July 28, 2014

After You’ve Found Your Assisting Attorney, Face the Music and Make a Plan


By Amy Symons and Julie Davis

I am going to blame it on the natural highlights that are making an appearance at my temples, but for the first time in more than a decade of practice a client asked me, “So what happens if something happens to you?”

I had an answer for him because my co-author and I had previously discussed it over lunch, but it was my wake-up call that we needed to take our conversation to the next level. Fortunately, Barb Cashman made that easy with her CLE presentation “Death of a Solo, Death of a Practice.”  One of us attended her presentation and the other, in exchange for a peek at her materials, offered up a blog on what we did to put our own succession plan into place.

The first thing was to get permission from our clients to allow another attorney to access the client file if we were unable to complete the matter. Each of us added provisions in our engagement letter requesting that the client waive confidentiality if we were unable to complete the matter. The provision or casualty clause also included details about steps that would be taken after death, incapacity, or our inability to complete the mater. Although we noticed that some of the engagement letter provision examples that we reviewed didn’t provide contact information of the assisting attorney, we figured it was a comfort to our clients and provided the name, telephone number, and email address of the other attorney.

We met for coffee to discuss the ins and outs of the other’s practice.  Both of us are cloud-based – one uses Google Docs and the other Clio and Dropbox – making our offices accessible with a password. We discussed how to access that password and how to determine which client matters are open and which are closed. We also talked about general operations, such as the fact that one of us is paper-based while a client’s matter is open, and executed documents are scanned into the system before they are mailed to the client.

Clio is a cloud-based practice management system that allows the user to log client matters and report the status of each, including when a matter is completed.  It also includes COLTAF and Operating Account ledgers, making it easy to determine whose money is in the trust account.  Because the COLTAF funds are still the client’s money, not knowing to whom they belong is another ethical violation waiting to rear its head.

Being able to slip into the others’ shoes in a password-based world is easy enough, but we needed to have documentation in place for financial institutions. A trip to the bank ensured that our Limited Power of Attorney was effective and that the safe deposit box could be accessed. One of us banks at a local, small bank and was asked by a teller if the COLTAF should be POD.  It was worth a conversation with her as to why that should never be the case!

We each are drafting policy manuals that will offer a compass to the other.  These include:

  • a copy of the Limited Power of Attorney;
  • a copy of our will and contact information for our Personal Representative;
  • passwords to our computers, document retention systems, and online bank accounts;
  • instructions to access our calendaring system;
  • bank location and contact information, account numbers and where to access COLTAF balances;
  • safe deposit box or office-safe access information;
  • insurance information, including malpractice carrier and when we renew, life insurance policy numbers, providers, and amounts;
  • disability insurance numbers and providers;
  • health insurance providers, amount, and how paid;
  • an explanation of how clients pay us and/or where to find that information in each client’s engagement letter;
  • financial information such as annual and monthly budgets and operating expenses;
  • contact information for accountants and bookkeepers or information about Quick Books and Intuit or other accounting systems;  contact information for employees;
  • employees’ salaries and employment arrangement or contract;
  • general instructions about client files such as where to find engagement letters (including the casualty clause or relevant succession plan provision) and billing information;
  • information about closed client files and how to access scanned documents after the paper file has been destroyed;
  • the procedure the succession attorney is to follow when contacting clients and how to handle particular matters;
  • and the procedure the succession attorney is to follow regarding death notices to the Bar and others.

There is nothing that illustrates the analogy of the shoemaker whose children have holes in their shoes as much as two estate planning attorneys who admit to each other that they have not drafted their own estate plans.  The Limited Power of Attorney was drafted after we had coffee and we are committed to completing wills in the near future.

It is an interesting play in psychology to see yourself in your client’s shoes.  One of us knows that she needs to call her insurance agent and increase her life insurance and acquire disability insurance but there is a hesitancy there – the same hesitancy that we see clients have about planning for their own demise. It isn’t so much that the fear of death is bothersome, it is the rationalization that there is plenty of time to do this.  Most lawyers make a living based on planning for the unknown happening at any time.  This blog post has prompted inquires of other solos and it is shocking how many of us do not plan for our own practice as we would for a client’s.

Follow this series and see previous articles about solo attorney succession planning here.

Amy Symons is an estate planning and estate administration attorney who has an office in Denver and Colorado Springs.  Three years ago she started her own practice after working in larger firms.  She is the incoming treasurer for the Colorado Bar Association Solo-Small Firm Section Council.

Julie Davis is an Elder Law and Estate Planning Attorney who started her own firm in 2009. Julie is an accredited attorney with the Veterans Administration and is a member of NAELA.

Amy and Julie are contributors to the SOLOinCOLO blog, where this post originally appeared.

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.

The Impact of Colorado’s Civil Unions Act on Estate Planning

EmilyBloedelBy Emily L. Bloedel

In the past twenty years, Colorado has gone from being dubbed the “hate state” for its discrimination against same-sex individuals (See Romer v. Evans, 517 U.S. 620 (1996)) to allowing civil unions. Beginning at midnight on May 1, 2013, same-sex couples will be able to enter into civil unions. A number of legal benefits, protections, and responsibilities that are granted to spouses under the law apply to parties to a civil union.

These changes include: the ability to inherit real or personal property from a party in a civil union under the probate code; priority for appointment as a conservator, guardian, or personal representative; survivor benefits; the ability to file a complaint about the care or treatment of a party in a civil union in a nursing home; rights related to declarations concerning the administration, withholding, or withdrawing of medical treatment, proxy decision-makers and surrogate decision-makers, CPR directives, or directives concerning medical orders for scope of treatment forms with respect to a party to a civil union; rights concerning the disposition of last remains of a party to a civil union; and the right to make decisions regarding anatomical gifts (C.R.S. 14-15-101 et seq).

