2020 Colorado Revised Statutes
Title 15 - Probate, Trusts, And Fiduciaries
Article 1. Fiduciary
Section 15-1-464.5. Disposition of natural resources - special applicability.
(1) If any part of the principal consists of a right to receive royalties, overriding or limited royalties, working interests, production payments, net profit interests, or other interests in minerals or other natural resources in, on, or under land, the receipts from taking the natural resources from the land shall be allocated as follows:
If received as rent on a lease or extension payments on a lease, the receipts are income;
If received from a production payment, the receipts are income to the extent of anyfactor for interest or its equivalent provided in the governing instrument. There shall be allocated to principal the fraction of the balance of the receipts that the unrecovered cost of the production payment bears to the balance owed on the production payment, exclusive of any factor for interest or its equivalent. The receipts not allocated to principal are income.
If received as a royalty, overriding or limited royalty, or bonus, or from a working,net profit, or any other interest in minerals or other natural resources, receipts not provided for in paragraph (a) or (b) of this subsection (1) shall be apportioned on a yearly basis in accordance with this paragraph (c) regardless of whether any natural resource was being taken from the land at the time the trust was established. Fifteen percent of the gross receipts, but not to exceed fifty percent of the net receipts remaining after payment of all expenses, direct and indirect, computed without allowance for depletion, shall be added to principal as an allowance for depletion. The balance of the gross receipts after payment therefrom of all expenses, direct and indirect, is income.
If a trustee, on April 22, 2009, held an item of depletable property of a type specifiedin this section, he or she shall allocate receipts from the property in the manner used before April 22, 2009, but as to all depletable property acquired after April 22, 2009, by an existing or new trust, the method of allocation provided herein shall be used.
This section does not apply to timber, water, soil, sod, dirt, turf, or mosses.
(a) Except as provided in paragraph (b) of this subsection (4), this section applies to a trust or estate that is subject to this subpart 7 and shall control over the other provisions of this subpart 7 to the extent that any inconsistency exists between such provisions and this section.
(b) (I) In the case of a trust or a probate estate, the trustee or the personal representative may elect to have this section not apply to the trust or the probate estate by giving notice of such election to the beneficiaries of the trust or the probate estate as provided in subsection (5) of this section.
(II) In the case of an estate other than a trust, a life tenant or the remainderman may elect to have this section not apply to the estate by giving notice of such election in the same time and manner as provided in section 15-1-454 (3) for an election out of the application of this subpart 7 to the estate.
(5) (a) If a trustee or a personal representative makes an election under this section, he or she shall satisfy the requirements set forth in section 15-1-405 for providing notice of the election.
(b) If a life tenant or a remainderman makes an election under this section, he or she shall satisfy the requirements set forth in section 15-1-454 (3) for providing notice of the election and recording the election.
Source: L. 2009: Entire section added, (HB 09-1241), ch. 169, p. 756, § 14, effective April 22.
