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How do I remove a trustee or invalidate a trust?

Removing a trustee or invalidating a trust is not easy to do. In fact, it could take sometimes years to resolve. However, there are reasons: the person who executed the trust did not have the capacity to sign it; or, the trustee was mismanaging the assets. In those cases, you may have grounds to do something about it. (Also, consider the appointment of a conservator and/or guardian if the acting trustee is losing capacity to act.)

This exact scenario is happening with the deceased Denver Bronco’s owner Pat Bowlen’s trust and his estate. His trust owns the Denver Broncos, and the heirs are his children. Two of his daughters do not like how the trust is being handled. Currently, the trustee is the team’s president, Joe Ellis. The daughters also do not believe their father had the capacity to execute the trust when he signed it. Therefore, they filed to remove the acting trustee and have attempted to invalidate the trust. However, those actions come with consequences.

Beth Wallace and Amie Klemmer filed a lawsuit Friday in Arapaho County Court challenging the validity of the trust, which includes a no-contest clause, on the grounds that their father lacked the mental capacity and was under undue influence when he signed his estate planning documents in March 2009…

…By choosing to challenge the validity of the trust in court, Wallace and Klemmer are putting themselves at risk of being disinherited if they’re found in violation of the no-contest clause and the 2009 trust is upheld in court. Their rights as beneficiaries would bypass them and go to their children.

https://gazette.com/sports/broncos/daughters-dispute-pat-bowlen-s-trust-risking-disinheritance/article_7f931d48-d657-11e9-b575-8fa17abe3e2c.html

How would someone start this process?

First, look at the trust document. It should include a section on how to remove the trustee. Sometimes, the trust states the majority of the beneficiaries can vote out a trustee. However, more often it requires the a court filing to remove the trustee with cause. That means you need a compelling reason and the judge has to agree. Always be careful before filing anything: The trust may include language regarding the consequences if you do file something against the trustee without any supporting evidence. This is called the no-contest or an in terrorem clause. They can be enforced if you do not have a basis for your claims. If they are enforced and you lose, you might have just lost your inheritance. The Colorado Supreme Court reversed such a decision from the trial court, but it took an appellate review to fix that error. Sandstead-Corona v. Sandstead, 415 P.3d 310, 2018 CO 26 (Colo. 2018).

Second, review the statute. The Uniform Trust Code codifies the procedure for a petition, which is set out in C.R.S. § 15-5-101 through 15-5-1404. Also, check the statute of limitations on your claims. You must file your claim within these deadlines. Some of these are codified in the Trust Code; some of them are codified in C.R.S. § 13-80-101 through 13-80-119. The new Trust Code allows the trustee to shorten the window, but he or she must do it properly.

Third, include supporting documentation with your claims. While not these are not required, medical information is important when invalidating a trust. A doctor’s statement of incapacity is helpful. If you are trying to remove a trustee, you should have financial or other documentation showing the trustee mismanaged the trust.

If you invalidate the trust, what happens?

Without knowing all the facts and the trust itself, it is possible all the assets in the trust will revert back into the individual’s name who created the trust. If there is a Will, it will control the disposition of assets. If there is no Will, you might create another nightmare.

If you are considering these claims or preparing to defend against such claims and need assistance, please call the Grand Junction Estate Attorneys Reams & Reams at 970-242-7847

The material presented on this site is included with the understanding and agreement that Reams & Reams is not engaged giving legal advice by posting material on this website. The services of a competent professional should be sought if legal or other specific expert assistance is required. Further, the firm does not wish to represent anyone desiring representation based upon viewing this website in any state or jurisdiction where this website fails to comply with all laws and ethical rules. The firm is also only licensed to practice in the State of Colorado. Any material presented on this site may be different or incorrect in another state. Please consult any attorney before using any of this information.

6 Things a Tenant Should Consider Before Signing a Lease

Along with probate law, our law firm represents landlords and tenants. Many times I will have a landlord or tenant asking to consult on a lease after something bad has happened. Some of these problems can be averted. And they can be addressed even before the lease starts. Are you a tenant and about to sign a long term lease? Then consider these six important things before signing the lease:

1. Read the Lease Agreement. This is straightforward, but most tenants do not read the Lease until it is too late. Read the clauses carefully. What does it prohibit? How much is the deposit? Is part of it non-refundable? Does the landlord require cash or cashier’s checks? Does it require extra-ordinary cleaning services prior to vacating the house? If you find something you do not like, suggest a change. If the landlord refuses to make reasonable changes, it may not be a good fit. I have had one landlord tell me it is against the housing laws to make changes to a lease (this is incorrect).

