October 25, 2014

Inherited IRAs in Light of the U.S. Supreme Court’s Decision in Clark v. Rameker

This post originally appeared on Barbara Cashman’s Denver Elder Law blog on June 18, 2014.

CashmanBy Barbara Cashman

Everyone knows what an IRA is – right?  We think IRAs have been around a really long time, but they only came into being in 1975 with ERISA legislation, and Roth IRAs came in 1997. IRAs are classic nonprobate property that someone can pass to others without probate in many circumstances.

Q: What happens if I complete the beneficiary designation form?

A: Your beneficiaries will have much more flexibility and protections (especially on the tax front).

Q: What happens if I don’t bother with the beneficiary form?

A: Well, you won’t be around to find out – right?!  Here’s a link to a Colorado Business Magazine article about the importance of designating a beneficiary to maintain that flexibility.

Some handy IRA vocabulary words:

  • RBD – required beginning date (701/2 years of age), after which you are required to withdraw the
  • RMD – required minimum distribution, an annual distribution.

Here it is important to consider whether the decedent died after his or her RBD.  If she or he was already receiving RMDs, you will want to determine whether the distribution for that final year needs to be paid. Be sure to check with the account custodians to determine if the distribution was made before the date of death.  There are two basic types of IRAs that can be passed along to survivors:

  1. Spousal IRA 
    This is generally the simplest to accomplish and a spouse will want to consider among several choices –  to roll them over into an IRA, start receiving benefits, have them paid out in a lump sum, or disclaim some portion to minimize estate taxes in the spouse’s estate.
  2. Inherited IRA
    There is an important distinction initially regarding whether the beneficiary designation was made out to the beneficiaries or left blank. . .  There is generally much more flexibility when the designations are completed.

So here’s a question . . . . Whether inherited IRAs are generally exempt from creditors depends on where you live! Are these funds still qualified and exempt, or are they just another inherited asset?

In an inherited IRA scenario, a beneficiary (often an adult child) will need to take out the RMD in the parent’s IRA every year and declare that as income. In addition, the IRA cannot be added to by the inheritor. You might be wondering what types of protections are afforded inherited IRAs from the creditors of the inheritor. Well, I can say with all lawyerlike confidence . . .  it depends. Under Colorado law, specifically Colo. Rev. Stat. § 13-54-102(1)(s), there is an exemption from judgment creditors for certain types of retirement accounts and benefits. The definition includes IRAs “as defined under Section 408 of the Code” (this would be 26 U.S.C. § 408(d)(3)(C)(ii)). Under the Bankruptcy Abuse Preventive and Consumer Protection Act of 2005 (BAPCPA), many states opted out of the federal bankruptcy exemptions in favor of state law exemptions. Read more on this topic here from my learned colleague Laurie Hunter.

It is important to consider that there are at least three different layers to the inherited IRA treatment: federal tax law, state law relating to bankruptcy and what creditors can collect, and bankruptcy. Until just a few days ago, when the U.S. Supreme Court ruled on a writ of certiorari on the U.S. Court of Appeals for the Seventh Circuit’s 2013 decision, In re Clark, there was a split among the federal circuit courts of appeal – you can read more about it here.

The Federal Circuit Courts of Appeal Were Split Over the Meaning of the Phrase “Retirement Funds”

Two federal courts of appeal – the Fifth and Seventh Circuits (whose decisions were binding in the regions that they cover – Colorado is part of the Tenth Circuit) had come to opposite conclusions while interpreting the meaning of the same term. In 2013, the Fifth Circuit decided that the phrase “retirement funds” in the bankruptcy exemption statute quoted above means any funds “set apart” in anticipation of “withdrawal from office, active service, or business” and that the statute does not limit “retirement funds” solely to funds of the bankrupt debtor, so long as the funds were originally “set apart” for someone’s retirement. In re Chilton, 674 F.3d 486 (5th Cir. 2012). Once the funds were set apart for retirement, they maintained that same character for bankruptcy exemption purposes. The court thereby permitted the debtor in Chilton to exempt all of a $170,000 IRA inherited from her mother.

