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A.R.S. § 14-9111

Third-Party Liability and Custodial Trusts

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

If you do business with a custodial trustee, you are protected as long as you act in good faith. You do not need to check whether the trustee was properly named or has authority to act.

Title 14, UNIFORM CUSTODIAL TRUST ACT

azleg.gov

Good Faith Protection for Third Parties

A custodial trustee manages trust property for a beneficiary. That trustee often works with banks, brokers, title companies, and other third parties.

This statute shields third parties from liability when they deal with a custodial trustee in good faith. As a result, these transactions can move forward smoothly.

A third person in good faith and without a court order may act on the instructions of or otherwise deal with a person who is purporting to make a transfer as or to act in the capacity of a custodial trustee.

A.R.S. § 14-9111

For example, a bank processing a transfer does not need to confirm the trustee was properly appointed. A broker running a trade or a title company recording a deed also does not need to check. The third party just needs to act without knowing something is wrong.

What Third Parties Do Not Need to Check

The protection covers four areas. A third party does not need to check whether the trustee's designation is valid. They do not need to confirm the trustee has authority to act.

They are not responsible for checking whether the trustee's documents are properly signed. They also do not need to verify that the trustee is using trust property correctly.

This practical approach keeps trust management efficient. The trustee can handle banking, investment, and property transactions on behalf of the beneficiary without delays.

A third person in good faith and without a court order may act on the instructions of or otherwise deal with a person who is purporting to make a transfer as or to act in the capacity of a custodial trustee. In the absence of knowledge to the contrary, the third person is not responsible for determining: 1. The validity of the purported custodial trustee's designation. 2. The propriety of, or the authority under this chapter for, any action of the purported custodial trustee. 3. The validity or propriety of an instrument executed or instruction given pursuant to this chapter either by the person purporting to make a transfer or declaration or by the purported custodial trustee. 4. The propriety of the application of property vested in the purported custodial trustee.

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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