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February 12, 2018

When Beneficiaries are Not Heirs

by Jody H. Hall, Paralegal

The terms Beneficiary and Heir both refer to someone who receives an inheritance after someone passes away.  However, while the terms are often used interchangeably, they do not always refer to the same individual or set of individuals.  Heirs can be beneficiaries but beneficiaries are not always heirs.

In our practice, we often see issues arising when these 2 sets are not identical or are different than the expectations of the parties. Read more >>

February 6, 2018

A Significant Client Victory in the Colorado Court of Appeals

by Morgan Wiener

A joint team of H&H attorneys from our Trusts & Estates Litigation (formerly Fiduciary Solutions) and Commercial Litigation groups, including Christina Gomez, Morgan Wiener, Matthew Skotak, Katie Custer, Steve Masciocchi, and Kevin McAdam recently secured a significant victory for our client, a protected person under a conservatorship, in opinions issued by the Colorado Court of Appeals in two related appeals (16CA198 and 16CA625). At issue was the theft of about $1.5 million of the protected person’s assets by her brother, a tenured law professor at a major university, while serving as her conservator. Using a complicated scheme in which he had undisclosed conflicts of interest, the brother diverted approximately one-third of the protected person’s inheritance to trusts for the benefit of himself and his children. Two years later, after his wrongdoing was discovered and challenged, the Denver Probate Court found that the brother had breached his fiduciary duties and committed civil theft, and it ordered him to repay the stolen funds along with treble damages and attorney fees. Read more >>

January 29, 2018

New Partnership Audit Rules Affect Many Family Partnerships

by Helen E. Rogers

The use of partnerships in estate and wealth transfer planning can provide a number of benefits, such as the consolidation of investment assets, centralized control over those assets, increased creditor protection, a mechanism for management succession and valuation discounts.

Entities taxed as partnerships are “passthrough” entities, meaning that they do not pay federal income taxes themselves.  Instead, partnerships pass their items of income and loss through to their partners, who report those items on their individual tax returns and pay income tax at their individual rates.  Until January 1, 2018, the tax law provided that if a partnership were audited and the IRS determined that the partnership underreported its income (which would result in the partners underpaying their income taxes), then the IRS would collect the unpaid income tax from the partners of the partnership.  The IRS would not look to the partnership itself to pay any unpaid tax liability on their 2020 tax returns. Read more >>

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 >>