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Future Contingent Beneficial Interests in a Trust - YouTube

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this is a how-to episode on future

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contingent beneficiary interests in a

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trust

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and how they can be addressed in a

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colorado divorce now instead of me just

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spitting out legal gobbledygook like

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future contingent beneficiary interests

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i'm going to be relying on my favorite

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two people you guessed it eric and

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melanie wolfe if you're unfamiliar with

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eric and melanie wolfe's divorce story

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you can listen to eric's story at

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episode one or you can listen to episode

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70 for melanie wolf's story you can also

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find them by searching their respective

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names and my last name online and you'll

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be able to find them on our website so

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eric and melanie are in the middle of

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their divorce uh eric is really close

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with his father and and his father's

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name is gary gary wolfe now gary and

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eric's mother have uh gone through a

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divorce on their own which is fairly

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common and uh gary has remarried to a

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woman that will name patty patty wolfe

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eric is telling his dad all about his

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divorce and because of the stress uh and

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uncertainty gary unfortunately passes

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away in the middle of the divorce now

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gary has uh quite a lot of money and he

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has provided for eric in two different

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ways he has left eric

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a trust interest

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that eric is going to inherit uh

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immediately and it will be for five

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million dollars but

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gary also wants to provide for uh his

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second wife uh eric's stepmother patty

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uh and once patty passes away then eric

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will inherit some additional money and

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that the way that gary provides for me

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uh patty is called a marital trust there

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could also be another example where uh

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eric might be the beneficiary of some

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sort of trust interest in which it's

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dependent on somebody else passing away

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in the future and in essence it's based

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on a future contingency so how do you

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address that in a cholera divorce well

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there's three different methods and

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they're mostly borrowed from how

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cases in colorado have addressed

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pensions or retirement interests

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and if you want you can go back and

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listen to another episode on

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qualified retirement accounts that we

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have in our how to series but in general

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what we have is deferred distribution

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reserved jurisdiction and the third

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method net present value so i'm going to

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go back to deferred distribution so in

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that circumstance the court could look

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at the uh marital trust that eric is a

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beneficiary of and he could

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he or she the judge could say well once

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patty dies uh then i'm going to split it

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60 40 for

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eric and melanie and it's going to be

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based on whenever she passes away you're

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going to

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address different issues such as

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the separate and marital portion of that

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marital trust

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you also are going to have to navigate

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and the judge is going to have to

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navigate post-decree appreciation

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there's other issues such as taxes and

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cpa and one issue that you could resolve

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or resort to in resolving the dispute

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between eric melanie is they could agree

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to have a cpa or to arbitration on what

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happens in that deferred distribution

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it's fairly unlikely that a court is

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going to use a deferred distribution

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when a future contingent beneficial

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interest in a trust is involved well

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what about the second method which is

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reserved jurisdiction

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could the court

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at some point say well i don't know when

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patty is going to pass away

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and i am going to just carve that issue

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out and once paddy does die i'll address

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that at a later point and the simple

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answer is that the core is authorized

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but there is case law that supports uh

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using a net present value but parties in

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uh selmit uh could certainly agree to

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address that and there might be some

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really compelling interest or issues as

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to why they might do that and they could

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have a disagreement on the estate taxes

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the estate tax could uh vary and often

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varies from you know political regime to

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political regime

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there also might be a risk that eric

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never actually inherits that money and

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so the parties eric and melanie could

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agree to arbitration or they could agree

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to reserve jurisdiction and address it

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once eric inherits

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the money once paddy dies

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but you then can address post-decree

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appreciation because generally speaking

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that's going to be separate property but

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there's a whole host of reasons why

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parties may

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agree to just preserve jurisdiction what

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about the net present value that's the

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most common method uh that is employed

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and that's pursuant to a case in romeron

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in remarriage of moorland and what's

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going to happen is a devaluation expert

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is going to come in and is going to

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rely on various assumptions and it's

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often going to be on an actuarial table

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so how long is it going to be

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before patty is likely

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going to pass away you also have to deal

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with what the future returns are going

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to be

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on that property that patty has suffice

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it to say involves a lot of complexities

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so whenever these future contingent

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beneficial interests uh in trust are

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involved you're frequently dealing with

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multiple experts

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there's a valuation expert on looking at

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the return of investment and discounting

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and other uh sorts of financial

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considerations there also might be

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estate

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experts in whether or not that marital

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trust or other things are or not

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property uh and if you want to learn

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