Dead Man's Statute Presentation to the Litigation Section

On Saturday, November 5, 2011, Marc Darling, Herb Tucker and Greg Washington are making a presentation at the Litigation Section Council meeting of the Colorado Bar Association concerning proposed revisions to the Dead Man’s Statute.

Favorable Tax Treatment of Contribution of IRA to Charity May End 12-31-2011

Unless Congress extends this benefit, the ability of taxpayers at least age 70-½ to contribute an IRA up to $100,000 in value directly to a public charity without having to report the IRA as taxable income followed by a charitable deduction (which does not offset the income 100%) will end as of December 31, 2011. Such a contribution will also satisfy the taxpayer’s Minimum Required Distribution for the year. If you are considering taking advantage of Code section 408(d)(8)(F), be sure to get the contribution started well before the end of the year.

Can I Be Accidentally Married?

Although we hear a lot of un-true estate planning rumors from clients, we seem to be encountering quite a few lately that deal with common law marriage.  Colorado recognizes common law marriage, but does not impose any particular time line for being considered married by common law.  Nor does Colorado have any kind of “automatic” common law marriage for couples living together.  Folks seem to think that just by living together for a particular amount of time (and the stories vary from six months to seven years), the state will legally consider the couple as husband and wife.  We want to set the record straight: you cannot be accidentally married, any more than you can be accidentally divorced.  Common law marriage is purposeful, and while not accomplished by filing for a marriage license, results from two people wanting to be married, holding themselves out to the community as married (by referring to each other as “husband” and “wife”) as well as creating a financial life together, such as filing “married” income tax returns.  But we also want to debunk one more fallacy - there is no common law divorce - those married by common law have to get a formal, court ordered decree of dissolution, just like a couple married by filing a marriage license. For more information, go to http://www.wadeash.com/newsletter.asp, click on the June 2007 Newsletter and go to the article entitled, “Look Before You Leap”. Another publication of interest might be the article entitled “Common Law Marriage”, as issued by the Office of Legislative Legal Services at http://wadeash.com/PDF/common-law-marriage.pdf. If you want to clarify your cohabitation rights, call us at (303) 322-8943 or you can send an email through our website under the Contact Us tab.

Form 8939 Released by IRS

The IRS has released Form 8939 and instructions, which the estate of a 2010 decedent can use to elect out of the estate tax system and into the modified carryover basis system. This form is due January 17, 2012. To view the form, go to http://www.irs.gov/pub/irs-pdf/f8939.pdf, and to view the instructions, go to http://www.irs.gov/pub/irs-pdf/i8939.pdf.

Thirty Years of Practicing Law!

Wade Ash Woods Hill & Farley, P.C. would like to congratulate Laurie A. Hunter for reaching her 30th anniversary of practicing law!  Laurie’s practice focuses on estate planning, probate and trust administration. She is a frequent speaker on trust and estate issues and is an active member of the Trust & Estate Section of the Colorado Bar Association. Ms. Hunter was elected as a Fellow in the American College of Trust and Estate Counsel and is also listed in Best Lawyers in America and Colorado Super Lawyers. For more information about Laurie, please visit our website.

Oral Contract Between Parties

In an unpublished case, the Colorado Court of Appeals affirmed the trial court’s holding for unjust enrichment and that an oral contract existed between the parties. The parties were engaged in an intimate relationship and participated in a commitment ceremony. At issue in the case was whether the parties had a valid oral contract to split rent and expenses incurred during the relationship. In an evaluation of credibility, the trial court found both unjust enrichment and the existence of an oral contract. The Appeals Court declined to evaluate the credibility of the witnesses and rather upheld the trial court’s decision based on a "clearly erroneous" standard of review. The take away from the case is the importance of reducing all agreements to writing! For more information, go to Dufour v. Jordan.

2012 Inflation Adjusted Numbers

Under the Internal Revenue Code, certain figures affecting estate planning are adjusted annually for inflation. RIA calculated those numbers and reported the following:

Estate, Gift and Generation-skipping transfer basic exemptions: $5,120,000 (an increase from $5 million in 2011).  Also keep in mind the effect of portability of the first deceased spouse's unused estate tax exemption that is potentially added to the surviving spouse's gift and estate tax exemptions (but not GST).  Portability must be elected by timely filing a U.S. Estate Tax Return (Form 706) for the deceased spouse.

Gift tax annual exclusion: $13,000 (no change).

Gift tax annual exclusion for gifts to non-U.S. citizen spouses: $139,000 (an increase from $136,000 in 2011).  Remember that gifts to non-U.S. citizen spouses are not unlimited.

2011 Form 706 and Instructions Released by IRS

The IRS has posted on its website the forms for the U.S. Estate Tax Return (Form 706) and instructions for estates of decedents dying in 2011. The IRS previously released Form 706 and instructions for estates of decedents who died in 2010. We are still waiting for the release of Form 8939 for estates of 2010 decedents to elect out of the estate tax system and into the carryover basis system. Click here for the IRS forms and instructions.

Guidance on 2011 Decedents and "Portability"

The IRS just released new guidance for personal representatives regarding electing portability of the deceased spouse’s unused estate tax exclusion amount and to potentially double the estate tax exemption that will be available at the surviving spouse’s later death. Notice 2011-82 confirms that the "portability" election must be made on a timely filed Federal Estate Tax Return (Form 706) and provides that the timely filing of a Form 706 "prepared in accordance with the instructions" will constitute the making of the portability election; therefore, by simply filing the Form 706, the estate will be considered to have elected portability "without the need to make an affirmative statement, check a box, or otherwise affirmatively elect." The Notice also provides that an estate may avoid making the election by following the instructions for the Form 706, which describe the necessary steps. For more information, go to http://www.irs.gov/pub/irs-drop/n-11-82.pdf.