The impact that the new Act will have on estate planning is not yet clear. The previous norm in Colorado for same-sex couples, designated beneficiary agreements, may no longer be necessary for an individual in a same-sex relationship to dispose of his or her property as desired and allow for his or her partner to make important medical decisions. The Act makes it clear that, for the most part, a “party to a civil union has the benefits, protections, and responsibilities under law as are granted to spouses” (C.R.S. 14-15-106 (1)).

The legislature has made it clear that for estate planning purposes, if a partner in a valid civil union dies intestate, his or her partner can now inherit via the intestacy statute. Although the full extent of the benefits to same-sex couples remains to be seen, the best way for any partner to a civil union to ensure the desired disposition of his or her property, or that the proper person handles decision-making when the partner is no longer able, remains, like any marriage, in informing loved ones of his or her wishes and creating valid estate planning documents.

Emily Bloedel joined Felser, P.C. in October 2012 as an associate attorney and can be reached on LinkedIn. She received her bachelor’s degree in Japanese Language and Literature from the University of Colorado and graduated from the University of Denver Sturm College of Law in 2012. She is licensed in Colorado. While in law school, Emily was a traveling oralist on the Willem C. Vis International Commercial Arbitration moot team and served on the board of editors of the Denver Journal of International Law and Policy. She also mediated small claims and FED cases through the Mediation-Arbitration Clinic. She enjoys playing the koto (a traditional Japanese instrument), reading, and traveling. She is a contributor to the DBA Young Lawyers blog, where this post originally appeared.

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.

Report Regarding The 2013 ABA Mid-Year House Of Delegates Meeting In Dallas, Texas

Troy RackhamBy Troy Rackham

I have the privilege of serving the Denver Bar Association as a delegate to the American Bar Association (“ABA”) House of Delegates. The ABA House of Delegates met at the ABA’s midyear meeting held in Dallas, Texas on February 11, 2013. The agenda was relatively light. This Article summarizes the House of Delegates events at the midyear meeting and the action taken by the House.

The House opened with a welcome speech by Senator Kay Bailey Hutchinson. Senator Hutchinson thanked the House for its leadership in maintaining the integrity of the profession and ensuring the quality of judges.

ABA President Laurel Bellows also spoke to the House. She thanked the House for the privilege of serving as President. She discussed the concept of justice as fairness. She raised important questions on how best to improve the quality of justice delivered and how to make justice more accessible. She also discussed the Gender Equity Task Force and commented on the fact that it is addressing issues of unfairness to women, including inequity of pay to women lawyers. Additionally, President Bellows discussed human trafficking and the ABA initiatives relating to the epidemic of human trafficking. Finally, President Bellows discussed promoting programs supporting law students and young lawyers, as well as reforms to legal education.

After hearing some other speeches, the House got to work on resolutions submitted to the house. First, the House passed Resolution 108, which encouraged practitioners, when appropriate, to consider limiting the scope of their representation, including the unbundling of legal services as a means of increasing access to legal services. The House also considered and approved three resolutions relating to administrative law.

Additionally, the House considered and approved Resolution 109 which supported the position that United States Bankruptcy Judges have the authority, upon the consent of all the parties to the proceeding, to hear, determine, and enter final orders and judgments in those proceedings designated as “core” within the meaning of 28 U.S.C. § 157(b) but that may not otherwise be heard and determined by a non-Article III tribunal absent consent. The House voted to revise the resolution and later approved it.

The House considered nine resolutions relating to issues of criminal justice. Those were as follows:

