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Simon Tolbert – Mountain States Energy Attorneys & Advisors, PLLC d/b/a Tolbert Law Office, PLLC. Intersect of Trust & Estates and Oil & Gas Law: Curative. stolbert@msenergylaw.com 720.588.8645. AGENDA. 1) Introduction to Estate Planning 2) Intestate Succession Statutes (CO, WY, TX)
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Simon Tolbert – Mountain States Energy Attorneys & Advisors, PLLC d/b/a Tolbert Law Office, PLLC Intersect of Trust & Estates and Oil & Gas Law: Curative stolbert@msenergylaw.com 720.588.8645
AGENDA • 1) Introduction to Estate Planning • 2) Intestate Succession Statutes (CO, WY, TX) • 3) Introduction to Probate (CO, WY, TX) • 4) Trust & Estate Intersect with Oil and Gas Law • Top 10 list
INTRO TO ESTATE PLANNING • Everything passes by either: 1) Contract; 2) Title or 3) Probate • 4-7 parts to a comprehensive estate plan: • 1) Will/Trust; Declaration of Last Remains; Personal Property Memo (stuff list); Parental Delegation of Power. • 2) Living Will; Medical POA; & Financial POA. • How to create: Test Necessary formalities + Capacity to create + No undue influence. • Basically, everyone needs a PLAN
TERMS & DEFINITIONS“ESTATE” • Heir a person who is entitled under the statutes of descent and distribution to a part of the estate of a decedent who dies intestate. The term includes the decedent’s surviving spouse. Tex. Estates Code § 22.015; Wyo. Stat. § 2-1-301(a)(xx); C.R.S. § 15-10-201(24) • Devise / Bequest used as a noun, includes a testamentary disposition of real property, personal property, or both; and (2) used as a verb, means to dispose of real property, personal property, or both, by will. Tex. Estates Code § 22.008; Wyo. Stat. § 2-1-301(a)(x & xi); C.R.S. § 15-10-201(12). • Devisee means a person designated in a will to receive a devise. C.R.S. § 15-1-301(13); Wyo. Stat. § 2-1-301(a)(xii); Tex. Estates Code § 22.009. • Distributee means a person entitled to any property of the decedent under his will or under the statutes of intestate succession. C.R.S. § 15-1-301(15); Wyo. Stat. § 2-1-301(a)(xiii); Tex. Estates Code § 22.010 • Agent means an attorney in fact under a durable or nondurable power of attorney. C.R.S. § 15-10-201(1).
INTESTATE SUCCESSION • Through time – look at statute at time of Death of Decedent & Title passes at time of Death • Per Stirpes - By stock or root = divide at first at first generation whether any dead or alive. • Per Capita - Count all living descendants (children) without a living parent and divide equally among them. • By Representation - Count heirs at first generation that is a living person (include those dead with live children) and divide equally at that generation. • To Living Children per capita at each generation - Same as by representation, except if there are two or more deceased children at the same generation who leave living children, the shares are re-calculated below that generation. • To Living Children Per Capita - Count all living descendants (children) and give each one equal shares. • Adopted children – statutory right – same rights as natural born children but severs rights from biological parents. Shippey v. Rogers (In re Estate of Kirkpatrick), 77 P.3d 404; • Equitable adoption – common law right – 1) Existence of an agreement by the Parent to adopt Child; 2) Parent gave love and affection; 3) performed parental duties; 4) hold out to public as children. Non-court ordered adoption. No Statutes in place. Child can challenge intestate succession proceeding through estoppel action. Dampier v. Yearn, 493 S.W.3d 118; Barlow v. Barlow, 170 Colo. 465; Sanderson v. Bathrick (In re Estate of Seader), 76 P.3d 1236. • Children born after death (presumption if born during marriage or 300 days after marriage termination) – same as natural born children
To Living Descendants (children) per capita at each generation
COLORADO – C.R.S. § 15-11-102Share of Spouse – After July 1, 2010 • Heirs = Surviving spouse, no descendants , no parents surviving, or all of the descendants surviving descendants also belong to decedent All to Surviving spouse • Heirs = Surviving spouse, no descendants, 1 parent(s) The first $300K, plus 3/4ths of any balance of the intestate estate • Heirs = Surviving spouse, 1+ descendant, 1+ descendant of surviving spouse The first $225K, plus ½ of any balance of the intestate estate • Heirs = Surviving spouse, 1+ descendant not related to surviving spouse The first $150K, plus ½ of any balance of the intestate estate
COLORADO – C.R.S. § 15-11-103After July 1, 2010 • To decedent’s descendants per capita at each generation; • If there are no surviving descendant, to decedents' parents equally if both survive, or to the surviving parent if only one survives; • If there is no surviving descendant or parent, to the descendants of the descendants of the decedent’s parents or either of them per capita at each generation;
Wyoming Intestate Statute Wyo. Stat. § 2-4-101 • Wyoming is among the minority of states to follow a strict per stirpes pattern of distribution. See In re Estate of Fosler, 13 P.3d 686 (Wyo. 2000).