In Clark, the Seventh Circuit expressly disagreed with the Fifth Circuit, adding that it “do[es] not think the question is close.” The Seventh Circuit observed that, while inherited IRAs do shelter money from taxes until it is withdrawn, they lack many of the other attributes of an IRA. That court noted in particular that the beneficiary of an inherited IRA is prohibited from rolling those funds over into his or her own IRA and from adding her own funds to the inherited IRA. The beneficiary must take distributions from the inherited IRA within a year of the original owner’s death and complete those payouts over a defined period, often as little as five years, regardless of the beneficiary’s age and employment status. In short, once the original owned died, “the money in the inherited IRA did not represent anyone’s retirement funds.” That court of appeals declined to extend the character of a decedent’s retirement funds into the inheritance context and therefore decedent’s daughter could not then use that money as her own retirement savings, and it became no different from an inherited certificate of deposit or money market account: non-exempt and available to distribute to the daughter’s creditors.  That was the essence of the split in the circuits.

Just a few days ago, the U.S. Supreme Court ruled unanimously in Clark v. Rameker that inherited IRAs are not protected in bankruptcy. Here’s a link to the SCOTUSblog coverage of the decision. The US Supreme Court followed the line of reasoning of the bankruptcy court and the Seventh Circuit, disallowing the attempt by petitioner in bankruptcy court, Hedi Heffron-Clark, to exclude the funds in the IRA from the bankruptcy estate using the “retirement funds” exemption under Section 522 of the Bankruptcy Code, which exempts tax-exempt retirement funds from a bankruptcy estate. Just in case you are an insomniac and want to read the entire decision, rendered June 12, 2014, here it is in pdf format.

I still think that, notwithstanding the U.S. Supreme Court’s ruling, inherited IRAs are  an important legacy for a parent to leave an adult child, and it is important to not underestimate the “emotional” value of the money from a deceased parent’s retirement savings for the use of a child’s retirement. But beware, they won’t be protected from an adult child’s creditors in a bankruptcy proceeding. So please remember that an IRA and an inherited IRA are not really the same animal!

Barbara Cashman is a solo practitioner in Denver, focusing on elder law, estate law, and mediation. She is active in the Trust & Estate and Elder Law sections of the CBA and is the incoming chair of the Solo/Small Firm section. She contributes to the SOLOinCOLO blog and blogs weekly on her law firm blog, where this post originally appeared. She can be contacted at barb@DenverElderLaw.org.

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

IAALS: Let’s Stop Choosing Law School Like It’s 1999

Alli_Gerkman_bw_2014

This post originally appeared on IAALS Online, the blog for IAALS, the Institute for the Advancement of the American Legal System at the University of Denver, on April 29, 2014.

By Alli Gerkman

I was preparing for a presentation to prospective law students last month when I realized it has been 15 years since I was standing in their shoes, trying to make the right decision about law school. I wanted to tell them about resources they should be looking for—beyond law school rankings—but as I tapped into all the resources I know of, one thing became very clear: we’re still asking prospective law students to make one of the most important decisions of their lives almost the same exact way we were doing it in 1999. And probably 1989, for that matter.

Which is pretty funny (and tragic), if you think about everything else that has happened in the last 15 years. “Google” became a verb. Our smart phones let us talk to anyone at any time—by video. Cars drive themselves. And, more relevant to the concept of choosing law school, all of our decisions have been made easier through individualized recommendations. When I go to the New York Times, it recommends articles based on my usage. My Amazon home screen recommends books based on past purchases. And Spotify introduces me to new music based on what I play. All of these used to be dominated by generic recommendations—newspapers were driven by “front page” articles, booksellers touted bestseller lists, and Billboard charted the top hits in the country. These generic recommendations persist (and provide some value), but they have been richly supplemented by individualized recommendations that drive our choices.