  • Resolution 104A – Indigent Defense. The Criminal Justice Section urged the adoption of Resolution 104A, as revised, which urged Congress to establish an independent federally funded Center for Indigent Defense Services for the purpose of assisting state, local, tribal and territorial governments in carrying out their constitutional obligation to provide effective assistance of counsel for the defense of the indigent accused in criminal, juvenile and civil commitment proceedings. The House adopted the resolution as revised.
  • Resolution 104C – Prohibiting Retaliatory Discharge Against Public Defenders. The Criminal Justice Section also urged the House to adopt Resolution 104C. Resolution 104C urged state and local governments to enact legislation to prohibit the retaliatory discharge of a Chief Public Defender or other head of an indigent defense services provider because of his or her good faith effort to control acceptance of more clients than the office can competently and diligently represent. The House adopted the resolution.
  • Resolution 104D – Increased Funding for Prosecutor Training. The Criminal Justice Section moved the House to adopt Resolution 104D, which urged the federal government to restore, maintain, and, where appropriate, increase funding to organizations which provide training to state and local prosecutors, to better promote justice, increase public safety, and prevent wrongful convictions. The House approved the resolution.
  • Resolution 104E – Investigation of Immigration Status of the Accused. Fourth, the Criminal Justice Section asked the House to adopt Resolution 104E, which urged courts to ensure that defense counsel inquires and investigates a juvenile defendant’s immigration status and informs the juvenile about any possible collateral consequences that may flow from different dispositions of the case. The resolution also sought to minimize adverse immigration consequences. Several revisions were made to the resolution and the House adopted it, as revised.
  • Resolution 104F – Victims of Human Trafficking. Additionally, the Criminal Justice Section urged the House to adopt Resolution 104F, as revised. Resolution 104F urged governments to enact laws and regulations and to develop policies that assure that once an individual has been identified as an adult or minor victim of human trafficking, that individual should not be subjected to arrest, prosecution or punishment for crimes related to their prostitution or other non-violent crimes that are a direct result of their status as an adult or minor victim of human trafficking. The House approved the resolution as revised in the House.
  • Resolution 104G – Affirmative Defenses for Victims of Human Trafficking. Consistent with President Bellows’ focus on Human Trafficking, the Criminal Justice Section also moved the House to adopt Resolution 104G, which urged governments to enact legislation allowing adult or minor human trafficking victims charged with prostitution related offenses or other non-violent offenses to assert an affirmative defense of being a human trafficking victim. The House revised the resolution and later adopted it.
  • Resolution 104H – Vacating Convictions for Victims of Human Trafficking. The Criminal Justice Section further moved the House to adopt Resolution 104H, which urged governments to aid victims of human trafficking by enacting and enforcing laws and policies that permit adult or minor victims of human trafficking to seek to vacate their criminal convictions for offenses related to their prostitution or other non-violent offenses that are a direct result of their trafficking victimization. The House approved the resolution as revised.
  • Resolution 104I – Training Relating to Human Trafficking. As the final human trafficking resolution, the Criminal Justice Section and the Commission on Domestic and Sexual Violence jointly urged the House to adopt Resolution 104I, which was revised. Resolution 104I urged bar associations to work with judges, lawyers, and other professionals with subject matter expertise in human trafficking, to develop and implement training programs for judges, prosecutors, defense counsel, law enforcement officers, immigration officials, civil attorneys, and other investigators that will enable them to identify adult and minor victims of human trafficking and enable them to direct victims and their families to agencies that offer social and legal services and benefits designed to assist adult and minor victims of human trafficking. The House approved Resolution 104I as revised.
  • Resolution 104J – Model Charge for Grand Juries. Finally, the Criminal Justice Section moved the House to adopt Resolution 104J, which urged the Judicial Conference of the United States to amend the Model Grand Jury Charge to clarify that the Grand Jury should be instructed to vote separately on each defendant. After hearing the arguments in support of the resolution, the House passed it without revision.

Additionally, the House considered several resolutions proposed by the Ethics 20/20 Commission. The resolutions largely sought amendments to the Model Rules of Professional Conduct, or other Model Rules, to address the realities of increasing lawyer mobility. The Ethics 20/20 Commission resolutions are discussed in turn.

First, the House approved revised Resolution 107A, which approved proposed amendments to Model Rule of Professional Conduct 5.5(b) and the ABA Model Rules of Professional Conduct (Unauthorized Practice of Law; Multijurisdictional Practice of Law) to allow foreign lawyers to serve as in-house counsel in the United States, as long as the foreign lawyers not advise on United States law except in consultation with a U.S.-licensed lawyer. There was a variety of interesting debate and discussion on this resolution. Ultimately, the House passed Resolution 107 as revised.

Second, the Ethics 20/20 Commission urged the House to adopt Resolution 107B. Resolution 107B proposed amendments to the ABA Model Rule for Registration of In-House Counsel so that the model rule would permit foreign lawyers to serve as in-house counsel in the United States with some restrictions. The House revised the resolution and adopted it.

Third, the House considered Resolution 107C, which proposed amendments to the ABA Model Rule on Pro Hac Vice Admission. The amendments were designed to provide judges with guidance about whether to grant limited and temporary practice authority to foreign lawyers to appear in courts in the United States. There was some interesting discussion prior to the House, and during the House debates, on the resolution. Ultimately, after an amendment, the House adopted the resolution.

Finally, the Ethics 20/20 Commission urged the House to adopt Resolution 107D, which proposed amendments to Model Rule of Professional Conduct 8.5. Rule 8.5 relates to choice of law applicable to conduct standards and lawyer discipline. The proposed amendments were designed to address common choice of law problems that are more frequently occurring in the context of conflicts of interest. The House approved the resolution.

The House considered a number of resolutions in addition to the nine resolutions proposed by the Criminal Justice Section and the four resolutions urged by the Commission on Ethics 20/20. Those are described below:

  • Resolution 10A – Court Funding Crisis. The New York State Bar Association moved the House to adopt Resolution 10A, which urged federal elected officials to adequately fund the federal courts and the Legal Services Corporation as they negotiate deficit reduction with the imminent threat of the implementation of sequestration if they fail. The House approved the resolution.
  • Resolution 101A – Patentable Subject Matter. The Section of Intellectual Property Law moved the House to adopt Resolution 101A, which was revised. Revised Resolution 101A provided that the ABA would support the principle that laws of nature, physical phenomena, and abstract ideas are not eligible for patenting as a process under 35 U.S.C. §101, even if they had been previously unknown or unrecognized. The House approved the resolution as revised.
  • Resolution 101B – Standards for Finding Direct Infringement. Additionally, the Section of Intellectual Property Law urged the House to adopt Resolution 101B, which supported clarifying the standards for finding direct infringement under 35 U.S.C. § 271(a) for a patent directed to a multiple-step process in the fact situation where separate entities collectively, but not individually, perform the required steps of the patented process. After a revision, the House approved the resolution.
  • Resolution 106 – Principles for Jury Trials. As its one resolution, the Commission on the American Jury Project asked the House to adopt Resolution 106, which proposed amendments to the 2005 ABA Principles for Juries and Jury Trials. The amendments were to Principles 1(C) through (F), 6(C), 10(C) and 11(A) of those Principles. After an interesting discussion in support of the resolution, the House approved the resolution.
  • Resolution 100 – Medicare Reimbursements. The ABA’s Standing Committee on Medical Professional Liability moved the House to adopt Resolution 100. Resolution 100 supports timely and efficient resolution of requests from a claimant or applicable plan for conditional payment reimbursement amounts where Medicare has a right to reimbursement from a recovery by way of settlement, judgment or award. The resolution also urged Congress and the Department of Health and Human Services to establish reasonable time limits and procedures for responding to such requests. The House approved the resolution.

