Colorado Trust Administration: Successor Trustee Guide

Colorado trust administration is the work of settling a revocable living trust after the person who created it (the settlor) dies. If a trust names you as the successor trustee, you step in to manage the property, notify the beneficiaries, pay valid debts and taxes, and hand out what is left under the trust terms. Most of this happens outside of court, which is one reason families set up a Colorado revocable living trust in the first place.

Colorado runs trusts under the Colorado Uniform Trust Code, found at C.R.S. 15-5-101 and the sections that follow. This guide walks through each step a successor trustee takes after a death, names the statute behind each duty, and shows where trust work and Colorado probate can still overlap.

The Successor Trustee Job in Colorado, Step by Step

Most Colorado trust administrations follow the same path:

1. Accept the trusteeship and read the full trust agreement plus any amendments.
2. Order certified death certificates and secure the trust property.
3. Get a tax ID number for the trust and open a trust bank account.
4. Send the beneficiary notice required by C.R.S. 15-5-813 within sixty days.
5. Inventory and value the trust assets as of the date of death.
6. Pay valid debts and file the needed tax returns.
7. Keep beneficiaries reasonably informed and send the required report.
8. Distribute the trust property under the terms, keeping a reserve for debts and taxes.

Accepting the Trusteeship

You are not the trustee until you accept the role. Under C.R.S. 15-5-701, you accept a trusteeship either by following the method written into the trust, or by accepting trust property, using a trustee's powers, or otherwise acting like the trustee. If you do not want the job, you can decline. A named trustee who does nothing within a reasonable time after learning of the designation is treated as having rejected the role.

You can also take limited steps to protect the property before you decide, and the statute lets you do that without locking yourself into accepting. Once you accept, C.R.S. 15-5-801 says you must administer the trust in good faith, following its terms and the interests of the beneficiaries.

First Practical Steps After the Death

Locate and read the trust

Find the signed trust agreement and every amendment. Read all of it. Note who the beneficiaries are, what each one receives, whether any gifts come before others, whether sub-trusts continue after the main trust closes, and whether the document sets your pay.

Order certified death certificates

Order several certified copies. Banks, title companies, brokerages, and insurers each want one. A handful of extra copies up front saves repeat orders later.

Secure the trust property

Protect what the trust owns. Lock up a vacant home, keep insurance in force, redirect mail, and write down what you find. A trustee has a duty under C.R.S. 15-5-804 to administer the trust as a prudent person would, using reasonable care, skill, and caution, and that duty starts the moment you take control.

Get a tax ID and open a trust account

While the settlor was alive and acting as their own trustee, the trust used the settlor's Social Security number. After death, the trust becomes its own taxpayer and needs an Employer Identification Number (EIN) from the IRS. You can apply online at no cost. Open a checking account in the trust's name with the new EIN, and run every trust payment through that account. One clean account is your best record.

The Colorado Beneficiary Notice (C.R.S. 15-5-813)

This is the deadline most successor trustees ask about. Colorado does not leave it vague. Under C.R.S. 15-5-813, a trustee must keep the qualified beneficiaries reasonably informed about the administration. After a settlor dies and a revocable trust becomes irrevocable, the statute sets two sixty-day clocks:

• Within sixty days after accepting the trusteeship, notify the qualified beneficiaries of your acceptance and give your name, address, and telephone number. (C.R.S. 15-5-813(2)(b).)
• Within sixty days after you learn the trust has become irrevocable by the settlor's death, notify the qualified beneficiaries of the trust's existence, the settlor's identity, the right to request the parts of the trust instrument that describe or affect their interest, and the right to a trustee's report. (C.R.S. 15-5-813(2)(c).)

A "qualified beneficiary" is a beneficiary close enough in line to receive these rights, a term the Colorado Uniform Trust Code defines and uses throughout. If a qualified beneficiary asks for the portions of the trust that affect their share, you must furnish them promptly under C.R.S. 15-5-813(2)(a).

