Cost of Living Adjustments to Probate Code

Effective January 1, 2012, certain figures in the Colorado Probate Code were adjusted for inflation, pursuant to the 2010 addition of C.R.S. 15-10-112 to the statutes, but such adjustments are only made where the increase or decrease is in increments of $1,000. The Colorado Department of Revenue is supposed to release the numbers by February 1, but this was the first year for this requirement, and apparently they had not been informed by the legislature! The numbers that change are as follows:

Description	2011 amount	2012 amount
Initial intestate share for spouse where parent survives decedent	$300,000	$309,000
Initial intestate share for spouse where spouse has children from prior marriage	$225,000	$232,000
Initial intestate share for spouse where decedent had children from prior marriage	$150,000	$154,000
Supplemental elective-share amount	$50,000	$51,000
Small Estate Affidavit limit	$60,000 (as of August 2011, increased from $50,000)	$61,000
Exempt Property	$26,000	$30,000 per statute change, not COLA adjustment
Family Allowance	$24,000	$30,000 per statute change, not COLA adjustment

Note that the increase in the small estate affidavit limit to $61,000 creates a disconnect from the total of the Exempt Property and Family Allowance amounts.

SB 12-131 Passed by Legislature

This bill protects a personal representative and trustee from liability for distribution of an estate or trust without regard to a valid designated beneficiary agreement so long as the fiduciary does not have actual knowledge of such an agreement, and the fiduciary reviewed the county records for a recorded designated beneficiary agreement in the counties in which the decedent was domiciled within three years before death.

IRS Expands Penalty and Installment Payment Relief

The IRS announced that it has expanded its "Fresh Start" initiative to help struggling taxpayers by providing late payment penalty relief and making installment agreements available to more taxpayers. Failure to pay penalty relief applies to two categories of taxpayers: (1) wage earners who have been employed at least 30 consecutive days during 2011or in 2012 (up to the April 17^th filing deadline); and (2) self-employed individuals who experienced a 25% or greater reduction in business income in 2011, due to the economy. To qualify, the taxpayer’s income must not exceed $100,000 for single and head of household filers or $200,000 for joint filers. In addition, the 2011 tax liability due cannot exceed $50,000. To seek relief, the taxpayer must file Form 1127-A, Application for Extension of Time for Payment of Income Tax for 2011 Due to Undue Hardship. Those qualifying for relief will avoid the penalty until October 15, 2012, but will be responsible for interest on the tax until paid. With respect to installment agreements, the IRS has raised the threshold limit to $50,000, meaning that taxpayers who owe up to $50,000 in back taxes may qualify for an installment agreement without having to provide financial information to the IRS. In addition, the IRS extended the maximum term for installment agreements to 72 months.

HB 12-1074 Passed by Legislature and Sent to Governor

This bill grants the courts access to contact information from other state agencies for guardians and conservators who fail to timely file required reports. This will add to the court’s options for contacting fiduciaries to obtain such reports. The Denver Probate Court has been issuing Letters to guardians and conservators that expire on the date such reports are due, and will only be re-issued once the reports are filed.

Do Children Born Post-Death of a Parent Qualify for Social Security Benefits?

On March 19, the U.S. Supreme Court will consider the case of Karen Capato, who is trying to receive Social Security survivor benefits for her children who were born after the death of her husband, using in vitro fertilization. In 2000, Robert Capato was diagnosed with cancer and, as a precaution, froze sperm with a fertility clinic, out of concern that the treatment would render him sterile. Robert and Karen decided before Robert’s death to use the frozen sperm to conceive a child, as a sibling to their son. Robert died in 2002, and Karen gave birth to twins in 2003. She then applied for Social Security survivor benefits for the twins, but was denied. The government says this is because of the inheritance laws in effect in Florida (where the Capatos reside) which states that children conceived after the death of a parent cannot inherit property unless specifically provided for in a Will. Mrs. Capato argues that under the 1938 Social Security Act, survivor benefits go to any "child" of a covered individual, and that includes biological offspring of a married couple. The Florida law would only come into play if biological parentage is uncertain. A federal appeals court in Philadelphia ruled in favor of Mrs. Capato last year. There are currently an estimated 100 similar cases pending with the Social Security Administration.