When the Beneficiary Calls the Shots
As long as the beneficiary is able, the trustee acts on their instructions. The beneficiary can direct the trustee to pay out as much or all of the trust property as they choose.
Unlike an irrevocable trust, where the grantor gives up control, custodial trusts let the beneficiary stay in charge during their able years.
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 trust flexible. The trust property stays accessible, whether it is cash, real estate, or financial accounts. The beneficiary keeps practical control over spending.
When Incapacity Changes the Rules
If the beneficiary becomes incapacitated, the trustee takes over spending decisions. The trustee can use trust property as they see fit for the beneficiary's care.
The trustee can also spend trust funds on people the beneficiary was supporting before incapacity. This includes anyone legally entitled to the beneficiary's support.
The trustee makes these decisions without needing a court order. There is no requirement to account for the beneficiary's other income or property. This gives the trustee room to cover immediate needs like housing, medical care, and daily expenses.
Custodial trusts serve a specific role in estate planning. They provide a simple way to manage assets for someone who may lose the ability to manage them.
The statute also allows the trustee to set up checking or savings accounts. Either the trustee or the beneficiary can access these accounts. Funds the beneficiary withdraws count as trust distributions.