Jury Finds for GKH&C Client in Estate Dispute / Will Contest

On January 27, 2011, a Colorado Springs jury returned a verdict for our client. The case involved a dispute over a large number of gifts a mother made to one of her four adult children during the last four years of her life, when she was a widow.

Mother lost her husband in 2002, after more than 50 years of marriage. Her husband was a very successful business man who built a profitable service company. They raised four adult children, who all lived in the area when the husband died. But only one of mother’s daughters visited her frequently, and helped and cared for her needs during the four years that she lived as a widow. The other three children either visited mother somewhat irregularly or infrequently. They did not consistently help their mother with her needs and daily activities, as did the one daughter who was our client.

Mother was wealthy and gave numerous gifts of money and property to the helpful daughter. After mother died, her three other children maintained that 40 to 55 transactions, in which Mother gave money and property to the one daughter who helped her, were invalid. They filed suit against their sister claiming that she had received $1.8 Million in money and property during the last four years of their mother’s life. They pointed to their mother’s Will and estate plan, which left the bulk of her wealth to her four children, equally. They claimed that given the large number of transactions and the high value of the gifts to one daughter, their Mother was either of unsound mind when she made the gifts, or the gifts were a result of undue influence. The also claimed that their sister, who cared for mother, had breached a fiduciary duty by accepting so many valuable gifts from her mother.

Gary S. Craw and Larry R. Gaddis represented the daughter that helped her mother and received the $1.8 Million in gifts before mother died. The case involved three years of highly contested litigation and culminated in a jury trial that lasted nearly two weeks.

Gary Craw tried the case to a jury of six citizens and convinced them that all the transfers made during the last four years of mother’s life were valid gifts, were not because of a lack of capacity or unsound mind by mother, or a result of any undue influence by the helpful daughter. The jury also rejected the three siblings’ claim that the helpful daughter breached a fiduciary duty to their mother. Accordingly, the Court refused to order our client to return the gifts to mother’s estate, and a judgment was entered in favor of our client.

 

Estate Tax Update

 

 The federal estate tax law has finally been settled - for the next 2 years!

 

The "2010 Tax Relief Act" increased the exemption amount on all estates for individuals dying commencing January 1, 2011 to $5,000,000 per estate.  The Senate also enacted a provision which allows the executor of a deceased spouse's estate to transfer any unused exemption to the surviving spouse.  This means between a husband and a wife they can leave $10,000,000 without paying any estate tax. 

 

Also, as somewhat of a surprise, gift tax has been reunified with the estate tax which means that any of you who are so inclined can give away up to $5,000,000 and not pay any gift tax out of pocket.

 

Both the estate and gift tax for amounts over the $5,000,000 threshold is 35%.  This is a decrease from the top of 55%.

 

There are some more complex provisions for individuals who died in 2010 and others involving the generation-skipping transfer tax exemption.

 

Finally, as we indicated above, this arrangement is only in effect through 2012.  What the law will be following December 31, 2012, is, as they say, anybody's guess.

 

Colorado continues to have no estate or inheritance tax.

 

 

Larry R. Gaddis, Esq.