Finally, the House of Delegates also considered a number of uniform acts proposed by the National Conference of Commissioners on Uniform State Laws. It is fairly typical for the House to consider proposed uniform laws at its meetings. The three uniform laws that the House considered were the Uniform Asset Freezing Orders Act, the Uniform Deployed Parents Custody and Visitation Act, and the Uniform Premarital and Marital Agreements Act. The House approved all three resolutions.


I hope this Article sufficiently highlighted many of the more interesting or important the agenda items considered by the House of Delegates at the midyear meeting in Dallas. The annual meeting this year will be in August 2013 in San Francisco. I appreciate all input that any members of the Denver Bar Association have regarding any of the issues that have been considered, or will be considered, by the ABA House of Delegates.

Troy Rackham defends lawyers, hospitals, nursing homes, long term care facilities and other health care organizations in a wide variety of cases and claims. He regularly advises legal professionals on ethics, malpractice and professional liability issues. Mr. Rackham co-wrote a treatise on Colorado Legal Malpractice litigation, which is updated annually. He has orally argued and prepared briefs in dozens of appellate cases, most of which involved claims against lawyers, hospitals, physicians, or health care systems. Mr. Rackham is a member of the American, Colorado, and Denver Bar Associations, and he is a member of the CBA Ethics Committee and the ABA House of Delegates.

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.

Funding a Small Business with Retirement Funds? Think Twice

AlexWenzelBy Alexander Wenzel

If you have listened to AM radio in the last three years, you may have heard advertisements for arrangements by which small business owners could use tax-deferred funds to inject some capital into their small business from their retirement funds. The IRS refers to these arrangements as Rollovers as Business Start-Ups (or “ROBS”), although the scheme is not limited to start-ups.

Structure of ROBS

One may be able to understand how the IRS feels about these arrangements by the acronym it has chosen for them. The ROBS arrangement is a fairly simple tax work-around that takes funds from an existing tax-deferred retirement account, rolls-over those funds to a new tax-deferred retirement account (the “ROBS Plan”) that has but one client (the business owner) and one investment (the small company). The ROBS Plan would acquire shares of stock in the company as an “investment”by making a nice tax-deferred injection of capital into the company. While this arrangement may be acceptable to the IRS in a narrow set of circumstances, there are some dangers to this type of funding.

Items of Concern

The IRS is most concerned with two aspects of these arrangements: (i) violations of nondiscrimination requirements of retirement plans; and (ii) faulty valuations of the small business stock traded for the capital injection.

Non-discrimination Issue: The Internal Revenue Code prohibits contributions or benefits provided under a qualified retirement plan from discriminating in favor of highly compensated employees—those who either own at least 5 percent of the company, or receive more than $80,000 in salary. The Treasury Regulations also provide that the benefits, rights, and features of a qualified retirement plan (including, in this case, the ROBS Plan) cannot be discriminatory in effect. That is, employees must be able to invest in the ROBS Plan, not just the business owner.

As is often the case, employees may not even know of the existence of a ROBS Plan, much less be able to participate in it. If either the business owner or the ROBS Plan holds more than 5 percent of the company’s equity and employees are not permitted to participate in the ROBS Plan, the ROBS Plan is in danger of violating the non-discrimination requirement.

Valuation Issue: The IRS is also concerned that the valuation of the stock issued to the ROBS Plan may be inflated. The business owner may not want to lose control of the business ownership to the ROBS Plan and may seek to sell a small percentage of the shares to the ROBS Plan at a high price not supportable by the company’s operations or financial condition. Any such transaction should be supported by a well-documented appraisal. Additionally, if the company’s only asset is the capital injected, the investment may be characterized as a “prohibited transaction” which may result in a 15 percent tax on the transaction, or even 100 percent tax if not promptly corrected.

Dangers abound with ROBS Plans, and it may be wise to pursue other avenues of funding a small business before using those hard-earned retirement funds.

Alex Wenzel is an associate attorney at Burns, Figa & Will, P.C. His practice focuses on real estate transactions and litigation, securities, and corporate formation and transactional work. Prior to becoming an attorney, Mr. Wenzel was a Presidential Writer for the White House in the Office of Special Letters and Responses. A native Ohioan, he earned his B.A. at the University of Cincinnati and his J.D. at the University of Denver.

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.

SEC Issues Report on Social Media Disclosures


By Trevor A. Crow

The Securities and Exchange Commission (SEC) recently issued a report of its investigation relating to a Facebook post by Reed Hastings, the CEO of Netflix, which stated Netflix’s monthly online viewing had exceeded 1 billion hours. The SEC’s investigation was to determine whether Hastings or the Company violated Regulation FD under the Securities Exchange Act through the posting of this information.

In general, Regulation FD prohibits public companies, or persons acting on their behalf, from selectively disclosing material, nonpublic information to certain securities professionals, or shareholders, where it is reasonably foreseeable that they will trade on that information, before it is made available to the general public. Here, the SEC decided not to initiate an enforcement action against Netflix or Hastings. However, the report also offers guidance to public companies on the application of Regulation FD to disclosures made through social media.