2. Read the reviews of the landlord. The property management company could either be the greatest landlord you have ever had that fixes everything or your worst nightmare. Become informed of people’s experiences.

3. Document damage of the house prior to moving in. Do not trust the landlord to know what is damaged before you move in. After moving in, you may find yourself trying to explain damage that was already there. If you do not have documentation, you may end up paying for that. You could also go one step further and do a home inspection with a professional. If you are in the Grand Junction area, I recommend Apex Home Inspectors.

4. See if you can talk with the previous tenants. Why did they leave?

5. Do not get stuck in the lease. At the end of lease, if do not want to renew, know the requirements for notice. Does the notice require a month in advance of the expiration? It may require written or in some cases, certified mail of non-renewal. Failure to do it correctly may put on the hook additional monthly payments.

6. Read your rights as a tenant. Some clauses are unenforceable.

Even with these examples, review of the lease may be daunting. If you need assistance on a landlord/tenant issue, please contact the Grand Junction Estate Attorneys, Reams & Reams at 970-242-7847 to set up an appointment.

conservatorship - Petition for Appointment of a Conservator

Do you need to file a Conservatorship or Guardianship?

You might be considering the possibility of filing a conservatorship or guardianship to assist someone else or a loved one. There are many options, and a court proceeding is one of them. Assuming the role as conservator or guardian is an important responsibility. These proceedings give a lot of power to do many things. However, it is not the only option. In fact, it should not be your first or second option. These proceedings have grave constitutional restrictions that should be considered. You are basically taking over the person’s constitutional right to do certain things. Because of that, they should be used only when there is not a lesser restrictive alternative.

The first alternative is whether you operate and assist this person without any authority at all. Can the person generally take care of themselves, but you assist on a limited basis? In that case, you may not need to do anything; however, you should probably consider the second alternative in case incapacity is looming.

The second alternative is a power of attorney. There is a medical one and financial one. You can review each of them on our Resources page. If you are able to access the Colorado Revised Statutes, there is a statutory form under C.R.S. Section 15-14-741. These forms are approved by the State of Colorado’s Judicial Branch, but I recommend having an attorney review it. Statutes change over the years, and the linked forms could be out of date. There might be referenced clauses and statutes that require further explanation. An attorney can advise you on the importance of a power of attorney and other options available. He or she can also distance you from the presumption of undue influence. If an attorney is retained, he can protect the interest of the principal, i.e., the person you are trying to help. If you intend to take on this responsibility, be mindful that you have fiduciary and confidential duties to this person that can be addressed here at the Colorado Bar Association’s website. There are also general powers and specific powers given to the agent that need to be addressed.

If the person has the capacity to sign a power of attorney, this is the best alternative. If you are concerned about his or her capacity, speak with the person’s primary care physician and ask if the doctor can make a determination of capacity. You can also get an independent medical evaluation. As attorneys, we determine capacity before clients sign important documents as a precaution, but you should defer to the person’s doctor if there are concerns.

One advantage of a power of attorney over a conservatorship or guardianship is cost. Generally, a power of attorney drafted by an attorney may only cost $250-$300. It is also a private matter without the court’s involvement. With a conservatorship or guardianship, it may cost $2,000 or more. There are filing fees, notice requirements, court visitors, and hearing to determine whether this proceeding is necessary. After appointment, annual reports are due and scrutinized. Even if the person’s capacity is in question, the person may not want to give up any freedoms and it becomes a difficult process. If it is contested, the cost skyrockets.

If the person does not have the capacity to sign a power of attorney, you may have to file a conservatorship or guardianship. These are court proceedings, supervised by the judge and the court clerks.

A conservatorship is a proceeding where someone is appointed as the conservator to manage the assets of the protected person, much like a trustee. However, unlike a trustee, you are appointed by the court because the person is unable to manage their own finances, and it is either by consent or against their will.

A guardianship is a proceeding where someone is appointed to manage the person, usually their medical decisions and residency when they cannot do it themselves.

Both appointments have the ability to file a Medicaid application for the person.

If the person has medical and asset issues, consider filing for both proceedings. It will save time and cost to file them at the same time. If you think you need to be appointed immediately, you can file emergency proceedings, but you will need more evidence to prove that an emergency is necessary. If that is filed, an attorney will be court-appointed immediately to protect the interest of protected person. After the petitions are filed, a court visitor will interview all interested parties to determine if these proceedings are necessary and will make a recommendation the court. In these types of cases, you must have a hearing with the respondent present (there are exceptions to excusing the respondent if circumstances should allow it). They have the right to an attorney. These proceedings are not permanent. They can be terminated at any time upon filing a petition to terminate if proceedings are no longer necessary.

