After the death of a person who created a revocable living trust, the trust is referred to as “irrevocable”, meaning that the trust terms cannot be changed. This held true until the adoption of the Colorado Uniform Trust Code (CUTC) effective January 2019. Since then, section 15-5-111 of the CUTC allows trust beneficiaries to enter into an agreement to modify “irrevocable” trust terms. This is referred to as a nonjudicial settlement agreement. Similarly, 15-5-401 allows a trust beneficiary to petition a court for judicial modification. Modification can be pursued for many reasons. LeonardLaw has primarily used nonjudicial settlement agreement modification to obtain favorable tax treatment through a step-up in basis upon the death of the first spouse or to change the state of administration. Modification can also be used to address unanticipated circumstances in a beneficiary’s life, such as divorce, drug abuse, medical illness, mental illness, or the need to qualify for government assistance, among other things. For more information schedule a consult with Frieda Leonard.
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