Probate, Trusts, And Fiduciaries - Digest of Bills

Digest of Bills - 2000

PROBATE, TRUSTS, AND FIDUCIARIES

H.B. 00-1139 Guardians - appointment for minors. Gives a guardian of a child the right to appoint a guardian by a will or other written instrument. Allows for court appointment of a guardian in cases where guardianship of a child has previously been granted to a third party and the guardian had not made a testamentary appointment of a guardian for the child. States that in such circumstances, the court shall not presume it is in the best interests of a child to be in the care of a parent in circumstances where a court has previously granted custody of a child to a third party. Provides that a guardian may not appoint a surviving parent who has no parental rights to be a successor guardian.

Changes the procedure for a minor to object to the appointment of a guardian by giving the minor the right to consent or refuse to consent to the appointment of a guardian and by reducing the age for consenting to appointment of a guardian from 14 to 12. Reduces the age of a minor who is entitled to nominate a guardian to the court during the appointment proceeding from 14 to 12. Reduces the age of a minor whose preference is given consideration by the court, in either a proceeding for the appointment of a guardian, a proceeding for the resignation or removal of a guardian, or the appointment of an attorney or representative for the minor. Allows the court to appoint a guardian ad litem to represent a minor in a proceeding for the appointment of a guardian or for the removal of a guardian.

Amends portions of the uniform guardianship bill, House Bill 00-1375, to conform with the changes in this act. Makes those changes to the uniform bill effective on January 1, 2001, and only if House Bill 00-1375 becomes law.

APPROVED by Governor March 31, 2000
PORTIONS EFFECTIVE July 1, 2000, January 1, 2001
NOTE: House Bill 00-1375 was signed by the Governor on June 1, 2000.

H.B. 00-1326 Uniform principal and income act - fiduciary duties - decedent's estate or terminating income interest - apportionment at beginning and end of income interest - allocation of receipts and disbursements during administration of trust. Repeals and reenacts, with amendments, the "Uniform Principal and Income Act". Updates the procedures for trustees administering an estate in separating principal from income. Updates the traditional income and allocation rules to accommodate modern investment theory and to coordinate with the "Uniform Prudent Investor Act". Reiterates the guiding principle of trustees to be the intention of the trust creator. Clarifies that the reenacted uniform principal and income act consists of default provisions that govern the administration of a trust or will by a fiduciary only if such trust or will contains no conflicting provisions.

Modernizes the distinction between property that is principal and distributed to remainder beneficiaries, and property that is income and distributed to income beneficiaries. Provides a means for implementing the transition to an investment regime based on principles embodied in the "Uniform Prudent Investor Act", including the principle for investing for total return instead of for a certain level of income. Clarifies the allocations of acquired assets, including those from corporate distributions.

Introduces the concept of "unincorporated entity" to deal with businesses operated by a trustee, including farming and livestock operations, and investment activities in rental real estate, natural resources, and timber. Provides for modern investment modalities, including derivatives, options, deferred payment obligations, and synthetic financial assets. Addresses disbursements made because of environmental laws. Provides the power to make adjustments between principal and income to correct inequities caused by tax elections or problems in the fiduciary tax rules.

Applies to trusts or estates existing on and after July 1, 2001, except as otherwise provided in the will or trust. For trusts established under a will or trust agreement existing and irrevocable on July 1, 2001, permits the trustee to elect by July 1, 2002, to apply the "Uniform Principal and Income Act" in effect on June 30, 2001.

APPROVED by Governor May 26, 2000
EFFECTIVE May 26, 2000

H.B. 00-1375 Guardianship and protective proceedings - procedures - appointment. Enacts the "Uniform Guardianship and Protective Proceedings Act" as recommended by the national conference of commissioners on uniform state laws, with some changes.

Replaces the parts of the "Colorado Uniform Probate Code" that relate to guardianship of minors, guardianship of incapacitated persons, and protection of property of persons under disability and minors with the uniform law, but maintains provisions relating to court-approved trust arrangements, income trusts, and disability trusts established for the purpose of establishing or maintaining income eligibility for medical assistance, authorizing guardians and conservators to petition the court for authority to commence and maintain an action for dissolution of marriage or legal separation of a ward or a protected person, and allowing small estates to be handled without a conservator.

General provisions. Increases the amount owed to a minor that is allowed for a transfer of property to the person having care and custody of a minor or to a guardian or custodial trustee of a minor to avoid the establishment of a conservatorship from $1000 to the greater of $10,000 or the current annual gift tax exclusion in the internal revenue code. Increases the length of time for a temporary delegation of powers by the parent or guardian of a minor or incapacitated person from 9 months to 12 months. Specifies the jurisdiction of the court and venue for proceedings. Specifies procedural requirements for notice and appointment of a guardian ad litem.

