Simplest Estate Planning

By: Jeff Bedingfield – Published in the BizWest Thought Leaders column on September 27th, 2018

Have you ever wondered if there is a simple way to pass assets at death? Maybe for that elderly parent with few remaining assets? Well, there is. It certainly isn’t appropriate for all, but it can work well in the right situation.

First, assets that name beneficiaries (IRA’s, life insurance, annuities, etc.) avoid complexity at death because a will or trust has no effect on them. They are contracts that dictate who will receive the benefits when the owner dies regardless of what a will or trust provides.

Second, the way assets are titled can also simplify matters at death. Couples can title their residence as joint tenants with right of survivorship (not as tenants in common). When a joint tenant dies, the property automatically becomes the property of the survivor and only the recording of a death certificate is required to accomplish that.

Or, a single person, may sign and record a beneficiary deed that designates who gets the residence when the owner dies. Again, only the recording of a death certificate is required. What’s more, the owner can revoke or change the designated beneficiary at any time before death.

Bank accounts and brokerage accounts can be simplified as well. Again, for a couple, a joint account will automatically transfer to the other spouse when one dies. With a single individual, the account can be made a “transfer on death” account. When the account owner dies, the individual(s) named as beneficiary receive the cash, stock or bonds in the account.

None of the methods described in this article requires that a person have a will and all methods allow the assets to without probate proceedings.

These methods are not for everyone, but can be very effective if done thoughtfully and with the advice of professionals.

Lessons from Queen’s Bench Courtroom Number Seven

By: Nate Wallshein – Published in the BizWest Thought Leaders column in August 2018

Leon Uris was a prolific author, known for his focus on dramatic moments in contemporary history, including World War II and the Cold War. His best-selling, entertaining, and imaginative novel Exodus (1958) has been translated into over fifty languages and has helped shape our collective understanding of the birth of modern Israel. His novel also, rather unintentionally, gave rise to the seminal defamation case Dering v. Uris, which took place in London in 1964.

The defamation case was born from a throwaway line contained in the backstory of one of the main characters in Exodus, Holocaust survivor Dov Landau:

Here in block X, Dr. Wirths used women as guinea pigs and Dr. Schumann sterilized by castration and X-ray and Clauberg removed ovaries and Dr. Dehring [sic] performed 17,000 experiments in surgery without anesthetics.

After Dr. Wladislaw Dering read this passage, he sued Leon Uris, the publisher, and the printer for defamation. While Dr. Dering admitted that he had performed unspeakable operations on Holocaust victims in Auschwitz during World War II, he argued that he had performed nowhere near 17,000 and that he never did so without anesthetic.

At the end of the closely followed and highly politicized trial, the jury found for Dr. Dering, awarding him “the smallest coin of the realm,” or one-half penny, in damages.

The court later assessed $30,000 pounds against Dr. Dering for the costs of the trial. Leon Uris was so fascinated by his experience that he novelized it in the best-selling novel QB VII or Queen’s Bench Courtroom Number Seven. The media coverage and subsequent novelization of Dering v. Uris cemented Dr. Dering’s infamous reputation as a Nazi sympathizer and war criminal, which was exactly the outcome that Dr. Dering wanted to avoid.

Our courts have produced similar outcomes. Here, if a defendant is found liable, but there are no damages arising from that liability, the court will generally instruct the jury to award “Nominal Damages”, in the amount of one dollar, to the plaintiff.

The lesson? When considering whether to file a claim, both liability and damages must be taken into account to avoid having a similar tale unfold in your courtroom.

Revocable Living Trusts for Second Homes

By: Tim Brynteson- Published in the BizWest Thought Leaders column in July 2018

Many residents of Colorado own real estate in other states.   If you own a condo, townhome or other piece of real estate in such popular destinations as Florida, Arizona or California, you may want to consider holding the property in a Revocable Living Trust located here in Colorado.   While many people will not opt for a Living Trust as their preferred estate planning vehicle for various reasons, if you own property in a different state, you should consider forming a Living Trust for the sole purpose of holding the real estate.   The reason is to avoid the necessity of opening a probate proceeding in the different state.

While the Colorado probate system is fairly inexpensive and simple to navigate, other state systems can be more complicated and expensive, not to mention simply the need to hire an attorney and navigate a different state’s system.

When you die, someone must have the authority to sell your real property.  In Colorado, opening a probate proceeding is required to Personal Representative (“P.R.”) being appointed.  The P.R. is issued “Letters Testamentary” which provides them the authority to sell property from your estate.  If you own property in another state, your estate’s P.R. will need to go to Arizona (as an example) and open what is called an “Ancillary Probate” to receive the authority to sell any real property in Arizona.   However, if your Arizona property was owned by a Living Trust you established here in Colorado, your successor Trustee has the authority, without the need of opening a probate, to sell any property in the Living Trust – even in Arizona.  If you already have a Living Trust as your primary estate planning vehicle, just transfer the property into it.  If you do not currently have a Living Trust, but own property in another state, you may want to consider this option to ease administration of your estate after your death.

Jennifer Peters Featured in BizWest

Each month BizWest invites a business leader to reflect on the issues affecting his or her industry. This month, BizWest asked Jennifer Peters to discuss issues facing her firm and the professional role she plays in the community.

To read the article click on the following link:

Transfer on Death Provisions

By: Brandy Natalzia- Published in the BizWest Thought Leader column in June 2018

What happens to a member’s membership interest in a limited liability company (LLC) upon his death? Generally, a death should be treated as nothing more than a transfer of interests between the deceased member and the person who is that member’s rightful heir. But what about any restrictions on transfer spelled out in the Operating Agreement? There is case law that holds that the express language in contracts (here, the Operating Agreement) addressing the disposition of the membership interest trumps contrary language in a testamentary instrument, such as a will or trust.