The report explains that, under certain circumstances, public companies may disseminate material, nonpublic information through social media without violating Regulation FD if investors previously have been notified that specific social media will be used to spread such information. The report states that the framework set forth in theSEC’s August 2008 Guidance on the Use of Company Websites should be used when analyzing communications made through social media. Specifically, “the central focus of this inquiry is whether the company has made investors, the market, and the media aware of the channels of distribution it expects to use, so these parties know where to look for disclosures of material information about the company or what they need to do to be in a position to receive this information.”

The report also explained that without prior notice to investors, it is unlikely that a corporate officer’s personal social media site used to disseminate corporate information would qualify as a method “reasonably designed to provide broad, non-exclusionary distribution of the information to the public” as required under Regulation FD. In the Netflix inquiry, Hastings’ Facebook page had never been previously used to announce company metrics, yet the SEC still chose not to initiate an enforcement action against Netflix or Hastings.

Bottom Line: Public companies should have social media policies in place for their directors and executive officers to educate them about Regulation FD. Before a representative of the company posts any material and nonpublic information on a social media platform, the company should take steps to ensure that investors, the market, and the media are aware of this channel of distribution.

Trevor A. Crow is an associate in Dufford & Brown’s corporate transactions group. He focuses on public company securities compliance, M&A, entity formation, and startup company financing. He has counseled clients on a variety of business issues including entity selection, formation, finance, acquisitions, and numerous operating transactions. Trevor’s LLM in taxation makes him uniquely qualified to handle complex issues regarding business transactions and tax planning.

Trevor received his J.D. and LL.M. in Taxation from the University of Denver’s Sturm College of Law.  He is a member of the American, Colorado, and Denver bar associations; an executive member of the Colorado Bar Association Tax Section; he belongs to the Denver Metro Chamber Impact Denver Class of 2012; and he is a member of the Colorado Association of Business Intermediaries (CABI). He writes for the CBA Business Law Section newsletter, where this article originally appeared.

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.

The American Taxpayer Relief Act of 2012: Bidding Adieu to the Sunset (Part 3)

Editor’s Note: This is Part 3 of a 3-Part Series. For Part 1, click here, and for Part 2, click here.

By Merry H. Balson and Laurie A. Hunter

Return of the Charitable IRA Rollover Through 2013. The 2012 Tax Act extended the IRA charitable rollover rules through 2013. These rules were originally put in place in 2006, and had expired at the end of 2011. The charitable IRA rollover provisions allow individuals who are 70 ½ or older to transfer (or “rollover”) up to $100,000 per year from their IRAs to most charities on a “tax neutral” basis if the transfer is a “qualified charitable distribution” and satisfies certain rules. Qualified Charitable Distributions will not count as taxable income to the individual (as would usually be the case in any other distribution from an IRA) but no charitable income tax deduction is allowed for the contribution. Transfers must be directly from the IRA trustee to the charity to qualify. Additionally, transfers to private foundations, donor advised funds, supporting organizations or split-interest trusts (such as charitable remainder or charitable lead trusts) do not qualify for this special treatment. Because the charitable IRA rollover had expired in 2011 and has now been reinstated retroactively for 2012, taxpayers were also allowed to treat distributions from IRAs made after November 20, 2012 and before January 31, 2013 as a charitable IRA rollover for 2012, if that distribution is made in cash to charity before January 31, 2013. As a result, in 2013 taxpayers had an opportunity to give up to $200,000 to charity from their IRAs (with $100,000 treated as given in 2012) if they acted by the end of January.

Other Annual Extenders. The 2012 Tax Act also extended a number of credits and deductions that have been extended year by year for some time, and did not make them “permanent.” These include the American Opportunity Tax Credit,[1] more favorable conservation easement rules,[2] more favorable depreciation rules, the wind energy credit, and research and development credits.

Health Care Act Changes. Finally, changes taking place in 2013 include raising the medical expense deduction to 10% of adjusted gross income from 7.5%, and the new 3.8% surtax on net investment income for single taxpayers with $200,000 “modified” adjusted gross income and $250,000 for married filing jointly.


The 2012 Tax Act is replete with references to permanence. While that might provide comfort to some, keep in mind that the provisions of the 2012 Tax Act are only truly permanent until Congress and the President decide to change them. Until then, we can all breathe a sigh of relief that sunset never came to pass, and for the first time in decades advise our clients about the tax implications of their gifts during life and at death with some measure of certainty.

Merry H. Balson is Of Counsel at Wade Ash Woods Hill & Farley, P.C., where her practice emphasizes estate planning, estate and trust administration and forming and advising exempt organizations. She can be reached at mbalson@wadeash.com or 303-329-2215.

Laurie A. Hunter is a Shareholder at Wade Ash Woods Hill & Farley, P.C., where her practice emphasizes estate planning, probate and trust administration. She can be reached at lhunter@wadeash.com or 303-329-2227.

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.


[1] Pub.L. 112-240, Sec. 103, H.R. 8, 126 Stat. 2313 (2013).

[2] Pub.L. 112-240, Sec. 206, H.R. 8, 126 Stat. 2313 (2013).

The Intersection of Lawful Off-Duty Activities and Employment Discrimination

A few years ago, the national and local news ran a story about a man who was employed by a company that distributes Budweiser beer and was fired for drinking a Coors (click here for the Denver Post story). The man said that the company president’s son-in-law saw him sipping the Coors, and he was terminated two days later.

We know there are two sides to every story, and the article focused on the man’s story, not the employer’s. However, if what the man said was true, the employer violated the Lawful Activities Statute, C.R.S. § 24-34-402.5. This statute provides “It shall be a discriminatory or unfair practice for an employer to terminate the employment of any employee due to that employee’s engaging in any lawful activity off the premises of the employer during nonworking hours. . . .” The statute applies only to employees, not job applications.

