ARTICLE 1 FIDUCIARY

Cross references: For bank and trust company fiduciaries and common trust funds, see articles 24 and 101 to 109 of title 11; for legal investments, see part 6 of article 75 of title 24 and article 60 of title 11; for investment of police officers' and firefighters' pension funds, see article 30.5 of title 31; for investments by veterans administration fiduciaries, see § 28-5-301; for investment by custodians under the "Colorado Uniform Transfers to Minors Act", see § 11-50-113; for abolition of the rule against perpetuities in cases of cemetery trust and employee pension trust, see §§ 38-30-110 to 38-30-112.

Section

PART 1 GENERAL PROVISIONS

PART 2 DISTRIBUTION BY FIDUCIARIES OF EXPRESS TRUSTS

PART 3 FIDUCIARY INVESTMENTS

PART 4 UNIFORM PRINCIPAL AND INCOME ACT

PART 5 FIDUCIARY PROPERTY - DEPOSITORY NOMINEES

PART 6 UNIFORM FIDUCIARY SECURITY TRANSFERS ACT

PART 7 FIDUCIARY INTERESTS IN ENTITIES

PART 8 POWERS

PART 9 DISCLAIMER OF SUCCESSION - NONTESTAMENTARY INSTRUMENTS

PART 10 CHARITABLE, EDUCATIONAL, RELIGIOUS, AND BENEVOLENT TRUSTS

PART 11 UNIFORM PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT

PART 12 LIFE ESTATE IN PROPERTY OF SURVIVING SPOUSE

PART 13 UNIFORM STATUTORY FORM POWER OF ATTORNEY ACT

PART 14 RESTRICTIONS ON EXERCISE OF CERTAIN FIDUCIARY POWERS

PART 15 REVISED UNIFORM FIDUCIARY ACCESS TO DIGITAL ASSETS ACT

15-1-101. Short title.

This part 1 shall be known and may be cited as the "Uniform Fiduciaries Law".

Source: L. 23: p. 178, § 14. CSA: C. 67, § 14. CRS 53: § 57-1-14. C.R.S. 1963: § 57-1-13.

15-1-102. Legislative declaration.

This part 1 shall be interpreted and construed so as to effectuate its general purpose to make uniform the law of those states which enact it.

Source: L. 23: p. 178, § 13. CSA: C. 67, § 13. CRS 53: § 57-1-13. C.R.S. 1963: § 57-1-12.

15-1-103. Definitions.

As used in this part 1, unless the context otherwise requires:

1. "Bank" includes any person or association of persons, whether incorporated or not, carrying on the business of banking.
2. "Fiduciary" includes a trustee under any trust, expressed, implied, resulting, or constructive, executor, administrator, personal representative, guardian, conservator, curator, receiver, trustee in bankruptcy, assignee for the benefit of creditors, partner, agent, officer of a corporation, public or private, public officer, or any other person acting in a fiduciary capacity for any person, trust, or estate.
3. "Person" includes a corporation, partnership, or other association, or two or more persons having a joint or common interest.
4. "Principal" includes any person to whom a fiduciary as such owes an obligation.

Source: L. 23: p. 173, § 1. CSA: C. 67, § 1. CRS 53: § 57-1-1. C.R.S. 1963: § 57-1-1. L. 2002: (2) amended, p. 650, § 1, effective July 1.

15-1-104. Prior transactions.

The provisions of this part 1 shall not apply to transactions taking place prior to April 16, 1923.

Source: L. 23: p. 178, § 11. CSA: C. 67, § 11. CRS 53: § 57-1-11. C.R.S. 1963: § 57-1-10.

15-1-105. Application of payments to fiduciary.

A person who in good faith pays or transfers to a fiduciary any money or other property which the fiduciary as such is authorized to receive is not responsible for the proper application thereof by the fiduciary; and any right or title acquired from the fiduciary in consideration of such payment or transfer is not invalid in consequence of a misapplication by the fiduciary.

Source: L. 23: p. 174, § 2. CSA: C. 67, § 2. CRS 53: § 57-1-2. C.R.S. 1963: § 57-1-2.

15-1-106. Transfer of negotiable instruments by fiduciary.

If any negotiable instrument payable or indorsed to a fiduciary as such is indorsed by the fiduciary, or if any negotiable instrument payable or indorsed to his principal is indorsed by a fiduciary empowered to indorse such instrument on behalf of his principal, the indorsee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in indorsing or delivering the instrument and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes the instrument with actual knowledge of such breach or with knowledge of such facts that his action in taking the instrument amounts to bad faith. If, however, such instrument is transferred by the fiduciary in payment of or as security for a personal debt of the fiduciary to the actual knowledge of the creditor or is transferred in any transaction known by the transferee to be for the personal benefit of the fiduciary, the creditor or other transferee is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in transferring the instrument.

Source: L. 23: p. 174, § 4. CSA: C. 67, § 4. CRS 53: § 57-1-4. C.R.S. 1963: § 57-1-3.

15-1-107. Check drawn by fiduciary payable to third person, effect.

If a check or other bill of exchange is drawn by a fiduciary as such or in the name of his principal by a fiduciary empowered to draw such instrument in the name of his principal, the payee is not bound to inquire whether the fiduciary is committing a breach of his obligations as fiduciary in drawing or delivering the instrument and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes the instrument with actual knowledge of such breach or with knowledge of such facts that his action in taking the instrument amounts to bad faith. If, however, such instrument is payable to a personal creditor of the fiduciary and delivered to the creditor in payment of or as security for a personal debt of the fiduciary to the actual knowledge of the creditor or is drawn and delivered in any transaction known by the payee to be for the personal benefit of the fiduciary, the creditor or other payee is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in drawing or delivering the instrument.

Source: L. 23: p. 175, § 5. CSA: C. 67, § 5. CRS 53: § 57-1-5. C.R.S. 1963: § 57-1-4.

15-1-108. Check drawn by and payable to fiduciary, effect.

If a check or other bill of exchange is drawn by a fiduciary as such or in the name of his principal by a fiduciary empowered to draw such instrument in the name of his principal, payable to the fiduciary personally or payable to a third person and by him transferred to the fiduciary, and is thereafter transferred by the fiduciary, whether in payment of a personal debt of the fiduciary or otherwise, the transferee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in transferring the instrument and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes the instrument with actual knowledge of such breach or with knowledge of such facts that his action in taking the instrument amounts to bad faith.

Source: L. 23: p. 175, § 6. CSA: C. 67, § 6. CRS 53: § 57-1-6. C.R.S. 1963: § 57-1-5.

15-1-109. Deposit in name of fiduciary.

If a deposit is made in a bank to the credit of a fiduciary as such, the bank is authorized to pay the amount of the deposit or any part thereof upon the check of the fiduciary, signed with the name in which such deposit is entered, without being liable to the principal, unless the bank pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in drawing the check or with knowledge of such facts that its action in paying the check amounts to bad faith. If, however, such a check is payable to the drawee bank and is delivered to it in payment of or as security for a personal debt of the fiduciary to it, the bank is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in drawing or delivering the check.

Source: L. 23: p. 176, § 7. CSA: C. 67, § 7. CRS 53: § 57-1-7. C.R.S. 1963: § 57-1-6.

15-1-110. Check drawn upon account of principal by fiduciary.

If a check is drawn upon the account of his principal in a bank by a fiduciary who is empowered to draw checks upon his principal's account, the bank is authorized to pay such check without being liable to the principal, unless the bank pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in drawing such check or with knowledge of such facts that its action in paying the check amounts to bad faith. If, however, such a check is payable to the drawee bank and is delivered to it in payment of or as security for a personal debt of the fiduciary to it, the bank is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in drawing or delivering the check.

Source: L. 23: p. 176, § 8. CSA: C. 67, § 8. CRS 53: § 57-1-8. C.R.S. 1963: § 57-1-7.

15-1-111. Deposits in personal account of fiduciary.

If a fiduciary makes a deposit in a bank to his personal credit of checks drawn by him upon an account in his own name as fiduciary, or of checks payable to him as fiduciary, or of checks drawn by him upon an account in the name of his principal if he is empowered to draw checks on that account, or of checks payable to his principal and indorsed by him, if he is empowered to indorse such checks or if he otherwise makes a deposit of funds held by him as fiduciary, the bank receiving such deposit is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary by that action; and the bank is authorized to pay the amount of the deposit or any part thereof upon the personal check of the fiduciary without being liable to the principal, unless the bank receives the deposit or pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in making such deposit or in drawing such check or with knowledge of such facts that its action in receiving the deposit or paying the check amounts to bad faith.

Source: L. 23: p. 177, § 9. CSA: C. 67, § 9. CRS 53: § 57-1-9. C.R.S. 1963: § 57-1-8.

Cross references: For deposits by a fiduciary, see part 5 of this article.

15-1-112. Deposits in name of two or more trustees.

When a deposit is made in a bank in the name of two or more persons as trustees and a check is drawn upon the trust account by any trustee authorized by the other trustee to draw checks upon the trust account, neither the payee nor other holder nor the bank is bound to inquire whether it is a breach of trust to authorize such trustee to draw checks upon the trust account and is not liable unless the circumstances be such that the action of the payee or other holder or the bank amounts to bad faith.

Source: L. 23: p. 177, § 10. CSA: C. 67, § 10. CRS 53: § 57-1-10. C.R.S. 1963: § 57-1-9.

Cross references: For deposits by a fiduciary, see part 5 of this article.

15-1-112.5. Liability of a fiduciary for acts of predecessor fiduciary.

In the absence of actual knowledge or information which would cause a reasonable fiduciary to inquire further, a fiduciary shall be under no duty to examine the accounts and records of or inquire into the acts or omissions of a predecessor fiduciary and shall not be liable for failure to seek redress for any act or omission of any predecessor fiduciary.

Source: L. 77: Entire section added, p. 829, § 1, effective July 1.

15-1-113. Cases not provided for in law.

In any case not provided for in this part 1, the rules of law and equity, including the law merchant and those rules of law and equity relating to trusts, agency, negotiable instruments, and banking, shall continue to apply.

Source: L. 23: p. 178, § 12. CSA: C. 67, § 12. CRS 53: § 57-1-12. C.R.S. 1963: § 57-1-11.

15-1-201. When part 2 applicable.

This part 2 shall be applicable to all powers of appointment or disposition existing or created on or after April 1, 1953, the donees of which powers shall be living on such date.

Source: L. 53: p. 304, § 6. CRS 53: § 57-2-6. C.R.S. 1963: § 57-2-6.

15-1-201.5. Definitions.

As used in this part 2, "donee" has the same meaning as "powerholder" as set forth in section 15-2.5-102 (13).

Source: L. 2014: Entire section added, (HB 14-1353), ch. 209, p. 782, § 3, effective July 1, 2015.

15-1-202. Trustee not liable, when.

If a trustee of an express trust which includes property subject to a power of appointment or other power of disposition distributes such property to those persons who would take such property in default of appointment and such distribution is made not sooner than six months after the death of the donee of such power and without knowledge of the existence of an instrument exercising such power, he shall not be responsible to the appointee under the instrument exercising such power.

Source: L. 53: p. 303, § 1. CRS 53: § 57-2-1. C.R.S. 1963: § 57-2-1.

15-1-203. No liability if distribution under instrument.

If a trustee of an express trust which includes property subject to a power of appointment or other power of disposition distributes such property pursuant to an instrument exercising such power and without knowledge of any infirmity in such instrument and thereafter such instrument shall be held wholly or partially invalid, such trustee shall not be responsible to those persons who would take in default of appointment.

Source: L. 53: p. 303, § 2. CRS 53: § 57-2-2. C.R.S. 1963: § 57-2-2.

15-1-204. Rights of appointees.

Nothing in this part 2 shall be deemed to affect the right of the appointee of such property to trace such property into the hands of the distributee or to affect the cause of action of such appointee against such distributee.

Source: L. 53: p. 303, § 3. CRS 53: § 57-2-3. C.R.S. 1963: § 57-2-3.

15-1-205. Rights of persons entitled.

Nothing in this part 2 shall be deemed to affect the right of the person entitled to such property in default of appointment to trace such property into the hands of the appointee or to affect the cause of action of such person against such distributee.

Source: L. 53: p. 303, § 4. CRS 53: § 57-2-4. C.R.S. 1963: § 57-2-4.

15-1-206. Rights of bona fide purchasers.

Nothing in this part 2 shall be construed to impair the title or lien of a purchaser or mortgagee in good faith and for value from the person to whom such property was first conveyed pursuant to, or in default of, appointment, as the case may be.

Source: L. 53: p. 304, § 5. CRS 53: § 57-2-5. C.R.S. 1963: § 57-2-5.

15-1-301. Fiduciary defined.

The word "fiduciary" as used in this part 3 means original or successor administrators, special administrators, administrators cum testamento annexo, executors, guardians, conservators, and trustees, whether of express or implied trusts.

Source: L. 51: p. 841, § 5. CSA: C. 176, § 126(9). CRS 53: § 57-3-5. C.R.S. 1963: § 57-3-5.

15-1-302. Application.

The provisions of this part 3 shall apply to and govern all fiduciaries appointed or lawfully acting.

Source: L. 51: p. 841, § 3. CSA: C. 176, § 126(7). CRS 53: § 57-3-3. C.R.S. 1963: § 57-3-4.

15-1-303. Construction of part 3.

Nothing in this part 3 shall be construed as modifying or repealing either section 28-5-214 or section 28-5-301, C.R.S., with respect to investment of surplus funds by appointed guardians and conservators of minor and incompetent beneficiaries of the veterans administration.

Source: L. 51: p. 841, § 6. CSA: C. 176, § 126(10). CRS 53: § 57-3-6. C.R.S. 1963: § 57-3-6.

15-1-304. Standard for investments.

In acquiring, investing, reinvesting, exchanging, retaining, selling, and managing property for the benefit of others, fiduciaries shall be required to have in mind the responsibilities which are attached to such offices and the size, nature, and needs of the estates entrusted to their care and shall exercise the judgment and care, under the circumstances then prevailing, which men of prudence, discretion, and intelligence exercise in the management of the property of another, not in regard to speculation but in regard to the permanent disposition of funds, considering the probable income as well as the probable safety of capital. Within the limitations of the foregoing standard, fiduciaries are authorized to acquire and retain every kind of property, real, personal, and mixed, and every kind of investment, specifically including, but not by way of limitation, bonds, debentures, and other corporate obligations, stocks, preferred or common, securities of any open-end or closed-end management type investment company or investment trust, and participations in common trust funds, which men of prudence, discretion, and intelligence would acquire or retain for the account of another.

Source: L. 51: p. 840, § 1. CSA: C. 176, § 126(5). CRS 53: § 57-3-1. C.R.S. 1963: § 57-3-1. L. 75: Entire section amended, p. 588, § 6, effective July 1.

Cross references: For investments by custodians under the "Colorado Uniform Transfers to Minors Act", see § 11-50-113; for legal investments, see part 6 of article 75 of title 24; for investments of police and fire pension funds, see § 31-31-302.

15-1-304.1. Standard for investments on and after July 1, 1995 - "Colorado Uniform Prudent Investor Act".

1. On and after July 1, 1995, when investing and managing assets, fiduciaries shall be governed by the standard for trustees set forth in the "Colorado Uniform Prudent Investor Act", article 1.1 of this title.
2. This section shall not apply to those persons, corporations, entities, or state agencies which were made subject to the provisions of section 15-1-304 by specific reference in another statute in existence prior to July 1, 1995.

Source: L. 95: Entire section added, p. 312, § 2, effective July 1.

15-1-305. Terms of instrument govern.

Nothing in this part 3 shall be construed as authorizing any departure from or variation of the express terms or limitations set forth in any will, agreement, court order, or other instrument creating or defining the fiduciary's duties and powers, but the terms "legal investment" or "authorized investment", or words of similar import as used in any such instrument, shall be taken to mean any investment which is permitted by the terms of section 15-1-304.

Source: L. 51: p. 840, § 2. CSA: C. 176, § 126(6). CRS 53: § 57-3-2. C.R.S. 1963: § 57-3-2.

15-1-306. Court not restricted.

Nothing in this part 3 shall be construed as restricting the power of a court of proper jurisdiction to permit a fiduciary to deviate from the terms of any will, agreement, or other instrument relating to the acquisition, investment, reinvestment, exchange, retention, sale, or management of estate or trust property.

Source: L. 51: p. 841, § 3. CSA: C. 176, § 126(7). CRS 53: § 57-3-3. C.R.S. 1963: § 57-3-3.

15-1-307. Powers of investment in persons other than fiduciary. (Repealed)

Source: L. 77: Entire section added, p. 829, § 2, effective July 1. L. 2014: Entire section repealed, (HB 14-1322), ch. 296, p. 1239, § 11, effective August 6.

15-1-308. Investments in United States government obligations.

In the absence of an express provision to the contrary, any fiduciary is authorized, whenever a governing instrument or order requires or permits investment in United States government obligations which are backed by the full faith and credit of the United States government, to invest in such obligations, either directly or in the form of the securities of or other interests in any open-end or closed-end management type investment company or investment trust registered under the federal "Investment Company Act of 1940", 15 U.S.C. sec. 80(a)-1 et seq., if the portfolio of such investment company or investment trust is limited to United States government obligations which are backed by the full faith and credit of the United States government and to repurchase agreements fully collateralized by such obligations and if any such investment company or investment trust actually takes delivery of such collateral, either directly or through an authorized custodian.

Source: L. 88: Entire section added, p. 645, § 1, effective April 6.

15-1-401 to 15-1-468. (Repealed)

Source: L. 2021: Entire part repealed, p. 841, § 2, effective January 1, 2022.

Editor's note: (1) This part 4 was numbered as article 4 of chapter 57, C.R.S. 1963. For amendments to this part 4 prior to its repeal in 2022, consult the 2021 Colorado Revised Statutes and the Colorado statutory research explanatory note beginning on page vii in the front of this volume.

(2) Section 15-1-468 provided for the repeal of this part 4, effective January 1, 2022. (See L. 2021, p. 841.)

15-1-501. Fiduciary property kept separate.

Every fiduciary shall keep fiduciary property separate and distinct from such fiduciary's own property and shall not invest or deposit the same with any person, association, or corporation in such fiduciary's own name. Except as provided in this part 5, every fiduciary shall keep the property of each fiduciary account separate and distinct from the property of every other fiduciary account, and all transactions shall be conducted in such fiduciary's name as fiduciary.

Source: L. 77: Entire part R&RE, p. 826, § 1, effective July 1.

Editor's note: This section is similar to former § 15-1-501 as it existed prior to 1977.

15-1-502. Nominees.

Any fiduciary may register or hold the title to fiduciary property in the name of a nominee.

Source: L. 77: Entire part R&RE, p. 826, § 1, effective July 1.

Editor's note: This section is similar to former § 15-1-501 as it existed prior to 1977.

15-1-503. Fiduciary property deposits.

Any fiduciary may deposit fiduciary property with a bank or trust company, including a federal reserve bank, or with a clearing corporation, as defined in section 4-8-102 (a)(5), C.R.S., as depository, and such fiduciary property so deposited may be registered in such depository's name as nominee for the fiduciary or may be registered in the name of a nominee of such depository.

Source: L. 77: Entire part R&RE, p. 826, § 1, effective July 1. L. 96: Entire section amended, p. 245, § 23, effective July 1.

Editor's note: This section is similar to former § 15-1-502 as it existed prior to 1977.

15-1-504. Holding of securities by fiduciary or depository of fiduciary property.

Any bank or trust company or clearing corporation acting as a fiduciary or depository of fiduciary property may merge and hold securities held as fiduciary property, without certification as to ownership attached, with other securities held as fiduciary property, in one or more certificates representing securities of the same class of the same issuer. Ownership of such securities may be transferred by bookkeeping entry on the books of the fiduciary or of the depository without physical delivery of certificates representing such securities.

Source: L. 77: Entire part R&RE, p. 826, § 1, effective July 1.

Editor's note: This section is similar to former § 15-1-503 as it existed prior to 1977.

15-1-505. Records.

The records of every fiduciary shall at all times show the ownership of any fiduciary property held by such fiduciary or in the name of its nominee or held in a depository.

Source: L. 77: Entire part R&RE, p. 827, § 1, effective July 1.

Editor's note: This section is similar to former § 15-1-505 as it existed prior to 1977.

15-1-506. Liability of issuer.

No issuer of securities or agent thereof shall be liable for registering or causing to be registered on the books of such issuer any securities in the name of any nominee or, when the transfer is made on the authorization of the nominee, for transferring or causing to be transferred on the books of the issuer any securities theretofore registered by the issuer in the name of any nominee.

Source: L. 77: Entire part R&RE, p. 827, § 1, effective July 1.

Editor's note: This section is similar to former § 15-1-506 as it existed prior to 1977.

15-1-507. Custodian as fiduciary.

For purposes of this part 5, a bank or trust company acting as custodian shall be deemed to be a fiduciary, and property held in custody by a bank or trust company shall be deemed to be fiduciary property.

Source: L. 77: Entire part R&RE, p. 827, § 1, effective July 1.

Editor's note: This section is similar to former § 15-1-507 as it existed prior to 1977.

15-1-508. Individual and corporate fiduciaries.

1. For purposes of this part 5, a bank or trust company acting as a fiduciary, alone or jointly with any cofiduciary, may take any action authorized by this part 5 without regard to the language or provisions, or any limitations, in the will or trust instrument or other instrument establishing the fiduciary relationship.
2. For purposes of this part 5, any fiduciary other than a bank or trust company may take any action authorized by this part 5, unless limited by the language or provisions in the will or trust instrument or other instrument establishing the fiduciary relationship expressing a clear intention that an action otherwise authorized by this part 5 shall be denied to such fiduciary.
3. Nothing in subsection (2) of this section shall be construed to limit the authority of a bank or trust company serving as a cofiduciary with one or more other fiduciaries or serving as a depository to take any action authorized by this part 5 which it could take if serving as sole fiduciary.

Source: L. 77: Entire part R&RE, p. 827, § 1, effective July 1.

15-1-509. Fiduciary duty.

In the exercise of any of the powers granted in this part 5, a fiduciary has a duty to act reasonably and equitably with due regard for his obligations and responsibilities toward the interests of beneficiaries and creditors and the estate or trust involved and the purposes thereof and with due regard for the manner in which men of prudence, discretion, and intelligence would act in the management of the property of another.

Source: L. 77: Entire part R&RE, p. 827, § 1, effective July 1.

15-1-510. Application.

This part 5 shall apply to every fiduciary, regardless of the date of the agreement, instrument, or court order by which the fiduciary is appointed.

Source: L. 77: Entire part R&RE, p. 827, § 1, effective July 1.

15-1-601 to 15-1-611. (Repealed)

Source: L. 96: Entire part repealed, p. 246, § 25, effective July 1.

Editor's note: This part 6 was numbered as article 6 of chapter 57, C.R.S. 1963. For amendments to this part 6 prior to its repeal in 1996, consult the Colorado statutory research explanatory note and the table itemizing the replacement volumes and supplements to the original volume of C.R.S. 1973 beginning on page vii in the front of this volume.

15-1-701. Power to become partner.

Subject to the terms of the partnership agreement, if permitted by the trust instrument or will under which the fiduciary serves or by order of a court having jurisdiction of the estate or trust, a fiduciary may enter into a partnership agreement and accept the assignment of or otherwise acquire, hold, and dispose of an interest in a partnership and in so doing may become either a general or a limited partner.

Source: L. 63: p. 496, § 1. C.R.S. 1963: § 57-7-1. L. 2002: Entire section amended, p. 650, § 2, effective July 1.

15-1-702. Family business interests - maintenance of entity - formation of successor entity.

1. As used in this section, unless the context otherwise requires:
   1. "Family" means an individual, such individual's spouse, parents, the descendants of either of such parents or of such spouse, or the spouses of such descendants or any combination of such persons.
   2. "Family business" means a business enterprise with respect to which the aggregate interests of the family are substantial in relation to the total outstanding interests in the business enterprise.
   3. "Interest" and "interests" include beneficial interests as beneficiaries of any estate or trust and indirect interests through any other form of entity.
   4. "Successor entity" includes the entity holding the family business where such entity survives a consolidation, merger, acquisition, or other combination.
2. Any fiduciary acting under a will or trust instrument that evidences an intent to retain an interest in a family business may maintain the interest in any form of entity or successor entity. Such a successor entity may be formed by consolidation, merger, acquisition, or other combination and shall be considered the same enterprise for purposes of maintaining the interest in the family business where the interests of the beneficiaries in the successor entity are substantial.
3. Except as otherwise provided in the instrument under which the fiduciary is acting:
   1. A fiduciary may proceed as provided in this subsection (3) with the formation of such a successor entity where the fiduciary believes in good faith that the formation is on a favorable basis considering only the overall interests of the beneficiaries including the maintenance of a substantial interest on the part of the beneficiaries in the enterprise and the value of such interest in the long term.
   2. A fiduciary may vote and otherwise deal with respect to interests in the family business as the fiduciary believes in the good faith exercise of the fiduciary's business judgment, under the business judgment rule, to be necessary or appropriate to complete such formation on such a favorable basis.
   3. A fiduciary may, in the good faith exercise of such judgment, accept a reduced participation in equity, voting, and other rights and preferences including a reduction in voting rights that results in less than voting control of the successor entity.
   4. A fiduciary may proceed without notice to the beneficiaries where disclosure is forbidden by law or where the fiduciary believes in the good faith exercise of such judgment, that nondisclosure is necessary to complete such formation on such a favorable basis.
4. This section shall apply to any interests held by an estate or trust in a family business on or after May 26, 2000, and to the formation of any entity or successor entity completed after May 26, 2000.

Source: L. 2000: Entire section added, p. 1171, § 1, effective May 26.

15-1-801. Short title.

This part 8 shall be known and may be cited as the "Colorado Fiduciaries' Powers Act".

Source: L. 67: p. 766, § 1. C.R.S. 1963: § 57-8-1.

15-1-802. Definitions.

