Couple with Two Special Needs Children
Facts: This married couple in their mid-sixties had two adult special needs children who were residing in a group home operated by a charitable institution. The couple was very close to their children and the children loved to spend weekends at their parent's home.
Concerns: Like all parents of special needs children, our clients were concerned about who would oversee the care of the children after the death of the surviving parent.
Solution: Our office created a Living Revocable Trust with a Special Needs Provision so as to avoid disqualifying the children from receiving governmental assistance. Further, we named a brokerage firm with a Trust Department to act as Trustee after the parents' death so that the money left to the children would be properly managed. Finally, we entered into an agreement with the charitable institution to convert our client's house into a small group home so that the children would be able to live in their parent's home for the rest of their lives. Now that both parents are gone, the children are happily residing in the home with their group home caretaker.
Couple with Real Estate in Two States
Facts: A married couple owned a home in Colorado and a vacation home in Arizona. They had basic Wills in which they named each other as the beneficiary and their two adult children as the ultimate beneficiaries. Their estate was not large enough to be subject to the federal estate tax.
Concerns: The clients had read about Probate and wanted to avoid subjecting their children to the time and expense that would be involved. In particular, they were concerned after learning that their estate would be subject to Probate in both Colorado and Arizona since they owned real property in both states.
Solution: Our office drafted a Living Revocable Trust for the clients and transferred all of their major assets, including their home and vacation home, into the Trust. When the survivor of them dies, their children will become the Co-Trustees of the Trust and the Trust Assets will pass directly to the children without being subject to Probate. The result will be a substantial savings in Probate Fees plus time and aggravation.
Couple with Federal Estate Tax Concerns
Facts: In 2003, a married couple with an estate of approximately $3,000,000 came to our office. The couple had simple Wills and three adult children all of whom were in good health physically. However, one of the children (a son) had a drug abuse problem.
Concerns: This couple sought advice on avoiding the federal estate tax and how to avoid Probate. In addition they wanted to insure that any money left to their son would be given to him over a period of time instead of all at once.
Solution: Given the numerous increases and decreases in the federal estate tax exemption over the past several years, our office prepared a Living Revocable Trust for each of them in order to maximize the federal estate tax exemption. We also placed restrictions on the distribution of Trust funds to their son by providing that he was only to receive interest from his share of the Trust until he was 45, at which time the Trustee was given discretion to also distribute principal to him. The result is that regardless of what changes are made in the federal estate tax exemption over the years, our clients will have double the amount of the exemption (because each of them has a Trust) and they will have the peace of mind in knowing that their son will have a steady income stream throughout his life.
Defective Will - Unknown Heirs
Facts: This client had assisted an elderly and physically disabled friend (now deceased) for over a decade. The friend had no known family and over a period of years had prepared various, sometimes confusing, documents - some hand written and some half-typed and half written - one of which stated that the client was to act as Personal Representative of his friend's estate and was entitled to inherit his stock portfolio.
Concerns: Our client sought our advice as to whether the various writings authorized him to act as Personal Representative for the estate and whether the bequest to him, worth several hundred thousand dollars, was valid since the document that made the bequest was not identified as a "Last Will and Testament."
Solution: Our firm first conducted genealogical research for the purpose of establishing that the deceased had no legal heirs. Once this was accomplished we opened Formal Probate and were able to persuade the court that the various documents reflected "the testator's intent" and thus constituted a Will. The net result was that our client was appointed as Personal Representative and received the proceeds of the estate.
Common Law Marriage, Probate & Probate Litigation
Facts: This client from Georgia approached our office for help with the estate of his brother who had resided in Colorado. His two brothers had died about a year apart. The first brother to die had a small estate that was to be distributed to his siblings and parents. Unfortunately, the second brother died the day before the distribution check arrived at the apartment he shared with a roommate. This roommate proceeded to forge the brother's endorsement on the check and deposit it. An alert bank employee put a hold on the check and notified the Executor of the estate, who had just been informed of the second brother's death. After her efforts to steal the money failed, she petitioned the court for appointment as Personal Representative and claimed to be the only beneficiary of the estate as the deceased' common law wife.
