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A.R.S. § 14-9102

Creating a Custodial Trust

Verified April 4, 202657th Legislature, 1st Regular Session

There are two ways to create a custodial trust. You can transfer property to another person as trustee. Or you can declare yourself as trustee for someone else. The beneficiary can end the trust at any time. The trust also ends when the beneficiary dies.

Title 14, UNIFORM CUSTODIAL TRUST ACT

azleg.gov

Two Paths to Creating a Custodial Trust

A custodial trust can be set up through a written transfer or a written declaration. The transfer method moves property to another person as the custodial trustee. The declaration method lets the property owner declare themselves as trustee for another person's benefit.

A person may create a custodial trust of property by a written transfer of the property to another person that is evidenced by registration or by another instrument of transfer, that is executed in any lawful manner, that names as beneficiary an individual who may be the transferor and that designates the transferee, in substance, as custodial trustee under this chapter.

A.R.S. § 14-9102(A)

One important limit: you cannot create a custodial trust solely for your own benefit using the declaration method. If you declare yourself as trustee, the beneficiary must be someone else. This prevents the arrangement from being used as a self-serving shield.

Ending the Trust

Custodial trusts are designed to be simple. The beneficiary can end the trust at any time. They just deliver a written, signed statement to the trustee.

If the beneficiary is incapacitated, their conservator can do the same. If nobody formally ends the trust, it closes when the beneficiary dies.

The beneficiary, if not incapacitated, or the conservator of an incapacitated beneficiary may terminate a custodial trust by delivering to the custodial trustee a writing signed by the beneficiary or conservator declaring the termination.

A.R.S. § 14-9102(E)

The statute also confirms that custodial trusts do not replace other types of trusts. Unlike revocable trusts, which serve broader estate planning goals, custodial trusts are a simplified option. A trust that does not follow the custodial trust format may still be valid under broader trust laws. This gives families options when deciding how to structure property management.

14-9102. Custodial trust; general A. A person may create a custodial trust of property by a written transfer of the property to another person that is evidenced by registration or by another instrument of transfer, that is executed in any lawful manner, that names as beneficiary an individual who may be the transferor and that designates the transferee, in substance, as custodial trustee under this chapter. B. A person may create a custodial trust of property by a written declaration that is evidenced by registration of the property or by another instrument of declaration executed in any lawful manner, that describes the property and that names as beneficiary an individual other than the declarant, and that designates the declarant as titleholder, in substance, as custodial trustee under this chapter. A registration or other declaration of trust for the sole benefit of the declarant is not a custodial trust under this chapter. C. Title to custodial trust property is in the custodial trustee and the beneficial interest is in the beneficiary. D. Except as provided in subsection E, a transferor may not terminate a custodial trust. E. The beneficiary, if not incapacitated, or the conservator of an incapacitated beneficiary may terminate a custodial trust by delivering to the custodial trustee a writing signed by the beneficiary or conservator declaring the termination. If not previously terminated, the custodial trust terminates on the death of the beneficiary. F. Any person may augment existing custodial trust property by the addition of other property pursuant to this chapter. G. The transferor may designate or authorize the designation of a successor custodial trustee in the trust instrument. H. This chapter does not displace or restrict other means of creating trusts. A trust whose terms do not conform to this chapter may be enforceable according to its terms under other law.

This page provides general legal information about Arizona statutes and is not legal advice. For guidance on how this law applies to your situation, speak with a qualified attorney.

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