Document dated Apr. 22, 2025, was received on May 16, 2025, due to a fixed feed.
Custodial Trust Provisions
A person may create a custodial trust by a written transfer of property or by a written declaration identifying the property, the custodial trustee, and the beneficiaries.
Trustor may designate custodial trust be administered for incapacitated beneficiary.
Custodial trusts terminate when the beneficiary dies or may be terminated earlier by delivering a writing signed by the beneficiary declaring the trust terminated.
Creates process for custodial trustee designation, acceptance, resignation, or removal.
Beneficiaries of custodial trusts can direct the trustee as to how trust property is managed and may order that some or all the trust property be paid to the beneficiary.
If beneficiary is incapacitated, a custodial trust continues with the custodial trustee exercising discretion over trust management until beneficiary no longer incapacitated.
Those who owe or hold property of an incapacitated person who lacks a conservator may transfer assets to a family member or trust company as custodial trustee.
Custodial Trustees Provisions
Provides custodial trustees have same powers and duties as trustees of other trusts.
Trustees are entitled to reimbursement for expenses, and may charge compensation.
Custodial trustees are held to a standard of care and required to use relevant skills.
Property in custodial trust must be kept separate from other property for identification
Custodial trustees must keep records of transactions, and report regularly on property.
Liability Provisions
Establishes statute of limitations within various custodial trust claims may be brought.
Third persons acting in good faith not responsible for determining validity of claims.
Claims of third persons arising from dealings with custodial trusts and trust property may be brought by suing the trustee in their capacity as trustee, whether or not liable.
A custodial trustee is generally not personally liable on such claims unless they failed to identify the trust or their role as trustee or they were personally at fault.
A beneficiary is not personally liable to third persons on such claims unless they were in possession of the trust property giving rise to the claim or were personally at fault.
The Superior Courts of Washington State have jurisdiction over custodial trust matters.
Parties may petition the court to remove or designate a custodial trustee, order an accounting, require the trustee post a bond or other security, or seek other relief.
Legislative History
On Jan. 13, 2025, bill introduced in Senate; on Feb. 5, 2025, bill passed in the Senate.
On Feb. 7, 2025, bill introduced in House; on Apr. 10, 2025, bill passed in the House.
On Apr. 17, 2025, bill sent to governor; on Apr. 22, 2025, bill signed, became Ch. 111.
Effectiveness
Bill becomes effective Jul. 27, 2025.
Regulators
WAS LEG
Entity Types
Bank; Fiduciary
Reference
Ch. 111, Bill SB5037, 4/22/2025; Citation: *WAS LEG* 11, 11.135.010;