The statute enumerates three exceptions to this rule, if the conduct: (1) relates to a bona fide occupational requirement; (2) creates a conflict of interest; and (3) is rationally related to the employment activities.

In the beer case, the employer claimed that the employee’s activity fell under all three exceptions–the employer stated that the employee was terminated to avoid a conflict of interest, and that his conduct was rationally related to a bona fide occupational requirement.

The beer case never went to trial, but the issue is not uncommon in employment disputes. Very few cases have interpreted the statute, however; Marsh v. Delta Air Lines, Inc., 952 F. Supp. 1458 (D. Colo. 1997) provides most of the guidance on the issue.

To learn more about the intersection of lawful off-duty activities and employment discrimination, don’t miss CBA-CLE’s Employment Law Conference April 4 and 5 at the Denver Marriott City Center. Click the links below to register online or call (303) 860-0608.

CLE Program: 2013 Employment Law Conference

This CLE presentation will take place on Thursday and Friday, April 4 and 5, 2013, at the Denver Marriott City Center. Click here to register for the live program.

Can’t make the live program? Click here to order the homestudy.

Split Decision in the U.S. Supreme Court

BNHoffmanBy Brian Neil Hoffman

The U.S. Supreme Court recently issued two much-anticipated decisions on securities law matters: One on the statute of limitations applicable in SEC enforcement matters in Gabelli et al. v. Securities and Exchange Commission, No. 11-1274 (Feb. 27, 2013) and another on class certification standards in private securities class actions in Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, No. 11-1085 (Feb. 27, 2013). The rulings together present a “you win some, you lose some” outcome for securities law litigants.

In the Gabelli case, the Supreme Court unanimously ruled that the SEC’s five-year time limit to recover civil penalties (contained in 28 U.S.C. § 2462) begins to run when the alleged fraud occurs, not when it is later discovered. The Court rejected the SEC’s attempt to graft a “discovery rule” onto the statutory limitations period. Unlike private plaintiffs, the Court reasoned, part of the SEC’s very mission is to ferret out potential securities law violations. The SEC has a plethora of tools available to aid in the effort — including examination and subpoena powers, the ability to pay whistleblower incentive awards, and cooperation agreements. As such, the Court found that the agency should not benefit from a presumption allowing further delays.

The ruling is bound to set the SEC scrambling to assess its current case load and prioritizations. Indeed, we may see a push to bring, or close, more dated cases, and a new urgency in cases approaching the five year mark. Importantly, the decision leaves untouched the SEC’s authority to seek a civil injunction, cease-and-desist order, and disgorgement at any point – even more than five years after the misconduct. Yet the staff may be reluctant to seek these remedies unaccompanied by claims for a civil penalty. Moreover, the Court did not address whether the SEC could rely on equitable tolling (that is, when a defendant takes steps – independent from the fraud itself – to conceal his or her actions) to seek penalties after the five year period. Nor did the Court address whether the ruling applies to other punishments that the SEC could seek: officer-and-director or securities industry collateral bars. Despite these uncertainties, registered entities, public companies, auditors, and other market participants can breathe a small, brief sigh of relief that there is now at least some certainty about how long a potential SEC enforcement action may be afoot.

The Amgen decision, however, is less defendant-friendly. In this 6-3 ruling, the majority held that private securities class action plaintiffs do not need to prove that the alleged misrepresentations or omissions were material at the class certification stage. Class action plaintiffs seeking class certification frequently rely on the “fraud-on-the-market” presumption to overcome a need to prove reliance by each individual class member. The presumption allows a court to presume that the price of a security in an efficient market reflects all publicly-available material information, which a buyer presumptively relied upon when purchasing the security. Although the efficiency of the market for Amgen’s securities was not in question, Amgen challenged the materiality of the challenged misrepresentations or omissions and, thus, the appropriateness of using the fraud-on-the-market presumption to overcome individual reliance issues. The Supreme Court majority rejected this argument. Rather, it held that materiality is evaluated on an objective standard, and thus raised a question common to all class members.

The Amgen decision is a disappointment to entities and individuals named as defendants in securities class actions. Rulings on class certification are important mileposts in a private securities lawsuit, often significantly affecting damages and sometimes dictating whether a case even proceeds at all. Yet decreasing plaintiffs’ burden at this stage, as the Amgen decision does, only increases the pressure on defendants to try and resolve or narrow claims at other stages of the case. The Amgen case is not a total loss for defendants, though. Justice Alito’s short concurrence noted that “more recent evidence suggests that the [entire fraud-on-the-market] presumption may rest on a faulty economic premise.” Time will tell the uses to which lower courts and the defense bar put this missive.

For litigants, the effects of the Supreme Court’s decisions in Gabelli and Amgen are both immediate and concrete. Both decisions, albeit in different contexts, ultimately address whether and how a securities case will proceed. And both decisions significantly affect the remedies that may be awarded in those cases. Yet perhaps most importantly, both decisions — whether viewed favorably or unfavorably — provide some degree of certainty in a previously uncertain area.

Brian Neil Hoffman is Of Counsel in Morrison & Foerster’s Securities Litigation, Enforcement, and White-Collar Defense Group. He recently served as a Senior Attorney in the SEC’s Division of Enforcement. He now represents entities and individuals in government and self-regulatory organization investigations and proceedings; conducts corporate internal investigations; and defends shareholder class action and derivative lawsuits. He can be contacted at bhoffman@mofo.com and (303) 592-2227.

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.

