When a trust is created, the settlor (the creator of the trust), is making decisions based upon the assets and circumstances as of the time the trust is created. Over time, circumstances in the settlor’s life and/or beneficiaries’ lives may change. In these circumstances, it may be prudent for an irrevocable trust to be modified.
Irrevocable trusts are meant to be permanent and unchangeable. However, in certain circumstances, an irrevocable trust may be modified as allowed by the Colorado Uniform Trust Code (CUTC). Each circumstance is unique but modification of an irrevocable trust may be accomplished under the CUTC through a Nonjudicial Settlement Agreement or by a petition to the court that requests court review and approval of the proposed modification. Depending on the terms of an irrevocable trust, it may be modified under the Colorado Uniform Trust Decanting Act (CUTDA).
Why Would a Trust Need to Be Modified?
Trust modification in Colorado is the process of modifying an irrevocable trust as contemplated by the CUTC or CUTDA. Some facts and circumstances that may warrant modification of an irrevocable trust under the CUTC or CUTDA include:
- Changes in tax laws
- Ambiguous or outdated trust terms
- A change in a beneficiary’s financial circumstances or health
- Changes regarding the composition of trust assets
- Trust administration challenges
- Trustee becoming incapacitated or resigning
- Beneficiary disputes
Colorado Uniform Trust Code
The CUTC is a series of statutes that generally apply to trusts that are administered in Colorado. Typically, a trust is considered to be administered in Colorado if the trustee keeps the books and records of the trust in Colorado. However, other circumstances may exist that allow a trust to be subject to the jurisdiction of the Colorado courts. The attorneys at Brown Law Firm have significant experience navigating the complexities of the CUTC and utilize such experience to assist trust beneficiaries and trustees with modifying Colorado trusts. Such assistance may include:
- Reviewing trust documents to identify the need for modification
- Advising settlor, trustees and/or qualified beneficiaries regarding the proposed trust modification
- Drafting proper documents such as the modified trust agreement, nonjudicial settlement agreement or other appropriate documents
- Preparing required notices to the trustee, qualified beneficiaries, financial institutions, and other interested persons
- Seeking court review and approval of the trust modification, if necessary
Colorado Uniform Trust Decanting Act
Generally, the CUTC are the appropriate statutes to utilize in a trust modification. In certain circumstances, however, the CUTDA may be more appropriate. The attorneys at Brown Law Firm can help clients determine which of the statutory options is better suited to the client’s facts and circumstances.
It is impossible to plan for every change or contingency that may come up during the administration of a trust. It may be appropriate to utilize some of the tools under the Colorado Uniform Trust Code or Colorado Uniform Trust Decanting Act to modify an irrevocable trust. If you believe you may need to modify a trust in Colorado, contact our expert team at Brown Law Firm to start the conversation.