Probate Filing Fees Increased

Effective July 1, 2013, the "temporary reduction" in court filing fees ended. The fees have now returned to their pre-January 23, 2012 levels: probate filing fee is $164 instead of $127, and certified copies of Letters are $20.75 each instead of $13. In addition, the fee for filing a Trust Registration Statement is $163 instead of $126.

Marc Darling Named Recipient of R. Sterling Ambler Award

Marc Darling was named the 2013 recipient of the R. Sterling Ambler Award in recognition of his remarkable and devoted service to the Trust & Estate Section of the Colorado Bar Association.

U.S. Supreme Court Finds Federal DOMA Unconstitutional

By Laurie A. Hunter, Esq.

On June 26, 2013, the U.S. Supreme Court, in a 5-4 decision, determined that the federal DOMA (Defense of Marriage Act) that prohibited recognition of a valid same-sex marriage under state law was unconstitutional. U.S. v. Windsor. In this case, the surviving spouse of a valid same-sex marriage filed a U.S. Estate Tax Return, claiming the marital deduction for assets passing to her. The marital deduction was denied by the IRS, and tax assessed. This decision makes clear that for a valid marriage under state law, the federal government cannot deny benefits to a spouse.

What this decision does not do: It did not address the validity of a state’s "DOMA" laws, which Colorado has passed, in which a state refuses to recognize the validity of a same-sex marriage that is valid under another state’s law. This may be the next case that reaches a court. It also does not address civil unions, that are specifically not marriage. In Colorado’s new Civil Union statute, a valid same-sex marriage in another state automatically converts to a civil union in Colorado. Therefore, it may be that couples married in a state where same-sex marriage is valid, would still not be entitled to spousal benefits in Colorado, but they could be entitled to federal spousal benefits. The effect is unclear at this point.

501(c)(4)-Gate: Shocking IRS Scandal or Business as Usual?

By Merry Balson, Esq.

Over the last few weeks I’ve been glued to the media reports as the IRS scandal, dubbed by some "501(c)(4)-Gate", has unfolded. After all, it is not often that the Exempt Organizations division of the IRS makes national news once, much less multiple times in the same month, focusing so much of the nation’s attention on my line of work. If you’ve followed this story at all, you too might be as shocked as members of Congress were to learn that the IRS has targeted various categories of politically backed organizations applying for tax-exempt status. While I am certainly not condoning this kind of behavior, targeting of groups by the IRS, lengthy delays in processing applications, and seemingly unnecessary requests for information from new organizations seeking exemption is certainly not a new phenomenon. Over the last few decades the IRS has targeted gay and lesbian organizations, credit counseling organizations, housing assistance organizations, family-controlled organizations and anyone else the IRS may think either does not deserve the much coveted tax-exempt status or (in the IRS’ experience) is likely to abuse that status. Remember too that, like many other areas of government, the IRS budget has been cut time and again over the last decade or more. While more senior agents have retired, the IRS has either not filled the positions, or filled them with far less experienced personnel who have not had the luxury of their predecessor’s training. Complaints have mounted for years that the IRS is understaffed and undertrained, that processing times for 1023s and 1024s (the applications organizations file with the IRS to obtain tax-exempt status) have become unreasonably long (up to more than a year at this point for many organizations), and that IRS agents routinely ask for seemingly unnecessary and burdensome information in their follow-up requests to new organizations seeking tax-exempt status, but until now, no one in Washington seemed to notice or have any motivation to make any changes. The singling out of political organizations of any nature would absolutely be inappropriate, but to those of us familiar with the long standing problems with the IRS, if the investigations uncover that an internal practice like this existed, it would not be entirely surprising, and though deplorable, it would certainly not be "shocking" given the IRS’ history. We can only hope that whatever the outcome, this new attention to the IRS Tax-Exempt/Government Entities division will bring about some long needed changes that will benefit all tax-exempt organizations, and maybe too a serious review of whether granting tax exemption to any political organization is an appropriate and intended use of taxpayer funds.

Read more about the IRS’ history of burdening nonprofits in the New York Times article published on June 3, 2013 at New York Times.

