David Prince

Tips and TalesFrom the Litigation Trenches

Tips and TalesFrom the Litigation

Trenches

I. UPIA 2001I. UPIA 2001

• Minerals/Nat. Resrs., C.R.S. 15-14-Minerals/Nat. Resrs., C.R.S. 15-14-42114211

• Was Percentage Depletion Method,Was Percentage Depletion Method,e.g., 15% Principal and 85% Incomee.g., 15% Principal and 85% Income

• Now, 90/10 RuleNow, 90/10 Rule• Impact: Imogene was getting Impact: Imogene was getting

$8,500 per month, now will get $8,500 per month, now will get $1,000 per month$1,000 per month

Amelioration ToolsAmelioration Tools

• 421(4) Partial Opt Out, Natural 421(4) Partial Opt Out, Natural Resource Rules OnlyResource Rules Only

• 404 Power To Adjust404 Power To Adjust

421(4) Partial Opt Out421(4) Partial Opt Out

• Apply Old Allocation Rules To Old Apply Old Allocation Rules To Old AssetsAssets

• New Assets Get New Allocation New Assets Get New Allocation RulesRules

• Only For Mineral/Nat. Resource Only For Mineral/Nat. Resource AllocationAllocation

• Imogene Stays Stable At $8,500Imogene Stays Stable At $8,500• Randy Expected $9,000 Allocation, Randy Expected $9,000 Allocation,

Gets Only Same Old $1,500Gets Only Same Old $1,500

404 Power To Adjust404 Power To Adjust

• Statutory TriggersStatutory Triggers• Boil Down To A Determination Boil Down To A Determination

That The Trustee Is Unable To That The Trustee Is Unable To Fulfill Duty To Serve All Fulfill Duty To Serve All BeneficiariesBeneficiaries

• Limitation Of Potential Limitation Of Potential ChallengesChallenges

• Limitation Of LiabilityLimitation Of Liability

Reasoned Decision-Making,Remember Your A-C-D’s

Reasoned Decision-Making,Remember Your A-C-D’s

• Benefits Paid On Calendar Year Benefits Paid On Calendar Year AnalysisAnalysis

• Evaluate Performance Under New Evaluate Performance Under New RulesRules

• Measure Against BenchmarkMeasure Against Benchmark• Develop Guidelines For ResponseDevelop Guidelines For Response• However, Evaluate Individual TrustHowever, Evaluate Individual Trust• CommunicateCommunicate Intended Action/Inaction Intended Action/Inaction

And Gain Protection Of 405 ShieldAnd Gain Protection Of 405 Shield

II. Case DevelopmentsII. Case Developments

• The Anxious HeirThe Anxious Heir

Green Valley Fin. v. Green, 994 P.2d 491Green Valley Fin. v. Green, 994 P.2d 491

• Son Convinces Mom and DadSon Convinces Mom and Dad• No Tax Benefits, No No Tax Benefits, No

MaintenanceMaintenance• Son Refuses to End TrustSon Refuses to End Trust• Probate Court Jurisdiction?Probate Court Jurisdiction?• Not a Business TrustNot a Business Trust

II. Case DevelopmentsII. Case Developments

• The Anxious HeirThe Anxious Heir• Estate ClaimsEstate Claims

Estate of Russo, 994 P.2d 491Estate of Russo, 994 P.2d 491

• Known, Out of State Health Known, Out of State Health Care CreditorCare Creditor

• January DeathJanuary Death• June Published Claims DeadlineJune Published Claims Deadline• Creditor Learns of Death and Creditor Learns of Death and

Makes Claim in AugustMakes Claim in August• Claim DisallowedClaim Disallowed

Estate of Russo, 994 P.2d 491Estate of Russo, 994 P.2d 491

• Claim is Property InterestClaim is Property Interest• Due Process Applies if State is Due Process Applies if State is

Extinguishing Property InterestExtinguishing Property Interest• PR Triggers Published Claim PR Triggers Published Claim

Deadline so State ActionDeadline so State Action• Due Process Requires Notice to Due Process Requires Notice to

Known or Reasonably Known or Reasonably Ascertainable CreditorsAscertainable Creditors

Alberico v. Health Management, 5 P.3d 967Alberico v. Health Management, 5 P.3d 967

• Over $100k in Reimbursable Over $100k in Reimbursable MedicaidMedicaid

• Secured Creditor, Liens Secured Creditor, Liens Attached Prior to DeathAttached Prior to Death

• No Claim Filed on EstateNo Claim Filed on Estate• Secured Creditors Need Not File Secured Creditors Need Not File

Claim (Misleading Phrasing)Claim (Misleading Phrasing)

Estate of Ongaro, 998 P.2d 1097

Estate of Ongaro, 998 P.2d 1097

• Local Creditor Known to PR, Secured Local Creditor Known to PR, Secured by Vehicle, Two Debtorsby Vehicle, Two Debtors

• Jan. Death, Publish June Claims Jan. Death, Publish June Claims DeadlineDeadline

• Monthly Payments Continued by PRMonthly Payments Continued by PR• Creditor Seizes Vehicle Upon Creditor Seizes Vehicle Upon

Default, Learns of Death, Makes Default, Learns of Death, Makes Claim Jan. +1Claim Jan. +1

• Claim DisallowedClaim Disallowed

Estate of Ongaro, 998 P.2d 1097

Estate of Ongaro, 998 P.2d 1097

• Unlike Russo, Bar is Statutory Unlike Russo, Bar is Statutory Deadline, Not Published DeadlineDeadline, Not Published Deadline

• Deadline is Self-ExecutingDeadline is Self-Executing• No State Action, No Due Process No State Action, No Due Process

ProtectionProtection• Action By PR Cannot Affect Action By PR Cannot Affect

DeadlineDeadline• Claim BarredClaim Barred• Why No Demand Made?Why No Demand Made?

