Three Paths to an Incapacity Determination
A custodial trustee does not need a court order to determine that a beneficiary has become incapacitated. Arizona provides three methods the trustee can rely on.
A custodial trustee may determine that the beneficiary is incapacitated by relying on: 1. Previous direction or authority given by the beneficiary while not incapacitated, including direction or authority pursuant to a durable power of attorney. 2. The certificate of the beneficiary's physician. 3. Other persuasive evidence.
A.R.S. § 14-9110(B)The most common path is a physician's certificate. A doctor who has examined the beneficiary provides a written statement about their condition. The trustee can also look to instructions the beneficiary gave while competent, including directions in a durable power of attorney about how incapacity should be handled.
Incapacity Does Not End the Trust
One of the most important protections in this statute is what happens after incapacity is established. The custodial trust continues. The trustee's powers remain intact. Any designated successor custodial trustee remains in place. And third parties who acted on the trustee's instructions remain protected.
If the beneficiary later recovers, the trustee can return to managing the trust as if the beneficiary were competent. The statute also provides for court involvement: any interested person can petition the court to determine whether the beneficiary is actually incapacitated. This acts as a safeguard against mistakes or disagreements about the beneficiary's condition.
When a trustee has reason to believe a beneficiary is incapacitated but has not yet made a formal determination, the statute directs the trustee to manage the trust under the incapacity provisions. This prevents delays in care while the determination is being finalized.
