This section is based in fact on Uniform Probate Code §7-307. This section governs time limits to beneficiaries bringing claims against the trustee (see, §1010). This section codifies the principles of estoppel and laches under common law of trusts. Those who receive reports must initiate a proceeding against the trustee within one year of the date of the report, so long as the report discloses facts related to the claim and notice of the one year to challenge the action. The UTC final draft imposes a five year statute of limitation for breach of fiduciary duty claims. This section also imputes a notice of a claim if the beneficiary knew of facts surrounding a claim or reasonably should have inquired into the existence of a claim but failed to do so, and would estop him from asserting that claim.
During the October 2000 meeting, the Committee recommended that the one year limitation period be reduced to six months (consistent with 15-16-307, C.R.S., accountings), and that the five year limitation period be reduced to three years, consistent with §13-80-101, C.R.S. (breach of fiduciary duty).
At the December 2000 meeting the Committee again reviewed this Section and agreed that the self-executing limitations specified in Section (c) should be deleted. The result of the deletion is Colorado’s general limitations statute applies in the event a situation falls outside of UTC §1005(a).
The Committee discussed whether a three year limitation period would be appropriate if no report contained adequate facts regarding the breach of trust as provided to the beneficiary. Specifically, the Committee questioned whether the current law contained such limitation and, in reviewing §13-80-101, C.R.S., it concluded that no such limitation period existed. Rather, pursuant to §13-80-101, C.R.S., no limitation period commences until such time as "the cause of action accrues." The Committee concluded that recommending adoption of the UTC §1005(c) would be inconsistent with §13-80-101, C.R.S., and also inconsistent with §15-16-307, C.R.S., (which requires a final accounting before a statute of limitations commences). It was further noted that if the beneficiary is a minor, no statute of limitation commences until the minor has obtained the age of majority. After the foregoing discussion, the Committee recommended the adoption of Section 1005 with the following modifications:
(1) Section 1005(a) shall include the word "not" after the phrase, "a beneficiary may";
(2) the one year limitation period in Section 1005(a) is reduced to six months, where a beneficiary or representative of the beneficiary was sent a report adequately setting for the facts constituting the breach of trust claim and informing the beneficiary of the limitation period;
(3) no revision to Section 1005(b) was made; and
(4) Section 1005(c) containing a self-executing five year limitation is deleted. The result of the deletion is that the provisions of §§13-80-101 and 15-16-307, C.R.S., control all circumstances and proceedings regarding the breach of trust claims when Section 1005(a) is not applicable.
The general committee believed it important to add a new section (c) taken from the October 1999 draft regarding the sending of reports to beneficiaries or their representative. In recognition of the "fraud exception," the general committee also believed subsection (d) was appropriate.