In the world of choosing law schools, we have the generic rankings and recommendations—including US News & World Report, and a number of others that have popped up over the years—and these provide a certain value, but they hardly give the whole picture and they certainly don’t provide prospective students with individualized information about a decision that, in the end, is very personal.

We’re trying to help with that. Last year, Educating Tomorrow’s Lawyers launched Law Jobs: By the Numbers, an employment calculator that allows you to review school employment numbers based on the criteria you care about most. With the American Bar Association’s release of the 2013 employment numbers, we made the tool easier for prospective students to use by adding a Q&A tool that walks you through each factor, explains what it is, and lets you decide whether you want to include it in your final calculations. At the end of the Q&A, you get a personalized list of schools based on your personal selections (here’s one example). Lots of groups will tell you which law schools are best, but only Law Jobs: By the Numbers lets you decide for yourself.

This is just the first step, but we think it’s a step in the right direction. Perhaps US News & World Report rankings won’t go away anytime soon. And perhaps that’s okay, so long as, like other industries, we find ways to supplement the generalized rankings with individualized information that allows prospective students to make choices about where to go to law school that are, in the end, right for them.

Alli Gerkman became the first full-time Director of Educating Tomorrow’s Lawyers, a national initiative to align legal education with the needs of an evolving profession, in May 2013. She joined IAALS in June 2011 as Online Content Manager, developing and managing all IAALS web properties, including Educating Tomorrow’s Lawyers, and became IAALS’ Director of Communications in August 2012. She brings significant professional development experience to the initiative, having spent five years in continuing legal education, first as a program attorney organizing multi-day conferences for a national provider and then as program attorney and manager of online content for Colorado Bar Association CLE. While at CBA-CLE, she developed an online legal resource that was the recipient of the Association of Continuing Legal Education’s 2011 Award of Professional Excellence for use of technology in education. She has written and presented nationally to continuing legal education providers, bar executives, and lawyers. Prior to her work in continuing legal education, she was in private practice.

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

Top 10 Reasons Attorneys Go In-House

Sharon_MclaughlinBy Sharon A. McLaughlin, Esq.

The majority of attorneys begin their legal careers in law firms (versus in-house corporate legal departments – i.e., “in-house”) for a variety of reasons–- e.g., there are fewer in-house opportunities for new attorneys, law school graduates often want to get “big firm” experience and training before going in-house, and the compensation can often be higher in big firms.  Nonetheless, in my experience as an attorney recruiter, many attorneys in law firms either know starting out or within their first 5 years of practice that they want to eventually transition in-house, and they usually cite one of the following 10 reasons.

 1.     Billable-hours

With in-house legal departments, companies pay their attorneys’ annual salaries/bonuses/benefits and do not have billable hour requirements or quotas that their attorneys must meet to justify their cost.  Conversely, law firms generally have a minimum billable hour requirement and quota that their attorneys must meet to justify their high salaries and to qualify for bonuses and salary increases. The billable-hour system is the way most lawyers in law firms charge their clients, and it’s a key measure of associate and partner productivity.  This system can create a culture in which everyone is pushed hard and works long hours, eventually resulting in frustration, fatigue and exhaustion.  Many attorneys despise this system, and it’s one of the most common complaints that recruiters hear from law firm attorneys.  Consequently, it’s one of the top reasons attorneys in law firms want to go in-house.

 2.     Work-life balance

Many law firm attorneys have the belief that they will have greater work-life balance going in-house, and this is often true.  However, that’s not always the case.  In their goal to become a profit center, some in-house legal departments have long, exhausting hours with a lower level of compensation.  However, this is generally not the norm.  It is incumbent on attorneys to vet this issue when interviewing with any prospective company to ensure that work-life balance exists (with appropriate questioning at the appropriate time, of course).  Many in-house interviewers will volunteer information about their organization’s work-life balance since they know this is generally something incoming attorneys want to know and a big selling point when it exists.  In addition, attorneys are often, by nature, intuitive and can sense when the in-house attorneys with whom they’re interviewing are happy and content in their roles versus overworked, exhausted and miserable.   The latter is generally a tell-tale sign that work-life balance does not exist.