As used in this part 8, unless the context otherwise requires:

1. "Court" means the district or probate court having jurisdiction over the administration of the estate or trust.
2. "Estate" means the estate of a decedent or a person under disability.
3. 1. "Fiduciary" means the one or more persons designated in a will, trust instrument, or otherwise, whether corporate or natural persons and including successors and substitutes, who are acting in any of the following capacities:
      1. Personal representatives, including executors, administrators, administrators with the will annexed (cum testamento annexo), administrators in succession acting under a will (de bonis non), ancillary administrators acting under a will, and ancillary executors;
      2. Special administrators;
      3. Conservators; and
      4. Trustees.
   2. "Fiduciary" does not include a guardian, special fiduciary, or public administrator, except when the public administrator has been appointed a fiduciary as defined in this subsection (3).
4. "Trust" means any express trust created by a will, trust instrument, or other instrument, whereby there is imposed upon a trustee the duty to administer a trust asset, for the benefit of a named or otherwise described income or principal beneficiary, or both. A trust shall not include trusts for the benefit of creditors, resulting or constructive trusts, business trusts where certificates of beneficial interest are issued to the beneficiary, investment trusts, voting trusts, security instruments such as deeds of trust and mortgages, trusts created by the judgment or decree of a court, liquidation or reorganization trusts, or trusts for the sole purpose of paying dividends, interest, interest coupons, salaries, wages, pensions, or profits, instruments wherein one or more persons are mere nominees for another, or trusts created in deposits in any banking institution or savings and loan institution.
5. "Will" means a will of a decedent and includes a testament or codicil.

Source: L. 67: p. 766, § 1. C.R.S. 1963: § 57-8-2. L. 73: p. 1647, § 7. L. 75: (3) R&RE, p. 588, § 7, effective July 1.

15-1-803. Powers conferred on fiduciaries.

Fiduciaries have all powers conferred upon them by the provisions of this part 8, unless limited by the language or provisions in the will or trust instrument expressing a clear intention that powers conferred under this part 8 shall be denied to the fiduciary. They have, in addition to the powers conferred in this part 8, such other or further powers as are set forth in the will or trust instrument or as are provided by other statutes or by court rule or order. If any power specifically conferred on a fiduciary by the will or trust instrument conflicts with any power conferred by this part 8, the fiduciary shall be deemed to have only the power specifically conferred by the will or trust instrument and not the conflicting power conferred by this part 8. Provisions in articles 10 to 20 of this title concerning the exercise of powers in the administration of an estate by an executor having powers under a will shall apply to executors having powers conferred under this part 8.

Source: L. 67: p. 767, § 1. C.R.S. 1963: § 57-8-3. L. 73: p. 1648, § 8.

15-1-804. Powers available.

1. During the period of administration of the estate or trust and until final distribution, a fiduciary has the power to perform, without court authorization, every act reasonably necessary to administer the estate or trust, including but not limited to the powers specified in subsection (2) of this section. In the exercise of any of his powers, whether derived from this part 8 or from any other source, a fiduciary has a duty to act reasonably and equitably with due regard for his obligations and responsibilities toward the interests of beneficiaries and creditors, the estate or trust involved, and the purposes thereof and with due regard for the manner in which men of prudence, discretion, and intelligence would act in the management of the property of another.
2. Subject to subsection (1) of this section, a fiduciary has the power:
   1. To receive, take possession of, recover, and preserve the assets of the estate or trust, both real and personal, coming to his attention or knowledge and the rents, issues, and profits arising therefrom;
   2. To retain the initial assets of the estate or trust without liability for loss, depreciation, or diminution in value resulting from such retention until, in the judgment of the fiduciary, disposition of such assets should be made;
   3. To accept additions to the estate or trust, not only from the estate of the decedent or the settlor of the trust, but also from other sources;
   4. To acquire an undivided interest in an estate or trust asset in which the fiduciary, in a fiduciary or individual capacity, also holds an undivided interest;
   5. To invest and reinvest assets of the estate or trust, as provided by law;
   6. To effect and keep in force fire, rent, title, liability, casualty, or other insurance to protect the assets of the estate or trust and the fiduciary against hazards usually insured against;
   7. With respect to real property or any interest in real property owned by the estate or trust, except where such real property, or interest in real property, is specifically devised:
      1. To grant options to sell and to sell and convey the same at public or private sale, for cash or on credit, upon fair, reasonable, and equitable terms;
      2. To lease the same, even for a term extending beyond the duration of the administration of the estate or trust, and, in any such case, to include or exclude the right to explore for and remove mineral or other natural resources, and in connection with mineral leases to enter into pooling and unitization agreements;
      3. To encumber the same;
      4. To make repairs or alterations in buildings, or other structures; to improve or demolish any improvements; to raze existing party walls or buildings and erect new party walls or buildings together with owners of adjoining or adjacent property or to enter into agreements with respect thereto; to subdivide, develop, and dedicate to public use; to make or obtain the vacation of public plats; to adjust boundaries; to adjust differences in valuation on exchange or partition by giving or receiving money or money's worth; and to dedicate and grant easements to public use without consideration;
   8. With respect to personal property or any interest in personal property, owned by the estate or trust, except where such personal property is specifically bequeathed:
      1. To grant options to sell and to sell the same at public or private sale, for cash or on credit, upon fair, reasonable, and equitable terms;
      2. To lease personal property, even for a term extending beyond the duration of the administration of the estate or trust;
      3. To encumber the same;
      4. To make repairs to the personal property of the estate or trust;
   9. With respect to any indebtedness owed to the estate or trust, secured or unsecured:
      1. To continue the same upon and after maturity, with or without renewal or extension, upon such terms as the fiduciary deems advisable;
      2. To foreclose any security for such indebtedness, to purchase any property securing such indebtedness, and to acquire any property by conveyance from the debtor in lieu of foreclosure;
   10. To perform, in the case of an estate, any and all valid and legally enforceable executory contracts to which at the time of his death the decedent was a party and which at the time of such death had not been fully performed by such decedent and to discharge all obligations of the estate arising under or by reason of such contracts if such obligations are legally enforceable against the estate;
   11. To enter into contracts which are reasonably incident to the administration of the estate or trust;
   12. To continue or to participate in the operation of any business activity or enterprise, including a sole proprietorship or partnership, existing at the inception of the estate or trust (in the case of an estate having due regard for those having claims against the estate) and to incorporate or otherwise change its form;
   13. To deposit funds of the estate or trust in one or more banks, including the banking department of a corporate fiduciary;
   14. To deposit fiduciary property with others, to the extent permitted by part 5 of this article, so long as the cost thereof does not constitute an additional charge against the estate or trust but is payable out of compensation otherwise properly payable to the fiduciary;
   15. To hold title to fiduciary property in the name of a nominee, without disclosure of the estate or trust, to the extent permitted by part 5 of this article;
   16. To borrow money from any source, including the commercial department of a corporate fiduciary, with any such indebtedness being repayable solely from assets of the estate or trust and to pledge or encumber estate or trust assets as security for such loans;
   17. To advance money for the protection of the estate, or the trust, or the assets thereof and for all expenses, losses, and liabilities incurred in or by the collection, care, administration, or protection of the estate, or trust, or the assets thereof. For all such advances, the fiduciary shall have a lien on the estate or trust assets and may reimburse himself with interest at a reasonable rate out of the estate or trust.
   18. To pay, contest, or otherwise settle claims by or against the estate or trust, including taxes, assessments, and expenses, by compromise, arbitration, or otherwise;
   19. To determine all matters of estate and trust accounting as the fiduciary deems to be proper and equitable;
   20. In the case of a trust, to advance trust income to or for the use of a beneficiary, for which advance the fiduciary shall have a lien on the future benefits of such beneficiary from the trust;
   21. To make distributions in kind, in money, or partially in each, at fair market values on the effective date of distribution, as determined by the fiduciary, and without requiring pro rata distribution of specific assets;
   22. In the case of a trust, to abandon, charge off, or otherwise dispose of any property held by or on behalf of the trust which is of no value or of insufficient value to justify collection, care, administration, or protection;
   23. To execute and deliver all legal instruments which are necessary or appropriate for the administration of the estate or trust;
   24. 1. To employ attorneys or other advisors to advise or assist the fiduciary in the performance of his or her duties or, instead of acting personally, to employ one or more agents to do any ministerial act required to be done by the fiduciary in the performance of his or her duties;
       2. In accordance with section 15-1.1-109 of the "Colorado Uniform Prudent Investor Act", to delegate investment and management functions that a prudent trustee of comparable skills could properly delegate under the circumstances;
   25. In the case of the survivors of the holders of a power given to or imposed upon two or more fiduciaries, to exercise or perform such power, unless the exercise of such power would be contrary to any express provision of the will, trust instrument, or other instrument;
   26. As successor or substitute fiduciary, to succeed to all of the powers and duties of an original, successor, or prior substitute fiduciary, unless contrary to any express provision of the will, trust instrument, or other instrument;
   27. To vote in person or by proxy shares of stock or other securities which are assets of the estate or trust;
   28. To pay calls, assessments, and any other sums chargeable to or accruing against or on account of shares of stock or other securities which are assets of the estate or trust whenever such payments may be legally enforceable against the fiduciary or any property of the estate or trust or whenever the fiduciary deems payment expedient and for the best interests of the estate or trust;
   29. To sell or exercise stock subscription or conversion rights, participate in foreclosures, reorganizations, consolidations, mergers, or liquidations; to enter into voting trust agreements or other similar arrangements; and to consent to corporate sales, leases, and encumbrances. In the exercise of such powers, the fiduciary shall be authorized, whenever he deems such course expedient, to deposit stocks or other securities which are assets of the estate or trust with any protective or other similar committee or with voting trustees under such terms and conditions respecting the deposit thereof as the fiduciary may approve.
   30. In the case of a trustee, to hold the assets of two or more trusts or parts of such trusts created by the same instrument or by two or more instruments if the trust provisions are substantially similar, as an undivided whole, without separation as between the assets of such trusts or parts of such trusts; but such separate trusts or parts of such trusts shall have undivided interests in such assets; and no such holding shall defer the vesting of any estate in possession or otherwise;
   31. In the case of an estate, to join with the surviving spouse, his conservator, his guardian, the executor of his will, or the administrator of his estate, in the execution and filing of a joint income tax return for any period prior to the death of a decedent for which he has not filed a return, a federal gift tax return on gifts made by the decedent's surviving spouse, or a Colorado gift tax return on gifts made before January 1, 1980, by the decedent's surviving spouse, and to consent to said gifts being made one-half by the decedent, for any period prior to a decedent's death, and to pay such taxes thereon as are chargeable to the decedent;
   32. With respect to stock of a corporation held in an estate or trust where the powers of investment conferred upon the fiduciary by the governing instrument or by this part 8 include the power to retain assets initially contributed, or subsequently added from the estate of the decedent or by the settlor of the trust or from any other source, to retain such stock, to exchange or convert such stock for the stock or other securities of an affiliate of the corporation issuing such stock, and to retain such new stock and other securities. For the purposes of this paragraph (ff), "corporation" includes the corporate fiduciary as well as any other corporation, and "affiliate" of a corporation means any corporation controlling, controlled by, or under common control with such corporation, or any corporation formed as a result of or for the purpose of effectuating any merger, consolidation, or reorganization of such corporation. The powers conferred by this paragraph (ff) are hereby conferred upon the fiduciaries of all estates and trusts, unless otherwise limited by language or provisions in the will or trust agreement expressing a clear intention to the contrary.
   33. In the case of a bank acting as a corporate fiduciary, to invest fiduciary funds awaiting investment or distribution in short-term investments, including, but not limited to, a collective investment fund. A bank acting as a corporate fiduciary may also deposit fiduciary funds awaiting investment or distribution in the commercial department of such bank or in an affiliate bank. For the purposes of this paragraph (gg), the term "bank" includes a state bank or bank and trust company which is chartered by this state or as a national bank.
   34. To grant a conservation easement in gross, as defined in section 38-30.5-102, C.R.S., whether for consideration or gratuitously; except that, if such grant is for less than fair market value, the consent of interested persons, as defined in section 15-10-201 (27), shall be obtained in writing or an order of the court shall be obtained after notice to interested persons, unless a will or trust instrument directs, permits, or requires a donation of a conservation easement in gross, in which case no such consent or order shall be required;
   35. Subject to the terms of the documents controlling the entity concerned, to retain or acquire interests in any entity in which the fiduciary does not have general liability, regardless of form, including but not limited to any partnership, corporation, limited liability company, and joint venture, and to become a shareholder, partner, member, or joint venturer.

Source: L. 67: p. 767, § 1. C.R.S. 1963: § 57-8-4. L. 70: p. 196, § 1. L. 73: p. 1648, § 9. L. 77: (2)(n) and (2)(o) amended, p. 827, § 2, effective July 1. L. 79: (2)(u) amended, p. 656, § 20, effective July 1. L. 81: (2)(ee) amended, p. 1885, § 6, effective May 27; (2)(g)(I) and (2)(g)(II) amended, p. 631, § 8, effective July 1. L. 92: (2)(gg) added, p. 1991, § 1, effective April 16. L. 95: (2)(x) amended, p. 312, § 3, effective July 1. L. 99: (2)(hh) added, p. 70, § 1, effective August 4. L. 2002: (2)(ii) added, p. 650, § 3, effective July 1.

15-1-805. Powers of fiduciary conferred by court.

The court having jurisdiction of the estate or trust may authorize the fiduciary to exercise any power not otherwise held by the fiduciary which, in the judgment of the court, is necessary for the proper collection, care, administration, and protection of the estate or the trust.

Source: L. 67: p. 770, § 1. C.R.S. 1963: § 57-8-5.

15-1-806. Third persons protected in dealing with fiduciary.

With respect to a third person dealing with a fiduciary or assisting a fiduciary in the conduct of a transaction, proper exercise of his powers by the fiduciary is to be presumed, and such third person shall not be bound to inquire whether the fiduciary has power to act or is properly exercising such powers, nor shall such third person be bound to see to the proper application of estate or trust assets paid or delivered to the fiduciary.

Source: L. 67: p. 770, § 1. C.R.S. 1963: § 57-8-6.

15-1-807. Applicability.

This part 8 shall apply to all trusts existing on January 1, 1968, which are later amended to make applicable this part 8, and to all estates and trusts which may come into existence after January 1, 1968.

Source: L. 67: p. 771, § 1. C.R.S. 1963: § 57-8-7.

15-1-901 to 15-1-907. (Repealed)

Editor's note: (1) This part 9 was numbered as article 9 of chapter 57, C.R.S. 1963. For amendments to this part 9 prior to its repeal in 1995, consult the Colorado statutory research explanatory note and the table itemizing the replacement volumes and supplements to the original volume of C.R.S. 1973 beginning on page vii in the front of this volume.

(2) Section 15-1-907 provided for the repeal of this part 9, effective July 1, 1995. (See L. 94, p. 1041.)

15-1-1001. Legislative declaration.

It is the purpose of this part 10 to preserve the intent of testators and grantors of testamentary and inter vivos trusts created prior to and after June 2, 1971, for charitable, educational, religious, and benevolent purposes, by minimizing the imposition of federal income and excise taxes, and federal estate and gift taxes, imposed upon the assets of such trusts, and thereby preserving the maximum amount of the trust assets for the charitable, educational, religious, and benevolent purposes for which they were intended. The attorney general of this state shall perform such acts as, in his or her opinion, will result in the effectuation of this declaration of purpose.

Source: L. 71: p. 589, § 1. C.R.S. 1963: § 57-10-1. L. 73: p. 638, § 1. L. 2016: Entire section amended, (HB 16-1094), ch. 94, p. 266, § 9, effective August 10.

15-1-1002. Prohibition of certain acts - amendment of governing instrument.

1. In the administration of any trust which is a private foundation as defined in section 509 of the federal "Internal Revenue Code of 1986", a charitable trust as defined in section 4947 (a)(1) of the federal "Internal Revenue Code of 1986", or a split-interest trust as defined in section 4947 (a)(2) of the federal "Internal Revenue Code of 1986", notwithstanding any provisions to the contrary in the governing instrument or in any other law of this state, and except as otherwise provided by court decree entered on or after June 2, 1971, the following acts shall be prohibited:
   1. Engaging in any act of "self-dealing", as defined in section 4941 (d) of the federal "Internal Revenue Code of 1986", which would give rise to any liability for the tax imposed by section 4941 (a) of the federal "Internal Revenue Code of 1986";
   2. Retaining any "excess business holdings", as defined in section 4943 (c) of the federal "Internal Revenue Code of 1986", which would give rise to any liability for the tax imposed by section 4943 (a) of the federal "Internal Revenue Code of 1986";
   3. Making any investments which would jeopardize the carrying out of any of the exempt purposes of the trust, within the meaning of section 4944 of the federal "Internal Revenue Code of 1986", so as to give rise to any liability for the tax imposed by section 4944 (a) of the federal "Internal Revenue Code of 1986"; and
   4. Making any "taxable expenditure", as defined in section 4945 (d) of the federal "Internal Revenue Code of 1986", which would give rise to any liability for the tax imposed by section 4945 (a) of the federal "Internal Revenue Code of 1986".
2. The provisions of subsection (1) of this section shall not apply either to those split-interest trusts or to amounts thereof which are not subject to the prohibitions applicable to private foundations by reason of the provisions of section 4947 of the federal "Internal Revenue Code of 1986".
3. Notwithstanding any provisions to the contrary in the governing instrument or in any other law of this state, the trustee of any charitable trust as defined in section 4947 (a)(1) or 4947 (a)(2) of the federal "Internal Revenue Code of 1986", with the consent of all the beneficiaries under the governing instrument, may, without application to any court and either before or after the funding of such trust, amend the governing instrument to conform to the provisions of sections 508 (e), 664, 2055 (e), and 2522 (c) of the federal "Internal Revenue Code of 1986", to the extent applicable, by executing a written amendment to the trust for that purpose. Consent shall not be required as to individual beneficiaries not living at the time of amendment or as to charitable beneficiaries not named or not in existence at the time of amendment. The possibility of beneficial interests arising after the amendment of the governing instruments shall not defeat the ability to amend. In the case of an individual beneficiary not competent to give consent, the consent of such beneficiary's guardian or conservator, if any, or the consent of a guardian ad litem appointed by a court of competent jurisdiction is treated as the consent of the beneficiary. A copy of the proposed amendment, executed by the trustee and consented to by all beneficiaries whose consent is required under this subsection (3), must be delivered in person or by registered mail to the attorney general. The attorney general may, within sixty days after such receipt, indicate by registered mail to the trustee his or her specific objections to such proposed amendment, in which event the provisions of subsection (4) of this section apply if he or she does not withdraw his or her objections. In the case of any amendment to a trust created by will or to a trust created by inter vivos instrument, unless otherwise provided, the amendment applies as of the date of death of the decedent or as of the date of gift.
4. In the event that all such trustees and beneficiaries under the governing instrument do not consent to such amendment or in the event that there are no named beneficiaries, any court of competent jurisdiction shall have the power to amend the governing instrument in accordance with subsection (3) of this section upon petition of the trustee or any beneficiary and upon a subsequent finding by the court that the testator's or the grantor's intention would not be defeated by such amendment. A copy of such petition shall be delivered in person or by registered mail to the attorney general.
5. Unless otherwise expressly provided in the governing instrument, any devise, bequest, or transfer in a testamentary or revocable inter vivos trust for religious, educational, charitable, or benevolent uses to be determined by the trustee or any other person shall be made only to organizations and for purposes within the meaning of section 2055 (a) of the federal "Internal Revenue Code of 1986".

Source: L. 71: p. 589, § 1. C.R.S. 1963: § 57-10-2. L. 73: p. 638, § 2. L. 2000: (1), (2), (3), and (5) amended, p. 1844, § 25, effective August 2. L. 2016: (3) amended, (HB 16-1094), ch. 94, p. 266, § 10, effective August 10.

15-1-1003. Requirement for distribution of certain amounts.

In the administration of any trust which is a private foundation, as defined in section 509 of the federal "Internal Revenue Code of 1986", or which is a charitable trust, as defined in section 4947 (a)(1) of the federal "Internal Revenue Code of 1986", there shall be distributed, for the purposes specified in the trust instrument, for each taxable year, amounts at least sufficient to avoid liability for the tax imposed by section 4942 (a) of the federal "Internal Revenue Code of 1986". No trustee of such a trust shall be required to reimburse the trust from his own property for the amount of any liability for such tax which is incurred by the trust if the trustee acted in a prudent manner and in good faith. No trustee of such a trust shall be required to reimburse the trust from his own property for any amount which he, acting prudently and in good faith, distributes from the trust, believing it to be required to be distributed in order to avoid the liability for such tax, but which later is determined not to have been required to be distributed for that purpose.

Source: L. 71: p. 590, § 1. C.R.S. 1963: § 57-10-3. L. 2000: Entire section amended, p. 1845, § 26, effective August 2.

15-1-1004. Applicability of sections 15-1-1002 and 15-1-1003.

The provisions of sections 15-1-1002 and 15-1-1003 shall not apply to any trust to the extent that a court of competent jurisdiction shall determine that such application would be contrary to the terms of the instrument governing such trust and that the terms of such instrument may not properly be changed to conform to such sections.

Source: L. 71: p. 590, § 1. C.R.S. 1963: § 57-10-4.

15-1-1005. Rights and powers of courts and attorney general not impaired.

Nothing in this part 10 shall impair the rights and powers of the courts or the attorney general of this state with respect to any trust.

Source: L. 71: p. 590, § 1. C.R.S. 1963: § 57-10-5.

15-1-1006. References to "Internal Revenue Code of 1954".

All references to sections of the "Internal Revenue Code of 1954" refer to the "Internal Revenue Code of 1954" as it exists on June 2, 1971; except that all references to the "Internal Revenue Code of 1954" in section 15-1-1002 (3) and (5) refer to the "Internal Revenue Code of 1954" as it exists on April 19, 1973.

Source: L. 71: p. 590, § 1. C.R.S. 1963: § 57-10-6. L. 73: p. 639, § 3.

15-1-1007. Application of part 10.

This part 10 shall apply to all trusts established after December 31, 1969, with the exceptions contained in section 4947 (a)(2) of the federal "Internal Revenue Code of 1986". This part 10 shall also apply to all trusts established before January 1, 1970, with the exceptions contained in section 508 (e)(2) and section 4947 (a)(2) of the federal "Internal Revenue Code of 1986". Section 15-1-1002 (3) to (5) shall apply in the case of all decedents dying after December 31, 1969, and in the case of all irrevocable inter vivos trusts created after July 31, 1969.

Source: L. 71: p. 591, § 1. C.R.S. 1963: § 57-10-7. L. 73: p. 639, § 4. L. 2000: Entire section amended, p. 1846, § 27, effective August 2.

15-1-1101. Short title.

This part 11 shall be known and may be cited as the "Uniform Prudent Management of Institutional Funds Act".

Source: L. 2008: Entire part R&RE, p. 559, § 1, effective September 1.

Editor's note: This section is similar to former § 15-1-1101 as it existed prior to 2008.

15-1-1102. Definitions.

As used in this part 11, unless the context otherwise requires:

1. "Charitable purpose" means the relief of poverty, the advancement of education or religion, the promotion of health, or any other charitable or eleemosynary purpose.
2. "Endowment fund" means an institutional fund or part thereof that, under the terms of a gift instrument, is not wholly expendable by the institution on a current basis. The term does not include assets that an institution designates as an endowment fund for its own use.
3. "Gift instrument" means a record or records, including an institutional solicitation, under which property is granted to, transferred to, or held by an institution as an institutional fund.
4. "Institution" means:
   1. A person, other than an individual, organized and operated exclusively for charitable purposes;
   2. A government or governmental subdivision, agency, or instrumentality, to the extent that it holds funds exclusively for a charitable purpose; or
   3. A trust that had both charitable and noncharitable interests, after all noncharitable interests have terminated.
5. "Institutional fund" means a fund held by an institution exclusively for charitable purposes. The term does not include funds held by the public employees' retirement association created by article 51 of title 24, C.R.S., or:

   (A) Program-related assets;

   (B) A fund held for an institution by a trustee that is not an institution; or

   (C) A fund in which a beneficiary that is not an institution has an interest, other than an interest that could arise upon violation or failure of the purposes of the fund.

6. "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.
7. "Program-related asset" means an asset held by an institution primarily to accomplish a charitable purpose of the institution and not primarily for investment.
8. "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

Source: L. 2008: Entire part R&RE, p. 559, § 1, effective September 1. L. 2009: IP(5) amended, (SB 09-282), ch. 288, p. 1398, § 61, effective January 1, 2010.

Editor's note: This section is similar to former § 15-1-1103 as it existed prior to 2008.

15-1-1103. Standard of conduct in managing and investing institutional fund.

1. Subject to the intent of a donor expressed in a gift instrument, an institution, in managing and investing an institutional fund, shall consider the charitable purposes of the institution and the purposes of the institutional fund.
2. In addition to complying with the duty of loyalty imposed by law other than this part 11, each person responsible for managing and investing an institutional fund shall manage and invest the institutional fund in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.
3. In managing and investing an institutional fund, an institution:
   1. May incur only costs that are appropriate and reasonable in relation to the assets, the purposes of the institution, and the skills available to the institution; and
   2. Shall make a reasonable effort to verify facts relevant to the management and investment of the institutional fund.
   3. Except as otherwise provided by law other than this part 11, an institution may invest in any kind of property or type of investment consistent with this section.
   4. An institution shall diversify the investments of an institutional fund unless the institution reasonably determines that, because of special circumstances, the purposes of the institutional fund are better served without diversification.
   5. Within a reasonable time after receiving property, an institution shall make and carry out decisions concerning the retention or disposition of the property or to rebalance a portfolio, in order to bring the institutional fund into compliance with the purposes, terms, and distribution requirements of the institution as necessary to meet other circumstances of the institution and the requirements of this part 11.
   6. A person that has special skills or expertise, or is selected in reliance upon the person's representation that the person has special skills or expertise, has a duty to use those skills or that expertise in managing and investing institutional funds.
4. An institution may pool two or more institutional funds for purposes of management and investment.
5. Except as otherwise provided by a gift instrument, the following rules apply:

   (1) In managing and investing an institutional fund, the following factors, if relevant, must be considered:

   1. General economic conditions;
   2. The possible effect of inflation or deflation;
   3. The expected tax consequences, if any, of investment decisions or strategies;
   4. The role that each investment or course of action plays within the overall investment portfolio of the institutional fund;
   5. The expected total return from income and the appreciation of investments;
   6. Other resources of the institution;
   7. The needs of the institution and the institutional fund to make distributions and to preserve capital; and
   8. An asset's special relationship or special value, if any, to the charitable purposes of the institution.

      (2) Management and investment decisions about an individual asset must be made not in isolation but rather in the context of the institutional fund's portfolio of investments as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the institutional fund and to the institution.

Source: L. 2008: Entire part R&RE, p. 560, § 1, effective September 1.

Editor's note: This section is similar to former §§ 15-1-1106 and 15-1-1108 as they existed prior to 2008.

15-1-1104. Appropriation for expenditure of accumulation of endowment fund - rules of construction.