One narrow exception: these two notice rules do not apply to a trust that became irrevocable before January 1, 2019. For a settlor who dies today, the sixty-day duties apply.

Keep a dated file of every notice you send and every request you answer. That record is your best defense if a beneficiary later questions how you ran the trust.

Gathering and Valuing the Assets

Build a full inventory of what the trust holds and what each item was worth on the date of death:

• Real estate, with an appraisal for the date-of-death value
• Bank accounts, CDs, and money market funds
• Brokerage and investment accounts
• Life insurance or retirement accounts that name the trust as beneficiary
• Business interests
• Vehicles, jewelry, and other valuable personal property

Date-of-death values matter for taxes and for splitting shares fairly. Heirs also get a step-up in tax basis to the date-of-death value, which can erase capital gains tax on years of appreciation when an asset is later sold.

While you hold the assets, you have a duty to invest with care. Under Colorado's Uniform Prudent Investor Act, C.R.S. 15-1.1-102, you invest and manage trust assets as a prudent investor would, judging each asset as part of the whole portfolio and weighing the trust's purposes, risk, and return needs. You do not have to be an expert, but you should get professional advice for a large or complex portfolio.

Paying Debts and Taxes

A trust is not free of the settlor's debts. Under C.R.S. 15-5-505, the property of a trust that was revocable at the settlor's death stays subject to claims and allowances as provided in C.R.S. 15-15-103, the statute on liability of nonprobate transferees. In plain terms, creditors of the person who died can still reach trust assets after death, and a trustee who pays out everything before settling valid debts can become personally responsible for the shortfall.

Pay known, valid debts and the costs of administration. Under C.R.S. 15-5-805, you may incur only costs that are appropriate and reasonable for the trust. Set aside a reserve for any claim you are still checking.

Taxes fall into a few buckets:

• The settlor's final income tax return (Form 1040) covers January 1 through the date of death.
• Federal Form 1041, the income tax return for estates and trusts, reports trust income earned after the death and is generally due April 15 of the following year, unless the trust uses a fiscal year. Income passed out to beneficiaries is usually taxed to them through a Schedule K-1.
• Colorado fiduciary income tax may apply to trust income with a Colorado connection.

Colorado has no separate state estate tax for deaths after December 31, 2004. Federal estate tax reaches only very large estates. A CPA who handles trust returns is worth the fee for anything beyond a simple trust.

Keeping Beneficiaries Informed and Accounting

The duty to inform does not stop with the first notice. Under C.R.S. 15-5-813(3), at least once a year and again when the trust ends, you must send the distributees, and any other qualified beneficiary who asks, a report that lists the trust property, its liabilities, the receipts and disbursements, and the source and amount of your own compensation, plus a list of the assets with their market values where feasible.

A qualified beneficiary can waive the right to a report, and can later withdraw that waiver for future reports. Until they do, send the report on time. Clear, regular reporting heads off most disputes before they start.

Trustee Compensation

You are allowed to be paid for the work. If the trust sets your compensation, follow it. If the trust says nothing, C.R.S. 15-5-708 sets compensation by reference to the reasonable-compensation rules in part 6 of article 10 of Title 15. A court can adjust pay that the trust fixed at an unreasonably high or low level. Many family trustees waive pay to leave more for the beneficiaries, but you are not required to.

Making Distributions

Distributions come last, after the debts and taxes are handled or reserved for. Under C.R.S. 15-5-817, when the trust ends you may send the beneficiaries a proposal for distribution. If your proposal tells them of the right to object and the time to do it, a beneficiary who does not object within thirty days loses the right to object to that proposed distribution.

The same statute tells you to distribute the property expeditiously once the trust terminates, while keeping a reasonable reserve for debts, expenses, and taxes. Get a signed receipt from each beneficiary for what they receive. If the trust creates a continuing sub-trust, for a minor or for a beneficiary who should not take everything at once, you may keep managing that share under its own terms after the main trust closes.

You can track the full sequence with our Colorado estate settlement checklist.

