by Kelly Dickson Cooper
More and more, I review trust agreements that appoint a trustee, but then appoint other individuals or institutions to perform certain tasks that are normally in the domain of the trustee. They are sometimes referred to as trust protectors, trust advisors, trust directors, special powerholders, investment trustees, or distribution trustees. I most often see these appointments in the areas of investments or distributions.
The trust language that attempts to divide the responsibilities of a trustee among a group is often unclear and give rise to difficult questions as to the scope of each individuals’ responsibilities. There is also the question of whether the trustee is responsible for the actions of the other appointees and if the appointees are fiduciaries. These problems with interpretation are often exacerbated because the laws are not clear about the division of these responsibilities and the liability of each actor.
Colorado proactively sought to address some of these issues with a directed trustee law. See C.R.S. Section 15-16-801, et seq. (Colorado’s Directed Trustee Act). This law is currently undergoing review because, in an attempt to bring uniformity to the law, the National Conference of Commissioners on Uniform State Laws promulgated the Uniform Directed Trust Act on July 19, 2017.
A subcommittee of the Colorado Bar Association Trust and Estate Section is reviewing the new Uniform Act, comparing it to current Colorado law, and is planning to make recommendations to the Section’s Statutory Revisions Committee regarding revisions to current law. If you draft these provisions or administer a trust with divided responsibilities, keep an eye on these potential changes.