Guardianship of minors. Allows appointment of a guardian by parental appointment or upon appointment by the court, and specifies that the guardianship continues until terminated. Allows a parent to make an advance appointment of a "standby guardian" to become effective upon death, adjudication of incapacity, or written determination by a physician who has examined the parent and determined that the parent is no longer able to care for a minor child. Allows a parent to appoint a guardian for children who may later be born or adopted or whose custody may be given to the appointing parent. Creates a rebuttable presumption that a person appointed as guardian by a parent should be appointed and that the court should not disregard the appointment without good cause. Allows an appointing parent to petition the court prior to the triggering event for advance confirmation of the appointment, with the result that advance court confirmation terminates the right of others to object and terminates the right of the appointing parent to revoke the appointment. Provides for the petition for advance court appointment to be made within 2 years from the date of the likely need for appointment.

Allows a minor who has attained 12 years of age, the other parent, or a person other than a parent or guardian having care or custody of the minor to object to a parental appointment of a guardian and turn the appointment into a contested proceeding. Directs that if an objection is filed, the appointee has no authority to act and instead must file a petition for appointment as a guardian. Allows a court to appoint a guardian if the court finds that appointment is in the minor's best interest and in one of 3 circumstances: The parents consent, all parental rights have been terminated, or the parents are unable or unwilling to exercise their parental rights.

Authorizes the court to appoint a temporary guardian or an emergency guardian. Specifies the procedures for judicial appointment of guardians, and allows the court to appoint a lawyer to represent the minor. Allows the court to limit the powers of a guardian for a minor and specifies the duties and powers of a guardian. States that a guardianship of a minor terminates upon the minor's death, adoption, emancipation, attainment of majority, or as ordered by the court.

Guardianship of incapacitated persons. Specifies the procedures and requirements for court appointment of a guardian for an incapacitated person. Requires the court to appoint a lawyer to represent the respondent if requested by the respondent or recommended by the visitor or if the court determines the respondent needs representation. Allows the court to order a professional evaluation of the respondent's alleged impairment, but requires the court to order such an evaluation only if the respondent demands an evaluation. Requires the proposed guardian and the respondent to attend the hearing unless excused for good cause.

Specifies the priorities for appointments of guardians. Allows the court to appoint a guardian only if it finds by clear and convincing evidence that the respondent is incapacitated and that no less restrictive alternative will meet the respondent's identified needs. Directs the court to give the guardian only those powers needed to meet the respondent's needs and specify the powers granted and the limits on the respondent's rights. Allows for appointment of an emergency guardian or a temporary substitute guardian. Specifies the duties and powers of a guardian and the guardian's reasonable standard of care, including the standard of care for a limited guardian. Requires reports and monitoring of guardians.

Protection of protected person's property. Sets forth the standards and procedures for appointment of a conservator or entry of a protective order. Requires the court to appoint a lawyer to represent the respondent if requested by the respondent, recommended by the visitor, or if the court determines the respondent needs representation. Requires the proposed guardian to attend the hearing unless excused for good cause. Directs the court to specify the powers of the conservator. Gives the court supervising a conservatorship all of the powers the protected person would be able to exercise and the power to protect the assets. Specifies those actions for which a conservator must obtain prior court approval. Allows the court in lieu of appointing a conservator to order less intrusive protective arrangements.

Specifies the order of priority for appointment of conservators. Specifies requirements for bonds. Details the compensation, fees, costs, and expenses for services provided by a visitor, guardian, conservator, or others relating to an incapacitated person or protected person. Lists the requirements of a conservator upon the death of the protected person and procedures for handling the estate.

Applies to appointments of guardians or conservators made on or after January 1, 2001.

APPROVED by Governor June 1, 2000
EFFECTIVE January 1, 2001

H.B. 00-1433 Fiduciary transactions - family business interests - representation of interests of incapacitated persons or minor children in probate proceedings - out-of-state banks as fiduciaries. Allows a fiduciary acting under a will or trust instrument that evidences an intent to retain an interest in a family business to maintain the interest in any form of entity or successor entity. Allows the fiduciary to proceed with the formation of a successor entity where the fiduciary believes in good faith that the formation is on a favorable basis considering the overall interests of the beneficiaries, the maintenance of a substantial interest on the part of the family in the enterprise, and the long-term value of such interest. Allows a fiduciary to vote and deal with interests in the family business as the fiduciary believes necessary using the good faith exercise of business judgment, under the business judgment rule. Allows a fiduciary in good faith to accept a reduced participation in equity, voting, and other rights and preferences. Directs that the fiduciary may proceed with formation of the entity without notice to the beneficiaries where disclosure is forbidden by law or where the fiduciary believes in good faith that nondisclosure is necessary to complete the formation on such a favorable basis.

Provides that an incapacitated person or a minor child who is not otherwise represented in a probate proceeding under the "Colorado Probate Code" is bound by an order to the extent his or her interest is adequately represented by another party having a substantially identical interest in the proceeding. Makes conforming amendments regarding notice to an incapacitated person or a minor child.

Amends the definition of company for purposes of the statutes allowing banks to act as fiduciaries to allow banks organized in other states but authorized to conduct business in Colorado to be able to do trust work.

APPROVED by Governor May 26, 2000
EFFECTIVE May 26, 2000