Monthly Archives: March 2014

March 31, 2014

From Wags to Riches: Estate Planning for Your Pets

by Morgan Wiener

DogWhile Trouble, Leona Helmsley’s dog who was left a $12 million trust fund in the late hotelier’s will, may be the most famous four-legged multi-millionaire, Colorado canines can also benefit from trusts created by their owners.  An owner concerned about what will happen to his pets after his death or incapacity may, under Colorado law, provide for his pets by trust or will.

Historically, trusts for the benefit of animals were deemed invalid; however, they are now valid in a majority of states.  Section 15-11-901 of the Colorado Probate Code specifically recognizes the validity of a trust created for the benefit of the settlor’s pets.  This section states that “a trust for the care of designated domestic or pet animals and the animals’ offspring in gestation [at the time the animal becomes a present beneficiary of the trust] is valid.”  Consistent with other sections of the Colorado Probate Code, this section places primary importance on the settlor’s intent and provides that “[a] governing instrument shall be liberally construed to bring the transfer within this subsection…, to presume against the merely precatory or honorary nature of the disposition, and to carry out the general intent of the transferor.  Extrinsic evidence is admissible in determining the transferor’s intent.”

One of the issues that used to militate against the validity of pet trusts (other than the fact that the beneficiaries were not human) was the rule against perpetuities.  The concepts of lives in being and measuring lives were difficult to apply to a trust whose main focus was animal lives.  For example, should a dog who outlived the settlor by a number of years count as a measuring life for determining the trust termination date?  Section 15-11-901 addresses this problem by providing both that pet trusts are an exception to statutory and common law rules against perpetuities and that, unless the trust provides for an earlier termination, the trust shall terminate when there is no living animal covered by the trust.

The statue also provides guidance on the administration of the trust.  For example, § 15-11-901(3)(b) provides for distribution of the trust upon termination, and § 15-11-901(3)(a) cautions that except for (1) reasonable trustee fees, (2) expenses of administration, or (3) as expressly provided in the trust, no portion of principal or income may be used for anything other than the benefit of the animal.  Section 15-11-901(3) also addresses the designation of trustees and other persons to enforce the trust.  In these ways, the Colorado Probate Code treats pet trusts very similarly to more traditional trusts and suggests that, if a dispute were to arise regarding a pet trust, standard principles and rules governing trusts would apply.

In addition to using trusts, a pet owner may also provide for the care of his pets in a will.  Although there is no section similar to 15-11-901 addressing bequests to and of pets in a will, there is also no provision of the Colorado Probate Code that suggests such bequests would be invalid.

In addition to being part of the estate planning process, pets can also have a part in estate litigation.  For example, in connection with a will contest, our office has used the inclusion of provisions for the care of the decedent’s pets as evidence that the decedent intended a holographic will to be his will.  We have also litigated issues about the ownership of animals in formal estate proceedings. 

Although there are no reported decisions on § 15-11-901, pet trusts have been the subject of estate proceedings in other jurisdictions.  The executors of Leona Helmsley’s estate, for instance, petitioned the court to reduce the size of Trouble’s trust fund.  New York law governing pet trusts allows the court to reduce the amount of principal in a pet trust if it is determined that the amount substantially exceeds what is required for the care of the pet.  What is considered excessive can certainly vary, as Trouble’s annual expenses were estimated to be around $200,000.  Not to worry though, the New York court left $2 million in Trouble’s trust, ensuring that he could continue to live in luxury and would not spend the rest of his days as a paw-per.

March 17, 2014

A Few Thoughts on Jury Trials

by Rebecca Klock Schroer

Although the majority of cases in the trusts and estates area are bench trials, there are circumstances where the litigants can request a jury, such as will or trust contests.  In addition to my experience as a litigator, I have had two unique opportunities to learn more about juries.  At the beginning of my career, I was a law clerk for a trial judge in Jefferson County, Colorado.  I saw approximately 45-50 jury trials and was able to speak with the jurors after they rendered a verdict.  Also, last week, I attended the National Institute for Trial Advocacy (“NITA”) in Chicago and did a mock jury trial after which the jurors gave us direct feedback.