Social Media Policies: Permissible Employer Regulation

Joel Jacobson_pictureBy Joel Jacobson

Social media use is rapidly increasing and has become central to the workforce. Employers recognize that public information posted online is useful for monitoring employee activity and the portrayal of the company. However, new technologies result in unintended, legal consequences. Recently, an Applebee’s waitress was terminated after posting a customer’s receipt on reddit and the SEC warned Netflix’s CEO that his Facebook post might trigger securities regulations. Colorado attorneys should pay attention to legal developments within the social media context because the appropriate level of employer regulation of employee social media use remains unsettled.

Many laws are potentially implicated when an employer improperly regulates or misuses information from social networking sites. Notably, Anti-Discrimination laws (ADA, Title VII, ADEA), Stored Communications Act, National Labor Relations Act (protecting concerted activities for the purpose of collective bargaining or other mutual aid or protection), Lawful Off-Duty Conduct, and common law privacy claims should be considered. Recent decisions have targeted social media policies that are wide sweeping and impinge on protected employee action. In fact, rulings by the NLRB led large, publicly traded companies including GM, Target, and Costco to rewrite their social media policies.

The chairman of the NLRB explains that social media is the “new water cooler” and that current government regulation results from “applying traditional rules to new technology.” Application of the traditional rules takes place on a case-by-case basis and the NLRB found it permissible to terminate a single employee whose internet posts harmed the company and had no relation to protected activity. Workers have the right to talk with each other for the goal of improving pay, benefits, and working conditions. As such, social media policies should be revisited to determine whether they are too restrictive. Courts will look to company policies, procedures, and conduct so it is essential that Colorado attorneys help draft guidelines tailored to accomplish a specific, lawful end.

Employers will continue to turn to lawyers for guidance in this developing area of law. To this end, Colorado lawyers should know that employers must not access employee, online information by deceitful means. Also, common law privacy claims can be addressed with a written policy that defeats an employee’s reasonable expectation of privacy. Finally, a savings clause in a social media policy can explicitly state that the policy is not meant to prevent employees from engaging in protected, concerted activity.

Joel Jacobson is a Contracts and Operations Associate with H.B. Stubbs Company, LCC – a national design and fabrication firm headquartered near Detroit, MI for exhibits displayed by technology and automotive companies. He focuses on contracts, employment law, and a variety of non-legal business issues. Joel serves on the Executive Council of the Denver Bar Association Young Lawyers Division and has an interest in topics impacting start-up companies in the Denver entrepreneurial community. He can be reached by email at jmjacobson1@gmail.com or on Twitter @J_m_Jacobson.

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.

U.S. District Court Strikes Down IRS’s Registered Tax Return Preparer Regulations

TramLeBy Tram Le

On Jan. 18, 2013, the U.S. District Court for the District of Columbia issued a decision enjoining the IRS from enforcing its new registered tax return preparer program. See Loving v. IRS, No. 12-385, 2013 WL 204667 (D.D.C. Jan. 18, 2013).

In 2011, the IRS issued final regulations requiring all paid tax return preparers, who were not otherwise regulated by the IRS, to comply with Circular No. 230. Specifically, the regulations required tax return preparers who are not attorneys, CPAs or enrolled agents to pass a qualifying exam, pay an annual fee, and take 15 hours of continuing education courses each year.

In promulgating the regulations, the IRS relied on 31 U.S.C. Sec. 330, which gave them the authority to regulate individuals who “practice” before it.

Factual and Procedural History

Three paid tax return preparers, who were not previously regulated, filed suit against the IRS in federal court. The individuals argued that the IRS had no authority under 31 U.S.C. Sec. 330 to regulate tax return preparers who only prepare and sign tax returns, and file claims for refund and other documents with the IRS.

The tax return preparers claimed that the new IRS regulations would likely cause them to lose customers and close their business due to the increased costs and burdens associated with compliance. Therefore, they sought for injunctive and declaratory relief and moved for summary judgment.

Issue and Decision

The issue before the court was whether all paid tax return preparers are “representatives” who “practice” before the IRS under 31 U.S.C. Sec. 330 and therefore, are properly subject to the new IRS regulations. In deciding the case, the court applied the two prong Chevron test. Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984). The first step asks whether “the intent of Congress is clear.” Under this test, if the intent is clear, then the court “must give effect to the unambiguously expressed intent of Congress” and does not need to address the second step.

In this case, the court found that the intent of Congress was clear under 31 U.S.C. Sec. 330 and preparers who are limited to preparing and signing tax returns and claims for refund, and other documents to the IRS are not “representatives” who “practice” before the IRS.

The court reasoned that under 31 U.S.C. Sec. 330(a)(2)(D), the definition of “practice of representatives” does not include tax return preparation. The court equates “practice” as advising and assisting taxpayers in presenting their cases. The court stated that merely filing a tax return would never in its normal usage be described as “presenting a case.”

The court also reasoned that the IRS’s interpretation of 31 U.S.C. Sec. 330 would displace an existing statutory scheme that regulates penalties on tax return preparers. The court referred to Title 26 of the U.S. Code, which provides for a “careful, regimented schedule of penalties for misdeeds by tax-return preparers.” For example, a tax return preparer would be subject to a fine of $50 (with an annual maximum of $25,000) for failing to sign a return without reasonable cause under 26 U.S.C. Sec. 6695(c). If tax return preparers were subject to 31 U.S.C. Sec. 330, the IRS would have a considerable amount of discretion to impose penalties ranging from $0 and the “gross income derived (or to be derived) from the conduct giving rise to the penalty.”