1. Subject to the intent of a donor expressed in the gift instrument, an institution may appropriate for expenditure or accumulate so much of an endowment fund as the institution determines is prudent for the uses, benefits, purposes, and duration for which the endowment fund is established. Unless stated otherwise in the gift instrument, the assets in an endowment fund are donor-restricted assets until appropriated for expenditure by the institution. In making a determination to appropriate or accumulate, the institution shall act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, and shall consider, if relevant, the following factors:
   1. The duration and preservation of the endowment fund;
   2. The purposes of the institution and the endowment fund;
   3. General economic conditions;
   4. The possible effect of inflation or deflation;
   5. The expected total return from income and the appreciation of investments;
   6. Other resources of the institution; and
   7. The investment policy of the institution.
2. To limit the authority to appropriate for expenditure or accumulate under subsection (a) of this section, a gift instrument must specifically state the limitation.
3. Terms in a gift instrument designating a gift as an endowment, or a direction or authorization in the gift instrument to use only "income", "interest", "dividends", or "rents, issues, or profits", or "to preserve the principal intact", or words of similar import:

   (1) Create an endowment fund of permanent duration unless other language in the gift instrument limits the duration or purpose of the endowment fund; and

   (2) Do not otherwise limit the authority to appropriate for expenditure or accumulate under subsection (a) of this section.

Source: L. 2008: Entire part R&RE, p. 562, § 1, effective September 1.

Editor's note: This section is similar to former §§ 15-1-1104 and 15-1-1105 as they existed prior to 2008.

15-1-1105. Delegation of management and investment functions.

1. Subject to any specific limitation set forth in a gift instrument or in law other than this part 11, an institution may delegate to an external agent the management and investment of an institutional fund to the extent that an institution could prudently delegate under the circumstances. An institution shall act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, in:
   1. Selecting an agent;
   2. Establishing the scope and terms of the delegation, consistent with the purposes of the institution and the institutional fund; and
   3. Periodically reviewing the agent's actions in order to monitor the agent's performance and compliance with the scope and terms of the delegation.
2. In performing a delegated function, an agent owes a duty to the institution to exercise reasonable care to comply with the scope and terms of the delegation.
3. An institution that complies with subsection (a) of this section is not liable for the decisions or actions of an agent to which the function was delegated.
4. By accepting delegation of a management or investment function from an institution that is subject to the laws of this state, an agent submits to the jurisdiction of the courts of this state in all proceedings arising from or related to the delegation or the performance of the delegated function.
5. An institution may delegate management and investment functions to its committees, officers, or employees as authorized by law of this state other than this part 11.

Source: L. 2008: Entire part R&RE, p. 563, § 1, effective September 1.

Editor's note: This section is similar to former § 15-1-1107 as it existed prior to 2008.

15-1-1106. Release or modification of restrictions on management, investment, or purpose.

1. If the donor consents in a record, an institution may release or modify, in whole or in part, a restriction contained in a gift instrument on the management, investment, or purpose of an institutional fund. A release or modification may not allow an institutional fund to be used for a purpose other than a charitable purpose of the institution.
2. The court, upon application of an institution, may modify a restriction contained in a gift instrument regarding the management or investment of an institutional fund if the restriction has become impracticable or wasteful, if it impairs the management or investment of the institutional fund, or if, because of circumstances not anticipated by the donor, a modification of a restriction will further the purposes of the institutional fund. The institution shall notify the attorney general of the application, and the attorney general must be given an opportunity to be heard. To the extent practicable, any modification must be made in accordance with the donor's probable intention.
3. If a particular charitable purpose or a restriction contained in a gift instrument on the use of an institutional fund becomes unlawful, impracticable, impossible to achieve, or wasteful, the court, upon application of an institution, may modify the purpose of the institutional fund or the restriction on the use of the institutional fund in a manner consistent with the charitable purposes expressed in the gift instrument. The institution shall notify the attorney general of the application, and the attorney general must be given an opportunity to be heard.
4. If an institution determines that a restriction contained in a gift instrument on the management, investment, or purpose of an institutional fund is unlawful, impracticable, impossible to achieve, or wasteful, the institution, sixty days after notification to the attorney general, may release or modify the restriction, in whole or part, if:
   1. The institutional fund, subject to the restriction, has a total value of less than one hundred thousand dollars; except that the dollar limit established in this paragraph (1) shall be adjusted for inflation in accordance with the annual percentage change in the United States department of labor, bureau of labor statistics, consumer price index for Denver-Aurora-Lakewood for all items and all urban consumers, or its applicable predecessor or successor index. On or before January 1, 2010, and each even-numbered year thereafter, the attorney general shall calculate the adjusted dollar amount for the next two-year cycle using inflation for the prior two calendar years as of the date of the calculation. The adjusted exemption shall be rounded upward to the nearest one-hundred-dollar increment. The attorney general shall certify the amount of the adjustment for the next two-year cycle and shall publish the amount on the attorney general's website.
   2. More than twenty years have elapsed since the institutional fund was established; and
   3. The institution uses the property in a manner consistent with the charitable purposes expressed in the gift instrument.

Source: L. 2008: Entire part R&RE, p. 563, § 1, effective September 1. L. 2018: (d)(1) amended, (HB 18-1375), ch. 274, p. 1697, § 11, effective May 29.

Editor's note: This section is similar to former § 15-1-1109 as it existed prior to 2008.

15-1-1107. Reviewing compliance.

Compliance with this part 11 is determined in light of the facts and circumstances existing at the time a decision is made or action is taken, and not by hindsight.

Source: L. 2008: Entire part R&RE, p. 564, § 1, effective September 1.

15-1-1108. Application to existing institutional funds.

This part 11 applies to institutional funds existing on or established after September 1, 2008. As applied to institutional funds existing on September 1, 2008, this part 11 governs only decisions made or actions taken on or after said date.

Source: L. 2008: Entire part R&RE, p. 565, § 1, effective September 1.

15-1-1109. Relation to "Electronic Signatures in Global and National Commerce Act".

This part 11 modifies, limits, and supersedes the "Electronic Signatures in Global and National Commerce Act", 15 U.S.C. sec. 7001 et seq., but does not modify, limit, or supersede section 101 (a) of that act, 15 U.S.C. sec. 7001 (a), or authorize electronic delivery of any of the notices described in section 103 (b) of that act, 15 U.S.C. sec. 7003 (b).

Source: L. 2008: Entire part R&RE, p. 565, § 1, effective September 1.

15-1-1110. Uniformity of application and construction.

In applying and construing this part 11, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.

Source: L. 2008: Entire part R&RE, p. 565, § 1, effective September 1.

Editor's note: This section is similar to former § 15-1-1102 as it existed prior to 2008.

15-1-1201. Life estate in property - rights of surviving spouse.

1. Unless the instrument provides otherwise, any devise of a life estate in property to a surviving spouse by a decedent spouse shall entitle the surviving spouse to:
   1. All income for life from the entire interest in or specific portion of the property, payable annually or at more frequent intervals;
   2. Exclusive beneficial enjoyment of the property during his life, including such income or use of the property as is consistent with the value of the property and its preservation; except that, during the surviving spouse's lifetime, no person other than the surviving spouse may receive any distribution of the property or its income; and
   3. Make the property productive or convert it into productive property within a reasonable time after the devise; except that, the exercise of such power shall be subject to the degree of judgment and care which a prudent person would use if he were the owner of the property. The proceeds of any such conversion shall be reinvested by the surviving spouse in a form subject to the life estate and remainder rights created by the decedent.
2. The provisions of this part 12 shall be interpreted consistently with the requirements of section 2056 (b)(7) of the federal "Internal Revenue Code of 1986", as amended, if the personal representative of the estate of the decedent spouse elects to treat such life estate as qualified terminable interest property under said Internal Revenue Code section.

Source: L. 88: Entire part added, p. 647, § 1, effective May 17. L. 2000: (2) amended, p. 1846, § 28, effective August 2.

15-1-1202. Applicability of part.

This part 12 shall apply to the estate of any person whose death occurred after December 31, 1981.

Source: L. 88: Entire part added, p. 648, § 1, effective May 17.

15-1-1301 to 15-1-1321. (Repealed)

Editor's note: (1) This part 13 was added in 1992. For amendments to this part 13 prior to its repeal in 2010, consult the Colorado statutory research explanatory note and the table itemizing the replacement volumes and supplements to the original volume of C.R.S. 1973 beginning on page vii in the front of this volume.

(2) Section 15-1-1321 provided for the repeal of this part 13, effective January 1, 2010. (See L. 2009, p. 427.)

15-1-1401. Restrictions on exercise of certain fiduciary powers.

1. 1. Due to the inherent conflict of interest that exists between a trustee who is a beneficiary of a trust and other beneficiaries of the trust, any of the following powers conferred upon a trustee shall not be exercised by such trustee:
      1. To make or cause to be made discretionary distributions of either principal or income to or for the direct or indirect benefit of such trustee; except that such a power may be exercised by such trustee to the extent that it may be exercised to provide for that trustee's health, education, maintenance, or support as described under sections 2041 and 2514 of the federal "Internal Revenue Code of 1986", as amended;
      2. To make discretionary distributions of either principal or income to satisfy any legal obligations of such trustee; or
      3. To make or cause to be made discretionary distributions of either principal or income to or for the direct or indirect benefit of any person who has the right to remove or replace such trustee; except that such a power may be exercised by such trustee to the extent that it may be exercised to provide for such person's health, education, maintenance, or support as described under sections 2041 and 2514 of the federal "Internal Revenue Code of 1986", as amended.
   2. Any of the powers prescribed in paragraph (a) of this subsection (1) that are conferred upon two or more trustees may be exercised by the trustees who are not so disqualified. If there is no trustee qualified to exercise such powers, any party in interest, as described in subsection (3) of this section, may apply to a court of competent jurisdiction to appoint an independent trustee, and such powers may be exercised by the independent trustee appointed by the court. Subparagraph (I) of paragraph (a) of this subsection (1) shall not prohibit a trustee from making payments, including reimbursement of and compensation of such trustee, for the protection of the trust, or the assets thereof, and for all expenses, losses, and liabilities incurred in or by the collection, care, administration, or protection of the trust or the assets thereof.
2. This section applies to every trust unless the terms of the trust as it may be amended in accordance with its terms provide expressly to the contrary and either specifically refer to this section or otherwise clearly demonstrate the intent that this rule not apply or unless, if the trust is irrevocable, all parties in interest, as described in subsection (3) of this section, elect affirmatively, in the manner prescribed in subsection (4) of this section, not to be subject to the application of this section. Such election shall be made on or before July 1, 1999, or three years after the date on which the trust becomes irrevocable, whichever occurs later.
3. For the purpose of subsection (1) or subsection (2) of this section:
   1. If the trust is revocable or amendable and the settlor is not incapacitated, the party in interest is the settlor.
   2. If the trust is revocable or amendable and the settlor is incapacitated, the party in interest is the settlor's legal representative under applicable law or the settlor's agent under a durable power of attorney that is sufficient to grant such authority.
   3. If the trust is not revocable or amendable, the parties in interest are:
      1. Each trustee then serving;
      2. Each income beneficiary then in existence or, if any such beneficiary has not attained majority or is otherwise incapacitated, the beneficiary's legal representative under applicable law or the beneficiary's agent under a durable power of attorney that is sufficient to grant such authority; and
      3. Each remainder beneficiary then in existence or, if any such remainder beneficiary has not attained majority or is otherwise incapacitated, the beneficiary's legal representative under applicable law or the beneficiary's agent under a durable power of attorney that is sufficient to grant such authority.
4. The affirmative election required under subsection (2) of this section shall be made:
   1. If the settlor is not incapacitated and the trust is revocable or amendable, through a revocation of or an amendment to the trust;
   2. If the settlor is incapacitated and the trust is revocable or amendable, through a written declaration executed in the manner prescribed for the acknowledgment of deeds in this state and delivered to the trustee; or
   3. If the trust is not revocable or amendable, through a written declaration executed in the manner prescribed for the acknowledgment of deeds in this state and delivered to the trustee.
5. A person who has the right to remove or to replace a trustee does not possess nor may that person be deemed to possess, by virtue of having that right, the powers proscribed in subparagraphs (I), (II), and (III) of paragraph (a) of subsection (1) of this section of the trustee that is subject to removal or to replacement.
6. 1. Subparagraphs (I) and (II) of paragraph (a) of subsection (1) of this section shall not apply to a trustee with respect to trust property and the income from such property where such property would, upon the death of such trustee, be included in the gross estate of such trustee for federal estate tax purposes for any reason other than the powers proscribed by subparagraphs (I) and (II) of paragraph (a) of subsection (1) of this section.
   2. Subparagraph (I) of paragraph (a) of subsection (1) of this section shall not apply to a trustee that may be appointed or removed by a person for whose benefit the proscribed powers may be exercised to distribute trust property or the income from such property where such property would, upon the death of such person, be included in the gross estate of such person for federal estate tax purposes for any reason other than such powers to appoint or remove such trustee.
7. The provisions of this section neither create a new cause of action nor impair any existing cause of action that, in either case, relates to any power proscribed by subsection (1) of this section that was exercised before July 1, 1996.

Source: L. 96: Entire part added, p. 654, § 4, effective July 1.

15-1-1501. Short title.

This part 15 may be cited as the "Revised Uniform Fiduciary Access to Digital Assets Act".

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 179, § 1, effective August 10.

15-1-1502. Definitions.

In this part 15:

1. "Account" means an arrangement under a terms-of-service agreement in which a custodian carries, maintains, processes, receives, or stores a digital asset of the user or provides goods or services to the user.
2. "Agent" means an attorney-in-fact granted authority under a durable or nondurable power of attorney.
3. "Carries" means engages in the transmission of an electronic communication.
4. "Catalog of electronic communications" means information that identifies each person with which a user has had an electronic communication, the time and date of the communication, and the electronic address of the person.
5. "Conservator" means a person appointed by a court to manage the estate of a living individual. The term includes a limited conservator.
6. "Content of an electronic communication" means information concerning the substance or meaning of a communication that:
   1. Has been sent or received by a user;
   2. Is in electronic storage by a custodian providing an electronic-communication service to the public or is carried or maintained by a custodian providing a remote-computing service to the public; and
   3. Is not readily accessible to the public.
7. "Court" means the district court, except in the city and county of Denver where it is the probate court.
8. "Custodian" means a person that carries, maintains, processes, receives, or stores a digital asset of a user.
9. "Designated recipient" means a person chosen by a user using an on-line tool to administer digital assets of the user.
10. "Digital asset" means an electronic record in which an individual has a right or interest. The term does not include an underlying asset or liability unless the asset or liability is itself an electronic record.
11. "Electronic" means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
12. "Electronic communication" has the meaning set forth in 18 U.S.C. sec. 2510(12), as amended.
13. "Electronic-communication service" means a custodian that provides to a user the ability to send or receive an electronic communication.
14. "Fiduciary" means an original, additional, or successor personal representative, conservator, agent, or trustee.
15. "Information" means data, text, images, videos, sounds, codes, computer programs, software, databases, or the like.
16. "On-line tool" means an electronic service provided by a custodian that allows the user, in an agreement distinct from the terms-of-service agreement between the custodian and user, to provide directions for disclosure or nondisclosure of digital assets to a third person.
17. "Person" means an individual; estate; business or nonprofit entity; public corporation; government or governmental subdivision, agency, or instrumentality; or other legal entity.
18. "Personal representative" means an executor, administrator, special administrator, or person that performs substantially the same function under law of this state other than this part 15.
19. "Power of attorney" means a record that grants an agent authority to act in the place of a principal.
20. "Principal" means an individual who grants authority to an agent in a power of attorney.
21. "Protected person" means an individual for whom a conservator has been appointed. The term includes an individual for whom an application for the appointment of a conservator is pending.
22. "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
23. "Remote-computing service" means a custodian that provides to a user computer-processing services or the storage of digital assets by means of an electronic communications system, as defined in 18 U.S.C. sec. 2510(14), as amended.
24. "Terms-of-service agreement" means an agreement that controls the relationship between a user and a custodian.
25. "Trustee" means a fiduciary with legal title to property under an agreement or declaration that creates a beneficial interest in another. The term includes a successor trustee.
26. "User" means a person that has an account with a custodian.
27. "Will" includes a codicil, testamentary instrument that only appoints an executor, and instrument that revokes or revises a testamentary instrument.
    1. any wire or oral communication;
    2. any communication made through a tone-only paging device;
    3. any communication from a tracking device (as defined in section 3117 of this title); or
    4. electronic funds transfer information stored by a financial institution in a communications system used for the electronic storage and transfer of funds.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 179, § 1, effective August 10.

15-1-1503. Applicability.

1. This part 15 applies to:
   1. A fiduciary acting under a will or power of attorney executed before, on, or after August 10, 2016;
   2. A personal representative acting for a decedent who died before, on, or after August 10, 2016;
   3. A conservatorship proceeding commenced before, on, or after August 10, 2016; and
   4. A trustee acting under a trust created before, on, or after August 10, 2016.
2. This part 15 applies to a custodian if the user resides in this state or resided in this state at the time of the user's death.
3. 1. This part 15 does not apply to a digital asset of an employer used by an employee in the ordinary course of the employer's business.
   2. This part 15 does not apply to a digital asset of an entity used by a manager, owner, or other person in the course of the conduct of the internal affairs of the entity. The terms "entity", "manager", and "owner" in this paragraph (b) have the same meaning as defined in section 7-90-102, C.R.S.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 181, § 1, effective August 10.

15-1-1504. User direction for disclosure of digital assets.

1. A user may use an on-line tool to direct the custodian to disclose to a designated recipient or to not disclose some or all of the user's digital assets, including the content of electronic communications. If the on-line tool allows the user to modify or delete a direction at all times, a direction regarding disclosure using an on-line tool overrides a contrary direction by the user in a will, trust, power of attorney, or other record.
2. If a user has not used an on-line tool to give direction under subsection (1) of this section or if the custodian has not provided an on-line tool, the user may allow or prohibit in a will, trust, power of attorney, or other record, disclosure to a fiduciary of some or all of the user's digital assets, including the content of electronic communications sent or received by the user.
3. A user's direction under subsection (1) or (2) of this section overrides a contrary provision in a terms-of-service agreement that does not require the user to act affirmatively and distinctly from the user's assent to the terms of service.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 182, § 1, effective August 10.

15-1-1505. Terms-of-service agreement.

1. This part 15 does not change or impair a right of a custodian or a user under a terms-of-service agreement to access and use digital assets of the user.
2. This part 15 does not give a fiduciary or designated recipient any new or expanded rights other than those held by the user for whom, or for whose estate, the fiduciary or designated recipient acts or represents.
3. A fiduciary's or designated recipient's access to digital assets may be modified or eliminated by a user, by federal law, or by a terms-of-service agreement if the user has not provided direction under section 15-1-1504.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 182, § 1, effective August 10.

15-1-1506. Procedure for disclosing digital assets.

1. When disclosing digital assets of a user under this part 15, the custodian may at its sole discretion:
   1. Grant a fiduciary or designated recipient full access to the user's account;
   2. Grant a fiduciary or designated recipient partial access to the user's account sufficient to perform the tasks with which the fiduciary or designated recipient is charged; or
   3. Provide a fiduciary or designated recipient a copy in a record of any digital asset that, on the date the custodian received the request for disclosure, the user could have accessed if the user were alive and had full capacity and access to the account.
2. A custodian may assess a reasonable administrative charge for the cost of disclosing digital assets under this part 15.
3. A custodian need not disclose under this part 15 a digital asset deleted by a user.
4. If a user directs or a fiduciary requests a custodian to disclose under this part 15 some, but not all, of the user's digital assets, the custodian need not disclose the assets if segregation of the assets would impose an undue burden on the custodian. If the custodian believes the direction or request imposes an undue burden, the custodian or fiduciary may seek an order from the court to disclose:
   1. A subset limited by date of the user's digital assets;
   2. All of the user's digital assets to the fiduciary or designated recipient;
   3. None of the user's digital assets; or
   4. All of the user's digital assets to the court for review in camera.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 183, § 1, effective August 10.

15-1-1507. Disclosure of content of electronic communications of deceased user.

1. If a deceased user consented or a court directs disclosure of the contents of electronic communications of the user, the custodian shall disclose to the personal representative of the estate of the user the content of an electronic communication sent or received by the user if the representative gives the custodian:
   1. A written request for disclosure in physical or electronic form;
   2. A certified copy of the death certificate of the user;
   3. A certified copy of the letter of appointment of the representative or a small-estate affidavit or court order;
   4. Unless the user provided direction using an on-line tool, a copy of the user's will, trust, power of attorney, or other record evidencing the user's consent to disclosure of the content of electronic communications; and
   5. If requested by the custodian:
      1. A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the user's account;
      2. Evidence linking the account to the user; or
      3. A finding by the court that:
         1. The user had a specific account with the custodian, identifiable by the information specified in subparagraph (I) of this paragraph (e);
         2. Disclosure of the content of electronic communications of the user would not violate 18 U.S.C. sec. 2701, et seq., as amended; 47 U.S.C. sec. 222, as amended; or other applicable law;
         3. Unless the user provided direction using an on-line tool, the user consented to disclosure of the content of electronic communications; or
         4. Disclosure of the content of electronic communications of the user is reasonably necessary for administration of the estate.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 183, § 1, effective August 10.

15-1-1508. Disclosure of other digital assets of deceased user.

1. Unless the user prohibited disclosure of digital assets or the court directs otherwise, a custodian shall disclose to the personal representative of the estate of a deceased user a catalog of electronic communications sent or received by the user and digital assets, other than the content of electronic communications, of the user, if the representative gives the custodian:
   1. A written request for disclosure in physical or electronic form;
   2. A certified copy of the death certificate of the user;
   3. A certified copy of the letter of appointment of the representative or a small-estate affidavit or court order; and
   4. If requested by the custodian:
      1. A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the user's account;
      2. Evidence linking the account to the user;
      3. An affidavit stating that disclosure of the user's digital assets is reasonably necessary for administration of the estate; or
      4. A finding by the court that:
         1. The user had a specific account with the custodian, identifiable by the information specified in subparagraph (I) of this paragraph (d); or
         2. Disclosure of the user's digital assets is reasonably necessary for administration of the estate.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 184, § 1, effective August 10.

15-1-1509. Disclosure of content of electronic communications of principal.

1. To the extent a power of attorney expressly grants an agent authority over the content of electronic communications sent or received by the principal and unless directed otherwise by the principal or the court, a custodian shall disclose to the agent the content if the agent gives the custodian:
   1. A written request for disclosure in physical or electronic form;
   2. An original or copy of the power of attorney expressly granting the agent authority over the content of electronic communications of the principal;
   3. A certification by the agent, under penalty of perjury, that the power of attorney is in effect; and
   4. If requested by the custodian:
      1. A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the principal's account; or
      2. Evidence linking the account to the principal.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 185, § 1, effective August 10.

15-1-1510. Disclosure of other digital assets of principal.

1. Unless otherwise ordered by the court, directed by the principal, or provided by a power of attorney, a custodian shall disclose to an agent with specific authority over digital assets or general authority to act on behalf of a principal a catalog of electronic communications sent or received by the principal and digital assets, other than the content of electronic communications, of the principal if the agent gives the custodian:
   1. A written request for disclosure in physical or electronic form;
   2. An original or a copy of the power of attorney that gives the agent specific authority over digital assets or general authority to act on behalf of the principal;
   3. A certification by the agent, under penalty of perjury, that the power of attorney is in effect; and
   4. If requested by the custodian:
      1. A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the principal's account; or
      2. Evidence linking the account to the principal.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 185, § 1, effective August 10.

15-1-1511. Disclosure of digital assets held in trust when trustee is original user.

Unless otherwise ordered by the court or provided in a trust, a custodian shall disclose to a trustee that is an original user of an account any digital asset of the account held in trust, including a catalog of electronic communications of the trustee and the content of electronic communications.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 186, § 1, effective August 10.

15-1-1512. Disclosure of contents of electronic communications held in trust when trustee not original user.

1. Unless otherwise ordered by the court, directed by the user, or provided in a trust, a custodian shall disclose to a trustee that is not an original user of an account the content of an electronic communication sent or received by an original or successor user and carried, maintained, processed, received, or stored by the custodian in the account of the trust if the trustee gives the custodian:
   1. A written request for disclosure in physical or electronic form;
   2. A certified copy of the trust instrument or a registration of the trust under part 2 of article 5 of this title 15 that includes consent to disclosure of the content of electronic communications to the trustee;
   3. A certification by the trustee, under penalty of perjury, that the trust exists and the trustee is a currently acting trustee of the trust; and
   4. If requested by the custodian:
      1. A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the trust's account; or
      2. Evidence linking the account to the trust.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 186, § 1, effective August 10. L. 2018: (1)(b) amended, (SB 18-180), ch. 169, p. 1192, § 6, effective January 1, 2019.

15-1-1513. Disclosure of other digital assets held in trust when trustee not original user.

1. Unless otherwise ordered by the court, directed by the user, or provided in a trust, a custodian shall disclose, to a trustee that is not an original user of an account, a catalog of electronic communications sent or received by an original or successor user and stored, carried, or maintained by the custodian in an account of the trust and any digital assets, other than the content of electronic communications, in which the trust has a right or interest if the trustee gives the custodian:
   1. A written request for disclosure in physical or electronic form;
   2. A certified copy of the trust instrument or a registration of the trust under part 2 of article 5 of this title 15;
   3. A certification by the trustee, under penalty of perjury, that the trust exists and the trustee is a currently acting trustee of the trust; and
   4. If requested by the custodian:
      1. A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the trust's account; or
      2. Evidence linking the account to the trust.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 186, § 1, effective August 10. L. 2018: (1)(b) amended, (SB 18-180), ch. 169, p. 1192, § 7, effective January 1, 2019.

15-1-1514. Disclosure of digital assets to conservator of protected person.

1. After an opportunity for a hearing under article 14 of this title, the court may grant a conservator access to the digital assets of a protected person.
2. Unless otherwise ordered by the court or directed by the user, a custodian shall disclose to a conservator the catalog of electronic communications sent or received by a protected person and any digital assets, other than the content of electronic communications, in which the protected person has a right or interest if the conservator gives the custodian:
   1. A written request for disclosure in physical or electronic form;
   2. A certified copy of the court order that gives the conservator authority over the digital assets of the protected person; and
   3. If requested by the custodian:
      1. A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the account of the protected person; or
      2. Evidence linking the account to the protected person.
3. A conservator with general authority to manage the assets of a protected person may request a custodian of the digital assets of the protected person to suspend or terminate an account of the protected person for good cause. A request made under this section must be accompanied by a certified copy of the court order giving the conservator authority over the protected person's property.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 187, § 1, effective August 10.