The Colorado Bar Association has more information regarding what to do after the appointment here: https://www.cobar.org/index.cfm/ID/20301

 

If you are in this situation, the process is not straight-forward. If you need assistance, please call the Grand Junction Estate Attorneys Reams & Reams at (970) 242-7847

I received a claim in an Estate. What do I do now?

If you are the executor or the personal representative of an estate, chances are you received a claim in the mail for the decedent. Most likely, it is an unpaid credit card bill. That bill has now been forwarded to collections and they are asking you, the next of kin, to personally pay it. Rest assured: You are not personally liable to pay this debt; however, the estate might be liable. Generally, creditor claims have priority over heirs, but they must be filed within certain deadlines. If it is a known creditor, that deadline to file a claim is generally one year from date of death. If you want to shorten this, give the known creditor notice. They have sixty days to file a claim or until the published notice deadline, whichever is later, or the claim is barred. If it is an unknown creditor and you publish a Notice of Creditors in the newspaper, the deadline to file is generally four months from the notice. This is considered the published notice deadline. That is why it takes at least six months to open and close an estate: You want the creditor period to expire first. You pay heirs before creditor, you open yourself up to personal liability. After the deadline has passed, the claim is barred and forever extinguished. The personal representative actually does not have the authority to pay a barred claim.

If the claim is valid or court-ordered to pay and if you have more than one, you must pay claims in the following priority. (1) Property held by or in the possession of the deceased person as fiduciary or trustee of a trust; (2) administrative costs and expenses to administer the estate or trust; (3) funeral expenses; (4) federal taxes; (5) medical expenses of last illness of decedent; (6) state taxes; (7) Medicaid; (8) child support obligations; and (9) all other claims. This is not word-for-word; I am paraphrasing the statute. For a more complete citation, look at the Colorado Revised Statutes Section  15-12-805. You can review them here.

As an example, if the estate has $100, and you receive a claim for $200 from Medicaid but you also have a funeral bill for $400, pay the funeral bill first and give notice to Medicaid why they are not receiving any funds.

If you do not think the claim is valid, disallow it. The creditor has sixty (60) days to file a petition for allowance and set a hearing for the claim or it is barred.

If you need assistance with a claim or general administration of an estate, please call the Grand Junction Estate Attorneys at Reams & Reams: 970-242-7847.

5 Easy Steps to Effectively Administer an Estate or Trust or Conservatorship

Managing an estate is much like managing a trust or a conservatorship. It primarily involves gathering the assets, managing them for creditors, heirs, or any interested persons, and then distributing the assets to the rightful people upon conclusion. With all these entities, there are things you need if you want to effectively administer assets for another person or an estate. Here are five of the most important things:

  1. Hire an accountant or an attorney with estate tax knowledge. Most often, there is no tax issue to deal with if the estate only consists of a house (see the “step up” basis rule) and some personal property; however, I recommend having a tax professional tell you that rather than ignoring what could become a tax nightmare. Accountants sometimes charge a reduced rate to review your file to confirm a return is not needed. For example, if the estate or trust collects dividends, that is considered taxable income, and the estate should file a return for that year you received the dividends. If you close or terminate the estate or trust before paying that taxable income, as the fiduciary, you might be stuck with personally paying the bill or penalty if your forgot about it. By then, the heirs are probably long gone or have already spent their money.
  2. Inventory the assets as best as you can.  In most cases, heirs or interested persons can reasonably work out how to divide the assets. However, in every case, you should itemize and inventory everything as best as possible. Contested cases sometimes materialize overnight. At the very least, put tags like these on every piece of property the estate or trust owns. Take pictures of everything. These practices will separate your stuff from the estate’s stuff, and it will avoid commingling. You should then prepare an inventory. Microsoft Excel works great. We track our assets with Wasp MobileAsset. The price for that may be more than what you are willing to invest for one estate; however, you can use this excel template I made as a guide. It will keep track of what the estate owns, the estimated value, and what the items sold for. I would recommend quickbooks and quicken to track your expenses and income as well. When you conclude your administration, this report is vital to show the interested parties how everything was distributed. If you do not adequately track the personal property and expenses, somebody is going to ask you about a particular item six months into the administration. Without proper tracking, you will not have any idea where that item is located or where it went.
  3. Keep track of your time and expenses. Many executors or trustees that do not regularly to this type of work forget to track their time on a consistent basis. When administration has concluded, they end up trying to estimate how much time they spent. Without calendars or a billing system, estimating in lump sums will get contested and you may not be able to charge at all or at a very reduced rate. Buy a cheap or free calendar and put down your hours for each day. You can calculate a reasonable hourly rate later. Don’t forget about mileage either. Expenses are also reimbursable.
  4. Get appraisals or a market analysis for assets. If you are selling land or valuable assets, nothing is better than a professional appraisal to back up your sale. They are also great expert witnesses to rely upon in contested cases. Where there have been disputes over sale of assets, and the ones that stand up are professional appraisals behind them the sale. The assessed value with the county’s assessor and Zillow will give you a good estimate but do not solely rely on them.
  5. Never buy or take estate owned for yourself. This is axiomatic, but it needs to be repeated. Someone else has put you in charge to handle the estate or conservatorship. Someone entrusted you to do the right thing on behalf of the others involved and to not take from the estate. Even if you buy it for market value, you are putting yourself in a compromising position. Further, the transaction could be voidable if it is not expressly authorized by the court and after notice of interested persons.

 

In many cases, you probably can do most of the work on your own if you follow these rules. If you need assistance, maybe even limited advisement, please call the Grand Junction Estate Attorneys, Reams & Reams at 970-242-7847.

Filing for Probate? Consider a Small Estate Affidavit (Updated 2020)

If you are the nominated personal representative of a Will, you have a lot of questions. The most important one is where to start. Do you need to file a probate proceeding or not? (For a quick overview of your duties, please see Colorado Bar Association’s article: So Now You Are A Personal Representative.)

There are two rules that require probate filing: (1) If the estate owns real property (exclude properties in joint tenancy or beneficiary deeds); (2) or the estate has more than $7,000 (2020) less liens and encumbrances. If you do not meet these criteria, you can use this form and not file a proceeding: Affidavit for the Collection of Personal Property

To reiterate those rules:

  • There is no real property in the decedent’s sole name (check the Assessor’s Online Lookup and the Mesa County Clerk and Recorder to review the chain of title to the property and the vesting deed) and the estate has less than $70,000 (see above) in assets less liens and encumbrances;
  • At least ten days have elapsed since the date of death;
  • There is no appointment of a personal representative pending in this district or any other state; and
  • You swear you are the successor to the estate

With the Small Estate Affidavit, you can: (1) collect assets from a financial institution; (2) transfer or sell vehicles in the decedent’s name (the DMV will require the use of its own form); (3) authorize cremation or deal with funeral services;  (4) deal with creditors of the estate; or, but not limited to (5) distribute assets to heirs. That means you can do everything as the personal representative but without a court proceeding.

However, anyone who uses the Affidavit is still held accountable for any action they make on behalf of the estate. If there is a Will, follow the terms of the Will. If there is no Will, you must follow the Colorado Revised Statutes regarding intestate succession.

One major disadvantage of not filing is the creditor period. If you do not file a proceeding, you must wait one year from the date of death for all creditor claims to expire (there are exceptions to this). If you file an proceeding and publish notice, you can reduce this period down to four (4) months from teh first publication date.

If you need assistance with the estate administration, please contact the Estate Attorneys at Reams & Reams, (970)-242-7847.

The material presented on this site is included with the understanding and agreement that Reams & Reams is not engaged giving legal advice by posting material on this website. The services of a competent professional should be sought if legal or other specific expert assistance is required. Further, the firm does not wish to represent anyone desiring representation based upon viewing this website in any state or jurisdiction where this website fails to comply with all laws and ethical rules. The firm is also only licensed to practice in the State of Colorado. Any material presented on this site may be different or incorrect in another state. Please consult any attorney before using any of this information.

Probate Questions from last presentation

At our last probate presentation we held at Immaculate Heart of Mary Catholic Church (if you would us to speak with your institution or group, free of charge, about Will, Trusts, and Probate, please contact us), there were a number of index cards with questions that we quickly answered. If you forgot or wanted more detail with those answers, I wanted to follow up with some of those answers on our site.

 

Some of you asked about the Colorado Judicial Branch website for the standard forms. You can find those forms here: https://www.courts.state.co.us/Self_Help/Index.cfm

I have also linked a couple of the forms from other resources on our resources page: http://dev.reamslaw.com/resources/

However, take caution with anything you download.

