Monthly Archives: March 2015

March 30, 2015

Using Your Powers for Good

by Morgan Wiener

As most basketball fans know, legendary University of North Carolina coach Dean Smith died in February at age 83.  Known for being one of the winningest coaches in NCAA history and coaching Michael Jordan, Coach Smith is now also being remembered for leaving a token of appreciation to former players in his revocable trust.  It was recently revealed that Smith directed his trustee to send $200 to each of the varsity lettermen who played for him with the message to “enjoy a dinner out compliments of Coach Dean Smith.” 

While we in the Fiduciary Solutions Group frequently become involved with a trust when there is a potential problem or dispute, Coach Smith’s gesture is a nice reminder of the happy surprises and fond memories that a testator’s loved ones can be left with through the use of thoughtful estate planning.

Click here to read the letter to Coach Smith’s players.

March 16, 2015

Advancements

by Rebecca Klock Schroer

Almost every estate dispute among children seems to have an emotional component relating to perceived disparity in treatment by one or both parents.  For example, a will may leave property in equal shares to the Decedent’s children, but the children still argue because one feels that the other received more financial support during the Decedent’s life.  Usually this results in one side making the argument that certain lifetime gifts should be counted against the child who received them and reduce their share of the estate. 

If a lifetime gift counts against a share of the estate, it is commonly referred to as an advancement.  The Colorado Probate Code is very specific regarding what is necessary for a gift to qualify as an advancement or ademption by satisfaction.  Colo. Rev. Stat. § 15-11-109, which is entitled “advancements,” addresses the requirements when a Decedent dies intestate.  Colo. Rev. Stat. § 15-11-609, which is entitled “Ademption by Satisfaction,” addresses the requirements when a Decedent dies with a will.

To be considered an advancement, (1) the will (if there is one) must specifically provide for deduction of the gift or (2) a contemporaneous writing by the Decedent or the heir (or devisee) must declare that the gift should be counted against a devise made in the will or the intestate share of the heir.  Colo. Rev. Stat. §§ 15-11-109(1) & 15-11-609(1).

For purposes of valuation, the property is valued at the time the heir or devisee came into possession or enjoyment of the property or the Decedent’s death, whichever occurs first.  Colo. Rev. Stat. §§ 15-11-109(2) & 15-11-609(2).

The two statutes address the effect of the heir or devisee predeceasing the Decedent.  If the Decedent dies intestate, the property is not taken into account unless the Decedent’s contemporaneous writing provides otherwise.  If the Decedent dies testate, the gift is considered a full or partial satisfaction of the devise, as appropriate, in applying 15-11-603 (antilapse statute) and 15-11-604 (failure of a testamentary provision), unless the testator’s contemporaneous writing provides otherwise. Colo. Rev. Stat. §§ 15-11-109(3) & 15-11-609(3).

Finally, for a Decedent who died intestate, Colo. Rev. Stat. § 15-11-109(4) provides that an heir does not have to refund the estate if he or she received more than his or her share, unless otherwise provided under the elective share statutes.

In order to minimize disputes, an estate planning attorney should ask their clients whether they wish to have any gifts counted as advancements and whether they have executed any other relevant writings.  For example, ambiguity could arise if the Decedent had a contemporaneous writing that referred to a certain gift as an advancement, but then signed a will at a later date that does not mention the gift.  Does the later will override the contemporaneous writing? 

Finally, the calculation of the impact of an advancement is referred to as a “hotchpot.”  Below is an example:

  • an estate holds $280,000
  • the estate is to be divided equally among three children
  • one child received a $20,000 advancement

First, the $20,000 advancement has to be added back in: $20,000 + $280,000 = $300,000. 

Second, the total is divided by the number of beneficiaries: $300,000/3 = $100,000 per beneficiary. 

The $20,000 is then subtracted from the share for the beneficiary that received the advancement, so the final shares of the estate would be (1) $100,000, (2) $100,000 and (3) $80,000.

March 2, 2015

Mediator’s Moment – Beginning at the End of the Matter

by Jean Stewart

Attorneys preparing for mediation would be well advised to spend some time drafting a Terms of Settlement sheet in advance of the mediation session.  This exercise presents the opportunity to be successful in multiple ways. 

First, one of the observations I have made in multiple mediations is that attorneys and their clients do not always have consensus on the client’s goals.  Reducing the “hoped-for” outcome to a simple set of reciprocal terms helps to identify the client’s real goals before the mediation begins and assists both the attorney and the client separate the grain from the chaff. 

Second, parties who have sorted their priorities into “must have” terms versus incidental, “sure, what the heck” terms have a tremendous advantage in mediation.  Instead of getting overheated in the tension of negotiations, they can stay focused on the real priorities they brought to the process and let go more easily of the peripheral issues they grew attached to during litigation or in the mediation itself.

Finally, at the conclusion of mediation, I almost always ask one of the attorneys present to take out his/her laptop and compose a Settlement Agreement for signature.  I am happy with a simple “Terms of Settlement” agreement although some counsel insist on drafting more elaborate contracts.  Regardless of the format, attorneys who have given real thought to the essential Terms of Agreement (even if only the ones they hope for) in advance of the mediation are more effective and efficient than attorneys who get distracted by the process of drafting.