First, and most importantly, jurors are smart.  Generally speaking, jurors listen to the evidence and pick up more details that you might expect.  In a complex civil case, it is easy to think that the jurors will not be able to follow the arguments or that the evidence is too technical or boring.  Regardless of a juror’s life or educational experience, they generally do a very good job making sense of the evidence.  At NITA, they assembled a jury entirely made up of high school students (which is the average educational level of a jury in Chicago).  Our mock trial involved a complex commercial transaction and the witnesses explained several technical terms to the jury.  It was fascinating to hear the jurors talk about the transaction and how they arrived at a verdict.  They were able to explain their reasoning and caught on to many of the nuances in the case. 

Something else I discovered through talking to jurors in Jefferson County is that jurors notice everyone in the court room.  They make judgments about the lawyers right away.  They notice the behavior of the parties at counsel table.  Although these judgments did not necessarily seem to change the verdict they reached in most cases, it is important to keep in mind that they are watching from the moment you step into the court room.

Third, stereotyping jurors can be useful, but also risky.  There may be a juror that fits the profile for a case, but it is always useful (if possible) to dig deeper and ask questions in voir dire that relate to the issues in the case.  If your gut is telling you to strike a juror, then listen to it.

Finally, be aware of distracting facts and questions that the jury may want answered even though they might be slightly irrelevant to the case and difficult to get into evidence.  When I was clerking, I spoke with the jury after a week-long murder trial.  The trial involved the murder of a man while he was at home in his bed.  His dog was mentioned during the testimony at trial.  The first question from the jurors after the trial was, “What ultimately happened to the dog?!”  It was a bit frustrating, and therefore distracting, that they never heard what happened to the dog. 

March 5, 2014

Tax Certainty for Civil Unions in Colorado

by Kelly Cooper

Couples in a civil union that are permitted to file federal income tax returns jointly can now file their Colorado income tax returns jointly as well.

Governor Hickenlooper signed the bill into law last Thursday (February 27, 2014).  It requires couples in a civil union to file their Colorado taxes using the same filing status used on their federal tax return.  The intent of the legislation is to align Colorado with updated federal tax law that permits joint filing for married same sex couples.

The new law will apply to tax years beginning on January 1, 2013 and any other income tax years that are still open under Section 39-21-107 or 39-21-108, C.R.S.

March 3, 2014

2014 Cost of Living Adjustment of Certain Dollar Amounts Under Colorado Probate Code

by Peter J. O'Brien

At the beginning of every year, the Colorado Department of Revenue publishes a  list of cost of living adjustments for certain dollar amounts under the Colorado Probate Code.  It is important for probate practitioners to be aware of the change in figures related to the intestate share of a decedent's surviving spouse, supplemental elective-share, exempt property, lump sum exempt family allowance and collection of personal property by affidavit.

The 2014 figures are as follows:

Statute

Description

2014 Amount

C.R.S. § 15-11-102(2)

Intestate share of decedent's surviving spouse if no descendant of the decedent survives the decedent, but a parent of the decedent survives the decedent

$320,000, plus fractional share pursuant to statute

C.R.S. § 15-11-102(3)

Intestate share of decedent's surviving spouse if all of the decedent’s surviving descendants are also descendants of the surviving spouse and the surviving spouse has one or more surviving descendants who are not descendants of the decedent

$240,000, plus fractional share pursuant to statute

C.R.S. § 15-11-102(4)

Intestate share of decedent's surviving spouse if one or more of the decedent’s surviving descendants are not descendants of the surviving spouse

$160,000, plus fractional share pursuant to statute

C.R.S. § 15-11-201

Supplemental elective-share amount

$53,000

C.R.S. § 15-11-403

Exempt property

$32,000

C.R.S. § 15-11-405

Lump sum exempt family allowance

$32,000

C.R.S. § 15-12-1201

Collection of personal property by affidavit

$64,000