joanne’s position (her office includes an advocate assistant) has been made possible by a grant from the Texas governor’s office but her substantial track record (nearly 100% success) clearly arises from the passion and expertise she brings to her work. Many judges expressed a desire to replicate programs like Joanne’s that would provide every community with a fearless and committed prosecutor to stem the tide of financial exploitation of the elderly.
Stanley Johanson, the James A. Elkins Chair in Law at the University of Texas School of Law, is one of our favorite lecturers in probate law and procedure. He raised multiple issues of interest to probate judges under the new federal estate and gift tax laws and introduced multiple ways in which estate planning and changes to estate plans will impact probate judges in the years to come. He even offered a little advice for probate judges thinking about their own estate plans.
We were heartened to hear from several of our speakers that the Uniform Adult Guardianship and Protective Procedures Jurisdiction Act (UAGPPA) has now been adopted in 37 states (presently on the New York Governor’s desk for signature). Perhaps no single uniform act has done more to insure the safety and security of vulnerable citizens in our mobile society by giving real legislative substance to the concept of “home state” and reducing the risks of conflicting court orders originating from multiple states than this uniform law created, in part, with the participation of NCPJ members. The 13 states that have not adopted UAGPPJA will be the focus of the many groups committed to bringing an end to interstate support and involvement in disputes over physical control and custody of the incapacitated elderly.
No conference of probate judges is complete without a presentation on the special evidentiary rules – Dead Man’s statute e.g., that accompany probate court litigation. Frank N. Ikard, Jr., a prominent Texas fiduciary litigator gave us his perspectives on many of these unique and complex rules. Frank elaborated on the duties of a fiduciary to disclose complete, detailed records of the trust/estate account because (1) the records belong to the beneficiary who owns equitable title to the trust/estate account and (2) the fiduciary has an unquestioned duty to keep the beneficiary(ies) informed about the beneficiary’s property. Frank refers to this as “equitable discovery” and lauds its virtues compared to the civil rules of discovery; most importantly, he has enjoyed great success in applying his analysis in his local practice in Texas.
At Friday evening’s spring banquet, NCPJ gave our annual Judge Isabella Horton Grant Guardianship Award to Erica Wood of the American Bar Association Commission on Law and Aging. The Isabella Award was established to honor the memory of the late Judge Isabella Grant, for many years the highly respected and innovative presiding judge of the San Francisco Probate Court. The Award, sponsored by The Rutter Group of California and administered by NCPJ, recognizes and encourages achievements in the field of guardianships of minors and adults. Erica Wood is particularly suited for this award because she has dedicated over 30 years to the improvement and adoption nationally of appropriate rules and procedures for guardianship proceedings involving our most vulnerable citizens. We congratulate and applaud Erica’s outstanding accomplishments.
We leave San Antonio to return to many diverse states, inspired and confirmed in our views about the unique and particularly human aspects of probate jurisdiction and looking forward to meeting in Nashville for the fall conference in November (meet us at Sheraton Music City November 13-16) and then in Vail, Colorado next May at the Four Season’s Hotel (May 15-18).
Mediator’s Moment – Before You Mediate
/in Fiduciary Litigation, MediationBy C. Jean Stewart
After serving for 16 years as the Presiding Judge of the Denver Probate Court, I resigned in 2011 to start a private practice providing neutral services to litigants and lawyers who confront conflicts around wealth transfer, fiduciary liability, estate and trust litigation and family dynamics. My practice here at Holland & Hart’s Fiduciary Solutions practice group includes mediation services. Some of my experiences in mediation remind me that all processes are only as good as the preparation of the participants.
I intend to provide a few of these observations in this and future posts as an aid to lawyers and their clients in asking for, preparing for and participating in mediation. One observation relates to the so-called “style” of the mediator. In my scheduling letter preliminary to a mediation engagement I advise the parties and their counsel that I have had experience in both evaluative and interest-based mediation. I think the best mediators can adapt to the facts and circumstances of individual cases in approaching the mediation process and apply one or both styles as appropriate.
