Attorney Tanja W. Leung was named a shareholder of the firm on January 1, 2016.  Tanja has practiced with the firm in the areas of estate planning, trusts, and estate and trust administration since graduating from Stetson University College of Law in 2007.  Please see Tanja's biographical sketch for more detailed information.  Tanja welcomes your inquiries and would be happy to assist with any of your legal needs.

 

Katz, Look & Onorato attorney, Tanja Leung, is quoted in an article entitled Leaving a Legacy - Establishing a Last Will and Testament on Jackson National's website.  If you would like to read the article, you may click on the following link:   Article

Katz, Look & Onorato, P.C. Provides Fiduciary Services

(by Christine V. Finn, Shareholder, Katz, Look & Onorato, P.C.)

During the estate planning process, you will need to name an entity or individual to be in charge of your affairs.  Our attorneys provide fiduciary services and are governed by the Colorado Supreme Court as opposed to being regulated by the Colorado Division of Banking.  Fiduciary services include serving as your agent, personal representative, and trustee.  Your fiduciaries have several responsibilities including collecting, managing, and protecting your assets; paying your debts; preparing and filing tax returns; paying your administration expenses; and distributing your assets in the manner directed by your estate planning documents.  Your fiduciaries should exercise good judgment, prudence, honesty, and have knowledge and experience.  During the estate administration process, our attorneys fulfill the responsibilities above and perform additional tasks such as meeting with financial advisors and banks that provide custodial services, keeping records and accountings, making tax decisions, meeting with beneficiaries to discuss their needs, preparing budgets, and preparing and filing court documents.

Our firm was established in 1972.  We have extensive knowledge and experience in handling estates and trusts, and the flexibility to serve as sole fiduciary, co-fiduciary, or successor fiduciary.  It may be advantageous for you to name our firm as your fiduciaries instead of individuals because of our impartiality, independence, and lack of emotional bias.  This separation can minimize family disputes considerably.  We have the time availability to perform fiduciary duties, whereas many individuals do not due to work and family obligations.  Also, naming our firm can ensure fiduciary succession for years to come, instead of only for the remainder of an individual’s lifetime.

We earn our fees on an hourly basis and we are reimbursed for costs.  Our compensation is based on work performed instead of on the size of your estate or trust.  For more information, please visit Fiduciary Services on our firm website under Practice Areas.

One of our Attorneys, Klaralee Charlton, will be volunteering at this year's 2015 Denver Senior Law Day.  This is a wonderful opportunity to gain information on many issues important to our seniors.  Please CLICK HERE FOR MORE INFORMATION

KUSA - Finances are difficult to discuss with parents, but a new survey reveals how terribly important it is to fight through the potential awkwardness.
Only half of American parents have a living trust document or will, according to a Caring.com survey.
Over those who have a will, only 40 percent have updated it within the last five years. A quarter of adult children surveyed did not know if their parents ever updated their will, and 16 percent of adult children did not know if their parents even had a will.
More than half of adult children surveyed said they did not know where their parents' estate documents are kept and did not know the contents of the documents.
According to the survey, women tend to be more informed about their parents' wills, but men are more likely to know where the documents are kept.
"Wills and estate documents can be a touchy subject, but they are necessary conversations to have," Andy Cohen, CEO of Caring.com, said. "Too often the surviving family members are left not knowing where to find the documents, or worse, have to go through a lengthy and expensive legal process because no documents were ever created."
While adults 18 to 49 years old are the least likely to be informed about their parents' documents, adults 50 years and older don't fare much better. Twenty-nine percent of 50 to 64 year olds don't know where their parents' documents are stored and 38 percent don't know the contents. For those 65 and older, 23 percent don't know where the documents are stored and a startling 44 percent don't know the contents.
"This is clearly not just a millennial issue," Cohen said. "It's sad to say, but most middle-aged Americans will likely have a parent who is nearing the end of their life. Remember, your parents are going to have bank accounts, a house and other assets that will need to be taken care of in a timely manner. Having the documents in place before tragedy strikes will make the aftermath much less stressful and will save money in the long run."
Interestingly enough, Republicans are more likely to have a parent with a will or living trust than Democrats and Independents.
Review the entire survey here: https://www.caring.com/research/wills-data-2015.
(KUSA-TV © 2015 Multimedia Holdings Corporation)

SEMINAR - FOR FEDERAL EMPLOYEES - PROBATE, WILLS, TRUSTS and MEDICAID FOR LONG-TERM CARE 3/31/15

Harley K. Look, III, and Julie Davis Ratner will be speaking on Tuesday, March 31, 2015, from Noon until 1:00 p.m.

