Trustee Duties and Responsibilities
Meurer & Potter, P.C., Law Office, Denver, Colorado
If you’ve been named successor trustee of a trust in Colorado, you now hold one of the most serious roles in civil law. You are a fiduciary. That means you are legally obligated to act in the best interests of the trust’s beneficiaries—not your own—and you can be held personally liable if you fail to meet that standard. Understanding your trustee duties and responsibilities is not optional. It is the difference between fulfilling your role properly and facing a lawsuit from the people you’re supposed to be protecting.
At Meurer & Potter, P.C., our trust administration attorneys have been guiding Colorado trustees through their legal obligations since 1991. We help you understand what the law requires, avoid the mistakes that create personal liability, and complete the administration process correctly.
Just been named trustee? Call 303-991-3544 for a free consultation before you take any action.
Core Fiduciary Duties Under Colorado Law
Guiding trustees through the trust administration process since 1991.
Colorado’s trustee duties are codified in the Colorado Uniform Trust Code (CUTC), found in Title 15, Article 5, Part 8 of the Colorado Revised Statutes. The trust instrument itself may expand or limit some of these duties, but the following obligations are fundamental and apply to virtually every trustee.
Duty to Administer the Trust (§ 15-5-801)
A trustee must administer the trust in good faith, in accordance with its terms and purposes, and in the interests of the beneficiaries. This is the foundational duty; everything else flows from it. If the trust document says distribute income quarterly, you distribute income quarterly. If it says hold assets until a beneficiary turns 30, you hold them. The trust’s terms are your operating instructions, and deviating from them without legal justification is a breach.
Duty of Loyalty (§ 15-5-802)
The trustee must act solely in the interests of the beneficiaries. This means no self-dealing, no transactions that benefit you at the trust’s expense, and no conflicts of interest. Under Colorado law, any transaction that involves the trustee’s own interests is presumptively voidable by the beneficiaries unless the trustee can prove the transaction was fair. This duty is strict; even the appearance of a conflict can create legal exposure.
Duty of Prudent Administration (§ 15-5-804)
A trustee must administer the trust with the care, skill, and caution that a prudent person would exercise. This standard applies to every decision—investment choices, distributions, vendor selection, and recordkeeping. If you have special skills or expertise (for example, you are a CPA or financial advisor), Colorado law holds you to an even higher standard based on those skills (§ 15-5-806).
Duty to Keep Records (§ 15-5-810)
The trustee must keep clear, accurate, and detailed records of all trust property, transactions, income, expenses, and distributions. Trust assets must be kept separate from the trustee’s personal assets—commingling is a breach. Good recordkeeping is also your best defense if a beneficiary ever challenges your administration.
Duty to Inform and Report (§ 15-5-813)
Colorado law requires the trustee to notify qualified beneficiaries within 60 days of accepting the trusteeship. The trustee must also provide beneficiaries with an annual report that includes a description of trust assets and their market values, liabilities, receipts, disbursements, and the trustee’s compensation. Beneficiaries have the right to request additional information, and the trustee must respond. This notice obligation shifted under the CUTC—the burden is now on the trustee to proactively provide information, not on the beneficiary to ask for it.
Trustee Compensation
Taking the Legal Burden Off Your Shoulders During a Difficult Time
Colorado law entitles trustees to reasonable compensation for their services. What qualifies as “reasonable” depends on the complexity of the trust, the time and effort required, the trustee’s expertise, and local custom. Professional trustees (banks, trust companies) typically charge a percentage of trust assets under management. Individual (non-professional) trustees should document their time carefully and discuss compensation expectations with an attorney to avoid beneficiary disputes.
Personal Liability for Breach of Duty
A trustee who breaches their fiduciary duties can be held personally liable for the resulting losses. Under Colorado common law, a beneficiary who proves breach of trust can recover not only the losses caused by the breach but also reasonable attorney fees (see Buder v. Sartore, 774 P.2d 1383, Colo. 1989). Breaches include self-dealing, failure to diversify investments, commingling trust and personal funds, failing to provide required reports to beneficiaries, making unauthorized distributions, and ignoring the terms of the trust.
The risk of personal liability is the single most important reason to work with an experienced trust administration attorney. Even well-intentioned trustees make mistakes, and in trust law, honest mistakes can still result in financial liability. If you are facing allegations of breach, our attorneys also provide representation in trust disputes and breach of fiduciary duty proceedings.
Concerned about your trustee obligations? Call 303-991-3544 for guidance before problems arise.
Frequently Asked Questions About Trustee Duties and Responsibilities
Our FAQs offer practical guidance on trust duties and responsibilities. They are written to help you stay informed, not overwhelmed.
Under the Colorado Uniform Trust Code, a trustee’s core duties include administering the trust in good faith, acting with undivided loyalty to beneficiaries, treating beneficiaries impartially, investing prudently, keeping accurate records, and providing annual reports to beneficiaries. Each of these duties is codified in C.R.S. Title 15, Article 5, Part 8.
Yes. A beneficiary who believes the trustee has breached their fiduciary duties can bring a legal action against the trustee. If breach is established, the trustee can be held personally liable for losses and may be required to pay the beneficiary’s attorney fees under Colorado common law.
Yes. Colorado law (§ 15-5-807) allows a trustee to delegate duties and powers that a prudent trustee of comparable skills could properly delegate. This is particularly important for investment management—non-professional trustees should consider delegating to qualified financial advisors. A trustee who properly delegates is not personally liable for the agent’s decisions.
At minimum, annually. The trustee must provide qualified beneficiaries with a report that includes trust assets and their market values, liabilities, receipts, disbursements, and trustee compensation. Beneficiaries can request information more frequently. The trustee must also provide notice within 60 days of accepting the trusteeship.
Yes. Colorado law provides that trustees are entitled to reasonable compensation. The amount depends on the trust’s complexity, time required, and local custom. Individual trustees should document their time and discuss compensation with an attorney to prevent disputes with beneficiaries.
Colorado’s Prudent Investor Act requires trustees to invest trust assets as a prudent investor would, considering the trust’s purposes, terms, and distribution requirements. This means diversifying investments, balancing risk and return, and considering the needs of both current and future beneficiaries. The standard is applied to the overall portfolio, not individual investments.