Monthly Archives: July 2013

July 29, 2013

Fall Symposium: Emerging Trends in Fiduciary Law and Litigation

Holland & 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

July 22, 2013

Reproductive Sciences Fertile Area for Estate and Trust Litigation

by Morgan Wiener

“Delivery Man”, a new movie starring Vince Vaughn slated for release later this year, is based on the seemingly ridiculous premise that a man has fathered 533 children through donations to a sperm bank.  The children file a lawsuit to discover his identity, and hilarity ensues.

While it is unlikely that any of us will ever have a client with quite that many children (imagine the personal property disputes in that family!), assisted reproductive technology is a subject that is likely to come up with increasing frequency in the areas of estate planning and fiduciary litigation.  For example, as people continue to have children later in life, and as civil unions and same-sex marriage become legal in more jurisdictions, it is likely that more children will be born from assisted reproduction.

The Colorado Probate Code currently contains certain provisions concerning assisted reproductive technology.  For example, §§ 15-11-115 – 15-11-122 address and define the parent-child relationship in the context of intestate succession and include numerous provisions about assisted reproduction.  Section 15-11-120, for example, addresses posthumously conceived children and the effect of divorce on the status of children conceived through assisted reproduction.

Many wills also address the issue of children born after the death of a parent; however, these provisions may not be drafted with an eye towards children who are both conceived and born after the death of a parent.  As assisted reproductive technology becomes more common, these provisions may take on more importance in the planning process and become more than mere boilerplate.

Depending on the laws of the jurisdiction and how the parent-child relationship is defined, issues may also arise after death, and a decedent may have more heirs than he anticipated and there may be more interested persons than assumed in an estate proceeding.  While the logistics of administering an estate or litigating a will contest with 533 potential beneficiaries are best left for the movie theatre, assisted reproduction and the potential complications stemming from it are issues that all practitioners in this area should be aware of and prepared to discuss with their clients.

Click this link to watch a trailer for “Delivery Man.”

The film is a remake of a 2011 Canadian film titled “Starbuck” slated for release on DVD tomorrow. 

July 15, 2013

Estate Planners Alert: Are Your Clauses Coordinated? Are Your Terms Clearly Defined?

by 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.

July 8, 2013

Dangers in Charitable Giving – Colorado’s Attorney General Takes Action Against Charities

by 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.

July 1, 2013

Trying to Do the Right Thing – Ethics and Estate Planning

by: Kelly Cooper

Many readers of this blog are familiar with (or even attended) the CBA’s Trust and Estate Section’s Estate Planning Retreat two weeks ago in Snowmass Village.  As always, the Retreat was a great time to reconnect or catch up with our colleagues who work in the estate planning and administration areas and attorneys who do estate planning, administration and litigation.  More importantly, each year the Retreat presents an opportunity for attorneys from all over the state to discuss issues and exchange ideas with each other in small groups.  This year, Jean Stewart and I hosted one of those small discussion groups.  Our discussion group focused on ethics and the conflict and confidentiality issues that arise during the course of representing a family – from the initial representation of a couple for estate planning, to representing the family business, pre-nuptial agreements for the couple’s children, divorces, the differing treatment of children (Greedy, Needy and Speedy), and eventually, the disability or death of a client.

For those who were not able to attend the Retreat (or just not able to attend our session), here is a summary of the issues that received the most attention during our four sessions:

  •  Do you represent couples jointly for estate planning?  If so, assume one of the
    client shares information with you and does not want the other half of the couple to know that information. Do you have an affirmative obligation to share that information with the other joint client? Do you only have to share the information if it affects the estate plan? Do you only have to share the information if it requires you to end the engagement?  Do you only have to share it if the other client asks for advice that requires you to use the information that was shared?  What conversations should you have with the couple before they become clients regarding these issues?  What type of written correspondence do you send discussing these types of issues?
  • Should you represent the family business?  This discussion did divide some of our groups and it gave rise to an important practical question.  Even if the ethical rules permit the representation, is it worth the effort required to work through the potential conflicts and the trouble that may arise in the future? 
  • Can you (or should you) continue to represent a couple during a divorce or individually after the divorce is final?  Should the terms of the couple’s separation agreement factor into your decision?
  • Should you represent one of the couple’s children, at the request of the couple, to draft a prenuptial agreement?  What if the couple is paying for your services?  What if the child’s view of the prenuptial agreement is different than the couple’s?
  • Can you (or should you) represent the couple in the sale of the family business to one of the children? 

I always enjoy the Retreat’s discussion group format because it provides a unique opportunity to pose interesting questions, pick people’s brains, challenge the status quo and hear real life war stories (there are some doozies out there!).  My thanks to all of you that participated in our discussion group and those that supported the Retreat.