2023 Colorado Revised Statutes › Title 15 - PROBATE, TRUSTS, AND FIDUCIARIES (§§ 15-1-101 — 15-24-403) › COLORADO PROBATE CODE (§§ 15-10-101 — 15-17-103) › Article 16 - TRUST ADMINISTRATION (§§ 15-16-101 — 15-16-931) › Part 9 - COLORADO UNIFORM TRUST DECANTING ACT (§§ 15-16-901 — 15-16-931) › Section 15-16-918 - Removal or replacement of authorized fiduciary

(1)
An authorized fiduciary may not exercise the decanting power to modify a provision in a first-trust instrument granting another person power to remove or replace the fiduciary unless:
(a)
The person holding the power consents to the modification in a signed record and the modification applies only to the person;
(b)
The person holding the power and the qualified beneficiaries of the second trust consent to the modification in a signed record and the modification grants a substantially similar power to another person; or
(c)
The court approves the modification and the modification grants a substantially similar power to another person.
Added by 2016 Ch. 228,§ 1, eff. 8/10/2016.
L. 2016: Entire part added, (SB 16-085), ch. 228, p. 885, § 1, effective August 10.
COMMENT
Section 15-16-918 authorizes a modification of a trustee removal provision only with either court approval or the consent of the person currently holding the right to remove or replace the trustee. The power to remove a fiduciary is a power to remove the fiduciary without the fiduciary's consent regardless of whether the remover has the power to designate the successor fiduciary. The power to replace a fiduciary is the power to remove the fiduciary and to designate the successor for the fiduciary without the consent of the fiduciary.
Unless the qualified beneficiaries also consent to such change, the person currently holding the right to remove the authorized fiduciary may only consent to the modification of the right with respect to himself or herself and cannot consent to the modification of such right with respect to any successor remover. Section 15-16-918(1)(a). For example, if a trust provides that the authorized fiduciary may be removed by X (the "current remover"), so long as X is living and not incapacitated, and after X is deceased or incapacitated, by Y, X may consent to a modification that would permit the authorized fiduciary to be removed only by the joint agreement of X and Z and only with 90 days' prior notice, but such modification would not affect Y's power of removal after X is deceased or incapacitated unless Y also consents to the modification or unless the qualified beneficiaries consent to such change.
Alternatively, the removal power may be modified by the current remover and the qualified beneficiaries if the modification grants a substantially similar removal right to another person. Section 15-16-918(1)(b). In the previous example, X (the current remover) and the qualified beneficiaries could consent to a modification that would permit the authorized fiduciary to be removed by Z, or if Z were not willing and able to act, by W. Y, the successor remover named in the first-trust instrument, would not need to consent to such modification if X and the qualified beneficiaries consent to it.
Alternatively, the power to remove or replace the authorized fiduciary may be modified if the court approves the modification and the modification grants a substantially similar power to another person. Section 15-16-918(1)(c).
In the case of a modification with the consent of the qualified beneficiaries or with court approval, the modification must grant a substantially similar power to another person. A power to remove a fiduciary only for cause would not be substantially similar to a power to remove a fiduciary for any reason. A power to remove a fiduciary only after the fiduciary has attained age 75 or served for ten years is not substantially similar to a power to remove the fiduciary at any time. A power to replace a fiduciary is not substantially similar unless it contains substantially the same restrictions on who may serve as the replacement fiduciary. For example, a power to remove a fiduciary and replace the fiduciary with any person would not be substantially similar to a power to remove the fiduciary and replace the fiduciary with a person who is not related or subordinate to the settlor.
In exercising the decanting power to designate a different person to remove and replace the trustee, the authorized trustee should be alert to the tax consequences if the person so designated is not independent for tax purposes.