This commentary is provided by an author who is both a senior lawyer on the one hand and a father and grandfather on the other.
Colorado Probate Blog - Wade Ash Woods Hill & Farley, P.C.
Aubrey McClendon, a co-founder of Chesapeak Energy Corp. and a pioneer in the shale industry, died on March 2, 2016. Mr. McClendon had significant assets yet his estate appears to be insolvent. Creditor claims filed to date exceed $1.1 billion. Mr. McClendon’s business holdings were complex and the estate has had a hard time selling assets.
Among the many wonders (and occasional terrors) of modern medicine, few strike more of an emotional chord than advances in reproductive technology. Preserving our genetic material for use after death has passed from science fiction to scientific fact; but the law remains unestablished in Colorado as to what happens if there is a dispute about ownership of frozen sperm, ova, or embryos after the death of one or both of the donors.
In 2001, when the estate tax exemption was $675,000 and George W. Bush was President, Congress “repealed” the estate tax. But the repeal was phased in over ten years and was then scheduled to last for only one year. Instead of actual repeal, what we got, under President Obama, was a reinstated estate tax with a much higher exemption of $5 million, indexed for inflation. The Republican party now controls both houses of Congress as well as the White House, and we are again hearing calls for repeal of the estate tax.
The law allows a person to sign binding contracts including Wills at age 18, the age when young adults should begin to plan to avoid financial and medical complications in the event of debilitating illness, injury or death. Wills, Medical and Financial Powers of Attorney, and Advanced Directives are the basic documents that every person should have in place.
When Michael Jackson died, his estate valued his image and “right of publicity” at zero on his U.S. Estate Tax Return, as well as the value of his music interests due to the large debts encumbering those interests. The IRS disagreed, and argued that the success of the documentary and Cirque du Soleil show released after his death were foreseeable and should affect the value of his estate. The disagreement resulted in a $526 million estate tax deficiency and penalties of $205 million imposed by the IRS. The trial began in Tax Court on February 6, 2017.
Beloved actress, producer and activist, Mary Tyler Moore, was laid to rest in a private ceremony in Fairfield, Connecticut on January 29, 2017 at 80 years old, after battling diabetes and suffering from complications with pneumonia. While the status of her estate is unclear at this point, it is very likely that Moore left behind a Will. With a considerable legacy, including an estate that is valued at $60 million, a question arises of who will inherit Moore’s fortune. Her son and only heir, passed away tragically in an accident and her brother and sister are also deceased. This essentially leaves Robert Levine, her longtime husband, as her primary heir. Under Connecticut Probate Rules, Levine is entitled to at least one third of Moore’s probate estate, which in this case, under Connecticut’s spousal share, could be in the spectrum of $20 million. Although Moore left an undetermined amount of money to charity, the question remains: Will her husband inherit a large chunk of the “high-net-worth” legacy that she leaves behind or will charities such as PETA and the Juvenile Diabetes Research Foundation, to which she has contributed in the past, receive the majority share?
This election season was full of interesting contests and a few surprises. If you were following the issues in Colorado, you saw an array of familiar ballot initiatives dealing with legalized marijuana, funding for the Scientific and Cultural Facilities District, and of course, heated contests between diametrically opposed candidates. But you also saw the passage of a ballot initiative that will only directly affect a limited portion of the population, but is intended to provide that small group with an alternative to suffering through a painful terminal illness.
On August 2, 2016, the Treasury Department proposed a series of regulations to Section 2704 of the Internal Revenue Code. If these proposed regulations are made final, this could greatly limit the ability of family controlled partnerships, limited liability companies, and corporations to transfer interests in a manner that takes advantage of minority discounts.
Effective August 10, 2016, the Colorado legislature enacted C.R.S. § 15-16-901 et seq., the Colorado Uniform Trust Decanting Act (the “Act”). “Decanting” generally refers to the distribution of trust property from one trust to another trust pursuant to a trustee’s discretionary power to make distributions for beneficiaries. New York was the first state to enact a trust decanting statute in 1992; now, nearly half of the states, including Colorado, have specific statutes addressing and authorizing trust decanting in various forms.
Annual Exclusion Gifts. The gift tax annual exclusion is $14,000 for 2016, and stays the same for 2017. You can make gifts of this amount to each of any number of people in a calendar year and not have to file a gift tax return, and the gifts will not use up part of your estate tax exemption. You can also make gifts of an unlimited amount by directly paying a donee's medical expenses to the provider, or tuition to the educational institution. If you make the gift by a check, the donee must deposit the check and the amount must clear your account prior to the end of the year.
We are very pleased to announce that Kevin D. Millard and Marc A. Chorney (formerly of Chorney & Millard LLP) have joined the firm as Of Counsel attorneys. Kevin and Marc will continue their practices in the areas of estate and trust planning, estate and trust administration and consultation (including expert testimony). Kevin and Marc will also be joined at Wade Ash by their staff of many years, Anne E. Wohlford and Laura A. Williams.
In July 2016, the Wade Ash Newsletter discussed liberalized rules for the creation of wills. At the end of the article, the author predicted that with new technology electronic wills and digital storage of estate planning documents may become a hot topic in many states. To date, Nevada is the only state that has adopted legislation permitting probate of electronic wills. Recently, however, Florida has introduced a bill allowing probate of electronic wills. It is anticipated that at least three other states will introduce similar legislation in 2017.
Prior to mediation, attorneys should meet with their clients and discuss a realistic settlement result. If the client has an unrealistic outcome that cannot be achieved or the client is not prepared to compromise then mediation will not be successful. The Confidential Settlement Memorandum should discuss various settlement scenarios. Coming to mediation with several creative ideas to settle the case will foster more meaningful negotiations by the mediator with the parties. Below are a few suggestions regarding mediation: