In Colorado, whether or not probate is required depends on the type and value of the property a deceased person (“decedent”) owns when they die. All of a decedent’s property is classified as either probate or nonprobate property. Generally, nonprobate property includes property owned in joint tenancy with others, life insurance proceeds, contracts with payable-on-death (POD) provisions, and property owned by a trust. Probate property on the other hand is property owned by the decedent individually or with others but not in joint tenancy. As the name implies, nonprobate property is not part of any probate. If a decedent owns only nonprobate property, then there is nothing to probate and you do not have to go through probate.
If a decedent owns any probate property, however, whether you have to go through probate depends on the type and value of the probate property. If any of the probate property is real property, then you have to go through probate. Real property is principally land and buildings. If none of the probate property is real property, then the value of the probate property determines if you have to go through probate. If the probate property is worth less than $64,000.00, then you do not have to go through probate. Instead, the probate property may be distributed using an affidavit. The $64,000.00 threshold is accurate for 2015 and changes annually based on the consumer price index.
If probate is required, don’t despair. Probate is simply a statutory process to finalize the decedent’s affairs because the decedent is not here to do it on their own. Finalizing a decedent’s affairs includes collecting the decedent’s probate property, using that property to settle the decedent’s debts, and distributing the rest to those who are entitled (“beneficiaries”). Because the decedent is not here, a court appoints someone, called the personal representative, to finalize the decedent’s affairs under the court’s supervision. The personal representative has a fiduciary obligation to the decedent’s creditors and beneficiaries to hold the decedent’s probate property for their benefit. Probate ensures creditors and beneficiaries do not end up with more or less property then they should.
To start a probate, an interested person files a petition with the district court for the county in which the decedent last resided. An interested person includes the decedent’s spouse, children, beneficiaries and creditors. The petition, among other things, nominates someone to be the personal representative. Colorado law prioritizes who may serve as the personal representative with the highest priority going to whomever the decedent nominated in their will. If there is a will, the original must be lodged with the court. If the decedent did not have a will, the next highest priority is the decedent’s spouse, followed by any beneficiary, the decedent’s heirs, and lastly the decedent’s creditors. After the petition is filed, the court will appoint someone as the personal representative and issue letters showing the court authorizes the personal representative to handle the decedent’s affairs.
Part of the petition is to elect between formal or informal probate. Formal probate has more court oversight of the personal representative compared to an informal probate. It is up to the person filing the petition to decide between formal or informal probate.
Once appointed, the personal representative informs the beneficiaries and the decedent’s creditors of the probate and appointment. The Decedent’s creditors then have four months to let the personal representative know if the decedent died with a debt. The personal representative then collects the decedent’s probate property and files a list of that property with estimated values with the court. By the end of the four months, the personal representative knows about all of the decedent’s probate property and all of the decedent’s debts. The personal representative then settles the debts using the decedent’s probate property. If the probate is formal, the personal representative may need prior court approval before settling any debts.
Once the debts are settled, the personal representative distributes the decedent’s remaining probate property to the beneficiaries. If the probate proceeding is formal, the personal representative may need prior court approval. The personal representative will distribute the probate property according to the will, but if there is no will, then pursuant to statute described below
- The decedent’s spouse inherits everything if (1) the decedent died without parent or child, or (2) all of the decedent’s children are the only children of the spouse.
- The decedent’s children inherit everything if the decedent died without a spouse.
- The decedent’s parents inherit everything if the decedent died without a spouse or child. The decedent’s siblings inherit everything if the decedent also died without a parent.
- The spouse inherits the first $335,000 worth of probate property plus 75% of the remainder if the decedent died without a child but was survived by a parent. The parent inherits the rest.
- The spouse inherits the first $251,000 worth of probate property plus 50% of the remainder if all of the decedent’s children are also children of the spouse, but the spouse has children that are not children of the decedent. The decedent’s children inherit the rest.
- The spouse inherits the first $167,000 worth of probate property plus 50% of the remainder if the any of the decedent’s children are not children of the spouse. The decedent’s children inherit the rest.
The amounts above are accurate for 2015 and change annually based on the consumer price index.
Once the remaining probate property is distributed, the probate case may be closed. The process for closing the probate depends on whether the probate is formal or informal. One year after closing the probate case, the personal representative is relieved of the obligation to handle and care for the probate property for the benefit of the creditors and beneficiaries.
Chalk one up for property rights. The U.S. Supreme Court just changed the playing field for wetland permitting, notably tipping the balance toward landowners and developers seeking clarification of whether their planned activities require Army Corps of Engineers authorization. Moreover, in somewhat of a rarity in environmental cases, the court did so unanimously.
The Clean Water Act requires a landowner to obtain a Corps permit before working in “waters of the United States,” a phrase that defines the reach of the Act. Contrary to what one might expect, it often is not clear whether a property contains such waters. Therefore, the Corps has long provided property owners Approved Jurisdictional Determinations that state the agency’s definitive position on whether a project area contains protected waters.
If the Corps determines that a planned project area does not contain protected waters (a negative JD), the project can proceed without a permit. A negative JD generally gives the property owner a five-year “safe harbor” for work in the evaluated area. However, if the Corps determines that the area contains protected waters (a positive JD), the landowner typically seeks Corps authorization before proceeding.
In this case, a company in Minnesota sought to expand its existing peat-mining operation to nearby lands. Before doing so, it requested an Approved JD from the Corps for certain wetlands in the expansion area. The Corps issued a positive JD based on the wetlands’ “significant nexus” to a river some 120 miles away. Moreover, the Corps indicated to the company that the required permitting process would take years and be very expensive.
Corps regulations specifically allow a party to appeal an Approved JD to a higher level within the Corps. The company pursued such an appeal, but the Corps affirmed its original determination. The company then sought review of the Approved JD by a court.
For years, courts have supported the Corps’ position that Approved JDs are not judicially reviewable. This recently began to change, causing inconsistencies among the lower courts. The Supreme Court accepted this case to definitively resolve the issue.
The authority of a court to hear such an appeal turns in part on whether the agency action at issue — here, the Approved JD — has legal consequences. The Corps has long argued that Approved JDs effectively have no legal consequences because landowners still have the options of applying for a permit and appealing any unsatisfactory results, or proceeding without a permit on the theory that the Corps’ Approved JD is faulty.
All eight Supreme Court justices (the late Antonin Scalia would have made it nine) rejected the Corps’ position, finding the agency’s articulated options inadequate. The court observed that getting a permit can be time-consuming and expensive, citing a study from 1999 showing that permits, such as the one required here, take an average of 788 days and $271,596 to obtain. (These figures have likely risen significantly since then.) Moreover, a positive JD deprives landowners of the five-year safe harbor, exposing them to potential civil penalties of up to $37,500 per day, and even higher criminal fines and imprisonment. The court found these to be tangible legal consequences that make Approved JDs appropriate for judicial review.
The Corps’ response to this decision is difficult to predict. Since the Clean Water Act does not require the Corps to issue Approved JDs, the agency could simply stop the practice. However, one justice warned the Corps about such a move.
In a concurring opinion, Justice Anthony Kennedy stated that the Clean Water Act, especially without the JD procedure, raises “troubling questions regarding the government’s power to cast doubt on the full use and enjoyment of private property throughout the nation.” In other words, dropping the practice of providing Approved JDs may prompt heightened scrutiny of the Corps’ authority under the Act. The court will likely soon have an opportunity to scrutinize the Corps’ Clean Water Act authority when, as most expect, it reviews a controversial rule defining which “waters” the Act protects.
Assuming the Corps continues its practice of issuing Approved JDs, this decision will change the dynamics between the Corps and landowners. Landowners will gain leverage in the JD process. The prospect of a resource-consuming judicial appeal will make the Corps less likely to push the envelope on JDs and more likely to seek common ground. Landowners should carefully consider the legal implications of this case, and how it ties into other recent Clean Water Act developments, before discussing planned projects with the Corps.
John Kolanz is a partner with Otis, Bedingfield and Peters LLC in Loveland. He focuses on environmental matters and can be reached at 970-663-7300 or JKolanz@nocoattorneys.com.
Otis, Bedingfield & Peters, LLC is proud to announce that on June 1, 2016 attorney Lee J. Morehead will become president of the Weld County Bar Association.
The Weld County Bar Association is a professional organization serving attorneys that live or work in Weld County, Colorado. The WCBA was first formed in the late 1800s, and held its first annual banquet in 1913. Initially consisting of three members, the WCBA now has over 250 members.
“I am excited for the opportunity to serve as the President of the Weld County Bar Association. I look forward to building on the great work of our past presidents by assisting our members in improving their practices, supporting the justice system, and helping the community obtain legal services,” said Lee Morehead.
Mr. Morehead’s practice at Otis, Bedingfield & Peters, LLC focuses on complex real estate, business and probate litigation, and oil and gas matters.
Otis, Bedingfield & Peters, LLC provides real estate and business law services throughout Northern Colorado. OBP has 14 attorneys serving its two offices in Greeley and Loveland. For more information, please visit www.nocoattorneys.com.
Choosing the appropriate entity for a new business is not as easy as one might think. Most people tend to gravitate towards a limited liability company, or LLC, for its relative ease of formation and asset protection, however there are various other entities that can be beneficial for an emerging business. The various entity types, including C and S corporations, LLCs, and partnerships all have aspects that can be useful to a new business and should be examined before selecting an entity.
Businesses with Multiple Owners
If the new business entity will have multiple owners with different rights and interests when it comes to control, income, business losses, or assets upon liquidation, ownership rights may need to be structured differently for each owner.
If the new entity is a C or S corporation, ownership is limited to company issued stock and those owning the majority of outstanding stock control the business, whereas partnerships and LLCs are flexible and can customize and define control and interests through the entity’s operating agreement. The ability to customize LLCs and partnerships can allow the owners to set up a business structure that can take into account the differences each owner may bring to the business.
Earnings Bailout Potential
Further, it is important for the new business owners to fully understand the earnings bailout potential of various entities. With S corporations, LLCs, and partnerships, it is fairly easy to remove earnings from the business and pass them on to the owners. In this case the profits generated by the business are taxed directly to the owners, so the distribution of profits in the form of dividends or partnership distributions will not carry tax consequences for the entity. However, when a C corporation distributes earning to owners, or shareholders, in the form of dividends, the dividend distribution is not deductible to the corporation. Instead, it is double taxed, once to the entity and once to the owner, which can be a huge hit against company profits. This tax trap can be avoided if the shareholders are employed by the corporation and receive earnings in the form of taxable compensation. The compensation would then be deductible to the corporation, which results in a tax at shareholder level only.
A new entity can also benefit from utilizing losses generated by the business. The threshold issue is whether the losses should be retained by the entity or passed through to the owners. Losses generated by C corporations are retained in the business and can be carried backwards or forwards to be deducted against earned income. This can be a valuable tool in lowering the business’s tax liability once the business makes a profit, but the shareholders never benefit from the losses of the business. In an S corporation, LLC, and partnership, losses can be passed through to the owners. For example, when losses are anticipated in the first year of the business, passing the losses on to the owners may generate tax advantages if the owners have other taxable income against which those losses can be offset.
Ability to Restructure
Additionally, the ability of an existing organization to restructure without being penalized can be a helpful tool for a business down the road. For a C corporation looking to restructure, the options are limited. If it converts to a partnership or LLC, the corporation will recognize gain on all its assets, and the shareholders will recognize gain on the liquidation of their stock, leading to tax liability. An S corporation and other pass through entities, on the other hand, can convert without triggering the type of gain and tax consequences you would see with a C corporation.
Estate Plan Integration
Although most people do not consider it when starting a business, it is also important to integrate a new business entity with the owners’ estate plan. Owners may want to shift income to a lower tax bracket, freeze or slow down the growth of an estate, or utilize the annual gift tax exclusion. To make use of these options, LLCs and partnerships provide the best options and flexibility.
Potential of Sale
Finally, although most people will not think about it when beginning a business, it is important to consider the possibility of selling the business or going public. If the business is an S corporation, partnership, or LLC when the assets are sold, the gains realized on the sale of the assets are taxed to the owners in proportion to their interests in the business. In a C corporation there will be taxes levied on the proceeds at the corporate level and then upon distribution to the shareholders. The shareholders will pay capital gains tax on the difference between the amount they received in distribution and their individual basis in the corporation’s stock. While there are ways for C corporations to mitigate their tax liability, it would be easier to sell a business if it was not a C corporation. However, if the company is funded with outside capital, as many emerging companies are these days, and the plan is to eventually go public, then a C corporation is the only option. The interests of outside investors and potential gain that can be found on the public market may trump any of the other concerns discussed above.
Deciding which type of entity to use for a new business venture may not be a difficult decision for some, but it is important to look at all the factors before creating the entity. The above discussion does not address every factor to consider nor is it a thorough discussion of the factors mentioned. The point is to make sure to fully analyze and understand how the choice of entity decision can help or hinder the goals of the business.
If you own or manage residential rental property in Colorado, you may have noticed a growing trend in tenant requests for “reasonable accommodations” in the form of emotional support animals (ESAs). Reasonable accommodations are defined as when a tenant asks a landlord to make a change in an existing rule or policy so they may have an equal opportunity to enjoy the unit and surrounding property. The Federal Fair Housing Act and the Americans with Disabilities Act require landlords to provide reasonable accommodations for tenants with disabilities, and ESAs typically do qualify as such an accommodation. This means that if your property is a “no-pet” property, you would be required to modify your policy to allow an animal that is claimed to be an ESA.
Landlords cannot refuse to rent to tenants with disabilities nor can landlords ask applicants and tenants about the details of any conditions. Sometimes the disability is apparent, such as a tenant in a wheelchair, but many times a person’s disability is not obvious to observers. An ESA is a companion animal which provides therapeutic benefit, such as alleviating or mitigating some symptoms of an individual’s mental or psychiatric disability. ESAs are typically dogs and cats, but may include other animals.
Many homeowners, property managers, and homeowners associations have become all too familiar with health professionals producing letters for individuals seeking to keep an emotional support animal in a property based on an online health questionnaire. Unlike service animals under the ADA, standards governing emotional support animals are virtually non-existent and there are no restrictions on the types of animals that qualify as assistance or companion pets. Associations frequently end up relying on statements made by unlicensed individuals who may be out of state and never even met the individuals making requests. The standards are vague enough that landlords and property managers may face a risk if they fail to make a proper determination regarding a tenant’s request for a reasonable accommodation.
House Bill 16-1201 (“HB 1201”) was introduced to address a gaping loophole used by tenants to keep dogs and cats in communities which ban them, but was killed by the Democrats in the House Health, Insurance & Environment Committee in March on a 7 to 6 party line vote.
HB 1201 would have regulated how licensed professionals in Colorado must approach providing recommendations for ESAs under the Colorado Fair Housing Act. In particular, this bill would have required that licensed physicians, physician assistants, nurses, psychologists, social workers, marriage and family therapists, licensed professional counselors and addiction counselors must make the following findings prior to recommending that an individual should be permitted to have an emotional support animal:
- The licensed professional must make a finding that the individual requesting the emotional assistance animal has a disability as defined by Colorado law orthat there is insufficient information available to make a determination that the individual has a disability; and
- The licensed professional must actually meet with the individual requesting an emotional support animal IN PERSON, prior to making a finding of whether the person has a disability which necessitates the emotional support animal.
This bill would have all but done away with the concept of online ESA approvals that require little more than a valid credit card to obtain. It would have given landlords a greater ability to confirm a tenant’s true disability and would have decreased the current abuse of the existing policy.
While House Bill 1201 has been defeated, there is now a new bill (House Bill 16-1308) that has been introduced and referred to the Judiciary Committee. Federal and state law require places of public accommodation to allow service animals trained to do work or perform tasks for a disabled person. Under this bill, it would be a misdemeanor for a person to intentionally and fraudulently misrepresent an animal in his possession as his service animal for the purpose of obtaining any of the rights or privileges granted by law to persons with disabilities that have service animals. This bill does not have the same type of impact on landlords since it applies to places of public accommodations, but further indicates that whether the issue is emotional support animals or service animals, there is a growing legislative reaction to perceived abuses of statutes designed to help persons with disabilities.
Many of the more recent court cases involving landlords, property owners, tenants, and animals center on the laws, rules, and regulations about ESAs, not service animals. To outsiders, it is difficult to distinguish between an ESA and a pet. As a landlord, it can be difficult to ensure that you are following federal, state, and municipal laws regarding reasonable accommodations. However, even if you believe you are in compliance with the law, it does not prevent an applicant or tenant from filing a discrimination claim if you deny the reasonable accommodation request. If a prospective tenant files a complaint with HUD, which is usually turned over to the Colorado Civil Rights Division (“CCRD”), you are required to thoroughly respond to the complaint in a timely manner. This response can be time-consuming with requests for documentation, telephone interviews, rebuttals, etc. If the CCRD finds probable cause for discrimination, there is a mandatory conciliation that the landlord and tenant must attend, at which time the CCRD will attempt to negotiate a settlement between the parties, which usually involves a monetary payment to the tenant. If that conciliation does not result in a resolution, the matter must then be set for a trial in front of an administrative law judge.
In general, the consequences of denying a reasonable accommodation request can vary depending on location. If you find yourself with a request for a reasonable accommodation, your existing community pet restriction policies are likely inapplicable and the consequences of denying a request could be costly, both in time and money. The best course of action for most landlords is to seek legal counsel before responding to these types of requests.
Otis, Bedingfield & Peters, LLC is proud to announce that attorney Shannan de Jesús has been appointed to The Greeley Philharmonic Orchestra Board of Directors.
The Greeley Philharmonic Orchestra is a not-for-profit organization, in its 105th season. It is the oldest orchestra in the West. As a board member, Shannan will help plan for upcoming seasons and help grow support for the orchestra. Shannan will also participate on the promotional subcommittee.
The Greeley Philharmonic Orchestra provides captivating and uplifting programs for a great evening out. The longevity of the orchestra is a result of their commitment to providing wonderful performances.
“I am excited about joining the Greeley Philharmonic Orchestra’s Board of Directors and working with others who are passionate about giving back to the community, promoting the arts, and sharing their love of classical music,” said Shannan de Jesús.
Ms. De Jesús’ practice with Otis, Bedingfield & Peters, LLC focuses on trademark and related intellectual property litigation, and business and probate litigation.
Otis, Bedingfield & Peters, LLC provides a range of legal services throughout Northern Colorado. OBP has 14 attorneys spread across its two offices in Greeley and Loveland. For more information, contact Shannan de Jesús at firstname.lastname@example.org or Jennifer Lynn Peters at email@example.com or call 970-330-6700 or visit www.nocoattorneys.com.
Mr. Otis saw law as a way to serve people in his community
GREELEY, CO, January 20, 2016, Fred L. Otis, Attorney of Otis Bedingfield & Peters, LLC, has been recognized by Martindale-Hubbell for showing dedication, leadership and excellence in real estate law and for holding an AV Preeminent Rating for more than 15 years.
“Fred has long been the go-to real estate lawyer in Northern Colorado,” said his partner Jennifer Lynn Peters. “It is nice to see him getting recognized on a national level for his long-standing commitment to excellence in real estate law.”
Mr. Otis is currently a managing member of the law firm of Otis, Bedingfield & Peters, LLC, where he routinely represents clients in all types of real estate transactions. He also works closely with the firm’s 12 other attorneys and is a champion of numerous community projects throughout Greeley and Weld County.
As an attorney, Mr. Otis is particularly skilled in the field of real estate law, and he is regularly responsible for handling commercial real estate and business transactions. He is admitted to practice in Colorado and before the United States District Court for the District of Colorado, the 10th Circuit Court of Appeals, and the U.S. Supreme Court.
During his over 40 years of practice as a real estate lawyer in Greeley, Colorado, Mr. Otis also served as a municipal court judge for the City of Greeley from 1979-1985, and as a director of the Northern Colorado Legislative Alliance from 1992-1997. He was a member of the Commission on Judicial Performance for the 19th Judicial District from 2000-2007, and he served on the Weld County Planning Commission from 1978-1983, and as chairman of the commission in 1982. Mr. Otis also taught real estate law at Aims Community College from 1977-1979. Prior to entering private practice, Mr. Otis served as a special agent for the Federal Bureau of Investigation from 1971-1976.
Looking back, Mr. Otis became involved in his profession because he enjoys serving people and wanted to serve more; he saw the law as a way to accomplish this, and he earned a JD from the University of Arkansas in 1972 to achieve his goal. He was recently inducted into Worldwide Registry and also maintains affiliation with the Weld County Bar Association and the Colorado Bar Association. As a testament to his sterling reputation, Mr. Otis maintains an AV-Preeminent Rating with Martindale-Hubbell, which he has held since 2001. Mr. Otis is looking forward to continuing to serve his clients throughout Northern Colorado.
For more information about Mr. Otis or Otis Bedingfield & Peters, LLC, visit http://nocoattorneys.com.
Corey W. Moore joins OBP as an associate attorney in our Loveland office. Born in Broomfield, Colorado, Corey most recently worked as a law clerk at Donahoe & Young, LLP in Valencia, California, where he handled bankruptcy, business, and real estate matters.
A former middle and high school history teacher, Corey holds a BA in History from the University of California, Berkeley and earned his J.D. from Pepperdine University School of Law, where he focused on estate and tax planning. During his tenure at Pepperdine University, Corey gained valuable experience working in-house at a global fixed-income investment firm in London, a litigation and transactional firm in Denver, and with the Los Angeles County District Attorney’s Office Hardcore Gang Division. He also served as a fellow for Pepperdine’s Geoffrey H. Palmer Center for Entrepreneurship and the Law, where he counseled community members in developing and implementing business plans.
“We are happy to welcome Corey back to Colorado,” says managing member Tim Brynteson. “Our firm’s estate planning and business succession practice is growing and we are excited to have Corey add his knowledge and personality to the team.”
Corey is admitted to practice law in Colorado and is a member of the Colorado and American Bar Associations. His practice at OBP will focus on business and real estate transactions and estate planning.
Otis, Bedingfield & Peters, LLC provides real estate law and business law services throughout Northern Colorado. OBP has 13 attorneys spread across its two offices in Greeley and Loveland. For more information, contact Corey Moore at firstname.lastname@example.org or Jennifer Lynn Peters at email@example.com or 970-330-6700 or visit www.nocoattorneys.com.
At Otis, Bedingfield & Peters, LLC, we believe every client deserves the highest quality legal services from a law firm that is part of their community. We know we can’t be everything to everyone everywhere. That’s why we focus on providing only real estate law and business law services in the Northern Colorado region. Our commitment to real estate law and business law and our Northern Colorado community permeates everything we do. We value personal relationships, knowledge, integrity, trust and loyalty. Read More >>