In 2018, the Colorado General Assembly passed the Colorado Uniform Trust Code (CUTC), which took effect on January 1, 2019. The CUTC replaced provisions of Colorado’s probate code that governed the administration of trusts. Importantly, the CUTC has retroactive effect, applying uniform rules to trusts created before January 1, 2019, as well as after.
The CUTC’s standardized rules are intended to cohesively govern trusts and provide uniformity in the administration of trusts while preserving certain aspects of Colorado’s trust laws under the former probate code. The provisions of the CUTC can be found in Colorado’s Revised Statutes § 15-5-101 et seq.
Important provisions of the CUTC involve the rights of beneficiaries to information about trust distribution as well as the fiduciary duties that apply to trustees.
Rights of Beneficiaries to Information
Before the CUTC went into effect, beneficiaries typically were not privy to information regarding the distribution of trust income and assets. In some cases—such as those involving a revocable trust that converted into an irrevocable trust upon the trustor’s death, it was not uncommon for beneficiaries to wait for over ten (10) months from when a trustee accepts their role before they saw a distribution.
However, under the newly passed CUTC, notices regarding trust distributions are required to be sent to beneficiaries subject to certain deadlines. The notice requirement applies to trusts that were formed affecter January 1, 2019, as well as those created before that date.
Furthermore, trustees were subject to specific deadlines designed to facilitate the efficient administration of trusts. Trustees are required to give beneficiaries notice of their interests in a trust at an early stage of proceedings. Required notices must include information about a beneficiary’s right to request portions of the trust instrument describing their interest and right to receive a report from the trustee of an irrevocable trust within 60 days after the trust’s creation.
Fiduciary Standards for Trustees
Trusts are legal relationships where the trustee is obligated to manage the assets of a trust in the best interests of the beneficiaries. This means that the trustee serves as a fiduciary who is responsible for managing a trust for the benefit of its beneficiaries. This obligation was articulated by U.S. Supreme Court Justice Benjamin Cardozo, who wrote: “A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior...”
Specifically, trustees owe the following fiduciary duties under Colorado law:
- To promote the trust’s interests and that of its beneficiaries
- To maintain an accurate record of the trust’s assets
- To pay taxes on the trust’s behalf
- To adhere to the terms of the trust
- To separately maintain the trust’s holdings
Consult Drexler Law for Legal Advice About Estate Planning
At Drexler Law, we are dedicated to assisting Colorado residents in securing a legacy after they pass away, for the benefit of those most important to them. If you are interested in learning about how a comprehensive estate plan can benefit you and your loved ones through the use of legal instruments, such as irrevocable trusts, you should seek the legal counsel of an experienced estate planning attorney.Please call us at (719) 259-0050 or contact us online to schedule a consultation with a dedicated member of our legal team about your legal options and potential benefits regarding an estate plan.