2021 Colorado Code
Title 15 - Probate, Trusts, and Fiduciaries
Article 16 - Trust Administration
Part 9 - Colorado Uniform Trust Decanting Act
§ 15-16-905. Application - Governing Law

1. This part 9 applies to a trust created before, on, or after August 10, 2016, which:
   1. Has its principal place of administration in this state, including a trust whose principal place of administration has been changed to this state; or
   2. Provides by its trust instrument that it is governed by the law of this state or is governed by the law of this state for the purpose of:
      1. Administration, including administration of a trust whose governing law for purposes of administration has been changed to the law of this state;
      2. Construction of terms of the trust; or
      3. Determining the meaning or effect of terms of the trust.

History. Source: L. 2016: Entire part added,(SB 16-085), ch. 228, p. 874, § 1, effective August 10.

COMMENT

Because the authorized fiduciary by decanting is exercising a power over the first trust, the requirements in Section 15-16-905 apply to the first trust. It is irrelevant whether the second trust is governed by the law of the state or administered in the state.

The laws of different states may govern a trust for purposes of determining its validity, for purposes of construing the trust and for purposes of administration of the trust. The determination of the state law that governs for these purposes is also dependent upon whether the trust property consists of movables or land and whether the trust was created by a will or by an inter vivos instrument. Restatement Second of Conflict of Laws §§ 267-279; Uniform Trust Code § 107; Uniform Probate Code § 2-703.

To provide greater certainty about whether the act applies to a trust, Section 15-16- 905(2) provides that the act applies to a trust that by its terms provides that it is governed by the law of the enacting state, without further inquiry as to whether the law of the enacting state actually applies. The act also applies where the law of the enacting state in fact governs administration of the trust, construction of the terms of the trust, or determination of the meaning or effect of terms of the trust, whether or not the trust instrument expressly so states.

Decanting is considered an administrative power because it deals with the powers of the trustee. Comment a to the Restatement Second Conflict of Laws § 271 (testamentary trusts) and Comment a to § 272 (inter vivos trusts). Decanting, however, can alter the beneficial interests of a trust. In order to avoid having different rules for the application of the act depending upon whether the exercise of the decanting power changes administrative provision or beneficial interests, and the difficulty of drawing a distinct line between modifications that are administrative in nature and modifications that change beneficial interests, the act is intended to have broad application.

This act applies if the law of the state governs for purposes of any one or more of administration, meaning or effect. “Meaning and effect” are the terms used in the Uniform Trust Code (see Section 107). “Construction” is the term used in the Restatement Second of Conflicts.

This act also applies if the trust instrument states that the law of the state governs for purposes of any one or more of administration, meaning or effect without the necessity of establishing that the law of the state in fact governs for such purpose.

Alternatively, it is sufficient if the trust has its principal place of administration in the state. See Section 108 of the Uniform Trust Code with respect to the principal place of administration of a trust. While a change of principal place of administration will usually change the law governing the administration of the trust, that is not the result under all circumstances. To avoid the difficulties of determining whether the law governing administration has changed when the principal place of administration has changed, the act applies to any trust with a principal place of administration in the state, regardless of what state law governs its administration and meaning and effect.