15-1-1515. Fiduciary duty and authority.

1. The legal duties imposed on a fiduciary charged with managing tangible property apply to the management of digital assets, including:
   1. The duty of care;
   2. The duty of loyalty; and
   3. The duty of confidentiality.
2. A fiduciary's or designated recipient's authority with respect to a digital asset of a user:
   1. Except as otherwise provided in section 15-1-1504, is subject to the applicable terms of service;
   2. Is subject to other applicable law, including copyright law;
   3. In the case of a fiduciary, is limited by the scope of the fiduciary's duties; and
   4. May not be used to impersonate the user.
3. A fiduciary with authority over the property of a decedent, protected person, principal, or settlor has the right to access any digital asset in which the decedent, protected person, principal, or settlor had a right or interest and that is not held by a custodian or subject to a terms-of-service agreement.
4. A fiduciary acting within the scope of the fiduciary's duties is an authorized user of the property of the decedent, protected person, principal, or settlor for the purpose of applicable computer-fraud and unauthorized-computer-access laws, including article 5.5 of title 18, C.R.S.
5. A fiduciary with authority over the tangible, personal property of a decedent, protected person, principal, or settlor:
   1. Has the right to access the property and any digital asset stored in it; and
   2. Is an authorized user for the purpose of computer-fraud and unauthorized-computer-access laws, including article 5.5 of title 18, C.R.S.
6. A custodian may disclose information in an account to a fiduciary of the user when the information is required to terminate an account used to access digital assets licensed to the user.
7. A fiduciary of a user may request a custodian to terminate the user's account. A request for termination must be in writing, in either physical or electronic form, and accompanied by:
   1. If the user is deceased, a certified copy of the death certificate of the user;
   2. A certified copy of the letter of appointment of the representative or a small-estate affidavit or court order, court order, power of attorney, or trust giving the fiduciary authority over the account; and
   3. If requested by the custodian:
      1. A number, username, address, or other unique subscriber or account identifier assigned by the custodian to identify the user's account;
      2. Evidence linking the account to the user; or
      3. A finding by the court that the user had a specific account with the custodian, identifiable by the information specified in subparagraph (I) of this paragraph (c).
8. A domiciliary foreign personal representative is not required to comply with the provisions of section 15-13-204, or with any other provision of article 13 of this title, as a condition to obtaining disclosure of a digital asset pursuant to this part 15.
9. A foreign conservator is not required to comply with the provisions of section 15-14-433 as a condition to obtaining disclosure of a digital asset pursuant to this part 15.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 187, § 1, effective August 10.

15-1-1516. Custodian compliance and immunity.

1. Not later than sixty days after receipt of the information required under sections 15-1-1507 to 15-1-1515, a custodian shall comply with a request under this part 15 from a fiduciary or designated recipient to disclose digital assets or terminate an account. If the custodian fails to comply, the fiduciary or designated recipient may apply to the court for an order directing compliance.
2. An order under subsection (1) of this section directing compliance must contain a finding that compliance is not in violation of 18 U.S.C. sec. 2702, as amended.
3. A custodian may notify the user that a request for disclosure or to terminate an account was made under this part 15.
4. A custodian may deny a request under this part 15 from a fiduciary or designated recipient for disclosure of digital assets or to terminate an account if the custodian is aware of any lawful access to the account following the receipt of the fiduciary's request.
5. This part 15 does not limit a custodian's ability to obtain, or to require a fiduciary or designated recipient requesting disclosure or termination under this part 15 to obtain, a court order that:
   1. Specifies that an account belongs to the protected person or principal;
   2. Specifies that there is sufficient consent from the protected person or principal to support the requested disclosure; and
   3. Contains a finding required by law other than this part 15.
6. A custodian and its officers, employees, and agents are immune from liability for an act or omission done in good faith in compliance with this part 15.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 189, § 1, effective August 10.

15-1-1517. Uniformity of application and construction.

In applying and construing this uniform act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 190, § 1, effective August 10.

15-1-1518. Relation to electronic signatures in global and national commerce act.

This part 15 modifies, limits, or supersedes the federal "Electronic Signatures in Global and National Commerce Act", 15 U.S.C. sec. 7001, et seq., but does not modify, limit, or supersede section 101(c) of that act, 15 U.S.C. sec. 7001(c), or authorize electronic delivery of any of the notices described in section 103(b) of that act, 15 U.S.C. sec. 7003(b).

Source: L. 2016: Entire part added, (SB 16-088), ch. 71, p. 190, § 1, effective August 10.

15-1.1-101. Prudent investor rule.

1. Except as otherwise provided in subsection (b) of this section, a trustee who invests and manages trust assets owes a duty to the beneficiaries of the trust to comply with the prudent investor rule set forth in this article.
2. The prudent investor rule, a default rule, may be expanded, restricted, eliminated, or otherwise altered by the provisions of a trust. A trustee is not liable to a beneficiary to the extent that the trustee acted in reasonable reliance on the provisions of the trust.

Source: L. 95: Entire article added, p. 309, § 1, effective July 1.

15-1.1-102. Standard of care - portfolio strategy - risk and return objectives.

1. A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.
2. A trustee's investment and management decisions respecting individual assets must be evaluated not in isolation but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust.
3. Among circumstances that a trustee shall consider in investing and managing trust assets are such of the following as are relevant to the trust or its beneficiaries:
   1. General economic conditions;
   2. The possible effect of inflation or deflation;
   3. The expected tax consequences of investment decisions or strategies;
   4. The role that each investment or course of action plays within the overall trust portfolio, which may include financial assets, interests in closely held enterprises, tangible and intangible personal property, and real property;
   5. The expected total return from income and the appreciation of capital;
   6. Other resources of the beneficiaries;
   7. Needs for liquidity, regularity of income, and preservation or appreciation of capital; and
   8. An asset's special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries.
4. A trustee shall make a reasonable effort to verify facts relevant to the investment and management of trust assets.
5. A trustee may invest in any kind of property or type of investment consistent with the standards of this article.
6. A trustee who has special skills or expertise, or is named trustee in reliance upon the trustee's representation that the trustee has special skills or expertise, has a duty to use those special skills or expertise.

Source: L. 95: Entire article added, p. 309, § 1, effective July 1.

15-1.1-103. Diversification.

A trustee shall diversify the investments of the trust unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying.

Source: L. 95: Entire article added, p. 310, § 1, effective July 1.

15-1.1-104. Duties at inception of trusteeship.

Within a reasonable time after accepting a trusteeship or receiving trust assets, a trustee shall review the trust assets and make and implement decisions concerning the retention and disposition of assets, in order to bring the trust portfolio into compliance with the purposes, terms, distribution requirements, and other circumstances of the trust, and with the requirements of this article.

Source: L. 95: Entire article added, p. 310, § 1, effective July 1.

15-1.1-105. Loyalty.

A trustee shall invest and manage the trust assets solely in the interest of the beneficiaries.

Source: L. 95: Entire article added, p. 311, § 1, effective July 1.

15-1.1-106. Impartiality.

If a trust has two or more beneficiaries, the trustee shall act impartially in investing and managing the trust assets, taking into account any differing interests of the beneficiaries.

Source: L. 95: Entire article added, p. 311, § 1, effective July 1.

15-1.1-107. Investment costs.

In investing and managing trust assets, a trustee may only incur costs that are appropriate and reasonable in relation to the assets, the purposes of the trust, and the skills of the trustee.

Source: L. 95: Entire article added, p. 311, § 1, effective July 1.

15-1.1-108. Reviewing compliance.

Compliance with the prudent investor rule is determined in light of the facts and circumstances existing at the time of a trustee's decision or action and not by hindsight.

Source: L. 95: Entire article added, p. 311, § 1, effective July 1.

15-1.1-109. Delegation of investment and management functions.

1. A trustee may delegate investment and management functions that a prudent trustee of comparable skills could properly delegate under the circumstances. The trustee shall exercise reasonable care, skill, and caution in:
   1. Selecting an agent;
   2. Establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust; and
   3. Periodically reviewing the agent's actions in order to monitor the agent's performance and compliance with the terms of the delegation.
2. In performing a delegated function, an agent owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation.
3. A trustee who complies with the requirements of subsection (a) of this section is not liable to the beneficiaries or to the trust for the decisions or actions of the agent to whom the function was delegated.
4. By accepting the delegation of a trust function from the trustee of a trust that is subject to the law of this State, an agent submits to the jurisdiction of the courts of this State.

Source: L. 95: Entire article added, p. 311, § 1, effective July 1.

15-1.1-110. Language invoking standard of article.

The following terms or comparable language in the provisions of a trust, unless otherwise limited or modified, authorizes any investment or strategy permitted under this article: "investments permissible by law for investment of trust funds," "legal investments," "authorized investments," "using the judgment and care under the circumstances then prevailing that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital," "prudent man rule," "prudent trustee rule," "prudent person rule," and "prudent investor rule."

Source: L. 95: Entire article added, p. 311, § 1, effective July 1.

15-1.1-111. Application to existing trusts.

This article applies to trusts existing on and created after July 1, 1995; except that, as applied to trusts existing on July 1, 1995, this article governs only decisions or actions occurring after said date.

Source: L. 95: Entire article added, p. 312, § 1, effective July 1.

15-1.1-112. Uniformity of application and construction.

This article shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this article among the states enacting it.

Source: L. 95: Entire article added, p. 312, § 1, effective July 1.

15-1.1-113. Short title.

This article shall be known and may be cited as the "Colorado Uniform Prudent Investor Act".

Source: L. 95: Entire article added, p. 312, § 1, effective July 1.

15-1.1-114. Severability.

If any provision of this article or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this article which can be given effect without the invalid provision or application, and to this end the provisions of this article are severable.

Source: L. 95: Entire article added, p. 312, § 1, effective July 1.

15-1.1-115. Colorado changes to uniform act - specific statutes control - use of term "trustee".

1. 1. The general assembly recognizes that persons, corporations, entities, or state agencies who have responsibility for investing funds may be subject to a standard that is specifically set forth in other statutes. Under such circumstances, such persons, corporations, entities, or state agencies shall comply with the standard of investment set forth in the other statute, and this article shall not modify or repeal that standard.
   2. In addition, as provided for in section 15-1-304.1, this article shall not apply to those persons, corporations, entities, or state agencies which were made subject to the provisions of section 15-1-304 by specific reference in another statute in existence prior to July 1, 1995.
2. As used in this article, "trustee" includes original or successor administrators, special administrators, administrators cum testamento annexo, executors, guardians, conservators, and trustees, whether of express or implied trusts.

Source: L. 95: Entire article added, p. 312, § 1, effective July 1.

15-1.2-101. Short title.

This article 1.2 may be cited as the "Uniform Fiduciary Income and Principal Act".

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 799, § 1, effective January 1, 2022.

15-1.2-102. Definitions.

In this article 1.2:

1. "Accounting period" means a calendar year, unless a fiduciary selects another period of twelve calendar months or approximately twelve calendar months. The term includes a part of a calendar year or another period of twelve calendar months or approximately twelve calendar months that begin when an income interest begins or ends when an income interest ends.
2. "Asset-backed security" means a security that is serviced primarily by the cash flows of a discrete pool of fixed or revolving receivables or other financial assets that by their terms convert into cash within a finite time. The term includes rights or other assets that ensure the servicing or timely distribution of proceeds to the holder of the asset-backed security. The term does not include an asset to which section 15-1.2-401, 15-1.2-409, or 15-1.2-414 applies.
3. "Beneficiary" includes:
   1. For a trust:
      1. A current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal;
      2. A remainder beneficiary; and
      3. Any other successor beneficiary.
   2. For an estate, an heir, legatee, and devisee.
   3. Reserved.
4. "Court" means the court in this state having jurisdiction relating to a trust or estate.
5. "Current income beneficiary" means a beneficiary to which a fiduciary may distribute net income, whether or not the fiduciary also may distribute principal to the beneficiary.
6. "Distribution" means a payment or transfer by a fiduciary to a beneficiary in the beneficiary's capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiary's right to receive the payment or transfer under the terms of the trust. "Distribute", "distributed", and "distributee" have corresponding meanings.
7. "Estate" means a decedent's estate. The term includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration.
8. "Fiduciary" includes a trustee, personal representative, and person acting under a delegation from a fiduciary. The term includes a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal. If there are two or more co-fiduciaries, the term includes all co-fiduciaries acting under the terms of the trust and applicable law.
9. "Income" means money or other property a fiduciary receives as current return from principal. The term includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in part 4 of this article 1.2.
10. "Income interest" means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciary's discretion. The term includes the right of a current beneficiary to use property held by a fiduciary.
11. "Independent person" means a person that is not:
    1. For a trust:
       1. A qualified beneficiary determined under section 15-5-103 (16) of the "Colorado Uniform Trust Code";
       2. A settlor of the trust; or
       3. An individual whose legal obligation to support a beneficiary may be satisfied by a distribution from the trust;
    2. For an estate, a beneficiary;
    3. A spouse, parent, brother, sister, or issue of an individual described in subsection (11)(a) or (11)(b) of this section;
    4. A corporation, partnership, limited liability company, or other entity in which persons described in subsections (11)(a) through (11)(c) of this section, in the aggregate, have voting control; or
    5. An employee of a person described in subsections (11)(a) through (11)(d) of this section.
12. "Mandatory income interest" means the right of a current income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.
13. "Net income" means the total allocations during an accounting period to income under the terms of a trust and this article 1.2 minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this article 1.2. To the extent the trust is a unitrust under part 3 of this article 1.2, the term means the unitrust amount determined under part 3 of this article 1.2. The term includes an adjustment from principal to income under section 15-1.2-203. The term does not include an adjustment from income to principal under section 15-1.2-203.
14. "Person" means an individual, estate, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.
15. "Personal representative" means an executor, administrator, successor personal representative, special administrator, or person that performs substantially the same function with respect to an estate under the law governing the person's status.
16. "Principal" means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary.
17. "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
18. "Settlor" means a person, including a testator, that creates or contributes property to a trust. If more than one person creates or contributes property to a trust, the term includes each person, to the extent of the trust property attributable to that person's contribution, except to the extent another person has the power to revoke or withdraw that portion.
19. "Special tax benefit" means:
    1. Exclusion of a transfer to a trust from gifts described in section 2503 (b) of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 2503 (b), as amended, because of the qualification of an income interest in the trust as a present interest in property;
    2. Status as a qualified subchapter S trust, as described in section 1361 (d)(3) of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 1361 (d)(3), as amended, at a time the trust holds stock of an S corporation, as described in section 1361 (a)(1) of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 1361 (a)(1), as amended;
    3. An estate or gift tax marital deduction for a transfer to a trust under section 2056 or 2523 of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 2056 or 26 U.S.C. sec. 2523, as amended, which depends or depended in whole or in part on the right of the settlor's spouse to receive the net income of the trust;
    4. Exemption in whole or in part of a trust from the federal generation-skipping transfer tax imposed by section 2601 of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 2601, as amended, because the trust was irrevocable on September 25, 1985, if there is any possibility that:
       1. A taxable distribution, as defined in section 2612 (b) of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 2612 (b), as amended, could be made from the trust; or
       2. A taxable termination, as defined in section 2612 (a) of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 2612 (a), as amended, could occur with respect to the trust; or
    5. An inclusion ratio, as defined in section 2642 (a) of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 2642 (a), as amended, of the trust which is less than one, if there is any possibility that:
       1. A taxable distribution, as defined in section 2612 (b) of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 2612 (b), as amended, could be made from the trust; or
       2. A taxable termination, as defined in section 2612 (a) of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 2612 (a), as amended, could occur with respect to the trust.
20. "Successive interest" means the interest of a successor beneficiary.
21. "Successor beneficiary" means a person entitled to receive income or principal or to use property when an income interest or other current interest ends.
22. "Terms of a trust" means:
    1. Except as otherwise provided in subsection (22)(b) of this section, the manifestation of the settlor's intent regarding a trust's provisions as:
       1. Expressed in the trust instrument; or
       2. Established by other evidence that would be admissible in a judicial proceeding;
    2. The trust's provisions as established, determined, or amended by:
       1. A trustee or trust director in accordance with applicable law;
       2. A court order;
       3. A nonjudicial settlement agreement under section 15-5-111; or
       4. By alternative dispute resolution under section 15-5-113; or
    3. For an estate, a will.
    4. Reserved.
23. "Trust":
    1. Includes:
       1. An express trust, private or charitable, with additions to the trust, wherever and however created; and
       2. A trust created or determined by judgment or decree under which the trust is to be administered in the manner of an express trust.
    2. Does not include:
       1. A constructive trust;
       2. A resulting trust, conservatorship, guardianship, multi-party account, custodial arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, retirement benefits, or employee benefits of any kind; or
       3. An arrangement under which a person is a nominee, escrowee, or agent for another.
24. "Trustee" means a person, other than a personal representative, that owns or holds property for the benefit of a beneficiary. The term includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.
25. "Will" means any testamentary instrument recognized by applicable law which makes a legally effective disposition of an individual's property, effective at the individual's death. The term includes a codicil or other amendment to a testamentary instrument.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 799, § 1, effective January 1, 2022.

15-1.2-103. Scope.

1. Except as otherwise provided in the terms of a trust, a will, or this article 1.2, this article 1.2 applies to:
   1. A trust or estate.
   2. Reserved.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 804, § 1, effective January 1, 2022.

15-1.2-104. Governing law.

Except as otherwise provided in the terms of a trust or this article 1.2, this article 1.2 applies when this state is the principal place of administration of a trust or estate. By accepting the trusteeship of a trust having its principal place of administration in this state or by moving the principal place of administration of a trust to this state, the trustee submits to the application of this article 1.2 to any matter within the scope of this article 1.2 involving the trust.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 804, § 1, effective January 1, 2022.

15-1.2-201. Fiduciary duties - general principles.

1. In making an allocation or determination or exercising discretion under this article 1.2, a fiduciary shall:
   1. Act in good faith, based on what is fair and reasonable to all beneficiaries;
   2. Administer a trust or estate impartially, except to the extent the terms of the trust manifest an intent that the fiduciary shall or may favor one or more beneficiaries;
   3. Administer the trust or estate in accordance with the terms of the trust, even if there is a different provision in this article 1.2; and
   4. Administer the trust or estate in accordance with this article 1.2, except to the extent the terms of the trust provide otherwise or authorize the fiduciary to determine otherwise.
2. A fiduciary's allocation, determination, or exercise of discretion under this article 1.2 is presumed to be fair and reasonable to all beneficiaries. A fiduciary may exercise a discretionary power of administration given to the fiduciary by the terms of the trust, and an exercise of the power which produces a result different from a result required or permitted by this article 1.2 does not create an inference that the fiduciary abused the fiduciary's discretion.
3. A fiduciary shall:
   1. Add a receipt to principal, to the extent neither the terms of the trust nor this article 1.2 allocates the receipt between income and principal; and
   2. Charge a disbursement to principal, to the extent neither the terms of the trust nor this article 1.2 allocates the disbursement between income and principal.
4. A fiduciary may exercise the power to adjust under section 15-1.2-203, convert an income trust to a unitrust under section 15-1.2-303 (1)(a), change the percentage or method used to calculate a unitrust amount under section 15-1.2-303 (1)(b), or convert a unitrust to an income trust under section 15-1.2-303 (1)(c), if the fiduciary determines the exercise of the power will assist the fiduciary to administer the trust or estate impartially.
5. Factors the fiduciary must consider in making the determination under subsection (4) of this section include:
   1. The terms of the trust;
   2. The nature, distribution standards, and expected duration of the trust;
   3. The effect of the allocation rules, including specific adjustments between income and principal, under parts 4 through 7 of this article 1.2;
   4. The desirability of liquidity and regularity of income;
   5. The desirability of the preservation and appreciation of principal;
   6. The extent to which an asset is used or may be used by a beneficiary;
   7. The increase or decrease in the value of principal assets, reasonably determined by the fiduciary;
   8. Whether and to what extent the terms of the trust give the fiduciary power to accumulate income or invade principal or prohibit the fiduciary from accumulating income or invading principal;
   9. The extent to which the fiduciary has accumulated income or invaded principal in preceding accounting periods;
   10. The effect of current and reasonably expected economic conditions; and
   11. The reasonably expected tax consequences of the exercise of the power.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 804, § 1, effective January 1, 2022.

15-1.2-202. Judicial review of exercise of discretionary power - definition.

1. In this section, "fiduciary decision" means:
   1. A fiduciary's allocation between income and principal or other determination regarding income and principal required or authorized by the terms of the trust or this article 1.2;
   2. The fiduciary's exercise or nonexercise of a discretionary power regarding income and principal granted by the terms of the trust or this article 1.2, including the power to adjust under section 15-1.2-203, convert an income trust to a unitrust under section 15-1.2-303 (1)(a), change the percentage or method used to calculate a unitrust amount under section 15-1.2-303 (1)(b), or convert a unitrust to an income trust under section 15-1.2-303 (1)(c); or
   3. The fiduciary's implementation of a decision described in subsection (1)(a) or (1)(b) of this section.
2. The court may not order a fiduciary to change a fiduciary decision unless the court determines that the fiduciary decision was an abuse of the fiduciary's discretion.
3. If the court determines that a fiduciary decision was an abuse of the fiduciary's discretion, the court may order a remedy authorized by law, including section 15-5-1001 of the "Colorado Uniform Trust Code" and part 5 of article 10 of this title 15. To place the beneficiaries in the positions the beneficiaries would have occupied if there had not been an abuse of the fiduciary's discretion, the court may order:
   1. The fiduciary to exercise or refrain from exercising the power to adjust under section 15-1.2-203;
   2. The fiduciary to exercise or refrain from exercising the power to convert an income trust to a unitrust under section 15-1.2-303 (1)(a), change the percentage or method used to calculate a unitrust amount under section 15-1.2-303 (1)(b), or convert a unitrust to an income trust under section 15-1.2-303 (1)(c);
   3. The fiduciary to distribute an amount to a beneficiary;
   4. A beneficiary to return some or all of a distribution; or
   5. The fiduciary to withhold an amount from one or more future distributions to a beneficiary.
4. Reserved.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 806, § 1, effective January 1, 2022. L. 2022: (3) introductory portion amended, (SB 22-212), ch. 421, p. 2968, § 24, effective August 10.

15-1.2-203. Fiduciary's power to adjust.

1. Except as otherwise provided in the terms of a trust or this section, a fiduciary, in a record, without court approval, may adjust between income and principal if the fiduciary determines the exercise of the power to adjust will assist the fiduciary to administer the trust or estate impartially.
2. This section does not create a duty to exercise or consider the power to adjust under subsection (1) of this section or to inform a beneficiary about the applicability of this section.
3. A fiduciary that in good faith exercises or fails to exercise the power to adjust under subsection (1) of this section is not liable to a person affected by the exercise or failure to exercise.
4. In deciding whether and to what extent to exercise the power to adjust under subsection (1) of this section, a fiduciary shall consider all factors the fiduciary considers relevant, including relevant factors in section 15-1.2-201 (5) and the application of sections 15-1.2-401 (9), 15-1.2-408, and 15-1.2-413.
5. A fiduciary may not exercise the power under subsection (1) of this section to make an adjustment or, under section 15-1.2-408, to make a determination that an allocation is insubstantial if:
   1. The adjustment or determination would reduce the amount payable to a current income beneficiary from a trust that qualifies for a special tax benefit, except to the extent the adjustment is made to provide for a reasonable apportionment of the total return of the trust between the current income beneficiary and successor beneficiaries;
   2. The adjustment or determination would change the amount payable to a beneficiary, as a fixed annuity or a fixed fraction of the value of the trust assets, under the terms of the trust;
   3. The adjustment or determination would reduce an amount that is permanently set aside for a charitable purpose under the terms of the trust, unless both income and principal are set aside for the charitable purpose;
   4. Possessing or exercising the power would cause a person to be treated as the owner of all or part of the trust for federal income tax purposes;
   5. Possessing or exercising the power would cause all or part of the value of the trust assets to be included in the gross estate of an individual for federal estate tax purposes;
   6. Possessing or exercising the power would cause an individual to be treated as making a gift for federal gift tax purposes;
   7. The fiduciary is not an independent person;
   8. The trust is irrevocable and provides for income to be paid to the settlor and possessing or exercising the power would cause the adjusted principal or income to be considered an available resource or available income under a public-benefit program; or
   9. The trust is a unitrust under part 3 of this article 1.2.
6. If subsection (5)(d), (5)(e), (5)(f), or (5)(g) of this section applies to a fiduciary:
   1. A co-fiduciary to which subsections (5)(d) through (5)(g) of this section do not apply may exercise the power to adjust, unless the exercise of the power by the remaining co-fiduciary or co-fiduciaries is not permitted by the terms of the trust or law other than this article 1.2; or
   2. If there is no co-fiduciary to which subsections (5)(d) through (5)(g) of this section do not apply, the fiduciary may appoint a co-fiduciary to which subsections (5)(d) through (5)(g) of this section do not apply, which may be a special fiduciary with limited powers, and the appointed co-fiduciary may exercise the power to adjust under subsection (1) of this section, unless the appointment of a co-fiduciary or the exercise of the power by a co-fiduciary is not permitted by the terms of the trust or law other than this article 1.2.
7. A fiduciary may release or delegate to a co-fiduciary the power to adjust under subsection (1) of this section if the fiduciary determines that the fiduciary's possession or exercise of the power will or may:
   1. Cause a result described in subsections (5)(a) through (5)(f) of this section or subsection (5)(h) of this section; or
   2. Deprive the trust of a tax benefit or impose a tax burden not described in subsections (5)(a) through (5)(f) of this section.
8. A fiduciary's release or delegation to a co-fiduciary under subsection (7) of this section of the power to adjust under subsection (1) of this section:
   1. Must be in a record;
   2. Applies to the entire power, unless the release or delegation provides a limitation, which may be a limitation to the power to adjust:
      1. From income to principal;
      2. From principal to income;
      3. For specified property; or
      4. In specified circumstances;
   3. For a delegation, may be modified by a re-delegation under this subsection by the co-fiduciary to which the delegation is made; and
   4. Subject to subsection (8)(c) of this section, is permanent, unless the release or delegation provides a specified period, including a period measured by the life of an individual or the lives of more than one individual.
9. Terms of a trust which deny or limit the power to adjust between income and principal do not affect the application of this section, unless the terms of the trust expressly deny or limit the power to adjust under subsection (1) of this section.
10. The exercise of the power to adjust under subsection (1) of this section in any accounting period may apply to the current period, the immediately preceding period, and one or more subsequent periods.
11. A description of the exercise of the power to adjust under subsection (1) of this section must be:
    1. Included in a report, if any, sent to beneficiaries under section 15-5-813 (3) of the "Colorado Uniform Trust Code"; or
    2. Communicated at least annually to the qualified beneficiaries determined under section 15-5-103 (16) of the "Colorado Uniform Trust Code", including the attorney general when applicable.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 807, § 1, effective January 1, 2022.

