## Facts

- A husband created an inter vivos trust naming a corporate bank as sole trustee, with his wife as primary beneficiary and nephews as remainder beneficiaries.
- The trust provided that, after the husband’s death, the wife could direct distribution of the residuary trust estate to herself, terminating the trust; the trust also granted her powers to change trustees and to amend or revoke the trust after the husband’s death.
- After the husband died, the bank notified the wife of her rights; she responded in writing that she wished to keep the trust intact during her lifetime.
- While in a nursing home, the wife executed a durable power of attorney appointing her brother as attorney-in-fact, authorizing him broadly to manage and deal with her real and personal property and interests for her benefit; the document did not specifically identify the trust.
- The brother later demanded distribution of trust assets and sent the bank a letter purporting to revoke the trust and remove the bank as trustee.
- The bank refused to distribute assets, sought court instructions regarding the brother’s authority, and pursued appointment of a conservator; litigation expenses and trustee fees were paid from the trust during this period.

## Issues

1. Whether, under Colorado law applicable to a durable power of attorney executed before a statute requiring “specific reference,” an attorney-in-fact could revoke an inter vivos trust and remove the trustee without the trust being named in the power of attorney.
2. Whether a compensated professional trustee is liable to be surcharged for trustee fees and attorney fees paid from trust assets after an effective revocation and removal, where the trustee continued litigation to resolve uncertainty about the agent’s authority.

## Decision

- The Colorado Supreme Court affirmed the court of appeals in full.
- The court held the durable power of attorney authorized the attorney-in-fact to revoke the trust and remove the trustee, despite the trust not being specifically referenced.
- The court held the trustee was not subject to surcharge for trustee fees and attorney fees incurred and paid from the trust after revocation because the trustee acted reasonably in seeking judicial instructions and was entitled to reimbursement for reasonable expenses not caused by its own fault.

## Legal Principles

- For durable powers of attorney executed before Colorado’s statutory “specific reference” requirement took effect, broad authority to manage and deal with a principal’s property and interests may include authority to exercise the principal’s trust-related powers (including revocation, amendment, and trustee removal), absent evidence those powers are nondelegable or strictly personal.
- Statutes restricting an agent’s authority to create, amend, revoke, or terminate an inter vivos trust by requiring specific reference are presumed prospective absent clear legislative intent to apply retroactively.
- A trustee faced with conflicting claims or genuine uncertainty about authority may seek judicial instructions and, if acting in good faith and without fault, may be indemnified from trust assets for reasonable administrative and litigation expenses, even if the trust is later determined to have been revoked and the trustee removed.

## Conclusion

The court upheld an agent’s ability, under a broadly worded pre-statute durable power of attorney, to revoke a trust and remove a trustee without naming the trust, and it refused to surcharge the trustee for reasonable fees incurred in good-faith proceedings to resolve uncertainty about the agent’s authority.


Franzen v. Norwest Bank Colo., N.A., 955 P.2d 1018 (Colo. 1998)