Colorado trusts – trustee legal duty managing investments

Posted by: Apr 19, 2015By Brian Stutheit

In this blog, Stutheit & Gartland summarizes the

legal duty of a Colorado trustee when managing investments.

Colorado follows what is called the “Prudent Man Rule” for trustees.  In managing property for a trust beneficiary, the trustee must exercise judgment and care, under the circumstances, which trustees of prudence, discretion and intelligence would exercise in managing the property of another.  The Colorado Court of Appeals once said that a trustee owed his beneficiary “utmost good faith.” In other words, the trustee’s personal motives should not influence investment and management decisions.

Where there has been a clear and serious breach of the prudent man duty, Colorado courts will remove the trustee, award damages and interest to the beneficiary and order a trustee to repay its compensation.  The probate court judge is even allowed to order the trustee to pay the beneficiary’s reasonable attorney fees in a breach of trust action.

The prudent man standard appears in Colorado Revised Statutes, as section 15-1-304.  The statutes are accessible to the public.  Try this link:

The Colorado Bar Association publishes a brochure entitled “So Now You Are A Trustee.”  Try this link:

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