15-1.2-204. Notice of action - definitions.

1. In this section, the following definitions apply:
   1. "Objection period" means the period of time prior to the date by which an objection must be received as described in section 15-1.2-304 (4)(e).
   2. "Qualified beneficiary" has the same meaning as set forth in section 15-5-103 (16).
2. A fiduciary may give a notice of proposed action regarding a matter governed by this article 1.2 as provided in this section. For the purpose of this section, a proposed action includes a course of action and a decision not to take action.
3. The fiduciary shall mail notice of the proposed action to all qualified beneficiaries and the fiduciary may give notice to other beneficiaries. A beneficiary shall be bound under this section with respect to such proposed action if the beneficiary receives actual notice or if the beneficiary would be bound under the provisions of part 3 of article 5 of this title 15.
4. Notice of proposed action need not be given to any beneficiary who consents in writing to the proposed action. The consent may be executed at any time before or after the proposed action is taken.
5. The notice of proposed action shall state that it is given pursuant to this section and shall follow the procedures set out in section 15-1.2-304 regarding notice.
6. A beneficiary may object to the proposed action by mailing a written objection to the fiduciary at the address stated in the notice of proposed action within the objection period.
7. A fiduciary is not liable to a beneficiary to whom notice is given for an action regarding a matter governed by this part 2 if the fiduciary does not receive a written objection to the proposed action from the beneficiary within the objection period and the other requirements of this section are satisfied. If no beneficiary who receives notice objects under this section, the fiduciary is not liable to the beneficiaries receiving notice with respect to the proposed action.
8. If the fiduciary receives a written objection within the objection period, either the fiduciary or a beneficiary may petition the court to have the proposed action performed as proposed, performed with modifications, or denied. In the proceeding, a beneficiary objecting to the proposed action has the burden of proving that the fiduciary's proposed action should not be performed. A beneficiary who has not objected is not estopped from opposing the proposed action in the proceeding. If the fiduciary decides not to implement the proposed action, the fiduciary shall notify the beneficiaries of the decision not to take the action and the reasons for the decision, and the fiduciary's decision not to implement the proposed action does not itself give rise to liability to any beneficiary. A beneficiary may petition the court to have the action performed, and has the burden of provision that it should be performed.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 809, § 1, effective January 1, 2022.

15-1.2-301. Definitions.

In this part 3:

1. "Applicable value" means the amount of the net fair market value of a trust taken into account under section 15-1.2-307.
2. "Express unitrust" means a trust for which, under the terms of the trust without regard to this part 3, income or net income must or may be calculated as a unitrust amount.
3. "Income trust" means a trust that is not a unitrust.
4. "Net fair market value of a trust" means the fair market value of the assets of the trust, less the noncontingent liabilities of the trust.
5. "Unitrust" means a trust for which net income is a unitrust amount. The term includes an express unitrust.
6. "Unitrust amount" means an amount computed by multiplying a determined value of a trust by a determined percentage. For a unitrust administered under a unitrust policy, the term means the applicable value, multiplied by the unitrust rate.
7. "Unitrust policy" means a policy described in sections 15-1.2-305 through 15-1.2-309 and adopted under section 15-1.2-303.
8. "Unitrust rate" means the rate used to compute the unitrust amount under subsection (6) of this section for a unitrust administered under a unitrust policy.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 810, § 1, effective January 1, 2022.

15-1.2-302. Application - duties and remedies.

1. Except as otherwise provided in subsection (2) of this section, this part 3 applies to:
   1. An income trust, unless the terms of the trust expressly prohibit use of this part 3 by a specific reference to this part 3 or an explicit expression of intent that net income not be calculated as a unitrust amount; and
   2. An express unitrust, except to the extent the terms of the trust explicitly:
      1. Prohibit use of this part 3 by a specific reference to this part 3;
      2. Prohibit conversion to an income trust; or
      3. Limit changes to the method of calculating the unitrust amount.
2. This part 3 does not apply to a trust described in section 170 (f)(2)(B), 642 (c)(5), 664 (d), or 2702 of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 170 (f)(2)(B), 642 (c)(5), 664 (d), or 2702, as amended.
3. An income trust to which this part 3 applies under subsection (1)(a) of this section may be converted to a unitrust under this part 3 regardless of the terms of the trust concerning distributions. Conversion to a unitrust under this part 3 does not affect other terms of the trust concerning distributions of income or principal.
4. This part 3 applies to an estate only to the extent a trust is a beneficiary of the estate. To the extent of the trust's interest in the estate, the estate may be administered as a unitrust, the administration of the estate as a unitrust may be discontinued, or the percentage or method used to calculate the unitrust amount may be changed, in the same manner as for a trust under this part 3.
5. This part 3 does not create a duty to take or consider action under this part 3 or to inform a beneficiary about the applicability of this part 3.
6. A fiduciary that in good faith takes or fails to take an action under this part 3 is not liable to a person affected by the action or inaction.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 811, § 1, effective January 1, 2022.

15-1.2-303. Authority of fiduciary.

1. A fiduciary, without court approval, by complying with subsections (2) and (6) of this section, may:
   1. Convert an income trust to a unitrust if the fiduciary adopts in a record a unitrust policy for the trust providing:
      1. That in administering the trust the net income of the trust will be a unitrust amount rather than net income determined without regard to this part 3; and
      2. The percentage and method used to calculate the unitrust amount;
   2. Change the percentage or method used to calculate a unitrust amount for a unitrust if the fiduciary adopts in a record a unitrust policy or an amendment or replacement of a unitrust policy providing changes in the percentage or method used to calculate the unitrust amount; or
   3. Convert a unitrust to an income trust if the fiduciary adopts in a record a determination that, in administering the trust, the net income of the trust will be net income determined without regard to this part 3 rather than a unitrust amount.
2. A fiduciary may take an action under subsection (1) of this section if:
   1. The fiduciary determines that the action will assist the fiduciary to administer a trust impartially;
   2. The fiduciary sends a notice in a record, in the manner required by section 15-1.2-304, describing and proposing to take the action;
   3. The fiduciary sends a copy of the notice under subsection (2)(b) of this section to each settlor of the trust which is:
      1. If an individual, living; or
      2. If not an individual, in existence;
   4. At least one member of each class of the qualified beneficiaries determined under section 15-5-103 (16) of the "Colorado Uniform Trust Code", other than the attorney general, receiving the notice under subsection (2)(b) of this section is:
      1. If an individual, legally competent;
      2. If not an individual, in existence; or
      3. Represented in the manner provided in section 15-1.2-304 (2); and
   5. The fiduciary does not receive, by the date specified in the notice under section 15-1.2-304 (4)(e), an objection in a record to the action proposed under subsection (2)(b) of this section from a person to which the notice under subsection (2)(b) of this section is sent.
3. If a fiduciary receives, not later than the date stated in the notice under section 15-1.2-304, an objection in a record described in section 15-1.2-304 to a proposed action, the fiduciary or a beneficiary may request the court to have the proposed action taken as proposed, taken with modifications, or prevented. A person described in section 15-1.2-304 (1) may oppose the proposed action in the proceeding under this subsection (3), whether or not the person:
   1. Consented under section 15-1.2-304; or
   2. Objected under section 15-1.2-304.
4. If, after sending a notice under subsection (2)(b) of this section, a fiduciary decides not to take the action proposed in the notice, the fiduciary shall notify in a record each person described in section 15-1.2-304 (1) of the decision not to take the action and the reasons for the decision.
5. If a beneficiary requests in a record that a fiduciary take an action described in subsection (1) of this section and the fiduciary declines to act or does not act within ninety days after receiving the request, the beneficiary may request the court to direct the fiduciary to take the action requested.
6. In deciding whether and how to take an action authorized by subsection (1) of this section, or whether and how to respond to a request by a beneficiary under subsection (5) of this section, a fiduciary shall consider all factors relevant to the trust and the beneficiaries, including relevant factors in section 15-1.2-201 (5).
7. A fiduciary may release or delegate the power to convert an income trust to a unitrust under subsection (1)(a) of this section, change the percentage or method used to calculate a unitrust amount under subsection (1)(b) of this section, or convert a unitrust to an income trust under subsection (1)(c) of this section, for a reason described in section 15-1.2-203 (7) and in the manner described in section 15-1.2-203 (8).

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 812, § 1, effective January 1, 2022.

15-1.2-304. Notice.

1. A notice required by section 15-1.2-303 (2)(b) must be sent in a manner authorized under section 15-5-109 to:
   1. The qualified beneficiaries determined under section 15-5-103 (16), other than the attorney general; and
   2. Each person acting as trust director of the trust under the "Colorado Uniform Directed Trust Act", part 8 of article 16 of this title 15; and
   3. Each person that is granted a power by the terms of the trust to appoint or remove a trustee or person described in subsection (1)(b) of this section, to the extent that power is exercisable when the person is not then serving as a trustee or person described in subsection (1)(b) of this section.
2. The representation provisions of sections 15-5-301 through 15-5-305 apply to notice under this section.
3. A person may consent in a record at any time to action proposed under section 15-1.2-303 (2)(b). A notice required by section 15-1.2-303 (2)(b) need not be sent to a person that consents under this subsection (3).
4. A notice required by section 15-1.2-303 (2)(b) must include:
   1. The action proposed under section 15-1.2-303 (2)(b);
   2. For a conversion of an income trust to a unitrust, a copy of the unitrust policy adopted under section 15-1.2-303 (1)(a);
   3. For a change in the percentage or method used to calculate the unitrust amount, a copy of the unitrust policy or amendment or replacement of the unitrust policy adopted under section 15-1.2-303 (1)(b);
   4. A statement that the person to which the notice is sent may object to the proposed action by stating in a record the basis for the objection and sending or delivering the record to the fiduciary;
   5. The date by which an objection under subsection (4)(d) of this section must be received by the fiduciary, which must be at least thirty days after the date the notice is sent;
   6. The date on which the action is proposed to be taken and the date on which the action is proposed to take effect;
   7. The name and contact information of the fiduciary; and
   8. The name and contact information of a person that may be contacted for additional information.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 814, § 1, effective January 1, 2022.

15-1.2-305. Unitrust policy.

1. In administering a unitrust under this part 3, a fiduciary shall follow a unitrust policy adopted under section 15-1.2-303 (1)(a) or (1)(b) or amended or replaced under section 15-1.2-303 (1)(b).
2. A unitrust policy must provide:
   1. The unitrust rate or the method for determining the unitrust rate under section 15-1.2-306;
   2. The method for determining the applicable value under section 15-1.2-306; and
   3. The rules described in sections 15-1.2-306 through 15-1.2-309 which apply in the administration of the unitrust, whether the rules are:
      1. Mandatory, as provided in sections 15-1.2-307 (1) and 15-1.2-416; or
      2. Optional, as provided in sections 15-1.2-306, 15-1.2-307 (2), 15-1.2-308 (2), and 15-1.2-309 (1), to the extent the fiduciary elects to adopt those rules.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 815, § 1, effective January 1, 2022.

15-1.2-306. Unitrust rate.

1. Except as otherwise provided in section 15-1.2-309 (2)(a), a unitrust rate may be:
   1. A fixed unitrust rate; or
   2. A unitrust rate that is determined for each period using:
      1. A market index or other published data; or
      2. A mathematical blend of market indices or other published data over a stated number of preceding periods.
2. Except as otherwise provided in section 15-1.2-309 (2)(a), a unitrust policy may provide:
   1. A limit on how high the unitrust rate determined under subsection (1)(b) of this section may rise;
   2. A limit on how low the unitrust rate determined under subsection (1)(b) of this section may fall;
   3. A limit on how much the unitrust rate determined under subsection (1)(b) of this section may increase over the unitrust rate for the preceding period or a mathematical blend of unitrust rates over a stated number of preceding periods;
   4. A limit on how much the unitrust rate determined under subsection (1)(b) of this section may decrease below the unitrust rate for the preceding period or a mathematical blend of unitrust rates over a stated number of preceding periods; or
   5. A mathematical blend of any of the unitrust rates determined under subsection (1)(b) of this section and subsections (2)(a) through (2)(d) of this section.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 815, § 1, effective January 1, 2022.

15-1.2-307. Applicable value.

1. A unitrust policy must provide the method for determining the fair market value of an asset for the purpose of determining the unitrust amount, including:
   1. The frequency of valuing the asset, which need not require a valuation in every period; and
   2. The date for valuing the asset in each period in which the asset is valued.
2. Except as otherwise provided in section 15-1.2-309 (2)(b), a unitrust policy may provide methods for determining the amount of the net fair market value of the trust to take into account in determining the applicable value, including:
   1. Obtaining an appraisal of an asset for which fair market value is not readily available;
   2. Exclusion of specific assets or groups or types of assets;
   3. Other exceptions or modifications of the treatment of specific assets or groups or types of assets;
   4. Identification and treatment of cash or property held for distribution;
   5. Use of:
      1. An average of fair market values over a stated number of preceding periods; or
      2. Another mathematical blend of fair market values over a stated number of preceding periods;
   6. A limit on how much the applicable value of all assets, groups of assets, or individual assets may increase over:
      1. The corresponding applicable value for the preceding period; or
      2. A mathematical blend of applicable values over a stated number of preceding periods;
   7. A limit on how much the applicable value of all assets, groups of assets, or individual assets may decrease below:
      1. The corresponding applicable value for the preceding period; or
      2. A mathematical blend of applicable values over a stated number of preceding periods;
   8. The treatment of accrued income and other features of an asset which affect value; and
   9. Determining the liabilities of the trust, including treatment of liabilities to conform with the treatment of assets under subsections (2)(a) through (2)(h) of this section.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 816, § 1, effective January 1, 2022.

15-1.2-308. Period.

1. A unitrust policy must provide the period used under sections 15-1.2-306 and 15-1.2-307. Except as otherwise provided in section 15-1.2-309 (2)(c), the period may be:
   1. A calendar year;
   2. A twelve-month period other than a calendar year;
   3. A calendar quarter;
   4. A three-month period other than a calendar quarter; or
   5. Another period.
2. Except as otherwise provided in section 15-1.2-309 (2), a unitrust policy may provide standards for:
   1. Using fewer preceding periods under section 15-1.2-306 (1)(b)(II), (2)(c), or (2)(d) if:
      1. The trust was not in existence in a preceding period; or
      2. Market indices or other published data are not available for a preceding period;
   2. Using fewer preceding periods under section 15-1.2-307 (2)(e)(I), (2)(e)(II), (2)(f)(II), or (2)(g)(II) if:
      1. The trust was not in existence in a preceding period; or
      2. Fair market values are not available for a preceding period; and
   3. Prorating the unitrust amount on a daily basis for a part of a period in which the trust or the administration of the trust as a unitrust or the interest of any beneficiary commences or terminates.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 817, § 1, effective January 1, 2022.

15-1.2-309. Special tax benefits - rules.

1. A unitrust policy may:
   1. Provide methods and standards for:
      1. Determining the timing of distributions;
      2. Making distributions in cash or in kind or partly in cash and partly in kind; or
      3. Correcting an underpayment or overpayment to a beneficiary based on the unitrust amount if there is an error in calculating the unitrust amount;
   2. Specify sources and the order of sources, including categories of income for federal income tax purposes, from which distributions of a unitrust amount are paid; or
   3. Provide other standards and rules the fiduciary determines serve the interests of the beneficiaries.
2. If a trust qualifies for a special tax benefit or a fiduciary is not an independent person:
   1. The unitrust rate established under section 15-1.2-306 may not be less than three percent or more than five percent;
   2. The only provisions of section 15-1.2-307 which apply are section 15-1.2-307 (1), (2)(a), (2)(d), (2)(e)(I), and (2)(i);
   3. The only period that may be used under section 15-1.2-308 is a calendar year under section 15-1.2-308 (1)(a); and
   4. The only other provisions of section 15-1.2-308 which apply are section 15-1.2-308 (2)(b)(I) and (2)(c).
3. Unless otherwise provided by the terms of unitrust policy or the terms of the trust, the distribution amount each year shall be deemed to be paid from the following sources for that year in the following order:
   1. Net income determined as if the trust was not a unitrust;
   2. Other ordinary income as determined for federal income tax purposes;
   3. Net realized short-term capital gains as determined for federal income tax purposes;
   4. Net realized long-term capital gains as determined for federal income tax purposes;
   5. Trust principal comprising assets for which there is a readily available market value; and
   6. Other trust principal.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 817, § 1, effective January 1, 2022.

15-1.2-401. Character of receipts from entity - definitions.

1. In this section:
   1. "Capital distribution" means an entity distribution of money which is a:
      1. Return of capital; or
      2. Distribution in total or partial liquidation of the entity.
   2. "Entity":
      1. Means a corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund, or any other organization or arrangement in which a fiduciary owns or holds an interest, whether or not the entity is a taxpayer for federal income tax purposes; and
      2. Does not include:
         1. A trust or estate to which section 15-1.2-402 applies;
         2. A business or other activity to which section 15-1.2-403 applies which is not conducted by an entity described in subsection (1)(b)(I) of this section;
         3. An asset-backed security; or
         4. An instrument or arrangement to which section 15-1.2-416 applies.
   3. "Entity distribution" means a payment or transfer by an entity made to a person in the person's capacity as an owner or holder of an interest in the entity.
2. In this section, an attribute or action of an entity includes an attribute or action of any other entity in which the entity owns or holds an interest, including an interest owned or held indirectly through another entity.
3. Except as otherwise provided in subsections (4)(b) through (4)(d) of this section, a fiduciary shall allocate to income:
   1. Money received in an entity distribution; and
   2. Tangible personal property of nominal value received from the entity.
4. A fiduciary shall allocate to principal:
   1. Property received in an entity distribution which is not:
      1. Money; or
      2. Tangible personal property of nominal value;
   2. Money received in an entity distribution in an exchange for part or all of the fiduciary's interest in the entity, to the extent the entity distribution reduces the fiduciary's interest in the entity relative to the interests of other persons that own or hold interests in the entity;
   3. Money received in an entity distribution that the fiduciary determines or estimates is a capital distribution; and
   4. Money received in an entity distribution from an entity that is:
      1. A regulated investment company or real estate investment trust if the money received is a capital gain dividend for federal income tax purposes; or
      2. Treated for federal income tax purposes comparably to the treatment described in subsection (4)(d)(I) of this section.
5. A fiduciary may determine or estimate that money received in an entity distribution is a capital distribution:
   1. By relying without inquiry or investigation on a characterization of the entity distribution provided by or on behalf of the entity, unless the fiduciary:
      1. Determines, on the basis of information known to the fiduciary, that the characterization is or may be incorrect; or
      2. Owns or holds more than fifty percent of the voting interest in the entity;
   2. By determining or estimating, on the basis of information known to the fiduciary or provided to the fiduciary by or on behalf of the entity, that the total amount of money and property received by the fiduciary in the entity distribution or a series of related entity distributions is or will be greater than twenty percent of the fair market value of the fiduciary's interest in the entity; or
   3. If neither subsection (5)(a) nor (5)(b) of this section applies, by considering the factors in subsection (6) of this section and the information known to the fiduciary or provided to the fiduciary by or on behalf of the entity.
6. In making a determination or estimate under subsection (5)(c) of this section, a fiduciary may consider:
   1. A characterization of an entity distribution provided by or on behalf of the entity;
   2. The amount of money or property received in:
      1. The entity distribution; or
      2. What the fiduciary determines is or will be a series of related entity distributions;
   3. The amount described in subsection (6)(b) of this section compared to the amount the fiduciary determines or estimates is, during the current or preceding accounting periods:
      1. The entity's operating income;
      2. The proceeds of the entity's sale or other disposition of:
         1. All or part of the business or other activity conducted by the entity;
         2. One or more business assets that are not sold to customers in the ordinary course of the business or other activity conducted by the entity; or
         3. One or more assets other than business assets, unless the entity's primary activity is to invest in assets to realize gain on the disposition of all or some of the assets;
      3. If the entity's primary activity is to invest in assets to realize gain on the disposition of all or some of the assets, the gain realized on the disposition;
      4. The entity's regular, periodic entity distributions;
      5. The amount of money the entity has accumulated;
      6. The amount of money the entity has borrowed;
      7. The amount of money the entity has received from the sources described in sections 15-1.2-407, 15-1.2-410, 15-1.2-411, and 15-1.2-412; and
      8. The amount of money the entity has received from a source not otherwise described in this subsection (6)(c); and
   4. Any other factor the fiduciary determines is relevant.
7. If, after applying subsections (3) through (6) of this section, a fiduciary determines that a part of an entity distribution is a capital distribution but is in doubt about the amount of the entity distribution which is a capital distribution, the fiduciary shall allocate to principal the amount of the entity distribution which is in doubt.
8. If a fiduciary receives additional information about the application of this section to an entity distribution before the fiduciary has paid part of the entity distribution to a beneficiary, the fiduciary may consider the additional information before making the payment to the beneficiary and may change a decision to make the payment to the beneficiary.
9. If a fiduciary receives additional information about the application of this section to an entity distribution after the fiduciary has paid part of the entity distribution to a beneficiary, the fiduciary is not required to change or recover the payment to the beneficiary but may consider that information in determining whether to exercise the power to adjust under section 15-1.2-203.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 819, § 1, effective January 1, 2022.

15-1.2-402. Distribution from trust or estate.

A fiduciary shall allocate to income an amount received as a distribution of income, including a unitrust distribution under part 3 of this article 1.2, from a trust or estate in which the fiduciary has an interest, other than an interest the fiduciary purchased in a trust that is an investment entity, and shall allocate to principal an amount received as a distribution of principal from the trust or estate. If a fiduciary purchases, or receives from a settlor, an interest in a trust that is an investment entity, section 15-1.2-401, 15-1.2-415, or 15-1.2-416 apply to a receipt from the trust.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 822, § 1, effective January 1, 2022.

15-1.2-403. Business of other activity conducted by fiduciary.

1. This section applies to a business or other activity conducted by a fiduciary if the fiduciary determines that it is in the interests of the beneficiaries to account separately for the business or other activity instead of:
   1. Accounting for the business or other activity as part of the fiduciary's general accounting records; or
   2. Conducting the business or other activity through an entity described in section 15-1.2-401 (1)(b)(I).
2. A fiduciary may account separately under this section for the transactions of a business or other activity, whether or not assets of the business or other activity are segregated from other assets held by the fiduciary.
3. A fiduciary that accounts separately under this section for a business or other activity:
   1. May determine:
      1. The extent to which the net cash receipts of the business or other activity must be retained for:
         1. Working capital;
         2. The acquisition or replacement of fixed assets; and
         3. Other reasonably foreseeable needs of the business or other activity; and
      2. The extent to which the remaining net cash receipts are accounted for as principal or income in the fiduciary's general accounting records for the trust;
   2. May make a determination under subsection (3)(a) of this section separately and differently from the fiduciary's decisions concerning distributions of income or principal; and
   3. Shall account for the net amount received from the sale of an asset of the business or other activity, other than a sale in the ordinary course of the business or other activity, as principal in the fiduciary's general accounting records for the trust, to the extent the fiduciary determines that the net amount received is no longer required in the conduct of the business or other activity.
4. Activities for which a fiduciary may account separately under this section include:
   1. Retail, manufacturing, service, and other traditional business activities;
   2. Farming;
   3. Raising and selling livestock and other animals;
   4. Managing rental properties;
   5. Extracting minerals, water, and other natural resources;
   6. Growing and cutting timber;
   7. An activity to which section 15-1.2-414, 15-1.2-415, or 15-1.2-416 applies; and
   8. Any other business conducted by the fiduciary.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 822, § 1, effective January 1, 2022.

15-1.2-404. Principal receipts.

1. A fiduciary shall allocate to principal:
   1. To the extent not allocated to income under this article 1.2, an asset received from:
      1. An individual during the individual's lifetime;
      2. An estate;
      3. A trust on termination of an income interest; or
      4. A payor under a contract naming the fiduciary as beneficiary;
   2. Except as otherwise provided in this part 4, money or other property received from the sale, exchange, liquidation, or change in form of a principal asset;
   3. An amount recovered from a third party to reimburse the fiduciary because of a disbursement described in section 15-1.2-502 (1) or for another reason to the extent not based on loss of income;
   4. Proceeds of property taken by eminent domain; except that proceeds awarded for loss of income in an accounting period are income if a current income beneficiary had a mandatory income interest during the period;
   5. Net income received in an accounting period during which there is no beneficiary to which a fiduciary may or must distribute income; and
   6. Other receipts as provided in sections 15-1.2-408 through 15-1.2-416.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 823, § 1, effective January 1, 2022.

15-1.2-405. Rental property.

1. To the extent a fiduciary does not account for the management of rental property as a business under section 15-1.2-403, the fiduciary shall allocate to income an amount received as rent of real or personal property, including an amount received for cancellation or renewal of a lease. An amount received as a refundable deposit, including a security deposit or a deposit that is to be applied as rent for future periods:
   1. Must be added to principal and held subject to the terms of the lease, except as otherwise provided by law other than this article 1.2; and
   2. Is not allocated to income or available for distribution to a beneficiary until the fiduciary's contractual obligations have been satisfied with respect to that amount.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 824, § 1, effective January 1, 2022.

15-1.2-406. Receipt on obligation to be paid in money.

1. This section does not apply to an obligation to which section 15-1.2-409, 15-1.2-410, 15-1.2-411, 15-1.2-412, 15-1.2-414, 15-1.2-415, or 15-1.2-416 applies.
2. A fiduciary shall allocate to income, without provision for amortization of premium, an amount received as interest on an obligation to pay money to the fiduciary, including an amount received as consideration for prepaying principal.
3. A fiduciary shall allocate to principal an amount received from the sale, redemption, or other disposition of an obligation to pay money to the fiduciary. A fiduciary shall allocate to income the increment in value of a bond or other obligation for the payment of money bearing no stated interest but payable or redeemable, at maturity or another future time, in an amount that exceeds the amount in consideration of which it was issued.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 824, § 1, effective January 1, 2022.

15-1.2-407. Insurance policy or contract.