When the Trust and Probate Overlap

A trust only controls property that was actually moved into it. If the settlor left an asset in their own name, that asset is not in the trust and may need Colorado probate. Many trust plans include a pour-over will, which directs stray assets into the trust after a probate step. A pour-over will must still meet Colorado's will signing requirements to be valid. If you are weighing whether a trust or a will fits a family's situation, our national will vs. trust guide compares the two.

Incapacity planning sits next to all of this. A trust handles property after death, while a durable Colorado power of attorney handles money decisions if someone is alive but unable to act. The two documents do different jobs, and most complete plans use both.

Frequently Asked Questions

How long does a Colorado successor trustee have to notify beneficiaries?

Sixty days. Under C.R.S. 15-5-813, you notify the qualified beneficiaries of your acceptance within sixty days of accepting, and you notify them of the trust's existence, the settlor's identity, and their information rights within sixty days after you learn the trust became irrevocable at the settlor's death.

Do I have to go to court to administer a Colorado trust?

Usually no. A successor trustee can collect assets, pay debts, and distribute property without court supervision. Court involvement comes up only when a beneficiary contests the trust, demands an accounting the trustee will not give, or asks a judge to interpret unclear terms.

Does a Colorado trust avoid all taxes?

No. A trust avoids probate, not taxes. The trust may owe income tax on earnings it keeps, and beneficiaries pay income tax on what is passed out to them. Colorado has no state estate tax for deaths after December 31, 2004, and federal estate tax reaches only very large estates.

Can I pay myself as the successor trustee?

Yes, within reason. If the trust sets your pay, follow it. If it is silent, C.R.S. 15-5-708 ties your compensation to the reasonable-compensation rules in Title 15. A court can step in if the pay set by the trust is unreasonably high or low.

What if the settlor never moved an asset into the trust?

That asset is not controlled by the trust and may need probate. A pour-over will can route it into the trust, but it passes through probate first. Check whether a small estate affidavit covers it for smaller amounts.

Can I distribute before paying debts?

That is risky. Under C.R.S. 15-5-505 and C.R.S. 15-15-103, trust assets stay reachable by the settlor's creditors after death. If you pay out everything and a valid debt surfaces, you can be personally on the hook. Settle or reserve for debts first.

The Bottom Line

A Colorado successor trustee accepts the role, sends the sixty-day beneficiary notice required by C.R.S. 15-5-813, gathers and values the assets, pays valid debts and taxes, keeps beneficiaries informed with a yearly and final report, and then distributes what is left under the trust terms while holding back a reserve. The Colorado Uniform Trust Code spells out each duty, and a careful paper trail protects you at every step. For anything large, contested, or tax-heavy, bring in a Colorado trust attorney and a CPA early.

Related Colorado Guides

• Colorado Revocable Living Trust
• Colorado Probate Guide
• Colorado Will Requirements
• Colorado Power of Attorney
• Will vs. Trust

Official Sources

• Colorado Uniform Trust Code, C.R.S. Title 15, Article 5 (15-5-101 et seq.) | Colorado General Assembly, Colorado Revised Statutes 2024, Title 15 | https://content.leg.colorado.gov/sites/default/files/images/olls/crs2024-title-15.pdf
• C.R.S. 15-5-813 (Duty to inform and report, the 60-day notices and reports) | Colorado General Assembly | https://colorado.public.law/statutes/crs_15-5-813
• C.R.S. 15-5-505 (Creditor's claim against a settlor) | Colorado General Assembly | https://colorado.public.law/statutes/crs_15-5-505
• C.R.S. 15-15-103 (Liability of nonprobate transferees for creditor claims and statutory allowances) | Colorado General Assembly | https://colorado.public.law/statutes/crs_15-15-103
• C.R.S. 15-1.1-102 (Colorado Uniform Prudent Investor Act, standard of care) | Colorado General Assembly | https://colorado.public.law/statutes/crs_15-1.1-102

Sources

This guide is general information, not legal advice. Consult a qualified attorney about your situation. It is not legal advice.