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. § 14-9111For 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.