And what if the LLC is a single-member LLC and that sole member dies? When the decedent operates a viable business in a single-member LLC, significant value can be lost to the estate if the LLC is dissolved upon the death of the member. If there is no provision within the single-member LLC’s Operating Agreement for the transfer of ownership to someone else, the LLC can become an asset of the decedent’s estate. As such, it may encounter tax and probate problems. The LLC may be divided among family members, dissolved, or even sold off to people the decedent did not choose.

Consider the use of and effect of a Transfer on Death (TOD) registration of the LLC interest under the Uniform TOD Security Registration Act. Arguably, this can be used to name a TOD beneficiary of the LLC interest within the Operating Agreement. Although the TOD designation may be a powerful estate planning tool for the members, it may be difficult procedurally for the remaining members when a member passes away. It is important for the members to discuss whether they want to allow TOD designations when the Operating Agreement is being drafted and then to work with an experienced business lawyer who can help ensure that any TOD designations for the membership interests are recognized.

Thanks to BizWest for recognizing Otis Bedingfield, and Peters at the Mercury 100 awards for fastest growing companies in Northern Colorado. We are proud to be one of such an elite group of organizations from Fort Collins, Loveland, Windsor and Greeley.

Thanks to BizWest for recognizing Otis Bedingfield, and Peters at the Mercury 100 awards for fastest growing companies in Northern Colorado. We are proud to be one of such an elite group of organizations from Fort Collins, Loveland, Windsor and Greeley. 

ARE YOU THE CONTROLLING TYPE?

By: John Kolanz

A version of this article was published in the March 2018 BizWest Thought Leaders column.

If so, and you own property on which tenants engage in certain regulated activities, you should consider consulting a specialist for a little preventive care – legal, not medical. Controlling the activities of these tenants can draw enforcement against the property owner when the tenants’ operations raise environmental compliance issues, as a recent federal case illustrates.

The case involved a sportfishing group that sued an industrial park owner for Clean Water Act (“CWA”) violations caused by discharges of polluted storm water. The fact that any pollutants in the storm water were put there by the tenants did not protect the landlord. The court held that “owners and/or operators who have sufficient control over a facility can be held liable under the CWA even if they do not themselves perform the industrial activities that create the pollutants in the storm water discharge.” Here, the landlord owned and controlled the storm water drainage system from which the pollutants were released.

Operations requiring storm water permits are not uncommon, and can include transportation, food processing, and recycling businesses, as well as construction activities. The requirement can also apply to other operations on a case-by-case basis.

Moreover, this potential enforcement trap for landlords goes beyond CWA concerns. Owners who exert control over their tenants’ waste management practices may also risk enforcement. In recent years, retail outlets like hardware stores, pharmacies, and even groceries have been targeted by hazardous waste enforcement actions. This is because many common products like drain cleaners, over-the-counter drugs, and hand sanitizers can be considered hazardous wastes under certain circumstances.

Thus, a tenant’s business may not necessarily raise a red flag. Landlords should consider how monitoring protocols or proper lease provisions could provide protection from the environmental afflictions of their tenants, and save the expense of a pound of cure.

Surprising Scope of Asbestos Regulation

By: John Kolanz

A version of this article was published in the January 2018 BizWest Thought Leaders column.

Most know that asbestos is bad stuff. However, building owners are often surprised to learn that federal and state asbestos requirements can capture routine activities such as minor renovation and even cleaning.

Asbestos was a popular building material for years. While mostly associated with older buildings, its use was never completely banned, so asbestos can be present even in newer construction. In fact, except under limited circumstances, one must assume asbestos is present, and take appropriate action, before conducting demolition or renovation work.

Owners of commercial properties, even small ones, that contain asbestos are required to protect employees, tenants, and contractors from exposure through training, notice, and work practices. Willful ignorance of asbestos requirements is not an effective compliance strategy. One call from a concerned neighbor, angry former employee, or unsuccessful contract bidder can trigger civil, or even criminal, enforcement.

Asbestos risks can be managed. Understanding how to do so will allow current and prospective building owners to protect their investments.

Work/Family Boundaries: Your Attorney Can Help

By: Christian J. Schulte- Published in the BizWest Thought Leaders column in January 2018

As a litigator in a business law firm, I have seen the best and worst of family businesses. When they work, they work great, for intuitive reasons: family know and trust each other, they share values, they want to maintain a generational tradition. But when they sour, they are horrible. Family business dissolutions are like divorces: parties supposedly fighting over fair asset division are really fighting over hurt feelings and deeper family conflicts.

This Forbes article: https://www.forbes.com/sites/nextavenue/2017/03/08/how-family-businesses-can-set-workfamily-boundaries/#13f6abc62a80 is worth reading. The authors do not, however, mention that legal advice is essential too.

During formation, your attorney will consider things you might not. For instance, you may not think that a sibling, spouse, or child might leave the business, because of new interests, divorce, or an untimely death. Does your business have a buyout provision that lets someone separate without crippling the business? Is your agreement fair to the heirs of a deceased partner? Your attorney can help you make conscious decisions about these issues, instead of leaving them to spring up during a crisis. Hopefully, this makes litigation less likely.

When are falling apart, however, you should consult a litigator early. A litigator such as myself would give you a sense how much litigation can cost and your likelihood of prevailing, but more importantly would help you think about your case dispassionately. Family members may try to “guilt-trip” you into an unfair settlement, or you might be taking an untenable stance motivated by non-business considerations. Regardless, your litigator’s goal should be to help you stop and think, Is this really what you want to do?

Ultimately, whether you want to pursue settlement or a full lawsuit, your litigator’s job is to help you carry out your decision. But that decision should be your informed decision, not an unfortunate gut reaction.