Franzen v. Norwest Bank Colorado
955 P.2d 1018 (1998)
Franzen created a $75k inter
vivos trust to provide for himself and
his wife, Frances. Norwest Bank was the trustee. Franzen died soon
The trust had a clause that
when Franzen died, his wife could take all the trust assets. If she did
not do so, then the trust would continue.
Frances decided to keep the
Norwest was concerned about
assets not included in the trust, and asked Franzen's nephews who were
remaindermen to help out. Eventually, Frances' brother James stepped in
and asked Norwest to turn over the trust assets to him.
James had a power of
attorney document signed by Frances.
This document allowed him to act on her behalf, and since she had the
power to dissolve the trust, he technically had the power to dissolve the
trust on her behalf.
Norwest refused to comply with
James' request, since the nephews told Norwest that James' motives were
not to be trusted. James moved to have Norwest removed as a trustee.
Norwest argued that there
was a Colorado law saying that in order to revoke a trust, the power
of attorney must specifically refer
to the particular trust.
However, this law was
enacted after the power of attorney
This law was probably
enacted because the trustees (who stood to lose money when trusts were
dissolved) has good lobbyists.
The Probate Court found that
the power of attorney was valid,
but that James did not have the authority to dissolve the trust. James
Norwest argued that the power
of attorney did no specifically
mention the trust, and therefore it was outside the scope of his powers.
The Appellate Court reversed
and found that James' power of attorney did give him the ability to dissolve the trust. Norwest
The Colorado Supreme Court
affirmed the Appellate Court.
The power of attorney document did give James the general ability to
manage trust and other investments. So the trust in question was covered
even though it wasn't specifically mentioned.
The Court said that since
Norwest was acting in their legitimate capacity as a trustee, all the
attorney's fees should be paid out of the trust assets.
In general, a power of
attorney that appears to give the
agent sweeping powers to dispose of the principal's (Frances) property is
to be narrowly construed. However, the principal may confer authority to
amend or revoke trusts on an agent without referring to the trusts by name
in the power of attorney.