Furthermore, the court stated that a federal penalty provision pursuant to 26 U.S.C. Sec. 7407, which remedies abusive practice by tax return preparers, would be irrelevant under the IRS’s interpretation.

The court held that the statute was not ambiguous based on the plain language and does not clearly cover individuals who prepare and sign tax returns, file claims for refund and other documents to the IRS. Since the regulations failed under the first prong of the Chevron test, the court did not consider the second prong. As such, the court granted a declaratory judgment and permanent injunctive relief, enjoining the IRS from enforcing its new regulations.

Appeal of Ruling

In response to the district court’s decision, the IRS filed a motion to suspend the permanent injunction against the tax return preparer regulations. On Feb. 1, 2013, the court denied the IRS’s motion. However, the court agreed to modify the ruling to clarify that IRS could continue its Preparer Tax Identification Number (PTIN) program and was not required to close its testing and continuing-education centers.

Tram Le, CPA, Esq., LL.M. – SALT Consultant – Golden, CO – With more than six years of government financial and forensic auditing experience, Tram has developed and implemented audit procedures for forensic audits and assisted in investigations of fraud, waste and abuse such as improper payments. Tram is a CPA and a licensed attorney.  She received a joint JD/LL.M. in taxation from the University of Denver. Tram is currently developing knowledge and expertise in State and Local Tax (SALT). She focuses on variety of state and local sales and income/franchise tax issues and assists with protesting and the representation of clients at administrative appeals and appeals meetings. She writes for the CBA Taxation Section newsletter, where this article originally appeared.

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.

Environmental Concerns in Estate Planning and Real Estate Conveyancing

When constructing an estate plan, property conveyance is an important feature. However, devising property can sometimes create unanticipated problems when the property is subject to environmental laws such as the Clean Water Act,  Endangered Species Act, and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

The Clean Water Act (CWA) regulates the discharge of pollutants into natural waters and regulates quality standards for surface waters. The CWA originated in 1948, but was significantly amended into the current CWA in 1972. There are numerous provisions of the CWA that may affect a landowner’s conveyance, but the most likely scenario encountered is the necessity of obtaining a Section 404 permit, which can authorize discharge of dredge or fill material into waters.

The Endangered Species Act (ESA) intends to protect and recover endangered or imperiled species in order to maintain the natural ecosystem. It has been described as the most far-reaching wildlife preservation act in the world. Although the ESA does not prevent conveyance of property, it has significant potential to inhibit development of land. If an endangered or threatened species resides on the land to be conveyed, the ESA could prohibit any changes to the natural ecosystem of that species.

CERCLA, the Comprehensive Environmental Response, Compensation, and Liability Act, was created by Congress in 1980. CERCLA creates penalties for the release of hazardous substances. It also encourages individuals to clean up waste in order to recover cleanup costs from others. CERCLA’s provisions can extend to inherited property, trusts, estates, and trustees or fiduciaries, so it has broad application to estate planning.

Strategies for addressing these environmental acts will be discussed at the CLE offices on Friday, March 9, 2013, at the “Natural Resource Issues in Estate Planning” seminar. Water law topics, real estate conveyancing, conveyance of mineral interests, oil and gas planning, and hard minerals will also be discussed. To register, click the link below or call the CLE offices at (303) 860-0608.

CLE Program: Natural Resource Issues in Estate Planning

This CLE presentation will take place on Friday, March 8, 2013, at 9:00 a.m. Click here to register for the live program, and click here to register for the webcast.

Can’t make the live program? Click here to order the homestudy.

Initial Discovery Protocols for Federal Employment Cases Being Tested in United States District Courts


By Diane King

As of December 1, 2012, United States District Court Judge William Martinez has implemented the Initial Discovery Protocols for Employment Cases Alleging Adverse Action (“Protocols”). The Protocols are the product of a national committee of defense and plaintiff attorneys with the goal of creating pattern discovery for employment cases that would limit unnecessary cost and delay in the litigation process.

The Protocols would replace initial disclosures with initial discovery specific to employment cases alleging adverse action and provided automatically by both sides within 30 days of the defendant’s responsive pleading or motion. Although the Protocols would not affect parties’ subsequent right to discovery under F.R.C.P., they are meant to supersede the initial disclosures pursuant to F.R.C.P. 26(a)(1).

Instead of standard initial disclosures, the Protocols would require both plaintiff and defendant to provide discovery specific to employment cases. For example, the plaintiff will be required to produce any claims, lawsuits, administrative charges and complaints related to the factual allegations at issue in the lawsuit, as well as diaries, journals and calendar entries maintained by the plaintiff concerning the factual allegations of the suit. Conversely, the defendant will be required to produce all communications concerning the factual allegations of the claim, including those between the plaintiff and defendant, as well as between members of management and human resources. The defendant will also be required to produce the plaintiff’s personnel file, and any documentation of discipline.

The effectiveness of the Protocols are currently being tested by individual judges throughout the United States District Courts in a pilot project overseen by the Federal Judicial Center. For a PDF of Judge Martinez’s practice standards for civil and criminal matters, including the Protocols, click here.

Diane S. King is a trial attorney who practices exclusively in the area of plaintiff’s employment/civil rights law. She has represented plaintiffs in all areas of employment law, including federal court, state court, appellate court, arbitration and administrative proceedings. She has written and lectured frequently on employment law issues. She is a member of the National Employment Lawyers Association Executive Board, the Colorado Plaintiff Employment Lawyers Association Board, and numerous other professional boards. Ms. King is also a Fellow in the College of Labor and Employment Lawyers. Ms. King is a partner in the firm of King & Greisen, LLP. She received her Juris Doctorate from the University of California at Berkeley.

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.