1. This section does not apply to a contract to which section 15-1.2-409 applies.
2. Except as otherwise provided in subsection (3) of this section, a fiduciary shall allocate to principal the proceeds of a life insurance policy or other contract received by the fiduciary as beneficiary, including a contract that insures against damage to, destruction of, or loss of title to an asset. The fiduciary shall allocate dividends on an insurance policy to income to the extent premiums on the policy are paid from income and to principal to the extent premiums on the policy are paid from principal.
3. A fiduciary shall allocate to income proceeds of a contract that insures the fiduciary against loss of:
   1. Occupancy or other use by a current income beneficiary;
   2. Income; or
   3. Subject to section 15-1.2-403, profits from a business.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 825, § 1, effective January 1, 2022.

15-1.2-408. Insubstantial allocation not required.

1. If a fiduciary determines that an allocation between income and principal required by section 15-1.2-409, 15-1.2-410, 15-1.2-411, 15-1.2-412, or 15-1.2-415 is insubstantial, the fiduciary may allocate the entire amount to principal, unless section 15-1.2-203 (5) applies to the allocation.
2. A fiduciary may presume an allocation is insubstantial under subsection (1) of this section if:
   1. The amount of the allocation would increase or decrease net income in an accounting period, as determined before the allocation, by less than ten percent; and
   2. The asset producing the receipt to be allocated has a fair market value less than ten percent of the total fair market value of the assets owned or held by the fiduciary at the beginning of the accounting period.
3. The power to make a determination under subsection (1) of this section may be:
   1. Exercised by a co-fiduciary in the manner described in section 15-1.2-203 (6); or
   2. Released or delegated for a reason described in section 15-1.2-203 (7) and in the manner described in section 15-1.2-203 (8).

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 825, § 1, effective January 1, 2022.

15-1.2-409. Deferred compensation, annuity, or similar payment - definitions.

1. In this section:
   1. "Internal income of a separate fund" means the amount determined under subsection (2) of this section.
   2. "Marital trust" means a trust:
      1. Of which the settlor's surviving spouse is the only current income beneficiary and is entitled to a distribution of all the current net income of the trust; and
      2. That qualifies for a marital deduction with respect to the settlor's estate under section 2056 of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 2056, as amended, because:
         1. An election to qualify for a marital deduction under section 2056 (b)(7) of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 2056 (b)(7), as amended, has been made; or
         2. The trust qualifies for a marital deduction under section 2056 (b)(5) of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 2056 (b)(5), as amended.
   3. "Payment" means an amount a fiduciary may receive over a fixed number of years or during the life of one or more individuals because of services rendered or property transferred to the payor in exchange for future amounts the fiduciary may receive. The term includes an amount received in money or property from the payor's general assets or from a separate fund created by the payor.
   4. "Separate fund" includes a private or commercial annuity, an individual retirement account, and a pension, profit-sharing, stock-bonus, or stock-ownership plan.
2. For each accounting period, the following rules apply to a separate fund:
   1. The fiduciary shall determine the internal income of the separate fund as if the separate fund were a trust subject to this article 1.2;
   2. If the fiduciary cannot determine the internal income of the separate fund under subsection (2)(a) of this section, the internal income of the separate fund is deemed to equal four percent of the value of the separate fund, according to the most recent statement of value preceding the beginning of the accounting period; and
   3. If the fiduciary cannot determine the value of the separate fund under subsection (2)(b) of this section, the value of the separate fund is deemed to equal the present value of the expected future payments, as determined under section 7520 of the "Internal Revenue Code of 1986", 26 U.S.C. sec. 7520, as amended, for the month preceding the beginning of the accounting period for which the computation is made.
3. A fiduciary shall allocate a payment received from a separate fund during an accounting period to income, to the extent of the internal income of the separate fund during the period, and the balance to principal.
4. The fiduciary of a marital trust shall:
   1. Withdraw from a separate fund the amount the current income beneficiary of the trust requests the fiduciary to withdraw, not greater than the amount by which the internal income of the separate fund during the accounting period exceeds the amount the fiduciary otherwise receives from the separate fund during the period;
   2. Transfer from principal to income the amount the current income beneficiary requests the fiduciary to transfer, not greater than the amount by which the internal income of the separate fund during the period exceeds the amount the fiduciary receives from the separate fund during the period after the application of subsection (4)(a) of this section; and
   3. Distribute to the current income beneficiary as income:
      1. The amount of the internal income of the separate fund received or withdrawn during the period; and
      2. The amount transferred from principal to income under subsection (4)(b) of this section.
5. For a trust, other than a marital trust, of which one or more current income beneficiaries are entitled to a distribution of all the current net income, the fiduciary shall transfer from principal to income the amount by which the internal income of a separate fund during the accounting period exceeds the amount the fiduciary receives from the separate fund during the period.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 826, § 1, effective January 1, 2022.

15-1.2-410. Liquidating asset - definition.

1. In this section, "liquidating asset" means an asset whose value will diminish or terminate because the asset is expected to produce receipts for a limited time. The term includes a leasehold, patent, copyright, royalty right, and right to receive payments during a period of more than one year under an arrangement that does not provide for the payment of interest on the unpaid balance.
2. This section does not apply to a receipt subject to section 15-1.2-401, 15-1.2-409, 15-1.2-411, 15-1.2-412, 15-1.2-414, 15-1.2-415, 15-1.2-416, or 15-1.2-503.
3. A fiduciary shall allocate:
   1. To income:
      1. A receipt produced by a liquidating asset, to the extent the receipt does not exceed four percent of the value of the asset; or
      2. If the fiduciary cannot determine the value of the asset, ten percent of the receipt; and
   2. To principal, the balance of the receipt.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 827, § 1, effective January 1, 2022.

15-1.2-411. Minerals, water, and other natural resources.

1. To the extent a fiduciary does not account for a receipt from an interest in minerals, water, or other natural resources as a business under section 15-1.2-403, the fiduciary shall allocate the receipt:
   1. To income, to the extent received:
      1. As delay rental or annual rent on a lease;
      2. As a factor for interest or the equivalent of interest under an agreement creating a production payment; or
      3. On account of an interest in renewable water;
   2. To principal, if received from a production payment, to the extent subsection (1)(a)(II) of this section does not apply; or
   3. Between income and principal equitably, to the extent received:
      1. On account of an interest in non-renewable water;
      2. As a royalty, shut-in-well payment, take-or-pay payment, or bonus; or
      3. From a working interest or any other interest not provided for in subsection (1)(a), (1)(b), (1)(c)(I), or (1)(c)(II) of this section.
2. This section applies to an interest owned or held by a fiduciary whether or not a settlor was extracting minerals, water, or other natural resources before the fiduciary owned or held the interest.
3. An allocation of a receipt under subsection (1)(c) of this section is presumed to be equitable if the amount allocated to principal is equal to the amount allowed by sections 611 through 614 of the "Internal Revenue Code of 1986", 26 U.S.C. secs. 611 through 614, as amended, as a deduction for depletion of the interest.
4. If a fiduciary owns or holds an interest in minerals, water, or other natural resources before the effective date of this article 1.2, the fiduciary may allocate receipts from the interest as provided in this section or in the manner used by the fiduciary before the effective date of this article 1.2. If the fiduciary acquires an interest in minerals, water, or other natural resources on or after the effective date of this article 1.2, the fiduciary shall allocate receipts from the interest as provided in this section.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 828, § 1, effective January 1, 2022.

15-1.2-412. Timber.

1. To the extent a fiduciary does not account for receipts from the sale of timber and related products as a business under section 15-1.2-403, the fiduciary shall allocate the net receipts:
   1. To income, to the extent the amount of timber cut from the land does not exceed the rate of growth of the timber;
   2. To principal, to the extent the amount of timber cut from the land exceeds the rate of growth of the timber or the net receipts are from the sale of standing timber;
   3. Between income and principal if the net receipts are from the lease of land used for growing and cutting timber or from a contract to cut timber from land, by determining the amount of timber cut from the land under the lease or contract and applying the rules in subsections (1)(a) and (1)(b) of this section; or
   4. To principal, to the extent advance payments, bonuses, and other payments are not allocated under subsection (1)(a), (1)(b), or (1)(c) of this section.
2. In determining net receipts to be allocated under subsection (1) of this section, a fiduciary shall deduct and transfer to principal a reasonable amount for depletion.
3. This section applies to land owned or held by a fiduciary whether or not a settlor was cutting timber from the land before the fiduciary owned or held the property.
4. If a fiduciary owns or holds an interest in land used for growing and cutting timber before the effective date of this article 1.2, the fiduciary may allocate net receipts from the sale of timber and related products as provided in this section or in the manner used by the fiduciary before the effective date of this article 1.2. If the fiduciary acquires an interest in land used for growing and cutting timber on or after the effective date of this article 1.2, the fiduciary shall allocate net receipts from the sale of timber and related products as provided in this section.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 829, § 1, effective January 1, 2022.

15-1.2-413. Marital deduction property not productive of income.

1. If a trust received property for which a gift or estate tax marital deduction was allowed and the settlor's spouse holds a mandatory income interest in the trust, the spouse may require the trustee, to the extent the trust assets otherwise do not provide the spouse with sufficient income from or use of the trust assets to qualify for the deduction, to:
   1. Make property productive of income;
   2. Convert property to property productive of income within a reasonable time; or
   3. Exercise the power to adjust under section 15-1.2-203.
2. The trustee may decide which action or combination of actions in subsection (1) of this section to take.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 829, § 1, effective January 1, 2022.

15-1.2-414. Derivative or option - definition.

1. In this section, "derivative" means a contract, instrument, other arrangement, or combination of contracts, instruments, or other arrangements, the value, rights, and obligations of which are, in whole or in part, dependent on or derived from an underlying tangible or intangible asset, group of tangible or intangible assets, index, or occurrence of an event. The term includes stocks, fixed income securities, and financial instruments and arrangements based on indices, commodities, interest rates, weather-related events, and credit-default events.
2. To the extent a fiduciary does not account for a transaction in derivatives as a business under section 15-1.2-403, the fiduciary shall allocate ten percent of receipts from the transaction and ten percent of disbursements made in connection with the transaction to income and the balance to principal.
3. Subsection (4) of this section applies if:
   1. A fiduciary:
      1. Grants an option to buy property from a trust, whether or not the trust owns the property when the option is granted;
      2. Grants an option that permits another person to sell property to the trust; or
      3. Acquires an option to buy property for the trust or an option to sell an asset owned by the trust; and
   2. The fiduciary or other owner of the asset is required to deliver the asset if the option is exercised.
4. If this subsection (4) applies, the fiduciary shall allocate ten percent to income and the balance to principal of the following amounts:
   1. An amount received for granting the option;
   2. An amount paid to acquire the option; and
   3. Gain or loss realized on the exercise, exchange, settlement, offset, closing, or expiration of the option.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 830, § 1, effective January 1, 2022.

15-1.2-415. Asset-backed security.

1. Except as otherwise provided in subsection (2) of this section, a fiduciary shall allocate to income a receipt from or related to an asset-backed security, to the extent the payor identifies the payment as being from interest or other current return, and to principal the balance of the receipt.
2. If a fiduciary receives one or more payments in exchange for part or all of the fiduciary's interest in an asset-backed security, including a liquidation or redemption of the fiduciary's interest in the security, the fiduciary shall allocate to income ten percent of receipts from the transaction and ten percent of disbursements made in connection with the transaction, and to principal the balance of the receipts and disbursements.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 831, § 1, effective January 1, 2022.

15-1.2-416. Other financial instrument or arrangement.

A fiduciary shall allocate receipts from or related to a financial instrument or arrangement not otherwise addressed by this article 1.2. The allocation must be consistent with sections 15-1.2-414 and 15-1.2-415.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 831, § 1, effective January 1, 2022.

15-1.2-501. Disbursement from income.

1. Subject to section 15-1.2-504, and except as otherwise provided in section 15-1.2-601 (3)(b) or (3)(c), a fiduciary shall disburse from income:
   1. One-half of:
      1. The regular compensation of the fiduciary and any person providing investment advisory, custodial, or other services to the fiduciary, to the extent income is sufficient; and
      2. An expense for an accounting, judicial or nonjudicial proceeding, or other matter that involves both income and successive interests, to the extent income is sufficient;
   2. The balance of the disbursements described in subsection (1)(a) of this section, to the extent a fiduciary that is an independent person determines that making those disbursements from income would be in the interests of the beneficiaries;
   3. Another ordinary expense incurred in connection with administration, management, or preservation of property and distribution of income, including interest, an ordinary repair, regularly recurring tax assessed against principal, and an expense of an accounting, judicial or nonjudicial proceeding, or other matter that involves primarily an income interest, to the extent income is sufficient; and
   4. A premium on insurance covering loss of a principal asset or income from or use of the asset.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 831, § 1, effective January 1, 2022.

15-1.2-502. Disbursement from principal.

1. Subject to section 15-1.2-505, and except as otherwise provided in section 15-1.2-601 (3)(b), a fiduciary shall disburse from principal:
   1. The balance of the disbursements described in section 15-1.2-501 (1)(a) and (1)(c), after application of section 15-1.2-501 (1)(b);
   2. The fiduciary's compensation calculated on principal as a fee for acceptance, distribution, or termination;
   3. A payment of an expense to prepare for or execute a sale or other disposition of property;
   4. A payment on the principal of a trust debt;
   5. A payment of an expense of an accounting, judicial or nonjudicial proceeding, or other matter that involves primarily principal, including a proceeding to construe the terms of the trust or protect property;
   6. A payment of a premium for insurance, including title insurance, not described in section 15-1.2-501 (1)(d), of which the fiduciary is the owner and beneficiary;
   7. A payment of an estate or inheritance tax or other tax imposed because of the death of a decedent, including penalties, apportioned to the trust; and
   8. A payment:
      1. Related to environmental matters, including:
         1. Reclamation;
         2. Assessing environmental conditions;
         3. Remedying and removing environmental contamination;
         4. Monitoring remedial activities and the release of substances;
         5. Preventing future releases of substances;
         6. Collecting amounts from persons liable or potentially liable for the costs of activities described in subsections (1)(h)(I)(A) through (1)(h)(I)(E) of this section;
         7. Penalties imposed under environmental laws or regulations;
         8. Other actions to comply with environmental laws or regulations;
         9. Statutory or common law claims by third parties; and
         10. Defending claims based on environmental matters; and
      2. For a premium for insurance for matters described in subsection (1)(h)(I) of this section.
2. If a principal asset is encumbered with an obligation that requires income from the asset to be paid directly to a creditor, the fiduciary shall transfer from principal to income an amount equal to the income paid to the creditor in reduction of the principal balance of the obligation.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 832, § 1, effective January 1, 2022.

15-1.2-503. Transfer from income to principal for depreciation - definition.

1. In this section, "depreciation" means a reduction in value due to wear, tear, decay, corrosion, or gradual obsolescence of a tangible asset having a useful life of more than one year.
2. A fiduciary may transfer to principal a reasonable amount of the net cash receipts from a principal asset that is subject to depreciation, but may not transfer any amount for depreciation:
   1. Of the part of real property used or available for use by a beneficiary as a residence;
   2. Of tangible personal property held or made available for the personal use or enjoyment of a beneficiary; or
   3. Under this section, to the extent the fiduciary accounts:
      1. Under section 15-1.2-410 for the asset; or
      2. Under section 15-1.2-403 for the business or other activity in which the asset is used.
3. An amount transferred to principal under this section need not be separately held.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 833, § 1, effective January 1, 2022.

15-1.2-504. Reimbursement of income from principal.

1. If a fiduciary makes or expects to make an income disbursement described in subsection (2) of this section, the fiduciary may transfer an appropriate amount from principal to income in one or more accounting periods to reimburse income.
2. To the extent the fiduciary has not been and does not expect to be reimbursed by a third party, income disbursements to which subsection (1) of this section applies include:
   1. An amount chargeable to principal but paid from income because principal is illiquid;
   2. A disbursement made to prepare property for sale, including improvements and commissions; and
   3. A disbursement described in section 15-1.2-502 (1).
3. If an asset whose ownership gives rise to an income disbursement becomes subject to a successive interest after an income interest ends, the fiduciary may continue to make transfers under subsection (1) of this section.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 833, § 1, effective January 1, 2022.

15-1.2-505. Reimbursement of principal from income.

1. If a fiduciary makes or expects to make a principal disbursement described in subsection (2) of this section, the fiduciary may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or provide a reserve for future principal disbursements.
2. To the extent a fiduciary has not been and does not expect to be reimbursed by a third party, principal disbursements to which subsection (1) of this section applies include:
   1. An amount chargeable to income but paid from principal because income is not sufficient;
   2. The cost of an improvement to principal, whether a change to an existing asset or the construction of a new asset, including a special assessment;
   3. A disbursement made to prepare property for rental, including tenant allowances, leasehold improvements, and commissions;
   4. A periodic payment on an obligation secured by a principal asset, to the extent the amount transferred from income to principal for depreciation is less than the periodic payment; and
   5. A disbursement described in section 15-1.2-502 (1).
3. If an asset whose ownership gives rise to a principal disbursement becomes subject to a successive interest after an income interest ends, the fiduciary may continue to make transfers under subsection (1) of this section.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 834, § 1, effective January 1, 2022.

15-1.2-506. Income taxes.

1. A tax required to be paid by a fiduciary which is based on receipts allocated to income must be paid from income.
2. A tax required to be paid by a fiduciary which is based on receipts allocated to principal must be paid from principal, even if the tax is called an income tax by the taxing authority.
3. Subject to subsection (4) of this section and sections 15-1.2-504, 15-1.2-505, and 15-1.2-507, a tax required to be paid by a fiduciary on a share of an entity's taxable income in an accounting period must be paid from:
   1. Income and principal proportionately to the allocation between income and principal of receipts from the entity in the period; and
   2. Principal to the extent the tax exceeds the receipts from the entity in the period.
4. After applying subsections (1) through (3) of this section, a fiduciary shall adjust income or principal receipts, to the extent the taxes the fiduciary pays are reduced because of a deduction for a payment made to a beneficiary.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 834, § 1, effective January 1, 2022.

15-1.2-507. Adjustment between income and principal because of taxes.

1. A fiduciary may make an adjustment between income and principal to offset the shifting of economic interests or tax benefits between current income beneficiaries and successor beneficiaries which arises from:
   1. An election or decision the fiduciary makes regarding a tax matter, other than a decision to claim an income tax deduction to which subsection (2) of this section applies;
   2. An income tax or other tax imposed on the fiduciary or a beneficiary as a result of a transaction involving the fiduciary or a distribution by the fiduciary; or
   3. Ownership by the fiduciary of an interest in an entity a part of whose taxable income, whether or not distributed, is includable in the taxable income of the fiduciary or a beneficiary.
2. If the amount of an estate tax marital or charitable deduction is reduced because a fiduciary deducts an amount paid from principal for income tax purposes instead of deducting it for estate tax purposes and, as a result, estate taxes paid from principal are increased and income taxes paid by the fiduciary or a beneficiary are decreased, the fiduciary shall charge each beneficiary that benefits from the decrease in income tax to reimburse the principal from which the increase in estate tax is paid. The total reimbursement must equal the increase in the estate tax, to the extent the principal used to pay the increase would have qualified for a marital or charitable deduction but for the payment. The share of the reimbursement for each fiduciary or beneficiary whose income taxes are reduced must be the same as its share of the total decrease in income tax.
3. A fiduciary that charges a beneficiary under subsection (2) of this section may offset the charge by obtaining payment from the beneficiary, withholding an amount from future distributions to the beneficiary, or adopting another method or combination of methods.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 835, § 1, effective January 1, 2022.

15-1.2-601. Determination and distribution of net income.

1. This section applies when:
   1. The death of an individual results in the creation of an estate or trust; or
   2. An income interest in a trust terminates, whether the trust continues or is distributed.
2. A fiduciary of an estate or trust with an income interest that terminates shall determine, under subsection (7) of this section and parts 4, 5, and 7 of this article 1.2, the amount of net income and net principal receipts received from property specifically given to a beneficiary. The fiduciary shall distribute the net income and net principal receipts to the beneficiary that is to receive the specific property.
3. A fiduciary shall determine the income and net income of an estate or income interest in a trust which terminates, other than the amount of net income determined under subsection (2) of this section, under parts 4, 5, and 7 of this article 1.2 and by:
   1. Including in net income all income from property used or sold to discharge liabilities;
   2. Paying from income or principal, in the fiduciary's discretion, fees of attorneys, accountants, and fiduciaries, court costs and other expenses of administration, and interest on estate and inheritance taxes and other taxes imposed because of the decedent's death, but the fiduciary may pay the expenses from income of property passing to a trust for which the fiduciary claims a federal estate tax marital or charitable deduction only to the extent:
      1. The payment of the expenses from income will not cause the reduction or loss of the deduction; or
      2. The fiduciary makes an adjustment under section 15-1.2-507 (2); and
   3. Paying from principal other disbursements made or incurred in connection with the settlement of the estate or the winding up of an income interest that terminates, including:
      1. To the extent authorized by the decedent's will, the terms of the trust, or applicable law, debts, funeral expenses, disposition of remains, family allowances, estate and inheritance taxes, and other taxes imposed because of the decedent's death; and
      2. Related penalties that are apportioned, by the decedent's will, the terms of the trust, or applicable law, to the estate or income interest that terminates.
4. If a decedent's will, the terms of a trust, or applicable law provides for the payment of interest or the equivalent of interest to a beneficiary that receives a pecuniary amount outright, the fiduciary shall make the payment from net income determined under subsection (3) of this section or from principal to the extent net income is insufficient.
5. Reserved.
6. A fiduciary shall distribute net income remaining after payments required by subsection (4) of this section in the manner described in section 15-1.2-602 to all other beneficiaries, including a beneficiary that receives a pecuniary amount in trust, even if the beneficiary holds an unqualified power to withdraw assets from the trust or other presently exercisable general power of appointment over the trust.
7. A fiduciary may not reduce principal or income receipts from property described in subsection (2) of this section because of a payment described in section 15-1.2-501 or 15-1.2-502, to the extent the decedent's will, the terms of the trust, or applicable law requires the fiduciary to make the payment from assets other than the property or to the extent the fiduciary recovers or expects to recover the payment from a third party. The net income and principal receipts from the property must be determined by including the amount the fiduciary receives or pays regarding the property, whether the amount accrued or became due before, on, or after the date of the decedent's death or an income interest's terminating event, and making a reasonable provision for an amount the estate or income interest may become obligated to pay after the property is distributed.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 836, § 1, effective January 1, 2022.

15-1.2-602. Distribution to successor beneficiary.

1. Except to the extent part 3 of this article 1.2 applies for a beneficiary that is a trust, each beneficiary described in section 15-1.2-601 (6) is entitled to receive a share of the net income equal to the beneficiary's fractional interest in undistributed principal assets, using values as of the distribution date. If a fiduciary makes more than one distribution of assets to beneficiaries to which this section applies, each beneficiary, including a beneficiary that does not receive part of the distribution, is entitled, as of each distribution date, to a share of the net income the fiduciary received after the decedent's death, an income interest's other terminating event, or the preceding distribution by the fiduciary.
2. In determining a beneficiary's share of net income under subsection (1) of this section, the following rules apply:
   1. The beneficiary is entitled to receive a share of the net income equal to the beneficiary's fractional interest in the undistributed principal assets immediately before the distribution date;
   2. The beneficiary's fractional interest under subsection (2)(a) of this section must be calculated:
      1. On the aggregate value of the assets as of the distribution date without reducing the value by any unpaid principal obligation; and
      2. Without regard to:
         1. Property specifically given to a beneficiary under the decedent's will or the terms of the trust; and
         2. Property required to pay pecuniary amounts not in trust; and
   3. The distribution date under subsection (2)(a) of this section may be the date as of which the fiduciary calculates the value of the assets if that date is reasonably near the date on which the assets are distributed.
3. To the extent a fiduciary does not distribute under this section all the collected but undistributed net income to each beneficiary as of a distribution date, the fiduciary shall maintain records showing the interest of each beneficiary in the net income.
4. If this section applies to income from an asset, a fiduciary may apply the rules in this section to net gain or loss realized from the disposition of the asset after the decedent's death, an income interest's terminating event, or the preceding distribution by the fiduciary.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 837, § 1, effective January 1, 2022.

15-1.2-701. When right to income begins and ends.

1. An income beneficiary is entitled to net income in accordance with the terms of the trust from the date an income interest begins. The income interest begins on the date specified in the terms of the trust or, if no date is specified, on the date an asset becomes subject to:
   1. The trust for the current income beneficiary; or
   2. A successive interest for a successor beneficiary.
2. An asset becomes subject to a trust under subsection (1)(a) of this section:
   1. For an asset that is transferred to the trust during the settlor's life, on the date the asset is transferred;
   2. For an asset that becomes subject to the trust because of a decedent's death, on the date of the decedent's death, even if there is an intervening period of administration of the decedent's estate; or
   3. For an asset that is transferred to a fiduciary by a third party because of a decedent's death, on the date of the decedent's death.
3. An asset becomes subject to a successive interest under subsection (1)(b) of this section on the day after the preceding income interest ends, as determined under subsection (4) of this section, even if there is an intervening period of administration to wind up the preceding income interest.
4. An income interest ends on the day before an income beneficiary dies or another terminating event occurs or on the last day of a period during which there is no beneficiary to which a fiduciary may or must distribute income.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 838, § 1, effective January 1, 2022.

15-1.2-702. Apportionment of receipts and disbursements when decedent dies or income interest begins.

1. A fiduciary shall allocate an income receipt or disbursement, other than a receipt to which section 15-1.2-601 (2) applies, to principal if its due date occurs before the date on which:
   1. For an estate, the decedent died; or
   2. For a trust or successive interest, an income interest begins.
2. If the due date of a periodic income receipt or disbursement occurs on or after the date on which a decedent died or an income interest begins, a fiduciary shall allocate the receipt or disbursement to income.
3. If an income receipt or disbursement is not periodic or has no due date, a fiduciary shall treat the receipt or disbursement under this section as accruing from day to day. The fiduciary shall allocate to principal the portion of the receipt or disbursement accruing before the date on which a decedent died or an income interest begins, and to income the balance.
4. A receipt or disbursement is periodic under subsections (2) and (3) of this section if:
   1. The receipt or disbursement must be paid at regular intervals under an obligation to make payments; or
   2. The payor customarily makes payments at regular intervals.
5. An item of income or obligation is due under this section on the date the payor is required to make a payment. If a payment date is not stated, there is no due date.
6. Distributions to shareholders or other owners from an entity to which section 15-1.2-401 applies are due:
   1. On the date fixed by or on behalf of the entity for determining the persons entitled to receive the distribution;
   2. If no date is fixed, on the date of the decision by or on behalf of the entity to make the distribution; or
   3. If no date is fixed and the fiduciary does not know the date of the decision by or on behalf of the entity to make the distribution, on the date the fiduciary learns of the decision.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 839, § 1, effective January 1, 2022.