The number one piece of advice we tried to instill from the presentation: Refrain from downloading forms off the internet. If you must do it, have someone (preferably an attorney) review the document before signing it. These documents have legal consequences that sometimes take years and may spend a lot of your hard-earned assets to fix in the court system if they are not done right. As I noted in the presentation, some of those forms, which purport to reflect Colorado law, are glaringly wrong.

 

Here were some of the index cards and my answers:

 

Question: I have a Colorado Will, but I will move out-of-state soon. Is this the Will still good? Vis-versa: I moved into Colorado and my Will is from another state.

Answer: Your Will is still generally valid from another state, but there are some things you need consider that you may want to update: What law governs my Will? (Most of the time, that clause is near the bottom of your Will.) If another state governs the interpretation of your Will or if it changes depending on which state your reside in, did distribution schedule of your Will change? (Terms like per capita at each generation or by representation may be defined differently in other states). Now that you have moved, will my nominated personal representative be able to efficiently administer my estate or will he or she have to delegate from afar? The marital rules may have changed, especially if you moved into a community property state such as California. Does the new state allow common law marriage and will that effect the outcome of your Will?

 

Q: Do you prepare medical and financial powers of attorney?

A: Yes, and we prepare them along with your Last Will and Testament and Advanced Directives to give your medical agent instructions in certain situations. Most estate planning attorneys can provide all of these documents for your estate plan.

 

Q: If most of my assets are in a 401k, should I still have a Will?

A: If your 401k has a listed beneficiary other than the Estate, this is considered a non-probate asset. That means upon death, it will generally be distributed to whomever is the listed beneficiary, no matter what your Will says. There are always exceptions to this rule, but generally non-probate assets trump your Will. However, even if all of your assets are going to be distributed outside your Will, we recommend a Will as a backup. There may be cases where you missed an asset, or the beneficiary designation is ineffective, or any issue that may arise. The most important thing to consider is making sure your estate plan is consistent. Without a Will, the distribution of assets may not be what you intended.

 

Q: What is the quickest type of Will to put together?

A: In Colorado, if you need to make a Will immediately and you have the capacity to do it, you may write out your Will in your own handwriting (on a legal pad, napkin, or any medium available) and then sign it. For some reason, Colorado does not require it to be dated, but I recommend it in case you do more than one. In this form, it does not need to be witnessed or notarized, but I recommend that too to confirm it was you who signed it and to prevent forgery or undue influence. Colorado refers to this as a holographic will. However, I do not recommend you continue to use this as your Last Will and Testament. Any mistake and ambiguous term or clause may invalidate it or create litigation among your family.

 

Q: Do I need a Trust?

A: My general answer to this question for most of my clients is No, but it depends on the person’s needs and estate plan. Trusts are complicated and difficult to manage if you do not maintain them appropriately. Colorado has a very efficient probate system, unlike California, which has seemed to have created the trust problem. Unlike California, lawyers cannot charge percentages (I have seen in some instances where they have, but the percentage has to be reasonable to services rendered on behalf of the estate.). The high commissions in California have resulted in a lot of trusts, because people have tried to avoid the probate system. In Colorado, I only recommend trusts if it serves a particular purpose, such as, but not limited to

  • Beneficiaries that are disabled, on special needs, public assistance, or minors
  • Beneficiaries have issues with financial responsibility and have creditors
  • Beneficiaries are incarcerated
  • You want give your beneficiaries their inheritance over time or when they reach a certain milestone rather than in one lump sum
  • Tax or marital issues
  • Medicaid issues
  • Real property in multiple states or multiple properties that need managed

 

Q: In Colorado, does a financial power of attorney expire on death?

A: Yes. Your authority to act as an agent under a financial power of attorney terminates on death.

 

Q: How much does a Will cost?

A: It depends. At our firm, we strive to keep the costs low. Please see our Estate Planning page to understand the factors of the cost and how you can lessen the cost. Estimated costs that I have seen in other firms range from $300 to $2,000; however, the market average in Mesa County seems to center around $500 to $1000. If you know someone who has done their estate plan recently, ask them about their experience and who they would recommend.

 

If any of these questions concern you, we recommend you have someone review your estate plan. Contact us today at 970-242-7847.

 

The material presented on this site is included with the understanding and agreement that Reams & Reams is not engaged giving legal advice by posting material on this website. The services of a competent professional should be sought if legal or other specific expert assistance is required. Further, the firm does not wish to represent anyone desiring representation based upon viewing this website in any state or jurisdiction where this website fails to comply with all laws and ethical rules. The firm is also only licensed to practice in the State of Colorado. Any material presented on this site may be different or incorrect in another state. Please consult any attorney before using any of this information.