Fiduciary Law Blog Archive – Page 7

Planning Opportunities Under the New Tax Cuts and Jobs Act

January 16, 2018/in Administration Expenses, Administration of Estate, Estate Planning, Legislation, Taxes

By Chelsea May

In December, President Trump signed into law what is commonly referred to as the Tax Cuts and Jobs Act. This legislation, which is mostly effective as of January 1, 2018, is the first major reform to the federal tax code since 1986 and affects almost every individual and business taxpayers in some way or another. For individuals, the top tax rate has temporarily dropped from 39.6% to 37% and the standard deduction has nearly doubled. Personal exemptions are repealed and the mortgage interest deduction is limited to interest on a mortgage of $750,000 or less per married couple. The AGI limitation for deductions of cash donations to public charities increased from 50% to 60% and the deduction for alimony payments was repealed (for divorces or separations executed after December 31, 2018). Corporate tax rates have dropped from a 35% top rate to a permanent 21% flat rate, a 20% deduction is now available for certain pass through entity income and the corporate AMT has been repealed.

The new tax act also increased the federal estate and gift tax exemption amount. Specifically, for lifetime gifts and the estates of any decedents passing between January 1, 2018 and December 31, 2025, the estate tax and GST tax exemption amounts were increased to $10 million per person, adjusted for inflation occurring after 2011 (expected to be about $11.2 million for 2018). The marginal transfer tax rate remains at 40%. Read more

Generative Trusts and Trustees: A New Paradigm For Trust Design and Administration

January 2, 2018/in Administration of Trust, Fiduciary Discretion, Testamentary Intent, Trustee, Will & Trust Construction

Note: From time to time we invite guest bloggers to share their thoughts on our blog. The following is a guest blog authored by John A. Warnick, the founder of the Purposeful Planning Institute.

by John A. Warnick, Esq.

Family Trusts commonly preserve family financial asset, but fail to preserve either family or trust—Hartley Goldstone, author of Trustworthy and Co-Author of Family Trusts – A Guide for Beneficiaries, Trustees, Trust Protectors and Trust Advisors

I have been concerned about the emotional and relational impact of trusts since I had a “professionally jarring” encounter in 2001 with a beneficiary of an irrevocable trust established by her grandfather. The dependency, disempowerment and entitlement I witnessed led me to ask “Is there a better way?”

The Generative Trust and the Generative Trustee are part of that better way.

I’m convinced there is a better way to think about the purpose and meaning of trusts which still honors the legal roles and responsibilities but lifts the influence of the trust to the point it becomes a generative (positive) influence in the lives of beneficiaries. Read more

Decanting to Eliminate a Beneficiary – New York Says Yes

October 9, 2017/in Administration of Trust, Court Procedures, Fiduciary Discretion, Fiduciary Duties, Fiduciary Litigation, Removal of Fiduciary, Surcharge of Fiduciary, Testamentary Intent, Trustee, Will & Trust Construction

by Kelly Dickson Cooper

Settlors often ask whether they can change the beneficiaries of an irrevocable trust because life circumstances or relationships have changed. Often, the answer is no. However, in a recent case in New York, the trustee was able to accomplish the settlor’s desire to disinherit one of his children through a decanting. Read more

Fifty Ways to Leave Your Lover (or Fifty Ways to Plan, Administer and Litigate Estates)

September 26, 2017/in Administration Expenses, Administration of Estate, Administration of Trust, Bonds, Conservator, Court Procedures, Fees, Fiduciary Discretion, Fiduciary Duties, Fiduciary Litigation, Guardian, Life Insurance, Personal Representative, Powers of Attorney, Removal of Fiduciary, Surcharge of Fiduciary, Testamentary Capacity, Testamentary Intent, Trustee, Undue Influence, Will & Trust Construction

by Carol Warnick

As the old song by Paul Simon contemplates, there are fifty ways to leave your lover, and there are also fifty ways to plan, administer and litigate estates and trusts. I have recently become aware of various situations in which attorneys assume that because things are done a certain way in the state in which they practice, they are done the same way in other states.

I am licensed in three states, Colorado, Utah and Wyoming, and deal regularly with the significant differences between them. For example, Colorado tends to use “by representation” in dealing with passing assets down the generations, but Utah and Wyoming both use “per stirpes.” Read more

Fiduciary Duty of Loyalty: Which Interest is Best?

September 11, 2017/in Administration of Trust, Fiduciary Discretion, Fiduciary Duties, Fiduciary Litigation, Trustee

by Matthew Skotak

The term “fiduciary” can be considered a vague term that encompasses many different people and several different relationships. Under Colorado law, a fiduciary includes, without limitation, a trustee of any trust, a personal representative, guardian, conservator, receiver, partner, agent, or “any other person acting in a fiduciary capacity for any person, trust, or estate.” Colo. Rev. Stat. § 15-1-103(2). It is within this context that we examine a fiduciary’s duty of loyalty and how best to uphold that duty.

In the context of a trust, and as stated in the Restatement (Second) of Trusts § 2, a fiduciary relationship with respect to property arises out of the manifestation of an intention to create the fiduciary relationship and subjects the trustee “to equitable duties to deal with the property for the benefit of another person.” From this relationship stems several inherent and implied fiduciary duties. Generally, the fiduciary duties applicable to a trustee are: the duty of loyalty, the duty to exercise care and skill in managing the trust assets and administering the trust, and the duty to remain impartial to all beneficiaries. Read more

Good News for Surviving Spouses Seeking to Elect Portability

August 14, 2017/in Administration of Estate, Administration of Trust, Fiduciary Duties, Personal Representative, Trustee

by Chelsea May

IRS Revenue Procedure 2017-34, effective as of June 9, 2017, increases the amount of time that a surviving spouse has to file an estate tax return (Form 706) for the purpose of electing portability of the Deceased Spousal Unused Exclusion amount (otherwise known as “DSUE”). The portability election, which was first introduced in 2010 and made permanent under the American Taxpayer Relief Act of 2012, offers a great way for a surviving spouse to preserve the unused estate tax exemption of their deceased spouse. The DSUE amount can then be added to the surviving spouse’s own exemption amount and be used to shelter the surviving spouse’s lifetime gifts and transfers at death from estate taxes.

Prior to June 9, 2017, a portability election was required to be made on a timely filed estate tax return, due to the IRS nine months from the decedent’s date of death, with the availability of an automatic six month extension. The IRS has once before provided some relief from this deadline in Revenue Procedure 2014-18, but that ruling was temporary and provided no relief for the estates of decedents dying after January 1, 2014. The IRS claims to have been flooded with numerous requests for an extension of time to file for the portability election and has issued this new Revenue Procedure to provide a simplified method to obtain the extension to elect portability for a decedent’s estate who has no estate tax filing requirement to the later of (i) January 2, 2018 or (ii) the second anniversary of the decedent’s date of death. Note that the regulation provides that this longer deadline is not available to the estate of a decedent if an estate tax return was timely filed. In such case, the executor either will have elected portability by timely filing the return or will have affirmatively opted out of portability by not making the election. Read more

Trust & Estate Litigation Practice

Holland & Hart has one of the premiere trust and estate litigation practices in the Mountain West Region. We offer legal services in the areas of probate, trust, and fiduciary litigation, and provide customized solutions to fiduciaries with the intent of avoiding future litigation. Our team represents trustees, financial institutions, trust companies, beneficiaries, creditors, agents under powers of attorney, and individuals in probate, trust, and fiduciary disputes. As part of a full-service law firm, we can also provide streamlined coordination with attorneys in other related disciplines to provide maximum efficiency and effectiveness. Click here to read more.

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.