POWERS AND DUTIES OF PERSONAL REPRESENTATIVES • Letters Testamentary (appoint powers); pay funeral expenses, preserve testator’s estate, & act as fiduciary
PROBATE OF WILLS RELATED TO O&GFormal Process • UPC - Formal or informal administration. Formal – Judge issues court order. Examples: • Determination of the validity of a will. • Appointment of a personal representative, administrator, or special administrator. • Determination of who are the heirs of the decedent. • Validity of a claim against the estate. • Closing the estate and having the personal representative discharged.
INFORMAL PROBATE • DEF Refers to actions of a PR in administering an estate without the need of court approval to perform specific duties (collecting assets, paying expenses & creditors, or distributing property) • Step 1 - Determination if probate is necessary • Step 2 - Determine if there is a valid will • Step 3 - Get a personal representative or administrator appointed • Step 4 - Properly administering the decedent’s assets - winding up the decedent’s personal affairs • Step 5 - Pay bills (notify creditors, tax issues) • Step 6 - Close the estate
HOLOGRAPHIC WILLS • DEF Hand written and signed by testator, no witnesses necessary • TX recognizes Tex. Estates Code § 251.107 • WY recognizes Wyo. Stat. § 2-6-113 • CO recognizes C.R.S. 15-11-502(2)
TRUSTS DEFINITION & TYPES • Basic fiduciary relationship between trustee(s) & beneficiaries – where title is divided between legal and equitable • Types of Express Trusts – intent to create & formalities satisfied • Revocable or Irrevocable • Testamentary or Intervivos • Charitable Trusts • Constructive Trusts
TRUSTS – WHAT ARE THEY FOR • Primary Reasons to Use Trusts • Special Needs • Minor Children • Need to Shelter assets from Estate Tax • Secondary Reasons to Use Trusts • Privacy • Probate Avoidance in State of Domicile (as long as it is fully funded) • Multiple State Property Ownership • Need for Advanced Estate Planning
MODIFICATION & TERMINATION • Modification of Trusts • Judicial Action Generally needed • Standard purpose fulfilled, illegal, impossible; or compliance defeats or impairs purposes of the trust • Termination • Judicial Action Sometimes needed • Standard By Agreement of ALL beneficiaries & no further trust purpose served; and • By Own Terms specified event
POWERS & DUTIES OF TRUSTEES • See Trust Instrument for actual authority • Trustee’s power to lease under Statutes & Court Order • Duty of Loyalty – no self-dealing or commingling • Duty to Act Impartially
Specific Scenarios – TOP 10 LIST TRUSTS & ESTATES vs. OIL & GAS
NUMBER 10 – MIS CONCEPTIONS ABOUT COST AND TIME • Not that expensive to probate an uncontested proceeding in UPC jurisdictions ($3.5k- $5k approximately) 6 WEEKS TO 6 MONTHS • However, contested proceedings are expensive – YEARS
NUMBER 9 - NOT RECORDING LETTERS TESTAMENTARY OR ADMINISTRATION • Mineral owners must show present authority granted from court with jurisdiction to transfer minerals via a PRD
NUMBER 8 – MODIFYING OR TERMINATING TRUSTS IS REALLY HARD • Death of Sole or Surviving Trustee Court appointment of new trustee; or termination/modification of trust • Conveyance by Successor Trustee see trust instrument or (Hopefully) recitals in the trustee’s deed that names a successor
NUMBER 7 – LEASING OIL AND GAS INTERESTS HELD BY TRUST • Agency Law = need actual or apparent authority. Best practice see trust instrument. • Statement of Authority – Prima facie evidence of the existence of an entity and the authority of one or more persons to act on behalf of the entity. C.R.S. 38-30-172; Wyo. Stat. § 17-29-302; Tex. Business Organizations Code § 252.005.
NUMBER 6 – TITLELING TRUSTS IN OIL AND GAS LEASES AND IN DEEDS • THE MORE SPECIFIC THE BETTER • X, as trustee, and Y, as successor trustee, of the (revocable/irrevocable name of the trust), dated… for the benefit of B: • For life, then all remaining trust assets distributed to C • For life, and then B’s heirs (per stirpes/capita/by representation)
NUMBER 5 – FORGETTING TO FUND THE TRUST • HAPPENS OFTEN • (Sometimes the trust must go through probate again to get funded, and then distributed)
NUMBER 4 – SMALL ESTATE AFFIDAVIT DON’T TRANSFER REAL PROPERTY • CO C.R.S. 15-12-1203 • TX Value excluding homestead and exempt property does not exceed $75K – Tex. Estates Code § 455.009 • WY Value of estate does not exceed $200K – Wyo. Stat. § 2-1-201 (Affidavits are used in practice to pass title to mineral property – with qualified witness) • Why? Need letters (and PRD) for Title
NUMBER 3 – INTESTACY LAWS USUALLY LIST AMOUNT SET ASSIDE FOR SURVIVING SPOUSE • Usually applies to amount Family Allowance and Exempt Property Allowance, which must be applied for within 1 year of date of death • How do you value undeveloped minerals?
NUMBER 2 – SUSPEND ALL MINERALS REMAINING IN ESTATES • WHY? Who are the lawful heirs? • WHY? Heirs vs. Devisees? (i.e. SOL for Probate)
NUMBER 1 – NO AMOUNT OF INTEREST IS TOO SMALL FOR THE KIDS (HEIRS) TO FIGHT OVER • As stated. • i.e. in-laws. • i.e. laughing heirs vs. close loving relationships.