3.     Predictability of schedule

Another common complaint among law firm attorneys is the fact that they are essentially on call at all times.  They must be available to deal with client emergencies or deadlines that arise at unpredictable and inopportune times – e.g., 4:00 p.m. on a Friday afternoon or over the weekend.  As a legal recruiter, I have worked with and placed many in-house attorneys who report that they keep regular hours (e.g., 8:00 am – 5:00 p.m.), do not work weekends, spend quality time with their families, plan vacations in advance and, most importantly, do not fear being penalized for taking vacation with mountains of work upon their return.

 4.    Working closely with the business team and interfacing with upper level management and executives.

Another appealing quality that attorneys have identified about going in-house is the opportunity to work closely with an organization’s business team and regularly interface with upper level management and executives.  An in-house attorney’s clients are the internal business units and the managers and executives who lead those units at the organization at which they work.  As a result, these are often the people with whom the attorneys are regularly working, communicating and assisting on a day to day basis.  For law firm attorneys, this level of interaction and exposure can be limited if not non-existent.

 5.     Career Track

In a law firm, an attorney’s career track is generally one dimensional – you begin your career as an associate and then you may or may not make partner.  If you do not make partner, you either remain an associate for many years until it becomes too embarrassing to stay; or, if it exists at your firm, you may move into a non-partner role with a special title – e.g., Counsel, Special Counsel, Of Counsel, etc.

At a company, attorneys often have various long term career opportunities available to them.  Depending on the organization and its size, you may have the opportunity to move between practice disciplines in the legal group (e.g., litigation to commercial, commercial to regulatory, etc.), be promoted to managerial positions within the legal group, move to the business side in non-legal management or executive positions, etc.  The in-house long term career opportunities are broader and may be more easily achieved than law firm partnership.

 6.     Focus on practicing law versus business development

Because law firms value attorneys that can develop and bring in new business to the firm with some level of regularity, this is generally a prerequisite to becoming a partner and remaining a partner.  However, this can be a daunting task for many attorneys because business development is generally sales-oriented, and it is not a skill that law schools or law firms teach.  And, not everyone is a natural at business development, particularly those attorneys who are more “cerebral” in the way that they approach things.

In an in-house setting, there is no business development pressure, need or requirement.  The company is the attorney’s client.  As such, in-house attorneys may simply focus on the practice of law without the worry of developing business or the pressure of “eating what you kill.”

 7.     Work on deals from start to finish

Attorneys at law firms often are called to assist their corporate clients part-way through a deal or transaction when, for example, an issue arises; or, they may only be asked to handle a specific portion of a deal.  Conversely, in-house attorneys are generally not only part of deals from start to finish, but they frequently participate in the pre-planning and business strategy.  They also have the opportunity to see how their work and legal counsel impacts the company long-term.

8.     Focus on one client

Attorneys in law firms generally have various individual and/or corporate clients with whom they work at any given time.  For in-house attorneys, the company (or business unit(s) within the company) is the client.  Only working with a single client allows you to get to know that client more intimately, better understand the client’s business strategies and perhaps assist the client in shaping future business strategies and goals.  The in-house attorney works with internal legal and business teams, all having a common goal to assist their single client.  This is contrasted with doing a little here and a little there for multiple clients and lacking the same level of cohesiveness.

9.     Sophisticated work

While many attorneys are under the impression that they may get less sophisticated work by leaving a big law firm and going in-house, this is simply not the case with many companies.  As a cost-cutting measure, more and more companies are keeping their legal work in-house versus outsourcing it to outside counsel.  So, where you have a large, global company that keeps much of their legal work in-house and engages in complex and sophisticated transactions or litigation valued at billions of dollars, the end result is that their in-house attorneys have the opportunity to work on exciting, high-profile and sophisticated legal matters to which they may not otherwise have access.  This is even more true at many big law firms where some associates get little hands-on experience or interaction with the clients.

