History of Orange Book Forms An Enduring Product of Its Times, 0620 COBJ, Vol. 49, No. 6 Pg. 44
| Author | BY FRANK T. HILL |
| Position | Vol. 49, 6 [Page 44] |
TRUST AND ESTATE LAW
BY FRANK T. HILL
This article explores the history of CBA-CLE's Orange Book Forms: Colorado Estate Planning Forms. It highlights the major legislation and primary players in the hook's development.
This article provides a chronological history of CBA-CLE's landmark publication Orange Book Forms: Colorado Estate Planning Forms1 (Orange Book Forms) and the key roles played by several prominent Colorado attorneys in its development. The story of the Orange Book Forms begins in earnest in the early 1970s. The setting was the then-extant federal wealth transfer tax system and the then-current Colorado trust and estate law.
Development of the Federal Wealth Transfer Tax System
The current federal wealth transfer tax system had its origin in 1916. It evolved throughout the Great War, the Great Depression, and World War II. This federal system consisted of an estate tax on wealth transmitted at death and a gift tax on lifetime transfers. By 1935, the top estate taxrate was 70%, the exemption had been lowered to $40,000,2 and an alternate valuation date concept had been enacted.3 In 1940, the top estate taxrate was increased to 77%.4 The Revenue Act of 1942 increased the estate tax exemption to $60,000, set the gift tax exemption at$30,000, and inaugurated the gift taxper-donee annual exclusion of $3,000.5 Finally, the Revenue Act of 19486 introduced the 50% estate and gift tax marital deductions in an attempt to bring parity to federal wealth transfer tax treatment between common law states and community property jurisdictions. Thereafter, not much changed in federal wealth transfer taxation law for the next 28 years.7
During this period of wealth transfer tax legislative inactivity, changes in the economy were working to expand the reach of the wealth transfer tax system. Increasing numbers of donors and decedents were drawn into its grasp by inflationary forces.8 As a result, for at least the next 50 years, avoiding or at least minimizing the impact of wealth transfer taxes became the central focus of estate planning for most clients. Then came the earthquakes.
The Probate Avoidance Revolution
In 1966 Norman F. Dacey published How to Avoid Prob ate!
9 Rocketing to the top of national best-seller lists, this book decried the archaic state of the regime then almost universally used to settle decedents' estates across the country, a lawyer-intensive process in which all but the smallest estates were administered under ongoing court supervision (including court audit of final accountings). Nothing could be accomplished without court hearings and orders; executors, administrators, heirs, and devisees were merely spectators. Dacey's work was soon regarded as a shot across the bow of the probate and trust bar and a harbinger of the revocable trust tsunami soon to come. The term "probate" had become a dirty word, and "avoiding probate" soon became the mantra of nearly every prospective estate planning client. In the early 1970s, it was considered very sophisticated for banks to publish form books for attorneys to consult for guidance in preparing documents that might later end up being administered by the bank. The first such work I encountered was put together by renowned Denver attorney William S. Huff. It was a compilation of some of the most commonly used basic estate planning forms (e.g., general power of attorney, simple will, will with contingent trust, and marital deduction will) with accompanying comments on their appropriate use and modification. These were assembled into a small loose-leaf book and distributed to bar members by the Trust Department of what was then the United Bank of Denver.
Origin of the Colorado Forms
Throughout the 1960s, in a project conceived and led by the late attorney William P. Cant-well, a team of quite a few Colorado attorneys volunteered countless hours of valuable time to help create an estate planning handbook for Colorado lawyers. It was recognized that such a work would be strengthened by including a set of forms that attorneys could adapt to their practices. An initial set of suggested forms was originally contributed by trust departments of several prominent Colorado banks. These forms were then refined by a select committee of four Colorado attorneys and included as Chapter 27 of the original edition of the handbook, Colorado Estate Planning,10 published in 1972. This work was released in conjunction with CLE's presentation of a major institute on estate planning. This first edition was produced in a 6" x 9" orange loose-leaf binder. Therefore, it quickly came to be referred to as the "Orange Book," and its forms became known as the "Orange Book forms."
Impact of the Uniform Probate Code
The next major development in Colorado's probate world was the enactment in 1973 of the Uniform Probate Code (UPC) as the Colorado Probate Code (CPC),11 effective July 1, 1974. The CPC addressed many of the long-standing abuses cited in Dacey's book and revolutionized the world of estate administration. It replaced a judicial-based system premised on presumed mistrust with a new administrative-based system built on presumed good faith. The CPC was designed to allow for more expeditious and economical estate settlements, with minimal court involvement intentionally limited to resolving controversies as they might arise. This new system was so revolutionary that it necessitated a full three-day roll-out program, which was sponsored by CLE and the CBA's Probate and Trust Law Section and held in the grand ballroom of the Regency Hotel in Denver. Hundreds of lawyers attended from all over the state.
The CPC altered the decades-long era during which probate and trust lawyers had reaped generous "commissions" dictated by "minimum fee schedules" that were universally promulgated by state supreme courts, state bar associations, and ethics committees. Such schedules (including one created by the CBA) were designed, ostensibly, to eliminate the unseemly aspect of competition from the profession. The UPC introduced the novel concept of "reasonable compensation" for both fiduciaries and their counsel, which was the idea that they should only be compensated for the value of services actually rendered. This idea was bolstered by a related development when attorneys filed a major case challenging state supreme court blanket prohibitions against lawyer advertising as violating their right to constitutionally protected commercial speech12 The U.S. Supreme Court determined that merely advertising the fees at which routine legal services would be performed falls within the scope of First Amendment protection and does not undermine true professionalism. Shortly after this double-barreled assault, the CBA withdrew its minimum fee schedule.
Enactment of the CPC dramatically transformed probate law and practice in Colorado, so the forms comprising Chapter 27 of Colorado Estate Planning were completely revised by a small committee of prominent Colorado probate and trust attorneys led by the late Walter B. Ash. These revised forms were then published as a dedicated estate planning form book rather than as a chapter in the comprehensive handbook. The form book was printed in 8½ " x 11" loose-leaf format, which, together with larger type size and generous line spacing, was designed to accommodate the direct use of the forms as reproducible mark-up masters. Envisioned as a companion publication to the also-revised handbook, CLE published the form book in 1975 in a separate one-inch, orange...
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