Estate Planning

Jul 20

Prince’s Estate And The Importance of Tax Planning

The world was stunned when it learned that Prince never created an estate plan, or even a will, to distribute and protect his assets after his passing.

For someone who was apparently so anti-establishment, it seems unlikely that Prince would have wanted the U.S. government to receive a windfall. Yet that will be the likely result of his failure to do any estate planning.

Prince’s lack of planning could cost his estate up to half of its estimated $300 million worth.

If Prince had established an estate plan that incorporated common tax planning strategies, a much greater portion of his wealth and future income would have passed to his intended beneficiaries. Tax and estate planning strategies could have substantially lowered his estate’s tax bill, and even protected his future earnings.

For high net-worth individuals, such as Prince, it is never too early to discuss comprehensive tax and estate planning.

Reference: Prince Estate: The Importance Of Having A Will, by Gary Borofsky, Forbes Magazine, July 18, 2016.

Jul 19

The Colorado Uniform Trust Decanting Act

The Colorado Uniform Trust Decanting Act will go into effect on August 10, 2016.

Trust decanting is done for several reasons. It may be used to correct drafting errors, add special needs provisions, or to comply with changing tax laws. It may also be used to change trustee provisions or to alter powers of appointment.

Decanting allows a trustee to distribute the assets of one trust to a second trust. However, it can only be done under specific circumstances. The Act applies to irrevocable trusts, other than irrevocable trusts held solely for a charitable purpose.

The Act contains many restrictions on the power to decant, which are designed to protect the beneficiaries and avoid potential tax consequences. In addition, a trustee cannot decant a trust to benefit personally.

This legislation is large and complex. If you have questions about the effect of this law on your trust, please contact your estate planning attorney.

Reference: Colorado Uniform Trust Decanting Act, National Law Review, June 20, 2016.

Jul 14

Judge Orders Prince’s Former Law Firm To Share Its Confidential Files With Estate Lawyers

Judge Kevin Eide has authorized the special administrator of Prince’s estate to review confidential files of the law firm that handled Prince’s second divorce, reasoning that the files may contain relevant information about Prince’s potential heirs.

The law firm was reluctant to provide information protected by the attorney-client privilege and work product doctrine.

However, Judge Eide agreed with the special administrator that it is in Prince’s and his estate’s interest for the law firm to share whatever information it has.

Prince’s lack of an estate plan has made it challenging for the Court to distribute his estate to his rightful heirs.

Reference: Judge Orders Prince’s Former Law Firm To Share Its Confidential Files With Estate Lawyers, Minneapolis Star Tribune, July 13, 2016.

Keeping your estate plan current and accessible can prevent costly disputes and protect your loved ones.

Jul 13

Tragedy To Triumph

Amy Purdy was 19 years old when she started having flu-like symptoms one day. The following day she was in the hospital on life support with a 2% chance of survival.

Amy had contracted bacterial meningitis. She went into septic shock less than 24 hours later. Both of her legs had to be amputated below the knee. She lost both kidneys, and her spleen had to be removed. She also lost all of the hearing of her left ear.

Amy beat the odds and recovered. She challenged herself to move on with her life, and to reach goals that anyone would struggle to achieve. She became one of the top ranked adaptive snowboarders in the world.

In the spring of 2014, Amy inspired millions of fans with her performances on ABC’s Dancing With The Stars. During the 2015 Super Bowl, she was featured in a commercial for Toyota. Later in 2015, her book “On My Own Two Feet” became a New York Times best-seller. Currently, she is a motivational speaker who is invited to share her wisdom with audiences around the world.

I love Amy Purdy’s story! We never know what the future holds for us. How we prepare for it, and respond to it, is up to us.

One way to be prepared for unforeseen critical illness is to ensure that your Advance Medical Directives and Powers of Attorney are up to date.

Jul 11

Colorado’s New Digital Assets Act

You may have read my previous posts about the estate planning challenges associated with digital assets.

Trustees and personal representatives often need to access digital assets to carry out a deceased or incapacitated person’s wishes. However, industry and consumer groups have been opposed to allowing such access, based on privacy concerns.

To address these issues, Colorado has recently enacted the Revised Uniform Fiduciary Access to Digital Assets Act (“RUFADAA”), which will be effective as of August 10, 2016.

This Act outlines the circumstances under which a fiduciary may have access to digital assets, while also considering the privacy interests of the deceased or incapacitated person.

RUFADAA also takes into account the interests of the custodians of the digital assets. These may include entities such as banks, Google, Yahoo, and Facebook.

RUFADAA places high importance on the intent of the deceased or incapacitated person, and limits a fiduciary’s automatic access to the content of the person’s digital communications, absent their consent or a court order.

RUFADAA does nothing to change a fiduciary’s duties with respect to his actions on behalf of the deceased or incapacitated person. Instead, RUFADAA provides that a fiduciary’s duties with respect to managing the person’s tangible personal property also apply with respect to managing the person’s digital assets.

Reference: Trust Administration: Colorado’s New Digital Assets Act, National Law Review, July 5, 2016.

Jul 09

The Story of Colby Cassani

In 1993, Colby Cassani, who was only one year old, was left unattended in a bathtub by his babysitter. He slipped under water and drowned. He was rushed to the hospital, but his life could not be saved.

A physician at the hospital asked Colby’s parents the difficult question: “Would you be willing to donate your son’s organs?” In spite of their grief, they agreed.

Although Colby’s life was short, his legacy touched many lives. His kidneys were transplanted into a twenty-seven year old man. His liver was implanted in a two year old girl. And his heart was donated to a five month-old boy. All of the transplants were successful.

The Cassanis established the Colby Foundation in 1995 as a way to honor Colby’s memory and to inspire and educate others about organ and tissue donation. You can read more about the Colby Foundation at www.colbyfoundation.org.

Almost anyone can be an organ donor, regardless of age or medical history.

You can make a statement regarding organ and tissue donation in your Living Will, on your driver’s license, or in a separate document. You can also give specific direction as to who should benefit from the donation, and may even give certain individuals, such as family members a preference.