Concerns: Our client, who disputed the woman's claim to be his brother's common law wife, wanted to recover the distribution check for the parents, who were the legal heirs of the second brother.
Solution: Under Colorado law the burden of proof is on the person alleging that a common law marriage exists. In this case our firm filed a petition with the Probate Court seeking formal appointment of our client as Personal Representative, and successfully argued that the roommate had not established a valid common law marriage and was therefore not entitled to any part of the estate. The proceeds were recovered and distributed to the deceased' parents.
Facts: This client was marrying for the second time and both he and his fiancee were in their 40's and had children from a previous marriage. The client was a partner with his brothers in a very lucrative family business. By contrast his fiancee was a school teacher who had few financial resources.
Concerns: Having been through an expensive divorce, our client was interested in protecting his assets and, in particular, his interest in the family business if the marriage failed. At the same time he was interested in providing financially for his wife in the event of his death.
Solution: Our office prepared a Prenuptial Agreement in which his wife waived any right to the family business in the event of divorce or his death. In turn, our client made certain provisions for the financial support of his wife in the event of his death.
Conservatorship and Guardianship
Facts: A client's mother, in the advanced stages of Alzheimer's disease, had previously executed a Medical Power of Attorney and a Financial Power of Attorney naming the client as her agent. For a time, the client was able to handle her mother's affairs effectively utilizing the powers of attorney. Unfortunately, the mother had become totally belligerent, threatened to revoke the powers of attorney, refused to take her medication and threatened to kill anyone who approached her house.
Concerns: Our client was concerned that her mother would revoke the powers of attorney and/or fall prey to opportunistic persons and that she would end up in litigation trying to care for her mother. Her mother needed 24 hour supervision, but she feared for her own safety as well the safety of her mother and others, and she felt compelled to take the steps necessary to protect all concerned.
Solution: On behalf of this client our office filed Petitions in the County District Court seeking appointment as Guardian and Conservator. Once the client was appointed to these positions, she was able to place her mother in an Alzheimer's Unit of a local long term care facility and take control of her mother's finances to insure that money was available to pay for her mother's care.
Business Succession Planning
Facts: Three brothers operated a business that was incorporated with each owning an equal share of the stock. Although each of the brothers is involved in the day to day operation of the business, neither their spouses nor any of their children work for or are involved in the business.
Concerns: Each of the brothers had cash equity and "sweat equity" in the business and wanted to insure that he and his family derived the fruits of his labor if he died, became disabled or just wanted to sell his share of the business. At the same time none of them wanted to be forced to include a new "partner" who was not a family member.
Solution: Our office drafted a Buy-Sell Agreement that provides for a First Right of Refusal for the remaining shareholders if one of them dies, becomes disabled or wants to sell his interest. A purchase price for the buy-out was determined by a formula developed by the company's certified public accountant, and the buy-out was funded by life insurance and disability insurance on each shareholder. Another provision of the Agreement obligates a shareholder to sell his shares to the remaining shareholders at the pre-determined value over a period of years so as to avoid jeopardizing the capital structure of the business if he chooses to leave the business. The net result is that the business can continue to operate as long as least one brother is involved in the business.
Life Estate Deed
Facts: This client, who was in his early 80's, wanted to insure that his daughter who looked after him would inherit his house when he died. He had considered transferring the house to her while he was living, but he had read that there might be better alternatives. The daughter already had a home, so she planned to sell the father's home immediately after his death.
Concerns: The client had three goals: (1) he wanted to transfer the property without the need for Probate; (2) he wanted to remain in the house until he died; and (3) he wanted his daughter to be able to avoid paying a capital gains tax when she sold the home.
Solution: Our office drafted a "life estate deed" which transferred the residence to his daughter subject to our client's right to live in the house until he died. This approach guaranteed that our client could live in the home for life while avoiding Probate. Furthermore, it gave his daughter a "stepped up basis" in the property so that no capital gains taxes would be owed when she sold it.