Interest-based mediation in its purest form seeks to address the needs of each side, maximizes the range of solutions available and strives to allow everyone to emerge from the mediation with a settlement that is satisfying and meets felt needs. Evaluative mediation involves largely an economic analysis that assigns values to litigation positions, evaluates risks of loss and potential for victory and helps the litigants and their lawyers arrive at a number or a non-economic resolution that closely matches the risk assessment analysis. Both approaches have legitimacy, both can result in satisfying and lasting settlements, and both should be in your chosen mediator’s repertoire.
Another area of comparison among mediators is the predisposition to use the assembly versus caucus methods. Some mediators insist that parties should always meet face to face to enjoy (?) the benefits of conflict resolution up close and personal. Some mediators just as assiduously insist that parties should always meet with the mediator apart from each other and the mediator “runs interference” between their separate caucus rooms (settlement conference style). Some lawyers find one or the other method more comfortable and pick the format based on what works best for them, not what the individuals want or need. If you are thinking of selecting a mediator who cannot work comfortably in both formats, ask around.
Attorneys can do a great deal to assist their clients prepare for and participate in meaningful and productive mediation. One thing I have identified as particularly helpful is an attorney’s ability to write a good pre-mediation statement. For many mediators, the mediation statement prepared by and presented by counsel will be the mediator’s first introduction to the project. Attorneys who approach the work as if it was a legal brief will put both the mediator and their own client at a disadvantage. When I advise counsel to “tell me what this case is about” I do not mean that I want to hear about the Rule 12(b) motion that was erroneously ruled on by the court and will almost certainly be reversed on appeal, about the discovery abuses that have delayed the trial setting and will undoubtedly attract sanctions, or about the . . . — I want to hear the story. An attorney who hopes to successfully represent a client in mediation needs to understand and be able to relate the story at the heart of their client’s lawsuit. A well-written narrative can set the stage for a mediator who often knows little or nothing about the litigation that is pending or unfolding and provide the foundation for a successful and efficient mediation session.
Trust Protector As A Fiduciary – To Be Or Not To Be
/in Administration of Trust, Fiduciary Dutiesby Carol Warnick
As the use of trust protectors has become more and more popular, one issue continues to surface. That is the question of whether or not a trust protector is a fiduciary or can be insulated by the trust language from being a fiduciary. It is an important question because of the duties and potential liability that could be imposed on a trust protector who is considered a fiduciary.
To set the stage, a brief discussion of trust protectors in general is in order. Some trace the beginnings of the concept to the world of off-shore asset protection trusts. Others point to thoughtful estate planners in the early 1980's who were trying to create flexible or "amendable" irrevocable trusts. While its origin is interesting, what a trust protector can and does do is obviously more important. A trust protector is a person who holds a power that when invoked is able to direct the trustee in matters relating to the trust. The power can be either a negative one or a positive one. It would be negative if it was merely the power to stop or veto some proposed action the trustee wanted to take. It would be positive if it allowed the trust protector to take action proactively, such as the power to add beneficiaries, remove or replace trustees, or even amend or terminate the trust.
Is it too trite or "lawyerly" to answer the question regarding whether or not a trust protector is a fiduciary by stating it depends? Alexander A. Bove, Jr., in his thoughtful article, "The Protector: Trust(y) Watchdog or Expensive Exotic Pet?"1 believes that the answer to the question depends not only on what the powers are that are given to the trust protector but also the identity of the trust protector. One example he gives is that of the settlor's daughter being named the trust protector and being given the power to add or delete beneficiaries. Pursuant to the power, the daughter deletes her siblings and adds her husband and children. Bove argues that in such a case, the settlor would have contemplated such action by his daughter and so the power should be considered a personal, not a fiduciary power. By contrast, however, Bove states that if the same power were given to the settlor's attorney as a trust protector, and the attorney deleted the settlor's children and added his own, it would be considered an inappropriate use of the power because it was clearly not what the settlor would have had in mind. Thus, the same power given to the settlor's attorney could only be exercised in a fiduciary capacity because he would clearly have to bear in mind the purpose of the trust and the settlor's intent.
