As a trustee, your role is not just about managing assets but also about building trust and maintaining open lines of communication with beneficiaries. This is especially true in Colorado, where state law has specific trustee requirements.

Understanding the Legal Requirements

In Colorado, the law requires trustees to provide beneficiaries with the parts of the trust agreement that affect them. You must share any sections of the trust document that mention the beneficiary or impact their rights. Sometimes it is obvious which parts those would be, but not always. A page giving a specific gift to a particular beneficiary would need to be shown to that beneficiary. But what about the "Definitions" section often included in trust agreements, where specific terms are defined?

Additionally, trustees must provide an accounting at least annually or upon reasonable request from a beneficiary. This accounting should detail the trust’s assets, liabilities, receipts, and disbursements, including the source and amount of the trustee’s compensation.

Going Above and Beyond

While these are the bare minimum requirements, effective communication often involves going above and beyond what is legally required. Regular and transparent communication can help reassure beneficiaries that you are working diligently to represent their interests.

For example, you might consider providing quarterly updates on the trust’s investments and performance, even if only an annual report is required. Or, you could offer to meet with beneficiaries individually to discuss their questions or concerns.

Remember, it can be easy to raise suspicions by communicating too little, but you are unlikely to get into trouble by sharing more than required. Over-communication can often prevent misunderstandings and disputes before they arise.

Co-Trustees: The Importance of Teamwork

If you are serving as a co-trustee, communication becomes even more critical. You and your co-trustee must work together to manage the trust’s assets, which requires regular, open, and honest communication.

Without effective communication, co-trustees run the risk of taking actions that are inconsistent or contradictory. This can confuse beneficiaries and potentially harm the trust’s assets. So, when in doubt, err on the side of over-communication.

Conclusion

Being a trustee is a significant responsibility, and effective communication is a vital part of the role. By understanding your legal obligations and striving to exceed them, you can build trust with beneficiaries and ensure the smooth administration of the trust. Remember, when it comes to communication, more is often better. Don’t hesitate to contact a legal professional if you have any questions or concerns about your duties as a trustee.