Chapter 46 - § 46.10 • CHARITABLE TRUSTS

• Jurisdiction: Colorado

§ 46.10 • CHARITABLE TRUSTS

Charitable trusts, generally being of unlimited duration, present special problems. Colorado's adoption of the Uniform Rule Against Perpetuities Act⁵³ exempts charitable trusts from the rule.

In 1981, the legislature recognized and reaffirmed the common law power of the attorney general to supervise charitable trusts.⁵⁴ The cy pres rule has been applied strictly in Colorado, and it is not given effect unless the will evinces a general charitable intent (see § 32.33).⁵⁵ In Estate of Vallery,⁵⁶ the court extended the cy pres doctrine to include restricted outright gifts as well as to charitable trusts. Colorado Uniform Trust Code § 15-5-413 recognizes and defines the elements of the cy pres doctrine.

Many charitable bequests are made to institutions such as hospitals, universities, foundations, and the like, and it may not be clear if the transfer was in trust. The bequest may be administered as part of the institution's endowment, perhaps in a restricted fund. In such case, the Uniform Management of Institutional Funds Act⁵⁷ will apply. The Act provides the prudent man rule, provides flexible standards for investment, and, under C.R.S. § 15-1-1109, allows the court to release a restriction on the use or investment of a fund, even without a finding of general charitable intent, that finding normally being necessary for application of the cy pres doctrine. See also § 32.33 and cases cited therein. The Act was repealed and reenacted, effective September 1, 2008, as the Uniform Prudent Management of Institutional Funds Act.⁵⁸ Elements of the Colorado Prudent Investor Act, including the provisions authorizing delegation of management and investment functions, are included.

The question of settlor standing is addressed indirectly in the Official Commentary that was enacted as part of the 2008 Uniform Prudent Management of Institutional Funds Act. In connection with petitions to modify trust provisions or to deviate from administrative provisions, notice is to be given to the Attorney General. The Commentary states that consideration was given to providing notice as well to third parties, including the settlor of the trust. This approach was rejected and there is no provision in the Act for notice to the settlor or his or her successors. Providing notice to third parties would strongly imply that the third party, having been given notice, would have standing to file a response to a petition. Conversely, the lack of a notice provision...