15-1.2-703. Apportionment when income interest ends - definition.

1. In this section, "undistributed income" means net income received on or before the date on which an income interest ends. The term does not include an item of income or expense which is due or accrued or net income that has been added or is required to be added to principal under the terms of the trust.
2. Except as otherwise provided in subsection (3) of this section, when a mandatory income interest of a beneficiary ends, the fiduciary shall pay the beneficiary's share of the undistributed income that is not disposed of under the terms of the trust to the beneficiary or, if the beneficiary does not survive the date the interest ends, to the beneficiary's estate.
3. If a beneficiary has an unqualified power to withdraw more than five percent of the value of a trust immediately before an income interest ends:
   1. The fiduciary shall allocate to principal the undistributed income from the portion of the trust which may be withdrawn; and
   2. Subsection (2) of this section applies only to the balance of the undistributed income.
4. When a fiduciary's obligation to pay a fixed annuity or a fixed fraction of the value of assets ends, the fiduciary shall prorate the final payment as required to preserve an income tax, gift tax, estate tax, or other tax benefit.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 840, § 1, effective January 1, 2022.

15-1.2-801. Uniformity of application and construction.

In applying and construing this uniform act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 840, § 1, effective January 1, 2022.

15-1.2-802. Relation to electronic signatures in global and national commerce act.

This article 1.2 modifies, limits, or supersedes the federal "Electronic Signatures in Global and National Commerce Act", 15 U.S.C. sec. 7001 et seq., but does not modify, limit, or supersede section 101 (c) of that act, 15 U.S.C. sec. 7001 (c), or authorize electronic delivery of any of the notices described in section 103 (b) of that act, 15 U.S.C. sec. 7003 (b).

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 840, § 1, effective January 1, 2022.

15-1.2-803. Application to trust or estate.

1. Except as provided in the terms of the trust and subsection (2) of this section, this article 1.2 shall take effect on January 1, 2022.
2. 1. This article 1.2 shall not apply to a trust established under a will or trust agreement existing and irrevocable on July 1, 2001, if a trustee of the trust has elected to apply the "Uniform Principal and Income Act" of this state that was in effect on June 30, 2001.
   2. This article 1.2 shall not apply to a trust existing on July 1, 2001, in which no trustee had the authority to act under section 15-1-404 of the "Uniform Principal and Income Act", subparts 1 to 6 of part 4 of article 1 of this title 15, as it existed on or after July 1, 2001, unless a trustee of the trust elected to apply the "Uniform Principal and Income Act" as it existed on or after July 1, 2001.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 840, § 1, effective January 1, 2022.

15-1.2-804. Severability.

If any provision of this article 1.2 or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this article 1.2 which can be given effect without the invalid provision or application, and to this end the provisions of this article 1.2 are severable.

Source: L. 2021: Entire article added, (SB 21-171), ch. 143, p. 841, § 1, effective January 1, 2022.

15-1.5-101. Definitions.

As used in this article 1.5:

1. "Adult" means an individual who is at least eighteen years of age.
2. "Beneficiary" means an individual for whom property has been transferred to or held under a declaration of trust by a custodial trustee for the individual's use and benefit under this article.
3. "Conservator" means a person appointed or qualified by a court to manage the estate of an individual or a person legally authorized to perform substantially the same functions.
4. "Court" means the district courts of this state, except in the city and county of Denver, where it means the probate court.
5. "Custodial trust property" means an interest in property transferred to or held under a declaration of trust by a custodial trustee under this article and the income from and proceeds of that interest.
6. "Custodial trustee" means a person designated as trustee of a custodial trust under this article or a substitute or successor to the person designated.
7. "Guardian" means a person appointed or qualified by a court as a guardian of an individual, including a limited guardian, but not a person who is only a guardian ad litem.
8. "Incapacitated" means lacking the ability to manage property and business affairs effectively by reason of a behavioral or mental health disorder, an intellectual and developmental disability, a physical illness or disability, a substance use disorder, confinement, detention by a foreign power, disappearance, minority, or other disabling cause.
9. "Legal representative" means a personal representative or conservator.
10. "Member of the beneficiary's family" means a beneficiary's spouse, descendant, stepchild, parent, stepparent, grandparent, brother, sister, uncle, or aunt, whether related by whole or half blood or by adoption.
11. "Person" means an individual, corporation, business trust, estate, trust, partnership, joint venture, association, or any other legal or commercial entity.
12. "Personal representative" means an executor, administrator, or special administrator of a decedent's estate, a person legally authorized to perform substantially the same functions, or a successor to any of them.
13. "State" means a state, territory, or possession of the United States, the District of Columbia, or the Commonwealth of Puerto Rico.
14. "Transferor" means a person who creates a custodial trust by transfer or declaration.
15. "Trust company" means a financial institution, corporation, or other legal entity authorized to exercise general trust powers.

Source: L. 99: Entire article added, p. 1211, § 1, effective August 4. L. 2017: IP and (8) amended, (HB 17-1046), ch. 50, p. 157, § 7, effective March 16; (8) amended, (SB 17-242), ch. 263, p. 1295, § 115, effective May 25.

Cross references: For the legislative declaration in SB 17-242, see section 1 of chapter 263, Session Laws of Colorado 2017.

15-1.5-102. Custodial trust - general.

1. A person may create a custodial trust of property by a written transfer of the property to another person, evidenced by registration or by other instrument of transfer, executed in any lawful manner, naming as beneficiary an individual who may be the transferor, in which the transferee is designated, in substance, as custodial trustee under the "Colorado Uniform Custodial Trust Act".
2. A person may create a custodial trust of property by a written declaration, evidenced by registration of the property or by other instrument of declaration executed in any lawful manner, describing the property and naming as beneficiary an individual other than the declarant, in which the declarant as titleholder is designated, in substance, as custodial trustee under the "Colorado Uniform Custodial Trust Act". A registration or other declaration of trust for the sole benefit of the declarant is not a custodial trust under the "Colorado Uniform Custodial Trust Act".
3. Title to custodial trust property is in the custodial trustee and the beneficial interest is in the beneficiary.
4. Except as provided in subsection (5) of this section, a transferor may not terminate a custodial trust.
5. The beneficiary, if not incapacitated, or the conservator of an incapacitated beneficiary, may terminate a custodial trust by delivering to the custodial trustee a writing signed by the beneficiary or conservator declaring the termination. If not previously terminated, the custodial trust terminates on the death of the beneficiary.
6. Any person may augment existing custodial trust property by the addition of other property pursuant to this article.
7. The transferor may designate, or authorize the designation of, a successor custodial trustee in the trust instrument.
8. This article does not displace or restrict other means of creating trusts. A trust whose terms do not conform to this article may be enforceable according to its terms under other law.

Source: L. 99: Entire article added, p. 1212, § 1, effective August 4.

15-1.5-103. Custodial trustee for future payment or transfer.

1. A person having the right to designate the recipient of property payable or transferable upon a future event may create a custodial trust upon the occurrence of the future event by designating in writing the recipient, followed in substance by "as custodial trustee for (name of beneficiary) under the "Colorado Uniform Custodial Trust Act"".
2. Persons may be designated as substitute or successor custodial trustees to whom the property must be paid or transferred in the order named if the first designated custodial trustee is unable or unwilling to serve.
3. A designation under this section may be made in a will, a trust, a deed, a multiple-party account, an insurance policy, an instrument exercising a power of appointment, or a writing designating a beneficiary of contractual rights. Otherwise, to be effective, the designation must be registered with or delivered to the fiduciary, payor, issuer, or obligor of the future right.

Source: L. 99: Entire article added, p. 1213, § 1, effective August 4.

15-1.5-104. Form and effect of receipt and acceptance by custodial trustee - jurisdiction.

1. Obligations of a custodial trustee, including the obligation to follow upon directions of the beneficiary, arise under this article upon the custodial trustee's acceptance, express or implied, of the custodial trust property.
2. The custodial trustee's acceptance may be evidenced by a writing stating in substance:

   I, ____________ (name of custodial trustee) acknowledge receipt of the custodial trust property described below or in the attached instrument and accept the custodial trust as custodial trustee for ____________ (name of beneficiary) under the "Colorado Uniform Custodial Trust Act". I undertake to administer and distribute the custodial trust property pursuant to the "Colorado Uniform Custodial Trust Act". My obligations as custodial trustee are subject to the directions of the beneficiary unless the beneficiary is designated as, is, or becomes incapacitated. The custodial trust property consists of ____________.

   Dated: _______________

   _____________________

   (Signature of Custodial Trustee)

3. Upon accepting custodial trust property, a person designated as custodial trustee under this article is subject to personal jurisdiction of the court with respect to any matter relating to the custodial trust.

CUSTODIAL TRUSTEE'S RECEIPT AND ACCEPTANCE

Source: L. 99: Entire article added, p. 1214, § 1, effective August 4.

15-1.5-105. Transfer to custodial trustee by fiduciary or obligor - facility of payment.

1. Unless otherwise directed by an instrument designating a custodial trustee pursuant to section 15-1.5-103, a person, including a fiduciary other than a custodial trustee, who holds property of or owes a debt to an incapacitated individual not having a conservator may make a transfer to an adult member of the beneficiary's family or to a trust company as custodial trustee for the use and benefit of the incapacitated individual. If the value of the property or the debt exceeds thirty thousand dollars, the transfer is not effective unless authorized by the court.
2. A written acknowledgment of delivery, signed by a custodial trustee, is a sufficient receipt and discharge for property transferred to the custodial trustee pursuant to this section.

Source: L. 99: Entire article added, p. 1214, § 1, effective August 4.

15-1.5-106. Multiple beneficiaries - separate custodial trusts - survivorship.

1. Beneficial interests in a custodial trust created for multiple beneficiaries are deemed to be separate custodial trusts of equal undivided interests for each beneficiary. Except in a transfer or declaration for use and benefit of husband and wife, for whom survivorship is presumed, a right of survivorship does not exist unless the instrument creating the custodial trust specifically provides for survivorship.
2. Custodial trust property held under this article by the same custodial trustee for the use and benefit of the same beneficiary may be administered as a single custodial trust.
3. A custodial trustee of custodial trust property held for more than one beneficiary shall separately account to each beneficiary pursuant to sections 15-1.5-107 and 15-1.5-115 for the administration of the custodial trust.

Source: L. 99: Entire article added, p. 1214, § 1, effective August 4.

15-1.5-107. General duties of custodial trustee.

1. If appropriate, a custodial trustee shall register or record the instrument vesting title to custodial trust property.
2. If the beneficiary is not incapacitated, a custodial trustee shall follow the directions of the beneficiary in the management, control, investment, or retention of the custodial trust property. In the absence of effective contrary direction by the beneficiary while not incapacitated, or if the beneficiary is incapacitated, the custodial trustee shall observe the standard of care that would be observed by a prudent person dealing with property of another and shall comply with the provisions of the "Colorado Uniform Prudent Investor Act". However, a custodial trustee, in the custodial trustee's discretion, may retain any custodial trust property received from the transferor.
3. Subject to subsection (2) of this section, a custodial trustee shall take control of and collect, hold, manage, invest, and reinvest custodial trust property.
4. A custodial trustee at all times shall keep custodial trust property of which the custodial trustee has control, separate from all other property in a manner sufficient to identify it clearly as custodial trust property of the beneficiary. Custodial trust property, the title to which is subject to recordation, is so identified if an appropriate instrument so identifying the property is recorded, and custodial trust property subject to registration is so identified if it is registered, or held in an account in the name of the custodial trustee, designated in substance: "as custodial trustee for (name of beneficiary) under the "Colorado Uniform Custodial Trust Act"".
5. A custodial trustee shall keep records of all transactions with respect to custodial trust property, including information necessary for the preparation of tax returns, and shall make the records and information available at reasonable times to the beneficiary or legal representative of the beneficiary.
6. The exercise of a durable power of attorney for an incapacitated beneficiary is not effective to terminate or direct the administration or distribution of a custodial trust.

Source: L. 99: Entire article added, p. 1215, § 1, effective August 4.

Editor's note: Colorado modified the model act by directing that the custodial trustee shall also comply with the provisions of the "Colorado Uniform Prudent Investor Act".

15-1.5-108. General powers of custodial trustee.

1. A custodial trustee, acting in a fiduciary capacity, has all the rights and powers over custodial trust property which an unmarried adult owner has over individually owned property, but a custodial trustee may exercise those rights and powers in a fiduciary capacity only.
2. This section does not relieve a custodial trustee from liability for a violation of section 15-1.5-107.

Source: L. 99: Entire article added, p. 1216, § 1, effective August 4.

15-1.5-109. Use of custodial trust property.

1. A custodial trustee shall pay to the beneficiary or expend for the beneficiary's use and benefit so much or all of the custodial trust property as the beneficiary while not incapacitated may direct from time to time.
2. If the beneficiary is incapacitated, the custodial trustee shall expend so much or all of the custodial trust property as the custodial trustee considers advisable for the use and benefit of the beneficiary and individuals who were supported by the beneficiary when the beneficiary became incapacitated or who are legally entitled to support by the beneficiary. Expenditures may be made in the manner, when, and to the extent that the custodial trustee determines suitable and proper, without court order and without regard to other support, income, or property of the beneficiary.
3. A custodial trustee may establish checking, savings, or other similar accounts of reasonable amounts under which either the custodial trustee or the beneficiary may withdraw funds from, or draw checks against, the accounts. Funds withdrawn from, or checks written against, the account by the beneficiary are distributions of custodial trust property by the custodial trustee to the beneficiary.

Source: L. 99: Entire article added, p. 1216, § 1, effective August 4.

15-1.5-110. Determination of incapacity - effect.

1. The custodial trustee shall administer the custodial trust as for an incapacitated beneficiary if:
   1. The custodial trust was created under section 15-1.5-105;
   2. The transferor has so directed in the instrument creating the custodial trust; or
   3. The custodial trustee has determined that the beneficiary is incapacitated.
2. A custodial trustee may determine that the beneficiary is incapacitated in reliance upon:
   1. Previous direction or authority given by the beneficiary while not incapacitated, including direction or authority pursuant to a durable power of attorney;
   2. The certificate of the beneficiary's physician; or
   3. Other persuasive evidence.
3. If a custodial trustee for an incapacitated beneficiary reasonably concludes that the beneficiary's incapacity has ceased, or that circumstances concerning the beneficiary's ability to manage property and business affairs have changed since the creation of a custodial trust directing administration as for an incapacitated beneficiary, the custodial trustee may administer the trust as for a beneficiary who is not incapacitated.
4. On petition of the beneficiary, the custodial trustee, or other person interested in the custodial trust property or the welfare of the beneficiary, the court shall determine whether the beneficiary is incapacitated.
5. Absent determination of incapacity of the beneficiary under subsection (2) or (4) of this section, a custodial trustee who has reason to believe that the beneficiary is incapacitated shall administer the custodial trust in accordance with the provisions of this article applicable to an incapacitated beneficiary.
6. Incapacity of a beneficiary does not terminate:
   1. The custodial trust;
   2. Any designation of a successor custodial trustee;
   3. Rights or powers of the custodial trustee; or
   4. Any immunities of third persons acting on instructions of the custodial trustee.

Source: L. 99: Entire article added, p. 1216, § 1, effective August 4.

15-1.5-111. Exemption of third persons from liability.

1. A third person in good faith and without a court order may act on instructions of, or otherwise deal with, a person purporting to make a transfer as, or purporting to act in the capacity of, a custodial trustee. In the absence of knowledge to the contrary, the third person is not responsible for determining:
   1. The validity of the purported custodial trustee's designation;
   2. The propriety of, or the authority under this article for, any action of the purported custodial trustee;
   3. The validity or propriety of an instrument executed or instruction given pursuant to this article either by the person purporting to make a transfer or declaration or by the purported custodial trustee; or
   4. The propriety of the application of property vested in the purported custodial trustee.

Source: L. 99: Entire article added, p. 1217, § 1, effective August 4.

15-1.5-112. Liability to third persons.

1. A claim based on a contract entered into by a custodial trustee acting in a fiduciary capacity, an obligation arising from the ownership or control of custodial trust property, or a tort committed in the course of administering the custodial trust may be asserted by a third person against the custodial trust property by proceeding against the custodial trustee in a fiduciary capacity, whether or not the custodial trustee or the beneficiary is personally liable.
2. A custodial trustee is not personally liable to a third person:
   1. On a contract properly entered into in a fiduciary capacity unless the custodial trustee fails to reveal that capacity or to identify the custodial trust in the contract; or
   2. For an obligation arising from control of custodial trust property or for a tort committed in the course of the administration of the custodial trust unless the custodial trustee is personally at fault.
3. A beneficiary is not personally liable to a third person for an obligation arising from beneficial ownership of custodial trust property or for a tort committed in the course of administration of the custodial trust unless the beneficiary is personally in possession of the custodial trust property giving rise to the liability or is personally at fault.
4. Subsections (2) and (3) of this section do not preclude actions or proceedings to establish liability of the custodial trustee or beneficiary to the extent the person sued is protected as the insured by liability insurance.

Source: L. 99: Entire article added, p. 1218, § 1 effective August 4.

15-1.5-113. Declination, resignation, incapacity, death, or removal of custodial trustee - designation of successor custodial trustee.

1. Before accepting the custodial trust property, a person designated as custodial trustee may decline to serve by notifying the person who made the designation, the transferor, or the transferor's legal representative. If an event giving rise to a transfer has not occurred, the substitute custodial trustee designated under section 15-1.5-103 becomes the custodial trustee, or, if a substitute custodial trustee has not been designated, the person who made the designation may designate a substitute custodial trustee pursuant to section 15-1.5-103. In other cases, the transferor or the transferor's legal representative may designate a substitute custodial trustee.
2. A custodial trustee who has accepted the custodial trust property may resign by:
   1. Delivering written notice to a successor custodial trustee, if any, the beneficiary, and, if the beneficiary is incapacitated, to the beneficiary's conservator, if any; and
   2. Transferring or registering, or recording an appropriate instrument relating to, the custodial trust property, in the name of, and delivering the records to, the successor custodial trustee identified under subsection (3) of this section.
3. If a custodial trustee or successor custodial trustee is ineligible, resigns, dies, or becomes incapacitated, the successor designated under section 15-1.5-102 (7) or section 15-1.5-103 becomes custodial trustee. If there is no effective provision for a successor, the beneficiary, if not incapacitated, may designate a successor custodial trustee. If the beneficiary is incapacitated, or fails to act within ninety days after the ineligibility, resignation, death, or incapacity of the custodial trustee, the beneficiary's conservator becomes successor custodial trustee. If the beneficiary does not have a conservator or the conservator fails to act, the resigning custodial trustee may designate a successor custodial trustee.
4. If a successor custodial trustee is not designated pursuant to subsection (3) of this section, the transferor, the legal representative of the transferor or of the custodial trustee, an adult member of the beneficiary's family, the guardian of the beneficiary, a person interested in the custodial trust property, or a person interested in the welfare of the beneficiary may petition the court to designate a successor custodial trustee.
5. A custodial trustee who declines to serve or resigns, or the legal representative of a deceased or incapacitated custodial trustee, as soon as practicable, shall put the custodial trust property and records in the possession and control of the successor custodial trustee. The successor custodial trustee may enforce the obligation to deliver custodial trust property and records and becomes responsible for each item as received.
6. A beneficiary, the beneficiary's conservator, an adult member of the beneficiary's family, a guardian of the beneficiary, a person interested in the custodial trust property, or a person interested in the welfare of the beneficiary may petition the court to remove the custodial trustee for cause and designate a successor custodial trustee, to require the custodial trustee to furnish a bond or other security for the faithful performance of fiduciary duties, or for other appropriate relief.

Source: L. 99: Entire article added, p. 1218, § 1, effective August 4.

15-1.5-114. Expenses, compensation, and bond of custodial trustee.

1. Except as otherwise provided in the instrument creating the custodial trust, in an agreement with the beneficiary, or by court order, a custodial trustee:
   1. Is entitled to reimbursement from custodial trust property for reasonable expenses incurred in the performance of fiduciary services;
   2. Has a noncumulative election, to be made no later than six months after the end of each calendar year, to charge a reasonable compensation for fiduciary services performed during that year; and
   3. Need not furnish a bond or other security for the faithful performance of fiduciary duties.

Source: L. 99: Entire article added, p. 1219, § 1, effective August 4.

15-1.5-115. Reporting and accounting by custodial trustee - determination of liability of custodial trustee.

1. 1. Upon the acceptance of custodial trust property, the custodial trustee shall provide a written statement describing the custodial trust property and shall thereafter provide a written statement of the administration of the custodial trust property:
      1. Once each year;
      2. Upon request at reasonable times by the beneficiary or the beneficiary's legal representative;
      3. Upon resignation or removal of the custodial trustee; and
      4. Upon termination of the custodial trust.
   2. The statements must be provided to the beneficiary or to the beneficiary's legal representative, if any. Upon termination of the beneficiary's interest, the custodial trustee shall furnish a current statement to the person to whom the custodial trust property is to be delivered.
2. A beneficiary, the beneficiary's legal representative, an adult member of the beneficiary's family, a person interested in the custodial trust property, or a person interested in the welfare of the beneficiary may petition the court for an accounting by the custodial trustee or the custodial trustee's legal representative.
3. A successor custodial trustee may petition the court for an accounting by a predecessor custodial trustee.
4. In an action or proceeding under this article or in any other proceeding, the court may require or permit the custodial trustee or the custodial trustee's legal representative to account. The custodial trustee or the custodial trustee's legal representative may petition the court for approval of final accounts.
5. If a custodial trustee is removed, the court shall require an accounting and order delivery of the custodial trust property and records to the successor custodial trustee and the execution of all instruments required for transfer of the custodial trust property.
6. On petition of the custodial trustee or any person who could petition for an accounting, the court, after notice to interested persons, may issue instructions to the custodial trustee or review the propriety of the acts of a custodial trustee or the reasonableness of compensation determined by the custodial trustee for the services of the custodial trustee or others.

Source: L. 99: Entire article added, p. 1220, § 1, effective August 4.

15-1.5-116. Limitations of action against custodial trustee.

1. Except as provided in subsection (3) of this section, unless previously barred by adjudication, consent, or limitation, a claim for relief against a custodial trustee for accounting or breach of duty is barred as to a beneficiary, a person to whom custodial trust property is to be paid or delivered, or the legal representative of an incapacitated or deceased beneficiary or payee:
   1. Who has received a final account or statement fully disclosing the matter unless an action or proceeding to assert the claim is commenced within two years after receipt of the final account or statement; or
   2. Who has not received a final account or statement fully disclosing the matter unless an action or proceeding to assert the claim is commenced within three years after the termination of the custodial trust.
2. Except as provided in subsection (3) of this section, a claim for relief to recover from a custodial trustee for fraud, misrepresentation, or concealment related to the final settlement of the custodial trust or concealment of the existence of the custodial trust is barred unless an action or proceeding to assert the claim is commenced within five years after the termination of the custodial trust.
3. A claim for relief is not barred by this section if the claimant:
   1. Is a minor, until the earlier of two years after the claimant becomes an adult or dies;
   2. Is an incapacitated adult, until the earliest of two years after the appointment of a conservator, the removal of the incapacity, or the death of the claimant; or
   3. Was an adult, now deceased, who was not incapacitated, until two years after the claimant's death.

Source: L. 99: Entire article added, p. 1221, § 1, effective August 4.

15-1.5-117. Distribution on termination.

1. Upon termination of a custodial trust, the custodial trustee shall transfer the unexpended custodial trust property:
   1. To the beneficiary, if not incapacitated or deceased;
   2. To the conservator or other recipient designated by the court for an incapacitated beneficiary; or
   3. Upon the beneficiary's death, in the following order:
      1. As last directed in a writing signed by the deceased beneficiary while not incapacitated and received by the custodial trustee during the life of the deceased beneficiary;
      2. To the survivor of multiple beneficiaries if survivorship is provided for pursuant to section 15-1.5-106;
      3. As designated in the instrument creating the custodial trust; or
      4. To the estate of the deceased beneficiary.
2. If, when the custodial trust would otherwise terminate, the distributee is incapacitated, the custodial trust continues for the use and benefit of the distributee as beneficiary until the incapacity is removed or the custodial trust is otherwise terminated.
3. Death of a beneficiary does not terminate the power of the custodial trustee to discharge obligations of the custodial trustee or beneficiary incurred before the termination of the custodial trust.

Source: L. 99: Entire article added, p. 1221, § effective August 4.

15-1.5-118. Methods and forms for creating custodial trusts.

1. If a transaction, including a declaration with respect to or a transfer of specific property, otherwise satisfies applicable law, the criteria of section 15-1.5-102 are satisfied by:
   1. The execution and either delivery to the custodial trustee or recording of an instrument in substantially the following form:

      I, ____________ (name of transferor or name and representative capacity if a fiduciary), transfer to ____________ (name of trustee other than transferor), as custodial trustee for ____________ (name of beneficiary) as beneficiary and as distributee on termination of the trust in absence of direction by the beneficiary under the "Colorado Uniform Custodial Trust Act", the following: (insert a description of the custodial trust property legally sufficient to identify and transfer each item of property).

      Dated: ________________ ______________________

      (Signature); or

   2. The execution and the recording or giving notice of its execution to the beneficiary of an instrument in substantially the following form:

      I, ____________ (name of owner of property), declare that henceforth I hold as custodial trustee for ____________ (name of beneficiary other than transferor) as beneficiary and as distributee on termination of the trust in absence of direction by the beneficiary under the "Colorado Uniform Custodial Trust Act", the following: (insert a description of the custodial trust property legally sufficient to identify and transfer each item of property).

      Dated: ________________ ______________________

      (Signature).

