When Irrevocable Doesn't Mean Forever

Irrevocable trusts provide many benefits, including estate and income tax savings and asset protection. As a trust ages, the original purpose for its creation may not align with its current performance. Trust assets may be underperforming, tax or trust laws may have changed, or the family dynamic or individual needs of family members may have changed. In these types of situations, several recently-enacted Colorado statutes provide several methods to change an irrevocable trust.

The Colorado Uniform Trust Code ("UTC"), effective as of January 1, 2019, provides several tools to change an otherwise irrevocable trust. Colorado's UTC allows interested parties to modify a trust by entering a binding out of court settlement agreement. These Nonjudicial Settlement Agreements are only available if the modification does not violate a material purpose of the trust. In addition, relying on the UTC, a court may modify or terminate a trust for the following reasons:  1) due to