Another Chapter in the Marshall Estate Saga

In June, a federal court ruled that the executor of the Estate of J. Howard Marshall and the trustee of a trust which received gifts from Mr. Marshall, are both personally liable for gift tax deficiencies related to the decedent. Both men, in reliance on legal counsel, distributed property without first paying unpaid gift tax. The court stated that reliance on incorrect legal advice does not excuse the non-payment, and personal liability attached to the fiduciaries. (U.S. v. MacIntyre, ___ F.Supp.2d ___, 2012 WL 2403491 (S.D. Tex June 25, 2012).

Wade Ash was involved with the infamous case of Anna Nicole Smith versus the Estate of J. Howard Marshall (Marshall v. Marshall, 547 U.S. 293 (2006)), for which our own Jim Wade submitted an amicus brief to the United States Supreme Court on behalf of the National College of Probate Judges.

“Distraction” Thieves Are Burglarizing Elders’ Homes

The Denver D.A.'s Crime Alert for July, 2012 referenced the fact that thieves posing as roofers, fence installers, utility workers and those of other trades are burglarizing Denver residences by using distraction tactics on elderly victims to gain entry into their homes. First, they lure their unsuspecting victims outdoors under false pretenses, such as to help locate property lines, or to assess “damaged power lines”,  trees in need of pruning, etc. While the victim is detained, . . . (to read more, go to Burglary Alert).

Senior Law Day

Saturday, July 28, 2012 marks the 14th Annual Senior Law Day event. Colorado seniors and adult children are invited to participate in this event. Workshop topics include, for example:

Adult Protection and Elder Abuse
Assisted Living and Nursing Home Issues
Estate Planning: Wills, Trusts & Your Property
Powers of Attorney and Guardianship & Conservatorship
What to do When Someone Dies

For more information or to register for this program visit http://www.seniorlawday.org/.

Can a Child Have More Than Two Parents?

Under current law, California does not allow more than two legal parents per child. But with the rise of surrogate births, same-sex parenthood, and assisted reproduction, California state senator, Mark Leno, introduced Senate Bill 1476, which would allow a child to have multiple parents. The bill states that in a situation in which three or more people could not agree on child custody, a court could divide custody among all of them.

The bill does not require a judge to take this step, but it provides another avenue when trying to decide what is in the best interest of a child. California’s children might ultimately benefit from additional financial support, health insurance, or social security benefits from more than two parents. Supporters of the bill believe this factor might ultimately reduce the state's potential financial responsibility. Opponents argue the bill is redefining and "muddy[ing] the waters" of family structure. It may also have unintended consequences in other areas of the law, such as inheritance or wrongful death. It will be interesting to hear the issues raised by this bill, and if it is signed into law, how it impacts families.

We are not aware of any Colorado law which would authorize more than two legal parents for purposes of determining child custody or child support issues. However, Colorado has changed state intestacy statutes to allow for a person to inherit from more than just two parents (adoptive and birth parents, under certain situations). This statute does not impact Colorado law regarding child support or child custody.

See Jim Sanders, California Bill Would Allow a Child to Have More than Two Parents, The Sacramento Bee, July 2, 2012.

Living Forever On Facebook - A Reminder

Today a Wade Ash attorney received a message on Facebook which notified her it was the birthday of a Friend. However, this Friend died of brain cancer in March. Her husband is not a Facebook user, and it appears no one has notified Facebook of her death (did you know you can do that)? Now that more of our lives are on-line, everything from our vacation photos to our banking needs, consider creating a password list and include a direction regarding your wishes for your digital assets. Pass this list on to your estate planning attorney and make it available to your agent under a durable power of attorney and the fiduciaries named in your estate planning documents for use upon your disability or death.

Court Allows Estate Tax Marital Deduction for Same-Sex Surviving Spouse

In Edith Schlain Windsor v. U.S. (DC NY 6/6/2012) 109 AFTR 2d ¶ 2012-870, a district court found that the federal Defense of Marriage Act (DOMA) was unconstitutional when it denied the marital deduction for gifts passing to a surviving spouse married under Canadian law to a same-sex partner. They were domiciled in New York, a state that also now recognizes same-sex marriage. The IRS denied the application of the marital deduction to gifts passing to the surviving same-sex spouse per DOMA, and assessed $363,000 in estate tax. The surviving spouse appealed, and the court found that DOMA violates the equal protection clause of the U.S. Constitution because there is no rational basis supporting the law. As a result, the marital deduction was applied to the estate of the deceased spouse. The federal estate tax marital deduction is unlimited in amount and postpones any estate tax on assets passing from the decedent to a surviving spouse who is a U.S. citizen. Special rules apply to a spouse who is not a U.S. citizen. (IRC §2056).

Federal Law News Flash!

On June 15, 2012, Treasury issued temporary and proposed regulations which give clarity and guidance as to the application, use and limitations on the portability of the unused estate tax exemption of the first spouse to die. In particular, the IRS clarified how the portable amount of estate tax exemption is calculated, and how that amount can be used by the surviving spouse, both for lifetime gifts as well as at death. Treasury calculates the surviving spouse’s exemption in a way that is favorable to taxpayers: The first spouse’s unused exemption (calculated in the year of death and pursuant to a timely filed U.S. Estate Tax Return) is added to the surviving spouse’s exemption. This means that if the first spouse dies in 2012 with $5 million in unused exemption; his estate timely files a Form 706; and surviving spouse dies in 2013 with a $1 million exemption because of the change in federal law, the surviving spouse’s estate will have a $6 million total exemption. Earlier, commentators had interpreted the statute as limiting the surviving spouse’s total exemption to two times the exemption available at the survivor’s death (or a total of $2 million in the example described above). This favorable interpretation makes it even more important to consider filing a Form 706 at the first death.