Powers such as the power to remove and replace trustees, power to change situs of the trust, and certain types of powers to amend the trust are more likely to be powers held in a fiduciary capacity.
Some state legislatures have jumped into the fray with statutes that attempt to give direction on the question. For example, in Wyoming, 2 the trust protector would likely be considered a fiduciary. In Alaska, the statutes provide that the trust protector has no fiduciary responsibility when performing the functions of a trust protector 3.
Absent state law on the subject, as is the case in Colorado and most other states, the question will likely ultimately be resolved by thoughtfully considering both the choice of the trust protector and successor trust protectors, as well as the effect of the particular powers granted to the trust protector. Bove suggests that, as a general rule, if the trust protector is the object of the settlor's bounty, and there is no language in the trust to suggest otherwise, then the power is probably held in a personal capacity. However, he goes on to state that if the trust protector is someone who serves in an advisory capacity to the settlor – not someone the settlor would likely name as a beneficiary – then the power will likely be held in a fiduciary capacity.
There is, however, a school of thought that holds (or perhaps hopes) that simply stating in the trust document that the trust protector will not be considered a fiduciary will settle the issue. Bove states that such an analysis is like saying "regardless of what type of animal walks through these gates, it will be deemed to be a horse." He vigorously argues that despite such language that may be included in a trust document, most trust protectors are intended to exercise their powers for the benefit of the trust, and as such can't escape the reality that comes with it.
The debate is far from being over. More states are likely to pass statutes relating to the question. Since the use of trust protectors, especially in long-term trusts, is increasing exponentially, the issue will be coming before judges who will be asked to rule on the issue. In the meantime, it behooves all of us who may be either drafting trusts with trust protectors, helping administer trusts where there are named trust protectors, or litigating trusts where such powers are involved, to not only consider the issue ourselves but to also discuss it thoughtfully with our clients.
1Bove, Alexander A., Jr., The Trust Protector: Trust(y) Watchdog or Expensive Exotic Pet? , Estate Planning, Vol. 30, No 8 (Warren, Gorham & Lamont, August 2003).
2"Trust protectors are fiduciaries to the extent of the powers, duties and discretions granted to them under the terms of the trust instrument." W.S. § 4-10-711.
3 “Subject to the terms of the trust instrument, a trust protector is not liable or accountable as a trustee or fiduciary because of an act or omission of the trust protector taken when performing the function of a trust protector under the trust instrument.” AS Sec. 13.36.370(d).
Civil Unions Legislation Effective May 1, 2013
/in Administration of Estate, Administration of Trust, Conservator, Fiduciary Litigation, Guardian, Legislation, Life Insurance, Personal Representative, Powers of Attorney, Trustee, Will & Trust Constructionby Kelly Cooper
In 2012, a law that would have permitted same-sex partners to enter into civil unions in Colorado failed. In this year’s legislative session, advocates for civil unions were successful and on May 1, 2013, the Colorado Civil Union Act will become effective.
The Act provides same-sex partners the benefits, protections and responsibilities given to spouses under Colorado law if they enter into a civil union. In addition, the Act provides that civil unions, domestic partnerships and other legal relationships between same-sex partners created in other states will be treated as civil unions in Colorado.
Even though the Colorado Constitution (by a 2006 amendment) limits marriage to a man and a woman, the Act provides that all Colorado laws granting rights to man and woman spouses will now grant the same rights to partners entering into civil unions.
This means, for example, that if partners wish to dissolve their civil union, they will need to file for a legal dissolution and that the laws regarding maintenance, parenting time, child support and property division will apply.
The Act does not alter the impact of the federal Defense of Marriage Act (DOMA), which provides that marriage is only between a man and a woman. As a result, federal laws granting rights to spouses will not apply to partners in a civil union. The United States Supreme Court is currently considering a challenge to DOMA. An opinion is expected from the US Supreme Court in June 2013. We can expect more developments and changes in this area in the near term, so stay tuned.