WashingtonSB 50372025-2026 Regular SessionSenate

Enacting the uniform custodial trust act.

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Bill Overview

Analyzed Economic Effects

8 provisions identified: 5 benefits, 0 costs, 3 mixed.

Spending and incapacity rules for beneficiaries

If you are not incapacitated, the trustee must follow your directions on payments. If you are incapacitated, the trustee can spend what it thinks is advisable for you and for people you supported when incapacity began, without a court order and without considering other income. Trustees can open checking or savings accounts for the trust; your withdrawals count as distributions. Trustees must act prudently, keep property separate, and keep records for taxes. Incapacity can be shown by your prior directions, a durable power, a doctor’s certificate, or other persuasive proof; a court can decide, and normal rules resume if incapacity ends.

When trusts end and who gets assets

A beneficiary who is not incapacitated can end the trust by a signed writing; a conservator can do so for an incapacitated beneficiary. The transferor generally cannot end the trust. If not ended earlier, the trust ends at the beneficiary’s death. When the trust ends, leftover property goes to the living, capable beneficiary; to the conservator or a court designee if the beneficiary is incapacitated; or, after death, by the last signed writing received during life, a survivorship rule, the trust instrument, or the estate. If a distributee is incapacitated, the trust continues for that person.

Small transfers allowed, over $20K need court

If a person is incapacitated and has no conservator, someone holding their property can transfer it to an adult family member or a trust company as custodial trustee. Any transfer over $20,000 is not effective without court approval. A written acknowledgment from the custodial trustee is a full receipt and discharge for the transfer.

Replacing or removing custodial trustees

A person named as trustee can decline before accepting. A trustee can resign by written notice to a successor and by transferring or registering trust property. If a trustee cannot serve, a named successor takes over; if none, a non‑incapacitated beneficiary may name one, and if no one acts within 90 days or the beneficiary is incapacitated, the conservator becomes successor. A court can appoint or remove a trustee and may require a bond.

Setting up and adding custodial trusts

You can create a custodial trust by a written transfer or a written declaration that names a beneficiary. You can make it start on a future event using a will, trust, deed, joint account, insurance, power of appointment, or beneficiary form; otherwise you must register or deliver the designation to the payor or obligor. You can add more property and name a successor trustee. If more than one beneficiary is named, each has an equal share; survivorship applies only for spouses or registered domestic partners or if the document says so. A person becomes trustee by accepting the property and is then subject to Washington court oversight.

Which state's law applies to trusts

This law applies when the trust refers to it and, at transfer time, the transferor, beneficiary, or trustee is in Washington or the property is in Washington. The trust stays under this law even if people move or property moves. A similar trust made under another state’s law stays under that state’s law but can be enforced in Washington. Courts and practitioners must read this law to keep rules uniform across states that adopt it.

Trustee pay, reports, and claim deadlines

Trustees can be repaid reasonable expenses and may elect reasonable yearly pay if they elect it within six months after year-end. Trustees usually do not need a bond. Trustees must give a property statement at acceptance and written statements at least yearly, on request, at resignation or removal, and when the trust ends; interested people can ask the court for an accounting. Deadlines to sue are: two years after receiving a full final account, or three years after the trust ends if no full account; five years for fraud or concealment. Deadlines are tolled for minors and incapacitated adults, and survivors may have two years after death for certain claims.

Trustee powers and liability protections

Trustees get the normal powers of a trustee under state law, but they remain liable for breaking their duties. Claims on trust contracts and property are usually paid from trust assets, not the trustee’s personal money. A trustee is personally liable only if they hid their fiduciary role or were personally at fault, and beneficiaries are not personally liable unless they hold trust property or are at fault. Third parties may rely in good faith on a person acting as trustee and do not have to verify papers unless they know otherwise.

Sponsors & Cosponsors

Sponsor

Jeff Holy
Republican • Senate

Cosponsors

Jamie Pedersen
Democratic • Senate
Lisa Wellman
Democratic • Senate
Manka Dhingra
Democratic • Senate
Sharon Shewmake
Democratic • Senate
T'wina Nobles
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 144 • No: 0

House vote • 4/10/2025

3rd Reading & Final Passage

Yes: 95 • No: 0 • Other: 3

Senate vote • 2/5/2025