2. Customary methods of transferring or evidencing ownership of property may be used to create a custodial trust, including any of the following:
   1. Registration of a security in the name of a trust company, an adult other than the transferor, or the transferor if the beneficiary is other than the transferor, designated in substance: "as custodial trustee for (name of beneficiary) under the "Colorado Uniform Custodial Trust Act"";
   2. Delivery of a certificated security, or a document necessary for the transfer of an uncertificated security, together with any necessary endorsement, to an adult other than the transferor or to a trust company as custodial trustee, accompanied by an instrument in substantially the form prescribed in paragraph (a) of subsection (1) of this section;
   3. Payment of money or transfer of a security held in the name of a broker or a financial institution or its nominee to a broker or financial institution for credit to an account in the name of a trust company, an adult other than the transferor, or the transferor if the beneficiary is other than the transferor, designated in substance: "as custodial trustee for (name of beneficiary) under the "Colorado Uniform Custodial Trust Act"";
   4. Registration of ownership of a life or endowment insurance policy or annuity contract with the issuer in the name of a trust company, an adult other than the transferor, or the transferor if the beneficiary is other than the transferor, designated in substance: "as custodial trustee for (name of beneficiary) under the "Colorado Uniform Custodial Trust Act"";
   5. Delivery of a written assignment to an adult other than the transferor or to a trust company whose name in the assignment is designated in substance by the words: "as custodial trustee for (name of beneficiary) under the "Colorado Uniform Custodial Trust Act"";
   6. Irrevocable exercise of a power of appointment, pursuant to its terms, in favor of a trust company, an adult other than the donee of the power, or the donee who holds the power if the beneficiary is other than the donee, whose name in the appointment is designated in substance: "as custodial trustee for (name of beneficiary) under the "Colorado Uniform Custodial Trust Act"";
   7. Delivery of a written notification or assignment of a right to future payment under a contract to an obligor which transfers the right under the contract to a trust company, an adult other than the transferor, or the transferor if the beneficiary is other than the transferor, whose name in the notification or assignment is designated in substance: "as custodial trustee for (name of beneficiary) under the "Colorado Uniform Custodial Trust Act"";
   8. Execution, delivery, and recordation of a conveyance of an interest in real property in the name of a trust company, an adult other than the transferor, or the transferor if the beneficiary is other than the transferor, designated in substance: "as custodial trustee for (name of beneficiary) under the "Colorado Uniform Custodial Trust Act"";
   9. Issuance of a certificate of title by an agency of a state or of the United States which evidences title to tangible personal property:
      1. Issued in the name of a trust company, an adult other than the transferor, or the transferor if the beneficiary is other than the transferor, designated in substance: "as custodial trustee for (name of beneficiary) under the "Colorado Uniform Custodial Trust Act""; or
      2. Delivered to a trust company or an adult other than the transferor or endorsed by the transferor to that person, designated in substance: "as custodial trustee for (name of beneficiary) under the "Colorado Uniform Custodial Trust Act""; or
   10. Execution and delivery of an instrument of gift to a trust company or an adult other than the transferor, designated in substance: "as custodial trustee for (name of beneficiary) under the "Colorado Uniform Custodial Trust Act"".

TRANSFER UNDER THE "COLORADO UNIFORM CUSTODIAL TRUST ACT"

DECLARATION OF TRUST UNDER THE "COLORADO UNIFORM CUSTODIAL TRUST ACT"

Source: L. 99: Entire article added, p. 1222, § 1, effective August 4.

15-1.5-119. Applicable law.

1. This article applies to a transfer or declaration creating a custodial trust that refers to this article if, at the time of the transfer or declaration, the transferor, beneficiary, or custodial trustee is a resident of or has its principal place of business in this state or custodial trust property is located in this state. The custodial trust remains subject to this article despite a later change in residence or principal place of business of the transferor, beneficiary, or custodial trustee, or removal of the custodial trust property from this state.
2. A transfer made pursuant to an act of another state substantially similar to this article is governed by the law of that state and may be enforced in this state.

Source: L. 99: Entire article added, p. 1224, § 1, effective August 4.

15-1.5-120. Uniformity of application and construction.

This article shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this article among states enacting it.

Source: L. 99: Entire article added, p. 1225, § 1, effective August 4.

15-1.5-121. Short title.

This article may be cited as the "Colorado Uniform Custodial Trust Act".

Source: L. 99: Entire article added, p. 1225, § 1, effective August 4.

15-1.5-122. Severability.

If any provision of this article or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this article which can be given effect without the invalid provision or application, and to this end the provisions of this article are severable.

Source: L. 99: Entire article added, p. 1225, § 1, effective August 4.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 775, § 1, effective July 1, 2015.

ARTICLE 2 POWERS OF APPOINTMENT

15-2.5-101. Short title.

This article may be cited as the "Colorado Uniform Powers of Appointment Act".

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 772, § 1, effective July 1, 2015.

15-2.5-102. Definitions.

In this article:

1. "Appointee" means a person to whom a powerholder makes an appointment of appointive property.
2. "Appointive property" means property or property interest subject to a power of appointment.
3. "Blanket-exercise clause" means a clause in an instrument, which clause exercises a power of appointment and is not a specific-exercise clause. The term includes a clause that:
   1. Expressly uses the words "any power" in exercising any power of appointment the powerholder has;
   2. Expressly uses the words "any property" in appointing any property over which the powerholder has a power of appointment; or
   3. Disposes of all property subject to disposition by the powerholder.
4. "Donor" means a person who creates a power of appointment.
5. "Exclusionary power of appointment" means a power of appointment exercisable in favor of any one or more of the permissible appointees to the exclusion of the other permissible appointees.
6. "General power of appointment" means a power of appointment exercisable in favor of the powerholder, the powerholder's estate, a creditor of the powerholder, or a creditor of the powerholder's estate.
7. "Gift-in-default clause" means a clause identifying a taker in default of appointment.
8. "Impermissible appointee" means a person who is not a permissible appointee.
9. "Instrument" means a record.
10. "Nongeneral power of appointment" means a power of appointment that is not a general power of appointment.
11. "Permissible appointee" means a person in whose favor a powerholder may exercise a power of appointment.
12. "Person" means an individual; estate; trust; business or nonprofit entity; public corporation; government or governmental subdivision, agency, or instrumentality; or other legal entity.
13. "Powerholder" means a person in whom a donor creates a power of appointment.
14. "Power of appointment" means a power that enables a powerholder acting in a nonfiduciary capacity to designate a recipient of an ownership interest in or another power of appointment over the appointive property. The term does not include a power of attorney.
15. "Presently exercisable power of appointment" means a power of appointment exercisable by the powerholder at the relevant time. The term:
    1. Includes a power of appointment not exercisable until the occurrence of a specified event, the satisfaction of an ascertainable standard, or the passage of a specified time only after:
       1. The occurrence of the specified event;
       2. The satisfaction of the ascertainable standard; or
       3. The passage of the specified time; and
    2. Does not include a power exercisable only at the powerholder's death.
16. "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
17. "Specific-exercise clause" means a clause in an instrument, which clause specifically refers to and exercises a particular power of appointment.
18. "Taker in default of appointment" means a person who takes all or part of the appointive property to the extent the powerholder does not effectively exercise the power of appointment.
19. "Terms of the instrument" means the manifestation of the intent of the maker of the instrument regarding the instrument's provisions as expressed in the instrument or as may be established by other evidence that would be admissible in a legal proceeding.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 772, § 1, effective July 1, 2015.

15-2.5-103. Governing law.

1. Unless the terms of the instrument creating a power of appointment manifest a contrary intent:
   1. The creation, revocation, or amendment of the power is governed by the law of the donor's domicile at the relevant time; and
   2. The exercise, release, or disclaimer of the power, or the revocation or amendment of the exercise, release, or disclaimer of the power, is governed by the law of the powerholder's domicile at the relevant time.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 774, § 1, effective July 1, 2015.

15-2.5-104. Supplementation by common law and principles of equity.

Unless displaced by the particular provisions of this article, the principles of law and equity supplement its provisions.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 774, § 1, effective July 1, 2015.

15-2.5-201. Creation of power of appointment.

1. A power of appointment is created only if:
   1. The instrument creating the power:
      1. Is valid under applicable law; and
      2. Except as otherwise provided in subsection (2) of this section, transfers the appointive property; and
   2. The terms of the instrument creating the power manifest the donor's intent to create in a powerholder a power of appointment over the appointive property exercisable in favor of a permissible appointee.
2. Subparagraph (II) of paragraph (a) of subsection (1) of this section does not apply to the creation of a power of appointment by the exercise of a power of appointment.
3. A power of appointment may not be created in a deceased individual.
4. Subject to an applicable rule against perpetuities, a power of appointment may be created in an unborn or unascertained powerholder.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 774, § 1, effective July 1, 2015. L. 2015: (1)(a)(II) amended, (SB 15-264), ch. 259, p. 951, § 37, effective August 5.

15-2.5-202. Nontransferability.

A powerholder may not transfer a power of appointment. If a powerholder dies without exercising or releasing a power, the power lapses.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 775, § 1, effective July 1, 2015.

15-2.5-203. Presumption of unlimited authority.

1. Subject to section 15-2.5-205, and unless the terms of the instrument creating a power of appointment manifest a contrary intent, the power is:
   1. Presently exercisable;
   2. Exclusionary; and
   3. Except as otherwise provided in section 15-2.5-204, general.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 775, § 1, effective July 1, 2015.

15-2.5-204. Exception to presumption of unlimited authority.

1. Unless the terms of the instrument creating a power of appointment manifest a contrary intent, the power is nongeneral if:
   1. The power is exercisable only at the powerholder's death; and
   2. The permissible appointees of the power are a defined and limited class that does not include the powerholder's estate, the powerholder's creditors, or the creditors of the powerholder's estate.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 775, § 1, effective July 1, 2015.

15-2.5-205. Rules of classification - definitions.

1. In this section, "adverse party" means a person with a substantial beneficial interest in property, which interest would be affected adversely by a powerholder's exercise or nonexercise of a power of appointment in favor of the powerholder, the powerholder's estate, a creditor of the powerholder, or a creditor of the powerholder's estate.
2. If a powerholder may exercise a power of appointment only with the consent or joinder of an adverse party, the power is nongeneral.
3. If the permissible appointees of a power of appointment are not defined and limited, the power is exclusionary.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 775, § 1, effective July 1, 2015.

15-2.5-206. Power of the donor to revoke or amend.

1. A donor may revoke or amend a power of appointment only to the extent that:
   1. The instrument creating the power is revocable by the donor; or
   2. The donor reserves a power of revocation or amendment in the instrument creating the power of appointment.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 776, § 1, effective July 1, 2015.

15-2.5-301. Requisites for exercise of power of appointment.

1. A power of appointment may be exercised only:
   1. If the instrument exercising the power is valid under applicable law;
   2. If the terms of the instrument exercising the power:
      1. Manifest the powerholder's intent to exercise the power; and
      2. Subject to section 15-2.5-304, satisfy the requirements of exercise, if any, imposed by the donor; and
   3. To the extent the appointment is a permissible exercise of the power.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 776, § 1, effective July 1, 2015.

15-2.5-302. Intent to exercise - determining intent from residuary clause.

1. In this section:
   1. "Residuary clause" does not include a residuary clause containing a blanket-exercise clause or a specific-exercise clause.
   2. "Will" includes a codicil and a testamentary instrument that revises another will.
2. A residuary clause in a powerholder's will, or a comparable clause in the powerholder's revocable trust, manifests the powerholder's intent to exercise a power of appointment only if:
   1. The terms of the instrument containing the residuary clause do not manifest a contrary intent;
   2. The power is a general power exercisable in favor of the powerholder's estate;
   3. There is no gift-in-default clause or the clause is ineffective; and
   4. The powerholder did not release the power.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 776, § 1, effective July 1, 2015.

15-2.5-303. Intent to exercise - after-acquired power.

1. Unless the terms of the instrument exercising a power of appointment manifest a contrary intent:
   1. Except as otherwise provided in paragraph (b) of this subsection (1), a blanket-exercise clause extends to a power acquired by the powerholder after executing the instrument containing the clause; and
   2. If the powerholder is also the donor of the power, the clause does not extend to the power unless there is no gift-in-default clause or the gift-in-default clause is ineffective.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 776, § 1, effective July 1, 2015.

15-2.5-304. Substantial compliance with donor-imposed formal requirement.

1. A powerholder's substantial compliance with a formal requirement of appointment imposed by the donor, including a requirement that the instrument exercising the power of appointment make reference or specific reference to the power, is sufficient if:
   1. The powerholder knows of and intends to exercise the power; and
   2. The powerholder's manner of attempted exercise of the power does not impair a material purpose of the donor in imposing the requirement.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 777, § 1, effective July 1, 2015.

15-2.5-305. Permissible appointment.

1. A powerholder of a general power of appointment that permits appointment to the powerholder or the powerholder's estate may make any appointment, including an appointment in trust or creating a new power of appointment, that the powerholder could make in disposing of the powerholder's own property.
2. A powerholder of a general power of appointment that permits appointment only to the creditors of the powerholder or of the powerholder's estate may appoint only to those creditors.
3. Unless the terms of the instrument creating a power of appointment manifest a contrary intent, the powerholder of a nongeneral power may:
   1. Make an appointment in any form, including an appointment in trust, in favor of a permissible appointee;
   2. Create a general or nongeneral power in a permissible appointee; or
   3. Create a nongeneral power in an impermissible appointee to appoint to one or more of the permissible appointees of the original nongeneral power.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 777, § 1, effective July 1, 2015.

15-2.5-306. Appointment to deceased appointee or permissible appointee's descendant.

1. An appointment to a deceased appointee is ineffective.
2. Unless the terms of the instrument creating a power of appointment manifest a contrary intent, a powerholder of a nongeneral power may exercise the power in favor of, or create a new power of appointment in, a descendant of a deceased permissible appointee, which deceased appointee is a descendant of one or more of the grandparents of the donor, regardless of whether the descendant is described by the donor as a permissible appointee.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 777, § 1, effective July 1, 2015.

15-2.5-307. Impermissible appointment.

1. Except as otherwise provided in section 15-2.5-306, an exercise of a power of appointment in favor of an impermissible appointee is ineffective.
2. An exercise of a power of appointment in favor of a permissible appointee is ineffective to the extent the appointment is a fraud on the power.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 778, § 1, effective July 1, 2015.

15-2.5-308. Selective allocation doctrine.

If a powerholder exercises a power of appointment in a disposition that also disposes of property the powerholder owns, the owned property and the appointive property must be allocated in the permissible manner that best carries out the powerholder's intent.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 778, § 1, effective July 1, 2015.

15-2.5-309. Capture doctrine - disposition of ineffectively appointed property under general power.

1. To the extent a powerholder of a general power of appointment, other than a power to withdraw property from, revoke, or amend a trust, makes an ineffective appointment:
   1. The gift-in-default clause controls the disposition of the ineffectively appointed property; or
   2. If there is no gift-in-default clause, or to the extent the clause is ineffective, the ineffectively appointed property:
      1. Passes to:
         1. The powerholder if the powerholder is a permissible appointee and living; or
         2. If the powerholder is an impermissible appointee or deceased, the powerholder's estate if the estate is a permissible appointee; or
      2. If there is no taker under subparagraph (I) of this paragraph (b), passes under a reversionary interest to the donor or to the donor's transferee or successor in interest.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 778, § 1, effective July 1, 2015.

15-2.5-310. Disposition of unappointed property under released or unexercised general power.

1. To the extent a powerholder releases or fails to exercise a general power of appointment other than a power to withdraw property from, revoke, or amend a trust:
   1. The gift-in-default clause controls the disposition of the unappointed property; or
   2. If there is no gift-in-default clause or to the extent the clause is ineffective:
      1. Except as otherwise provided in subparagraph (II) of this paragraph (b), the unappointed property passes to:
         1. The powerholder if the powerholder is a permissible appointee and living; or
         2. If the powerholder is an impermissible appointee or deceased, the powerholder's estate if the estate is a permissible appointee; or
      2. To the extent the powerholder released the power, or if there is no taker under subparagraph (I) of this paragraph (b), the unappointed property passes under a reversionary interest to the donor or to the donor's transferee or successor in interest.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 778, § 1, effective July 1, 2015.

15-2.5-311. Disposition of unappointed property under released or unexercised nongeneral power.

1. To the extent a powerholder releases, ineffectively exercises, or fails to exercise a nongeneral power of appointment:
   1. The gift-in-default clause controls the disposition of the unappointed property; or
   2. If there is no gift-in-default clause, or to the extent the clause is ineffective, the unappointed property:
      1. Passes to the permissible appointees if:
         1. The permissible appointees are defined and limited; and
         2. The terms of the instrument creating the power do not manifest a contrary intent; or
      2. If there is no taker under subparagraph (I) of this paragraph (b), passes under a reversionary interest to the donor or the donor's transferee or successor in interest.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 779, § 1, effective July 1, 2015.

15-2.5-312. Disposition of unappointed property if partial appointment to taker in default.

Unless the terms of the instrument creating or exercising a power of appointment manifest a contrary intent, if the powerholder makes a valid partial appointment to a taker in default of appointment, the taker in default of appointment may share fully in unappointed property.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 779, § 1, effective July 1, 2015.

15-2.5-313. Appointment to taker in default.

If a powerholder makes an appointment to a taker in default of appointment and the appointee would have taken the property under a gift-in-default clause had the property not been appointed, the power of appointment is deemed not to have been exercised and the appointee takes the property under the clause.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 779, § 1, effective July 1, 2015.

15-2.5-314. Powerholder's authority to revoke or amend exercise.

1. A powerholder may revoke or amend an exercise of a power of appointment only to the extent that:
   1. The powerholder reserves a power of revocation or amendment in the instrument exercising the power of appointment and, if the power is nongeneral, the terms of the instrument creating the power of appointment do not prohibit the reservation; or
   2. The terms of the instrument creating the power of appointment provide that the exercise is revocable or amendable.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 779, § 1, effective July 1, 2015.

15-2.5-401. Disclaimer.

1. Subject to the "Uniform Disclaimer of Property Interests Act", part 12 of article 11 of this title:
   1. A powerholder may disclaim all or part of a power of appointment; and
   2. A permissible appointee, appointee, or taker in default of appointment may disclaim all or part of an interest in appointive property.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 780, § 1, effective July 1, 2015.

15-2.5-402. Authority to release.

A powerholder may release a power of appointment, in whole or in part, except to the extent the terms of the instrument creating the power prevent the release.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 780, § 1, effective July 1, 2015.

15-2.5-403. Method of release.

1. A powerholder of a releasable power of appointment may release the power in whole or in part:
   1. By substantial compliance with a method provided in the terms of the instrument creating the power; or
   2. If the terms of the instrument creating the power do not provide a method, or the method provided in the terms of the instrument is not expressly made exclusive, by:
      1. Delivering a writing declaring the extent to which the power is released to a person who could be adversely affected by an exercise of the power;
      2. Joining with some or all of the takers in default in making an otherwise-effective transfer of an interest in the property that is subject to the power, in which case the power is released to the extent that a subsequent exercise of the power would defeat the interest transferred;
      3. Contracting with a person who could be adversely affected by an exercise of the power not to exercise the power, in which case the power is released to the extent that a subsequent exercise of the power would violate the terms of the contract; or
      4. Communicating in any other appropriate manner an intent to release the power, in which case the power is released to the extent that a subsequent exercise of the power would be contrary to manifested intent.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 780, § 1, effective July 1, 2015.

15-2.5-404. Revocation or amendment of release.

1. A powerholder may revoke or amend a release of a power of appointment only to the extent that:
   1. The instrument of release is revocable by the powerholder; or
   2. The powerholder reserves a power of revocation or amendment in the instrument of release.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 781, § 1, effective July 1, 2015.

15-2.5-405. Power to contract - presently exercisable power of appointment.

1. A powerholder of a presently exercisable power of appointment may contract:
   1. Not to exercise the power if the contract, when made, does not confer a benefit on a person other than a taker in default or a permissible appointee; or
   2. To exercise the power if the contract, when made, does not confer a benefit on an impermissible appointee.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 781, § 1, effective July 1, 2015.

15-2.5-406. Power to contract - power of appointment not presently exercisable.

1. A powerholder of a power of appointment that is not presently exercisable may contract to exercise or not to exercise the power only if the powerholder:
   1. Is also the donor of the power; and
   2. Has reserved the power in the instrument creating the power.

Source: L. 2014: Entire article added, (HB 14-1353), ch. 209, p. 781, § 1, effective July 1, 2015.

PART 6 MISCELLANEOUS PROVISIONS

ARTICLE 5 COLORADO UNIFORM TRUST CODE

Law reviews: For article, "The C olorado Uniform Trust C ode", see 48 Colo. Law. 37 (Mar. 2019).

Section

PART 1 GENERAL PROVISIONS AND DEFINITIONS

PART 2 JUDICIAL PROCEEDINGS

PART 3 REPRESENTATION

PART 4 CREATION, VALIDITY, MODIFICATION, AND TERMINATION OF TRUST

PART 5 CREDITOR'S CLAIMS - SPENDTHRIFT AND DISCRETIONARY TRUSTS

PART 6 REVOCABLE TRUSTS

PART 7 OFFICE OF TRUSTEE

PART 8 DUTIES AND POWERS OF TRUSTEE

PART 9 (Reserved)

PART 10 LIABILITY OF TRUSTEES AND RIGHTS OF PERSONS DEALING WITH TRUSTEES

PART 11 (Reserved)

PART 12 (Reserved)

PART 13 LIFE INSURANCE POLICY OWNED BY A TRUSTEE

PART 14 MISCELLANEOUS PROVISIONS

15-5-101. Short title.

This article 5 is known and may be cited as the "Colorado Uniform Trust Code" and is referred to in this article 5 as "this code" or "code".

Source: L. 2018: Entire article added, (SB 18-180), ch. 169, p. 1144, § 1, effective January 1, 2019.

15-5-102. Scope.

This code applies to express trusts, charitable or noncharitable, and trusts created pursuant to a statute, judgment, or decree that requires the trust to be administered in the manner of an express trust. This code does not apply to a business trust, a security arrangement, a trust created by a deposit arrangement in a financial institution, or any arrangement under which a person is a nominee or escrowee for another.

Source: L. 2018: Entire article added, (SB 18-180), ch. 169, p. 1144, § 1, effective January 1, 2019.

15-5-103. Definitions.

As used in this article 5, unless the context otherwise requires:

1. "Action", with respect to an act of a trustee, includes a failure to act.
2. "Alternative dispute resolution" means a method of nonjudicial dispute resolution as set forth in the trust instrument, which may include but is not limited to a method prescribed pursuant to the uniform arbitration act, part 2 of article 22 of title 13.
3. "Ascertainable standard" means a standard relating to an individual's health, education, support, or maintenance within the meaning of section 2041 (b)(1)(A) or 2514 (c)(1) of the federal "Internal Revenue Code of 1986", as amended.
4. 1. "Beneficiary" means a person who:
      1. Has a present or future beneficial interest in a trust, vested or contingent; or
      2. In a capacity other than that of trustee, holds a power of appointment over trust property.
   2. "Beneficiary" does not include an appointee under a power of appointment unless and until the power is exercised and the trustee has knowledge of the exercise and the identity of the appointee.
5. "Business trust" has the same meaning as set forth in section 15-10-201 (6.5).
6. "Charitable trust" means a trust, or a portion of a trust, created for a charitable purpose described in section 15-5-405 (1).
7. "Conservator" means a person appointed by a court to administer the estate of a minor or adult individual.
8. "Environmental law" means a federal, state, or local law, rule, regulation, or ordinance relating to protection of the environment.
9. "Guardian" means a person appointed by a court to make decisions regarding the support, care, education, health, and welfare of a minor or adult individual. The term does not include a guardian ad litem.
10. "Interested person" means a qualified beneficiary or other person having a property right in or claim against a trust estate, which right or claim may reasonably and materially be affected by a judicial proceeding pursuant to this code. The term also includes fiduciaries and other persons having authority to act under the terms of the trust.
11. "Interests of the beneficiaries" means the beneficial interests provided in the terms of the trust.
12. "Jurisdiction", with respect to a geographical area, includes a state or country.
13. "Person" means an individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal or commercial entity.
14. "Power of withdrawal" means a presently exercisable general power of appointment other than a power:
    1. Exercisable by a trustee and limited by an ascertainable standard; or
    2. Exercisable by another person only upon consent of the trustee or a person holding an adverse interest.
15. "Property" means anything that may be the subject of ownership, whether real or personal, legal or equitable, or any interest therein.
16. "Qualified beneficiary" means a beneficiary who, on the date the beneficiary's qualification is determined:
    1. Is a distributee or permissible distributee of trust income or principal;
    2. Would be a distributee or permissible distributee of trust income or principal if the interests of the distributees described in subsection (16)(a) of this section terminated on that date without causing the trust to terminate; or
    3. Would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date.
17. "Revocable", as applied to a trust, means revocable by the settlor without the consent of the trustee or a person holding an adverse interest.
18. "Settlor" means a person, including a testator, who creates, or contributes property to, a trust. If more than one person creates or contributes property to a trust, each person is a settlor of the portion of the trust property attributable to that person's contribution except to the extent another person has the power to revoke or has a power of withdrawal over that portion.
19. "Spendthrift provision" means a term of a trust that restrains both voluntary and involuntary transfer of a beneficiary's interest.
20. "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. The term includes an Indian tribe or band recognized by federal law or formally acknowledged by a state.
21. "Terms of a trust" means the manifestation of the settlor's intent regarding a trust's provisions, as expressed in the trust instrument, or as may be established by other evidence in a judicial proceeding, or in a nonjudicial settlement agreement pursuant to section 15-5-111 or by alternative dispute resolution pursuant to section 15-5-113.
22. "Trust instrument" means an instrument executed by the settlor that contains terms of the trust, including any amendments thereto.
23. "Trustee" includes an original, an additional, and a successor trustee or a cotrustee.

Source: L. 2018: Entire article added, (SB 18-180), ch. 169, p. 1144, § 1, effective January 1, 2019.

15-5-104. Knowledge.

1. Subject to subsection (2) of this section, a person has knowledge of a fact if the person:
   1. Has actual knowledge of it;
   2. Has received a notice or notification of it; or
   3. From all the facts and circumstances known to the person at the time in question, and acting in a reasonably prudent manner given the person's experience and expertise, has reason to know it.
2. An organization that conducts activities through employees has notice or knowledge of a fact involving a trust only from the time the information was received by an employee having responsibility to act for the trust, or would have been brought to the employee's attention if the organization had exercised reasonable diligence. An organization exercises reasonable diligence if it maintains routines for communicating significant information to the employee having responsibility to act for the trust and there is reasonable compliance with the routines. Reasonable diligence does not require an employee of the organization to communicate information unless the communication is part of the individual's regular duties or the individual knows that a matter involving the trust would be materially affected by the information.

Source: L. 2018: Entire article added, (SB 18-180), ch. 169, p. 1147, § 1, effective January 1, 2019.

15-5-105. Default and mandatory rules.

1. Except as otherwise provided in the terms of the trust, this code governs the duties, rights, and powers of a trustee; relations among trustees; the rights, powers, and interests of a beneficiary; the relationship between the trustees and the beneficiaries; the purpose of the trust; and other matters with respect to the trust or the property subject to the trust.
2. Subject to sections 15-16-809, 15-16-810, and 15-16-811, the terms of a trust prevail o