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Charities are Beneficiaries Too!
/in Administration of Estate, Administration of Trust, Charities, Fiduciary Duties, Personal Representative, Trusteeby Jody H. Hall, Paralegal
“No, you cannot have it. The trust is a private document” – Well, maybe, but not to the exclusion of the beneficiaries, and I mean ALL of the beneficiaries, named in that testamentary instrument.
Prior to returning to Colorado a few months ago, I worked in the Legal Department for a national charity where the responsibility of my team (totaling more than 8 attorneys, paralegals and staff) was to represent the charity’s interests in trust and estate matters around the country.
Coming from a background as a trusts and estates paralegal for well-respected law firms, I was absolutely shocked at the number of times that attorneys or fiduciaries (both professional and individual) would respond in the negative to a request for a copy of the will or trust or financial information regarding the gift of which we had just received notice. There seemed to be this prevailing attitude that, because we were a non-profit organization, we would simply take whatever we were given or what was left over and be grateful for it, even in large trusts or estates where the designated gift was a portion or entirety of the residuary estate. Unfortunately there was not a consistent understanding that if Charity XYZ and Cousin Sue are each to receive one-half of the residuary estate, they need to be treated equally.
Most charities do not intend to be adversarial or difficult. Any money spent on legal fees reduces the ultimate charitable gift of the donor; however, they have a fiduciary obligation to the ultimate beneficiaries of their particular mission to ensure they receive everything to which they are ENTITLED! In Colorado, that means a copy of the terms of the trust which affect the interest; other jurisdictions require a complete copy of the instrument, including codicils and/or amendments. Almost every jurisdiction requires providing at least some information about the assets or accountings.
As with many things in life, upfront communication is usually the best policy. My experience working for a “professional beneficiary” has reinforced and taught me several things about good estate and trust administration communications. Provide an initial notification as soon as possible at the beginning of the trust or estate administration. Provide periodic updates. If there are assets that may take some time to sell, litigation or any other factors that may delay the distribution, let your contact know and they will calendar their system accordingly. I know that I was less likely to question or challenge things when I received regular contact from the attorney or fiduciary.
So if the Decedent has been deceased for several years and you are just now sending a check for several hundreds of thousands of dollars as their first notification of the gift under a will or trust, do not be surprised if the charity requests additional information (including, but not limited to, the testamentary documents, an inventory or list of assets and an accounting) before signing a waiver or release. After all, charities are beneficiaries too!
Description or Condition?
/in Administration of Estate, Administration of Trust, Fiduciary Litigation, Legislation, Personal Representative, Trustee, Will & Trust Constructionby Kelly Cooper
Lawyers that regularly litigate in the probate world always have an improbable story to tell. Here is one of those stories that ended up in front of the North Dakota Supreme Court last year:
A couple, Lee and Robyn, were engaged and planned to be married on July 18, 2009. On June 26, 2009, Lee and Robyn signed a prenuptial agreement that required Lee to make gifts to Robyn and her daughter upon his death.
Also on June 26, 2009, Lee executed a Will that contained the provisions to comply with the requirements of the prenuptial agreement. The Will gave property to Robyn, describing her as “my wife, Robyn.” The Will also stated, “My spouse’s name is Robyn Risovi and all references in this Will to “my spouse” are to her only.” However, a footnote followed stating, “This Will has been prepared in anticipation of the upcoming marriage of …Lee Paulson and Robyn Risovi set for July 18, 2009.”
Lee died on July 15, 2009 – three days before the wedding.
Before you read any further, answer this question: should Robyn receive the gifts under the Will even though she was not yet Lee’s wife?
Technically, one of the questions before the North Dakota Supreme Court was whether the term “wife” being used to describe Robyn in the Will resulted in a conditional gift or whether the term “wife” was a merely a description. In addition, the North Dakota Supreme Court had to determine whether the prenuptial agreement, which was not effective since the marriage did not occur before Lee’s death, had any impact on the interpretation of the word “wife” in the Will.
The North Dakota Supreme Court held that the Will was unambiguous, the term “wife” was only descriptive, and ordered distribution to Robyn. The Court held the prenuptial agreement had no effect on the interpretation of the Will for a variety of reasons.
This is just one more example of the ways that the best laid plans are derailed by unexpected events.
Real Lessons From the Gandolfini Will?
/in Administration of Estate, Life Insurance, Testamentary Intentby C. Jean Stewart
In the six weeks since the death of Soprano’s actor, James Gandolfini, the web-based criticism of his will that was lodged in the New York Surrogate’s Court last month has exceeded the entire analysis of his career as Tony Soprano or genuine expressions of sympathy on his untimely death while in Italy with his son—maybe I’m just reading the wrong posts?
Much of the commentary is highly sensationalized, presumably to draw the readers’ attention to the pages where advertisements lurk, and does little to advance the dialogue about sound and sensible estate and tax planning. The small part of the plan that is actually public, a brief will, has been described as “clumsy,” a “disaster,” and “a catastrophe” by critics who reveal how little they knew about the man, his motives or his assets.
I think there are some real lessons for the public about the actor’s death and about the small part of his estate plan that was published on the world-wide web:
Fall Symposium: Emerging Trends in Fiduciary Law and Litigation
/in UncategorizedHolland & Hart's Fiduciary Solutions Practice Group is pleased to present an overview of trends crucial in helping you avoid or litigate legal disputes.
