2023 Colorado Revised Statutes › Title 15 - PROBATE, TRUSTS, AND FIDUCIARIES (§§ 15-1-101 — 15-24-403) › FIDUCIARY (§§ 15-1-101 — 15-1.5-122) › Article 1 - FIDUCIARY (§§ 15-1-101 — 15-1-1518) › Part 7 - FIDUCIARY INTERESTS IN ENTITIES (§§ 15-1-701 — 15-1-702) › Section 15-1-702 - Family business interests - maintenance of entity - formation of successor entity

(1)
As used in this section, unless the context otherwise requires:
(a)
"Family" means an individual, such individual's spouse, parents, the descendants of either of such parents or of such spouse, or the spouses of such descendants or any combination of such persons.
(b)
"Family business" means a business enterprise with respect to which the aggregate interests of the family are substantial in relation to the total outstanding interests in the business enterprise.
(c)
"Interest" and "interests" include beneficial interests as beneficiaries of any estate or trust and indirect interests through any other form of entity.
(d)
"Successor entity" includes the entity holding the family business where such entity survives a consolidation, merger, acquisition, or other combination.
(2)
Any fiduciary acting under a will or trust instrument that evidences an intent to retain an interest in a family business may maintain the interest in any form of entity or successor entity. Such a successor entity may be formed by consolidation, merger, acquisition, or other combination and shall be considered the same enterprise for purposes of maintaining the interest in the family business where the interests of the beneficiaries in the successor entity are substantial.
(3)
Except as otherwise provided in the instrument under which the fiduciary is acting:
(a)
A fiduciary may proceed as provided in this subsection (3) with the formation of such a successor entity where the fiduciary believes in good faith that the formation is on a favorable basis considering only the overall interests of the beneficiaries including the maintenance of a substantial interest on the part of the beneficiaries in the enterprise and the value of such interest in the long term.
(b)
A fiduciary may vote and otherwise deal with respect to interests in the family business as the fiduciary believes in the good faith exercise of the fiduciary's business judgment, under the business judgment rule, to be necessary or appropriate to complete such formation on such a favorable basis.
(c)
A fiduciary may, in the good faith exercise of such judgment, accept a reduced participation in equity, voting, and other rights and preferences including a reduction in voting rights that results in less than voting control of the successor entity.
(d)
A fiduciary may proceed without notice to the beneficiaries where disclosure is forbidden by law or where the fiduciary believes in the good faith exercise of such judgment, that nondisclosure is necessary to complete such formation on such a favorable basis.
(4)
This section shall apply to any interests held by an estate or trust in a family business on or after May 26, 2000, and to the formation of any entity or successor entity completed after May 26, 2000.
L. 2000: Entire section added, p. 1171, § 1, effective May 26.