Claims Against the Trust, Not the Individual
Who pays when something goes wrong with a custodial trust? This statute draws a clear line. Claims go against the trust property, not the people involved.
If a trustee signs a contract, takes on a debt, or causes harm while managing the trust, the trust property covers it. The trustee is not personally liable when they act properly.
A claim based on a contract entered into by a custodial trustee acting in a fiduciary capacity, an obligation arising from the ownership or control of custodial trust property or a tort committed in the course of administering the custodial trust may be asserted by a third person against the custodial trust property by proceeding against the custodial trustee in a fiduciary capacity, whether or not the custodial trustee or the beneficiary is personally liable.
A.R.S. § 14-9112(A)This means trust property is the first source for paying debts. Knowing these rules helps families plan their estates more effectively.
Personal Liability Has Narrow Exceptions
A custodial trustee faces personal liability in only two cases. First, if the trustee fails to disclose their role or name the trust in a contract. Second, if the trustee is personally at fault for an injury or debt.
A custodial trustee is not personally liable to a third person on a contract properly entered into in a fiduciary capacity unless the custodial trustee fails to reveal that capacity or to identify the custodial trust in the contract.
A.R.S. § 14-9112(B)(1)Beneficiaries get similar protection. A beneficiary is not liable unless they personally hold the property that caused the claim or are personally at fault.
These protections do not block claims covered by liability insurance. A trustee who fails to manage the trust properly can also face claims from the beneficiary directly.