Mark your calendar to join us for an enlightening look at the changing landscape of fiduciary law and litigation. We will discuss a broad range of topics including: managing digital assets; family conflict; migratory clients and changes in situs; alternate dispute resolution; firearms and "gun trusts"; trust modification, reformation, and decanting; assisted reproductive technology; and incapacity.
Tuesday, September 17, 2013
7:30 – 8:00 a.m. – Breakfast and Registration
8:00 – 10:00 a.m. – Presentation
Holland & Hart
555 17th Street, 32nd Floor
Denver, CO 80202
Click here for a map and directions
Click here to register.
Questions? Contact David Marks at dwmarks@hollandhart.com.
Colorado CLE Credit Pending
Estate Planners Alert: Are Your Clauses Coordinated? Are Your Terms Clearly Defined?
/in Administration of Estate, Administration of Trust, Estate Planning, Fiduciary Litigation, Will & Trust Constructionby Carol Warnick
What is the definition of the "residuary" of a trust or a will? Is it clearly defined in all of our documents or do we assume that it will be easy to figure out? Or do we even think about it since we clearly know what the residuary is? I have seen several instances lately where the actual residuary was not well-defined in the document and thus became the subject of very expensive litigation.
It is not just a matter of who gets what assets, but since taxes and administrative costs often come out of the residuary, it is important to make sure it is clear what that means. In one instance I have seen, it was clearly defined where taxes were to be paid from, but very unclear as far as administrative expenses are concerned. In some estates or trusts, that might not be such a big deal because the costs may be fairly nominal. However, there may be unexpected circumstances. (What percentage of our trusts/estates actually don't have something expected arise?) What happens if the trust or estate, through no fault of its own, becomes embroiled in litigation between the beneficiaries or if the fiduciary has to defend the document against an undue influence claim? The allocation of administrative expenses in that situation can create additional litigation even after the first lawsuit has been resolved.
Remember that the attorneys chosen by a beneficiary to litigate such an issue very often are not lawyers with a background in trusts and estates. As such, they are not familiar with what many of us consider the "common sense" assumptions we make with trust and estate administration. General trust and estate concepts that we work with every day will not be recognized by attorneys outside of this practice area. When other attorneys in a litigation case ask me for authority for such concepts, the actual authority is often hard to come up with. "Because we all know that is the way it is," is not a helpful comeback. In addition, how many of our state court judges actually have a trust and estate background?
It may make sense to have someone else in your office read through the will or trust (perhaps with a prepared checklist) to look for problems like this that may arise. Often, when drafting, we become so engrossed in the document and adding in all of the "special things" that our clients request in their documents, that we don't see it when provisions don't track in the document. Often we have added in other language, and possibly deleted a sentence or two here and there, and unwittingly created another problem that we don't see because we are too close to the document. Such a problem may not only relate to defining the residuary for the purpose of tax and cost apportionment clauses, but could also easily create issues with tax clauses, conflicting powers given to the fiduciary, unintended consequences related to trustee removal and replacement, or other types of problems. Another option would be to let the document sit for a day or two and then reread it. This has to be done with a critical eye, however. It is still easy for the drafting attorney to not look critically at how the provisions might be interpreted or to think about what unintended circumstances might occur. As drafters, we know the family (or so we think) and we just tend to look to see how the document will play out in the circumstances we expect to occur.
The more trust and estate litigation I do, the more critical I become about the documents that I draft. If there is a way for a clause to be interpreted differently by a beneficiary who has a beef with the way the assets are being divided, you can bet it will be read that other way and will provide fodder for a lawsuit. It behooves all of us who draft to look for clauses in our documents that might be unclear or might be the subject of multiple interpretations. In doing so, there will be less work for those of us who litigate these cases, but we will all have happier clients years down the road.
Dangers in Charitable Giving – Colorado’s Attorney General Takes Action Against Charities
/in Charities, Fiduciary Duties, Fiduciary Litigation, Legislation, Personal Representative, Powers of Attorney, Trusteeby Kelly Cooper
Normally, when the topic of charitable giving comes up with a client, the discussion is a positive one. The client is excited about the great work being done by a charity, wants to ensure that their charitable work is continued after their death or has a desire to create a legacy. However, when representing clients that are fiduciaries who are making distributions for charitable purposes, a danger lurks – donating money to a corrupt or fake charity.
This danger was brought to the forefront last week in Colorado when Attorney General John Suthers filed suit against Boobies Rock! Inc., the Se7ven Group, Say No 2 Cancer and owner Adam Cole Shryock. In the lawsuit, the Attorney General has claimed that these charities deceived consumers into thinking they were donating money to a cancer-related charity when consumers were actually giving money to a for-profit business that provided only small amounts to charity. Allegedly, the charities would hire models to take donations on behalf of Boobies Rock! at various venues and events and tell people that their donations would go to other charities fighting breast cancer. The Complaint filed by the Attorney General also alleges that these charities used the names of other legitimate charities in its fundraising efforts without their consent and that Mr. Shryock used a portion of the funds collected to pay for an online dating service, buy a BMW, pay for his cleaning service, and pay his bar tabs.
This is a harsh example, but is a good reminder to counsel clients to thoroughly investigate any charity they wish to give to and any charitable solicitation they receive. To read the Complaint filed by the Attorney General, click here.