10.  Overseas assignments

Large companies with global operations require legal counsel in the countries in which they are conducting business.  This is often accomplished with attorneys native to the country in which the company has operations, but many companies are also sending their U.S. attorneys on international expatriate assignments or temporary rotations to work in conjunction with their foreign counterparts.  This is a very appealing opportunity for some attorneys and can be a primary motivation to work for global companies.

Sharon A. McLaughlin, Esq. is a Regional Search Director with Special Counsel in Houston, Texas. As a Regional Search Director for Special Counsel, she trains and advises internal Attorney Search Directors on the permanent placement of attorneys in in-house corporate legal departments. Her role focuses on training, strategizing, coaching, developing and implementing solutions for Special Counsel’s Attorney Search Directors nationally to provide the company’s clients the best attorney search power on the market. Ms. McLaughlin has more than nine years of legal recruiting experience placing associate and partner level attorneys with law firms and in-house corporate legal departments throughout the country. Prior to transitioning into legal recruiting, Ms. McLaughlin was an attorney in private practice and specialized in business and employment-based immigration law in Texas and California. Ms. McLaughlin is admitted to the State Bar of Texas as well as the State Bar of California. She received her B.A. from Stephen F. Austin State University in Nacogdoches, Texas in 1992, and her J.D. from Southwestern University School of Law in Los Angeles, California in 1996. Special Counsel operates in 42 markets across the United States. Through its affiliation with its parent company, Adecco Group North America, the company has access to a vast network of additional locations throughout the U.S. and in over 60 other countries, enabling the company to provide permanent placement and legal staffing services and solutions nationally or internationally. Special Counsel also has a blog, where this post originally appeared on February 23, 2014.

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

IAALS: Integrating More Professionalism and Ethics into Law School Curriculum

This post originally appeared on IAALS Onlinethe blog for IAALS, the Institute for the Advancement of the American Legal System at the University of Denver, on February 10, 2014.

Alli_Gerkman_bw_2014By Alli Gerkman

In his Voices from the Field interview, Bill Walters, Partner at Heizer Paul and former president of the Colorado Bar Association, suggests that law schools need to expose students to the various career options they have following law school, which extend far beyond the traditional big firm practice of law. For example, dual degree programs, like dual J.D./M.B.A. programs, allow law students to use the skills they’ve learned in combination with business skills to potentially and more successfully run a business after graduating.

As to better preparing law students for practice, Walters suggests that the first year curriculum should remain largely traditional through use of the Socratic method and fundamental courses. However, in the second and third year of law school, professors should use different pedagogical methods to teach students, like experiential course offerings. Walters also underscores the importance of having practicing attorneys teach students.

Finally, Walters advocates for integrating more professionalism and ethics into law school curriculum to help produce law school graduates that are better prepared for the practice of law and serving clients. He suggests that schools need exposure to these issues beyond the Rules of Professional Conduct. By “infusing” the curriculum with ethical issues, students can better understand the issues in the context of practice. Walters suggests that a student who attends a law school that emphasizes professionalism by modeling ethical behaviors will have an advantage interviewing with law firms and will increase the potential for the student to get hired.

Hear more of Bill Walters’ suggestions for reforming legal education in his Voices from the Field interview below.

William E. (“Bill”) Walters, III, has practiced law for more than 36 years in Denver, Colorado. His practice focuses on advising nonprofit organizations, trade and professional associations, and for-profit business entities. Bill also has expertise in antitrust and trade regulation law. 

From 1978 to 1981, Bill was an Assistant Attorney General for the State of Colorado. He was President of the Denver Bar Association from 2001 to 2002 and is a former Chair of the Colorado Lawyers Committee. He was President of the Colorado Bar Association from 2008 to 2009 and served on its Executive Council and Board of Governors for many years. 