Claims CasesClaims Cases

• PR LessonsPR Lessons– Provide Direct Provide Direct

Notice to Known Notice to Known or Reasonably or Reasonably AscertainableAscertainable

– Pay Reasonable Pay Reasonable Claims Prior to Claims Prior to One YearOne Year

– Do Not Pay Past Do Not Pay Past One YearOne Year

• Creditor Creditor LessonsLessons– Always Always

“Demand” “Demand” PaymentPayment

– Monitor Monitor AccountsAccounts

– Investigate at Investigate at DefaultDefault

II. Case DevelopmentsII. Case Developments

• The Anxious HeirThe Anxious Heir• Estate ClaimsEstate Claims• Trust/Estate Reimbursement of Trust/Estate Reimbursement of

Attorney Fees/Litigation Attorney Fees/Litigation Expenses, Expenses, In re PhippsIn re Phipps, 713 , 713 P.2d 412P.2d 412

• Figuring on Foiling the Former Figuring on Foiling the Former Spouse, Spouse, Marriage of BalansonMarriage of Balanson

Balanson, 25 P.3d 28Balanson, 25 P.3d 28

• Parents Create Inner Vivos Parents Create Inner Vivos Trust, Married Daughter is a Trust, Married Daughter is a Remainder BeneficiaryRemainder Beneficiary

• At Divorce, Daughter’s Future At Divorce, Daughter’s Future Interest May Be Marital Interest May Be Marital Property! Property!

• Vested Interest Subject to Vested Interest Subject to Complete DefeasanceComplete Defeasance

Balanson-Planning StrategiesBalanson-Planning Strategies

• Nancy Crow Article, October Nancy Crow Article, October Colo. Lawyer (page 131, not Colo. Lawyer (page 131, not 135)135)

• Avoid Vested InterestAvoid Vested Interest• Discretionary Trust, Discretionary Trust,

Independent T’eeIndependent T’ee• Dynasty TrustDynasty Trust

III. Something DifferentIII. Something Different

Trust Fee InquiryTrust Fee Inquiry

• Roy Ricks is Settlor CallingRoy Ricks is Settlor Calling• Trust Holds Stock in Closely Held Corp, Trust Holds Stock in Closely Held Corp,

Reynolds & Wilson, Ltd., which is subject Reynolds & Wilson, Ltd., which is subject to Security Interest held by Dr. Hans to Security Interest held by Dr. Hans RieckeRiecke

• Beneficiary is Ricks Family and Charles Beneficiary is Ricks Family and Charles RomeoRomeo

• Holds CO Land Subject to Lien by the Holds CO Land Subject to Lien by the Savings & Real Estate Investment BankSavings & Real Estate Investment Bank

• Receives Note Payments from the Refinery Receives Note Payments from the Refinery of the Southwest in Switzerland and of the Southwest in Switzerland and Advanced Electronics Development Advanced Electronics Development CorporationCorporation

Trust Fee InquiryTrust Fee Inquiry

• Pay Loan to Burt and Binny’s Ice Pay Loan to Burt and Binny’s Ice Cream of KabulCream of Kabul

Office of Foreign Asset ControlOffice of Foreign Asset Control

• Felony just to do Business with or Felony just to do Business with or Provide Services to Specially Provide Services to Specially Designated Nationals (SDN’s)Designated Nationals (SDN’s)

• Punishable by 30 yrs/$5 millionPunishable by 30 yrs/$5 million• First Tier Banks Now UnavailableFirst Tier Banks Now Unavailable• ““Educational” Enforcement Action Educational” Enforcement Action

LikelyLikely• Co. Owes Employees Duty of Co. Owes Employees Duty of

ProtectionProtection

Trust Fee InquiryTrust Fee Inquiry

• Bank of Afghanistan StockBank of Afghanistan Stock• Sell to Avoid ImproprietySell to Avoid Impropriety• ““Money Laundering”Money Laundering”

What To DoWhat To Do

• www.compliancedesk.comwww.compliancedesk.com• www.ustreas.gov/ofacwww.ustreas.gov/ofac• Screening SoftwareScreening Software• Screen with ListScreen with List• Risk of Combing Files for Risk of Combing Files for

ProblemsProblems• Get Attorney FirstGet Attorney First

David Prince

Tips and TalesFrom the Litigation Trenches

Tips and TalesFrom the Litigation Trenches