Federal Center

4535 West Warren Avenue, Building # 25

Denver, CO  80219

For further information, please call 720.232.5236 or 303.922.4304

This program is free to any federal employee.

Harley K. Look, III, was named a shareholder of the firm on September 12, 2014.  Harley has practiced with the firm in the areas of estate planning, trust, estate and trust administration and business planning since his graduation from Stetson University College of Law in 2007.  Please see his biographical sketch for more information.  Please feel free to contact Harley with any of your legal needs. 

How Divorce Affects Estate Planning Documents

By Christine V. Finn, Esq.

When spouses divorce their estate planning documents are affected.  Under Colorado law, any revocable designation of a former spouse as a beneficiary or a fiduciary in estate planning documents is automatically revoked upon divorce.  This includes documents such as wills, trusts, powers of attorney, and beneficiary designations for assets that are paid out on death.  Also, any assets owned by former spouses as joint tenants with the right of survivorship will automatically be owned as tenants in common upon divorce.

The purpose of this law is clearly to ensure that former spouses’ most probable wishes are carried out.  If a former spouse is designated as a personal representative, an agent, or a trustee, that former spouse will be treated as if he or she is deceased and the named successor individual will take on that role instead.  If a former spouse is designated as the beneficiary of assets, that former spouse will be treated as if he or she disclaimed the property and those assets will go to the named contingent beneficiary instead.

As always, individuals should coordinate their beneficiary designations with their estate plans.  They should review every document to determine whether the designation of a former spouse will remain in effect or be automatically revoked.  They should review contingent beneficiaries as well, to determine if assets will go through probate or get paid to unintended heirs at law if an automatic revocation does occur.  Just to be safe, individuals may choose to designate other beneficiaries, even if a designation in favor of a former spouse is automatically revoked.

There are some situations where the automatic revocation will not take place.  For example, if the specific document states that a former spouse is required to receive the asset unless the beneficiary designation is changed before death then he or she will receive the asset, regardless of a subsequent divorce.  In addition, if a court orders a particular division of property in a divorce then that court order will prevail.  Further, if the spouses or former spouses enter into a marital agreement regarding the division of the marital estate then that agreement will succeed.  Nevertheless, if former spouses still want to name each other as beneficiaries or fiduciaries in their estate planning documents, it will be effective if they do so after the divorce is final.   

Spouses should also consider what happens to their estate plans while their divorce is pending.  For example, many spouses designate each other as the sole beneficiaries of their estates.  If one of them passes away before the divorce is final, then his or her spouse will receive everything.  Thus, the spouses may want to revise their estate plans before the divorce is final so their assets go to other beneficiaries upon their deaths.  It is important to note, however, that a disinherited spouse can elect to take a statutory share of the other spouse’s estate.  In that case, the assets he or she receives by statute will still be less than what he or she would have received as the sole beneficiary.

Because divorce affects estate planning documents, spouses should always consult with both their divorce attorney and their estate planning attorney before making any changes to their estate plans because when one spouse files for divorce, a temporary injunction goes into effect that restrains both spouses from transferring, encumbering, concealing, or in any way disposing of any marital property without the other spouse’s consent or an order of the court.  Therefore, spouses should proceed cautiously so the court will not have reason to conclude that they violated the temporary injunction.

New Estate Tax Laws Impact All Family Trusts Created Prior to 2013

by Harley K. Look, Jr.