Alli Gerkman became the first full-time Director of Educating Tomorrow’s Lawyers, a national initiative to align legal education with the needs of an evolving profession, in May 2013. She joined IAALS in June 2011 as Online Content Manager, developing and managing all IAALS web properties, including Educating Tomorrow’s Lawyers, and became IAALS’ Director of Communications in August 2012. She brings significant professional development experience to the initiative, having spent five years in continuing legal education, first as a program attorney organizing multi-day conferences for a national provider and then as program attorney and manager of online content for Colorado Bar Association CLE. While at CBA-CLE, she developed an online legal resource that was the recipient of the Association of Continuing Legal Education’s 2011 Award of Professional Excellence for use of technology in education. She has written and presented nationally to continuing legal education providers, bar executives, and lawyers. Prior to her work in continuing legal education, she was in private practice.

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

IAALS: Recipe for Rules Change Success: An Update on Colorado’s Pilot Project Evaluation

Corina_GeretyBy Corina Gerety

This post originally appeared on IAALS Online on October 29, 2013.

IAALS follows a four-step framework for continuous improvement of the American civil justice system. Within our Rule One Initiative, we gather research on existing court processes, convene stakeholder groups to develop recommended models aimed at increasing efficiency and access while reducing costs and delays, facilitate the implementation of those models, and support measurement of their outcomes. This process provides a feedback loop for crafting civil procedures that make a real and positive difference for all who use our courts, on both sides of the “v”. IAALS works with courts, judges, lawyers, and other stakeholders to shepherd these changes, so together we can create a better system.

Currently, many of the rules projects implemented around the countryare in a measurement phase, and the resulting evaluations will provide valuable information to decision-makers on whether the projects fulfill their goals when put in practice. Although the timing can vary, the lapse of a few years between implementation and the final evaluation results is not uncommon. It takes some time for enough cases to work their way through the system to the point where it is appropriate to draw empirical conclusions about the implemented rule changes.

This kind of evaluation is a bit like baking. Even with quality ingredients and the temperature set just right, taking the dish out of the oven before the timer goes off will not provide a fair basis for judging the recipe. In the meantime, however, everyone is hungry. Without the ability to see the progress being made, it is quite tempting to grab an oven mitt and have a taste.

In the spirit of turning on the oven light so that all may have a look inside, this short Update on the Colorado Civil Access Pilot Project Evaluation provides information on the specifics and timing of the evaluation that IAALS is conducting in Colorado.

Hopefully, this information will provide some reassurance to the Colorado legal community on what to expect in the coming year, while also providing some insight into other evaluation processes that are going on around the country. Though the recipe for each evaluation differs, the time devoted to gathering data is always critical.

Stay tuned!  We will keep you informed of all of the results as they come out.

Corina Gerety directs long-term research and evaluation projects for IAALS. Her work involves legal and empirical research, analysis, and writing, as well as research-related collaboration and presentation. She conducts research for all IAALS initiatives on an as-needed basis. Gerety came to IAALS in the Spring of 2009 from the public sector, having worked for a number of years in the Office of the Colorado Attorney General and in clerkships at the Colorado Supreme Court, Colorado’s Second Judicial District Court, and the Office of the Presiding Disciplinary Judge.

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

Laurel Anne Markus: Medical Marijuana & Child Custody Case from Colorado Court of Appeals

Just before the Memorial Day Weekend, our Court of Appeals released its decision in the case In re Marriage of Parr, 09 CA 0854 (May 27, 2010) the first Colorado appellate case involving an allocation of parental responsibilities in which one parent is a medical marijuana patient. As expected, the Court answered only the specific questions presented by the case on appeal, leaving many gaps in our understanding. Still, it is encouraging to finally have some judicial guidance in this hotly contested area of law.

