Colorado § 15-16-910 - Formalities.

§ 15-16-910. Formalities.

An exercise of the decanting power must be made in a record signed by an authorized fiduciary. The signed record must, directly or by reference to the notice required by section 15-16-907, identify the first trust and the second trust or trusts and state the property of the first trust being distributed to each second trust and the property, if any, that remains in the first trust.

Source: L. 2016: Entire part added, (SB 16-085), ch. 228, p. 878, § 1, effective August 10.

COMMENT

Once the authorized fiduciary has provided the requisite notice of a proposed decanting under Section 15-16-907 and the notice period has either passed or been waived as provided in Section 15-16-907(6), then on or about the proposed effective date for the exercise of the decanting power the authorized fiduciary may effectuate the decanting by a signed record. The notice (a) includes copies of the first-trust instrument and the second-trust instrument, (b) specifies the manner in which the decanting power would be exercised, including which property of the first trust is being distributed to each of the second trusts and which property, if any, remains in the first trust, and (c) specifies the proposed effective date for the decanting. In the case of an exercise of the decanting power that is structured as a modification of the first trust, the signed record required by Section 15-16-910 may be the same instrument setting forth the terms of the modified trust. Where the decanting is structured as a distribution to a separate second trust, generally the signed record required by Section 15-16-910 will be a separate instrument from the second-trust instrument.

The decanting power can be exercised by either an actual distribution of property to one or more second trusts or by modifying the terms of the first trust to create the second trust with or without an actual distribution of property. If the decanting power is exercised by modifying the terms of the first trust, the trustee could either treat the second trust created by such modification as a new trust, in which case the property of the first trust would need to be transferred to the second trust, or alternatively treat the second trust as a continuation of the first trust, in which case the property of the first trust would not need to be retitled.

Other actions may be required to formally complete the transfer of property from the first trust to the second trust, such as retitling accounts, executing deeds, and signing assignments.