How Custodial Trust Property Reaches a Trustee
Life does not always wait for formal court proceedings. Sometimes a person becomes incapacitated before a conservator has been appointed. Bills still need to be paid. Assets still need to be managed. This statute provides a practical path forward, allowing custodial trust property to be placed with a trustee quickly.
A person, including a fiduciary other than a custodial trustee, who holds property of or owes a debt to an incapacitated individual not having a conservator may make a transfer to an adult member of the beneficiary's family or to a trust company as custodial trustee for the use and benefit of the incapacitated individual.
A.R.S. § 14-9105(A)The transfer works simply for smaller amounts. Anyone holding property or owing a debt to the incapacitated person can place it with a successor custodial trustee or an existing custodial trustee. The trustee must be either an adult family member or a trust company. This keeps things manageable without requiring a full conservatorship.
The $20,000 Threshold
The statute draws a clear line at $20,000. If the value of the property or debt exceeds that amount, a court must authorize the transfer. This safeguard prevents large sums from being moved without oversight. Interested parties can petition the court to approve or block the transfer if needed.
Once property is transferred, the custodial trustee provides a written acknowledgment of delivery. That signed receipt serves as a sufficient discharge for the person making the transfer. It protects both sides: the transferor has proof they delivered the funds responsibly, and the custodial trustee has formal custody of the assets.
If the beneficiary is not incapacitated, different rules apply. The trust instrument itself may name a trustee and set out directions for how transfers should be handled. If the custodial trust is later terminated, the remaining property goes to the beneficiary or their estate.