Colorado has adopted the Uniform Trust Code, providing a comprehensive framework for trust administration. The state also adopted the Uniform Trust Decanting Act, giving families one of the most developed decanting frameworks in the West. Colorado has no state estate tax or inheritance tax, and as a common law property state, it avoids the community property complications that affect several neighboring states. The Colorado Trust Code is found at C.R.S. Sections 15-5-101 and following.
This guide applies to both revocable and irrevocable trusts in Colorado.
Where Colorado trust law lives
Colorado's trust statutes are codified at C.R.S. Sections 15-5-101 and following. The Uniform Trust Decanting Act provides a comprehensive framework for moving trust assets into new trusts with updated terms. Colorado has also adopted the Uniform Disposition of Community Property Rights at Death Act, which preserves the community property character of assets imported by people moving to Colorado from community property states.
Accounting and notice requirements
Colorado follows the standard UTC notice framework. Trustees must notify qualified beneficiaries within 60 days of accepting trusteeship of an irrevocable trust. Annual accounting to qualified beneficiaries is required under the default rules. While the trust is revocable and the trust creator is alive and competent, the trustee's duties run primarily to the trust creator.
Trustee duties
Colorado trustees must administer the trust in good faith, following the trust's terms and purposes, and in the interests of the beneficiaries. All standard UTC duties apply: loyalty, impartiality, prudent administration, and prudent investing. Compensation follows the trust instrument first, with reasonable compensation as the default.
What makes Colorado different
No state estate tax or inheritance tax. Colorado does not impose any state-level death taxes. Only the federal estate tax applies to estates exceeding the federal exemption. This makes Colorado one of the more tax-friendly Western states, especially compared to neighbors like Oregon (which has the lowest estate tax exemption in the nation at $1 million).
Uniform Trust Decanting Act. Colorado's adoption of the comprehensive decanting act gives trustees robust tools for modernizing outdated trust provisions. Trustees can distribute assets from an existing trust into a new trust with different terms, without going to court. This is especially valuable for families that moved to Colorado from other states and want to update trusts that were drafted under a different state's laws.
Community property preservation. Colorado is a common law property state, but it has adopted the Uniform Disposition of Community Property Rights at Death Act. This means that if you move to Colorado from a community property state like California, Arizona, or New Mexico, your community property retains its character. This preserves the full stepped-up basis benefit at the first spouse's death, which is a meaningful tax advantage.
Popular destination for California moves. Colorado is one of the top destinations for people relocating from California. Moving from California (non-UTC, strict notice and accounting requirements, 13.3% state income tax) to Colorado creates significant trust planning opportunities, but also requires affirmative steps to ensure the trust complies with Colorado law and takes advantage of its benefits.
TrustHelm tip: If you moved to Colorado from another state, your trust may have been drafted under a different state's rules. TrustHelm's AI-powered document analysis can help you understand how your trust's provisions interact with Colorado law and identify areas that may benefit from updating through the decanting process.
The most common Colorado trust mistakes
Not funding the trust. As in every state, the most common mistake is failing to transfer assets into the trust. Real estate, bank accounts, and investment accounts must be retitled in the trust's name.
Not updating trusts after moving to Colorado. Families who move from California or other states often continue operating under the prior state's trust rules. Reviewing and potentially updating the trust to take advantage of Colorado's framework is important.
Missing the 60-day notice deadline. When a trust becomes irrevocable, the trustee must notify qualified beneficiaries within 60 days.
Not knowing about the decanting act. Colorado's decanting provisions are a powerful but often overlooked tool for modernizing older trusts without going to court.
When to talk to an attorney
You should consult a Colorado trust attorney if you recently moved from another state and want to review your trust under Colorado law, if you are interested in using the decanting act to update trust terms, if you have been named as trustee and need to understand your obligations, or if you need to modify a trust to address changed circumstances.
If you need help finding a qualified estate planning attorney in your area, visit TrustHelm's Find an Attorney tool.
This guide is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for decisions about your trust.