Now is the time to update your family trust to take advantage of the new estate tax laws.   Everyone with a tax planning family trust will want to look at how the laws impact their trust. 2013 was a watershed year for estate tax planning, and the benefits continue for 2014 and the foreseeable future.  Under the new laws, there is an opportunity to amend your trust to provide the best income tax benefits to your children or other beneficiaries.  Almost all family trusts prior to 2013 sacrificed income tax benefits in order to achieve estate tax benefits, but everyone prefers to have their beneficiaries pay long term capital gains taxes somewhere down the road if there’s a sale after they’re gone instead of estate taxes at their deaths. Moreover, with a family trust, all post death appreciation during the surviving spouse’s lifetime escapes estate taxes upon the death of the survivor.  Estate taxes are currently at 40%; capital gains are taxed generally at 20%.  Estate taxes are assessed on the fair market value; capital gains only on the appreciation of the deceased spouse’s assets in the family trust.  Estate taxes are due at death; capital gains only on sale.  Estate taxes are generally payable all at once; capital gains can be spread out over time.  Estate taxes are due when the assets are usually not liquid; capital gains taxes are due only after there’s been a sale.  You get the idea. Due to the fiscal cliff on December 31, 2012, and a $1,000,000 estate tax exemption, any amounts over that threshold would have been taxed at 39-55%.  For married couples without tax planning trusts, assets usually pass from one spouse to the survivor without any estate taxes, but upon the surviving spouse’s death, all estate taxes are due within 9 months.  Consequently, most trusts prior to 2013 were designed to fully utilize the estate tax exemptions of both spouses instead of only the survivor’s, and if the children or other beneficiaries later sell appreciated assets, they have to pay long term capital gains taxes. Now, with the new tax laws, for the vast majority of clients, it’s possible to get the best of both worlds, no estate taxes and no capital gains taxes.  Most clients are electing to change their trusts so that their beneficiaries will receive better capital gains tax benefits without any estate taxes, but each case depends on the facts, so we’ll be glad to meet with you to give you greater details and let you decide. Our firm has maintained a policy of offering complimentary meetings to review the documents we prepare for our clients, and if we make changes, then there would be a fair fee only for those changes.  We also offer new clients a complimentary initial meeting to discuss their current estate plans. We would be pleased to educate you as to the pros and cons of making any changes to your trusts while reviewing other changes in the law or your circumstances.

Estate Tax Exemption Increases to $5.34 Million for 2014

by Harley K. Look, Jr.

The estate tax exemption is $5.34 million for 2014.  If your personal representative timely files a proper estate tax return, the surviving spouse may preserve the deceased spouse’s unused tax credit. This is called portability and for now it is permanent.  In other words, with portability, married couples can shelter a combined $10.68 million. While estate taxes may not currently be an issue for many Americans, there is still a vital need for estate planning, and for those with trusts, you may simply want to amend your trusts, but not abandon them.  There are still nontax benefits to maintaining your trusts such as protecting your heirs, making sure they get what’s left instead of predators and creditors, providing for a fair and equitable distribution among all of your beneficiaries rather than only the surviving spouse’s next of kin, protecting assets in the case of remarriage by the surviving spouse, probate avoidance, and management of assets in the event of mental incapacity. You cannot rely on portability to shelter any excess over the estate tax exemption if for instance there is a divorce, because portability works only if there is a surviving spouse. Even with portability, there is also the risk that if one of you passes away, and the personal representative files for portability, the statute of limitations will remain open to allow the IRS to determine the deceased spouse’s unused exclusion amount available for use by the surviving spouse. If the surviving spouse remarries and the new spouse also passes away, the surviving spouse is limited to the unused exclusion of the last such deceased spouse.  Remember that life insurance is income tax free to the recipients, but the death benefit is still taxable for estate tax purposes in your estate, unless you properly place the insurance into an Irrevocable Life Insurance Trust (“ILIT”) or consider additional planning to address taxes on the excess. There is still a three year waiting period after you transfer your existing insurance into an ILIT before it is out of your taxable estate.  New insurance properly structured under which the ILIT is the applicant, owner and beneficiary is out of the taxable estate without having to wait for three years. The estate tax laws are subject to change, and while there are currently no further fiscal cliffs, sequesters, or pending legislation that would reduce the exemption or change portability, both tax and nontax issues must still be considered. If you have any questions about taxes or other issues, please feel free to give us a call or schedule a meeting. It will be our pleasure to help you!

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