The underlying case had a distinctive fact pattern. Father hid his application for inclusion on the medical marijuana registry from the opposing party and the Court. Father voluntarily entered into a parenting agreement that compelled him to submit to periodic urine analyses (UAs) to demonstrate he was refraining from the use of marijuana. Once he was accepted into the registry, he then sought to have the urine testing provisions of the parenting agreement stricken. A few months later, Mother petitioned the Court to restrict Father’s parenting time because he had not submitted clean UAs per the parenting agreement and was asking the child to “keep secrets about his drug use”. Without holding a hearing, the district court ordered that Father’s parenting time would be supervised until he either demonstrated by clear and convincing evidence that his use of medical marijuana was not detrimental to the child or submitted a clean hair follicle test. Moreover, Father was ordered not to consume marijuana while with the child. Consequently, while his usage of marijuana was a factor in the original allocation of parental responsibilities, the case was brought up on appeal from a modification of parenting time.

This posture of the case is important because in a modification case, instead of applying the “best interests of the child” standard, the Court must apply the “endangerment” standard of §14-10-129(1) C.R.S. Under the endangerment standard, a Court shall not restrict a parent’s parenting time rights unless it finds that the parenting time would endanger the child’s physical health or significantly impair the child’s emotional development. In general, the application of the endangerment standard makes it more difficult for the parent seeking a modification of parenting time to succeed. For example, it would be harder to show that a parent’s marijuana use constitutes a danger to the child, than it would be to show that his or her use of marijuana while parenting was not in the child’s “best interests”.

While the Court implies that a requirement to refrain from medical marijuana while parenting would constitute a restriction on parenting time, for its holding the Court instead relies upon the “condition precedent” of the parties’ parenting agreement. Since Father had already agreed to a parenting plan that required him not to use marijuana at all, there was no qualitative change in his parenting time when the Court ordered him to refrain from marijuana use when the child was with him.

The remainder of the Court’s ruling focuses on the fact that the district court did not conduct an evidentiary hearing to determine whether Father’s use of marijuana constituted endangerment to the children’s physical health or an impairment to their emotional development. Both the majority and concurring opinions noted that Mother filed a petition for a hearing on the issue of endangerment that was neither granted nor denied. Instead, the lower court appears to have entered orders without taking evidence or making appropriate findings of fact.

For this reason the appellate court reversed the imposition of supervised parenting time. Without an evidentiary hearing, the record could not support the requirement of supervised parenting time. The Court contrasts the record before it, with a Washington case In re Marriage of Wieldraayer 147 Wash. App. 1048 (Wash.App.1988)(unpublished) holding that trial court had discretion to require supervised visitation where evidence amply illustrated the effects on children of father’s use of medical marijuana while around them. The Court also made note of a California case In re Alexis E. 90 Cal. Rptr.3d 44, 56 (Cal.Ct.App. 2009) that to bring a case within jurisdiction of a dependency court, the record must reflect more than the mere usage of medical marijuana, for example showing secondhand smoke effects or evidence of a negative impact on using parent’s “demeanor toward the children”.

Finally, the appellate court held that the district court erred in requiring hair follicle testing rather than another type of testing “without an evidentiary basis”. Mother’s petition alleged that Father had not been submitting urine analyses (“UA”s) in accordance with the parenting plan. It seems that ordering a hair follicle test would be an appropriate judicial response to a parent’s repeated failure to comply with court-ordered UAs. It’s unclear from the ruling what is necessary to support hair follicle testing under these circumstances: merely some evidence of noncompliance with the UAs or some additional evidence regarding hair follicle testing.

In summary, this case would have been much more instructive if an appropriate evidentiary record had been established in the underlying case. Perhaps there will be another appeal after findings of fact are made at the trial court level. In the meantime, In Re Marriage of Parr reminds us of the importance of affording family law cases a proper hearing on the merits, despite budget constraints and crowded dockets.

Laurel Anne Markus blogs at the Colorado Business and Family Lawyer Blog and this post originally appeared hereClick here to read all posts by this author.

More news on Medical Marijuana.

More news on Family Law.