January 16, 2018

Planning Opportunities Under the New Tax Cuts and Jobs Act

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  Personal exemptions are repealed and the mortgage interest deduction is limited to interest on a mortgage of $750,000 or less per married couple.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deductions of cash donations to public charities increased from 50% to 60% and the deduction for alimony payments was repealed (for divorces or separations executed after December 31, 2018).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21% flat rate, a 20% deduction is now available for certain pass through entity income and the corporate AMT has been repealed.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 >>

January 2, 2018

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

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 >>

December 5, 2017

Litigating RUFADAA: What is a “communication”?

by Morgan Wiener

I’ve been on a calendar, but never on time.

-Marilyn Monroe

While the Revised Uniform Fiduciary Access to Digital Assets Act (“RUFADAA”) has now been enacted in a majority of states – 17 states have adopted a version of the act so far this year – there has been very little litigation about the act to date.  As a result, there is little guidance from the courts about the interpretation of key terms and how disputes will be resolved.  A recent decision from the New York Surrogate’s Court helps fill in some of the gaps.  In In re Estate of Serrano, 54 N.Y.S.3d 564 (2017), the court interpreted the definition of “communication” in Article 13-A of the Estate’s Powers and Trusts Law (“EPTL”), a New York statute modeled after RUFADAA.

The issue in Serrano involved a personal representative’s request for access to the decedent’s Google email account, contacts, and calendar.  In response to the request, Google asked for a court order stating that “disclosure of the content [of the requested electronic information] would not violate any applicable laws, including but not limited to the Electronic Communications Privacy Act and any state equivalent.”  Id. at 565.  Read more >>

November 20, 2017

IRS Can Reopen Estate Tax Return to Determine Available DSUE Upon Death of Second Spouse

by Margot Edwards

In Estate of Minnie Lynn Sower, 149 T.C. No. 11 (Sept. 11, 2017), the Tax Court held that the IRS can reopen the portability return filed for a predeceased spouse as part of its examination of the estate tax return filed for the second spouse to die.

In this case, Frank Sower passed away in 2012 and his estate filed an estate tax return electing portability of deceased spousal unused exclusion (DSUE). Frank’s estate received a letter from the IRS stating that it had accepted his return as filed. Minnie Sower later passed away and her estate filed an estate tax return claiming the DSUE reported by Frank’s estate. As part of its examination of Minnie’s return, the IRS reopened Frank’s return and reduced the DSUE. Read more >>

October 20, 2017

You’re Invited! 5th Annual Fiduciary Solutions Symposium

MONDAY, OCTOBER 23, 2017

7:30 – 8:00 a.m. – Breakfast and Registration
8:00 – 10:00 a.m. – Presentation

Grand Hyatt Denver
Capitol Peak A, 555 17th Street, 38th Floor
Denver, CO 80202

ABOUT THE SYMPOSIUM

Every day, the Fiduciary Solutions Practice Group at Holland & Hart addresses legal issues that impact fiduciaries and beneficiaries and litigates issues that arise in those relationships. Working to deal with conflicts arising from the transfer of wealth requires insight and vigilance. Our seasoned group of problem solvers will share their experiences, perspectives, practice tips, and wisdom to arm you with the knowledge to help improve your fiduciary relationships.

Topics will include:

  • What Can Go Wrong with Estate Plans and How to Fix It
  • Trust Modification
  • The Meaning of “Interested Person” in Fiduciary Litigation
  • Tax Considerations for Fiduciaries and their Advisors
  • Notarization and Wills in an Electronic Age
  • Recent Appellate Issues

Holland & Hart Panelists:

2 General CLE Credits Approved

For more information please contact Jennifer Mauk at jamauk@hollandhart.com or 303.295.8349

October 9, 2017

Decanting to Eliminate a Beneficiary – New York Says Yes

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 >>

September 26, 2017

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

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 >>

September 11, 2017

Fiduciary Duty of Loyalty: Which Interest is Best?

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 >>

August 28, 2017

Who are the Partners Now?

by Rebecca Klock Schroer

We are often asked as trust and estate litigation attorneys for advice on how to avoid future family disputes with better estate planning.  I want to highlight an issue that seems to be appearing more frequently in disputes involving family partnerships.  When a partner dies, the succession provisions of the partnership agreement can become an issue in litigation when the provisions are not clearly drafted or fail to coordinate with other estate planning documents.

We have had several cases involving whether the decedent’s successors are partners, or simply assignees who do not have all the rights of a partner.  Family partnership agreements may allow for the transfer of a partnership interest to another family member automatically.  Even in these scenarios, there may be technical terms of the partnership agreement that have to be complied with before the family member officially becomes a partner.  Some agreements do not allow anyone to succeed to a partner’s interest unless otherwise determined by the partnership/other partners.  Accordingly, if a partner’s will purports to unilaterally pass a partnership interest to a beneficiary, it may cause a dispute if such a transfer is not allowed by the partnership agreement.  The dispute is often fueled by a beneficiary who asserts that the will is the best evidence of the decedent’s intent. Read more >>