Kardashian Diaries Suit, Copyrights and Estate Planning

The recent news that the late Robert Kardashian’s widow, Ellen Pearson (a/k/a Ellen Kardashian), has been sued by the Kardashian children (and Mr. Kardashian’s former wife, Kris Jenner), for selling excerpts from their father’s diaries about their lives is a good reminder of the importance of good, clear estate planning documents. Reportedly, Ms. Pearson, who sold portions of the diaries to the tabloids, found the diaries in a box at a vacation home she shared with her late husband. The Kardashian children claim that Mr. Kardashian’s will left the bulk of his tangible and intangible personal property (which would include copyrighted items) to them, including the diaries, and that Ms. Pearson’s sale of them was, among other things, a copyright violation. Interestingly though, Mr. Kardashian’s will may have given both the vacation home and other personal property "customarily used at that property" to Ms. Pearson. The question is whether the property left to Ms. Pearson with the vacation home included the intangible personal property rights (such as copyright and publication rights) in the diaries. Though he probably had no idea his children would have such a public life following his death, had Mr. Kardashian given careful thought to how those diaries and any intangible property rights from photos and other personal effects should be disposed of in his will, and had drafted his plan to clearly reflect that intent, this dispute might have well been avoided. A court has not yet ruled but for estate planners and their clients, the lesson is to plan for all eventualities - who knows, your own kids may turn out to be reality TV stars well after your death and your own notes and photos might be for sale to the highest bidder.

Fraud Alert

The Denver D.A.'s Fraud Alert this month is related to Auto Dent-Repair Scammers who are targeting victims in parking lots. For the full Fraud Alert go to Alert

World Elder Abuse Awareness Day

Meet National Senior Olympians on Tuesday, June 4, 2013 from 9:00 a.m. to Noon at Eisenhower Recreation Center. This free event will feature an Age of Champions Documentary, hands-on workshops, resource fair and free breakfast. For more information, go to Awareness Day.

New Colorado Statutes Effective August 8, 2013

On May 11, 2013, Governor John Hickenlooper signed Senate Bill 13-077 into law which will become effective on August 8, 2013. This Bill contains the statutory changes requested by the Trust & Estate Section of the Colorado Bar Association. Several statutes will go into effect in August. Among them, the new law modifies Colorado’s Dead Man’s Statute to make it more user friendly, particularly in the probate context in which it often plays a part. It adds to the factors that are to be considered by a judge when determining the reasonableness of compensation and costs in probate matters, and reaffirms that nominated and appointed personal representatives have legal standing to determine their decedent’s probable intent and estate planning purposes on issues involving the decedent’s estate and it allows those representatives to prosecute or defend their decedent’s intent at the expense of the estate, resolving a previously open question in probate proceedings.

The Bill also contains a statute harmonizing the information of appointment requirements sent to heirs and beneficiaries (and other interested persons) with those under the corresponding probate rule, it modifies the priority of claims in decedent estates to give child support claims a higher priority than those of general creditors and it makes clear that funds on deposit in bank accounts and credit unions are subject to collection by affidavit in small estates.

We will now have a statute that makes mandatory the requirement that a court order a professional evaluation in a conservatorship proceeding if the respondent requests it. In order to preserve assets in a conservatorship, the new law also will provide relief when there are insufficient funds available to pay all creditors, by providing a mechanism for the conservator to request that the protective person's limited funds be used for his or her care prior to being paid to general creditors.

In August, we will have a law that authorizes a grantor to be reimbursed by the trust for taxes he or she paid on behalf of their IDGT (intentionally defective grantor trust) without exposing the trust’s assets to his or her creditors or causing them to be included in his or her estate. Another statute will provide protection to trustees under certain circumstances involving ILITs (irrevocable life insurance trusts). The Bill also adopts, with some changes, the Uniform Trust Code’s codification of the law involving revocable trusts and makes definitional changes to ensure that revocable trusts in probate are characterized differently from business trusts.

Finally, the Bill contains new effective date provisions for amendments to the Colorado Probate Code (other than those effecting “protective proceedings” like guardianships and conservatorships) that, with one notable exception, will be uniform with the effective date provisions of the Uniform Probate Code. The one exception deals with the law of intestacy in which it will now be clarified that the intestate law in effect in Colorado at the time of the decedent’s death controls the identification of the heirs and the amount of their shares, despite any prior or future amendments to the laws of intestacy.

Colorado Secretary of State Increases Filing Fees

For most of the past year, the filing fees for the Secretary of State’s office were $1, including filing Articles of Incorporation (corporations), Articles of Organization (limited liability companies), and Certificates of Limited Partnership. That temporary reduction of fees has ended, and the filing fees are now back to $50 for each new fling, and generally $25 for amendments. Certificates of Good Standing are free on-line, and periodic reports are $10 on-line. The periodic reports cannot be filed in paper form.

President’s Budget Includes Changes Affecting Estate Plan

The President released his budget on April 10, 2013. While this does not mean these provisions will become law, they could be part of a tax reform package later this year. Some of the changes include: (1) a $3 million cap on IRAs and retirement plan; (2) Inherited IRAs would have to be paid out in 5 years instead of over the beneficiary’s life expectancy; (3) Generation-skipping transfer tax exemption applicable to trusts would expire after 90 years; (4) Grantor retained annuity trusts would have a minimum term of 10 years; and (5) coordination between the value of an asset reported on the U.S. Estate Tax Return and the beneficiary’s reported basis on a sale.