When the Beneficiary Calls the Shots
As long as the beneficiary is competent, the custodial trustee acts on their instructions. The beneficiary can direct the trustee to pay out as much or all of the custodial trust property as they choose. The trustee does not second-guess those decisions.
A custodial trustee shall pay to the beneficiary or expend for the beneficiary's use and benefit as much or all of the custodial trust property as the beneficiary while not incapacitated may direct from time to time.
A.R.S. § 14-9109(A)This makes the custodial trust flexible during the beneficiary's competent years. The trust property is accessible, and the beneficiary retains practical control over spending decisions.
When Incapacity Changes the Rules
If the beneficiary becomes incapacitated, the dynamic shifts. The custodial trustee takes over spending decisions and can use trust property as they consider advisable for the beneficiary's care. The trustee can also spend trust funds on people the beneficiary was supporting before incapacity, or who are legally entitled to the beneficiary's support.
The trustee makes these decisions without needing a court order, and without having to account for the beneficiary's other income, support, or property. This gives the trustee practical latitude to cover immediate needs: housing, medical care, daily expenses.
The statute also allows the custodial trustee to set up checking or savings accounts that either the trustee or the beneficiary can access. Funds the beneficiary withdraws from these accounts count as distributions from the trust. This provides a practical way for the beneficiary to handle everyday spending while the trustee maintains overall oversight.
