WashingtonSB 50372025-2026 Regular SessionSenateWALLET

Enacting the uniform custodial trust act.

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Bill Overview

Analyzed Economic Effects

8 provisions identified: 4 benefits, 0 costs, 4 mixed.

Asset transfers help adults needing care

Beginning July 27, 2025, holders of property or debts owed to incapacitated adults without conservators can use custodial trusts. They can transfer the assets to an adult family member or trust company serving as trustee for the adult. The transfer cannot conflict with an existing trustee designation or contrary transferor instructions. Court approval is required above $20,000, but this rule does not require approval for amounts of $20,000 or less. The trustee’s written acknowledgment serves as a receipt and releases the holder or debtor from that obligation.

Clearer trust shares and inheritance rules

Beginning July 27, 2025, multiple beneficiaries hold equal, undivided interests treated as separate trusts, with separate accounting. Spouses and state-registered domestic partners generally inherit the survivor’s share; other beneficiaries need written survivorship terms or applicable community or marital property rules. A beneficiary who is not incapacitated, or an incapacitated beneficiary’s conservator, can end the trust by signed writing. Otherwise, the trust ends at the beneficiary’s death. Remaining assets go to the living beneficiary, or their conservator or court-designated recipient if incapacitated. After death, assets go first under the beneficiary’s last signed directions made while not incapacitated and received during life. Next come an eligible surviving beneficiary, the trust document’s named recipient, and finally the beneficiary’s estate. If the recipient is incapacitated, the trust continues for them until incapacity ends or the trust otherwise ends. Trustees retain authority to settle obligations incurred before termination.

Personal liability protections for trust participants

Beginning July 27, 2025, beneficiaries generally are not personally liable for trust obligations or wrongful acts during trust administration. Trustees generally avoid personal contract liability when they disclose their trustee role and identify the trust. Claims can still reach trust assets through the trustee. Personal fault can create personal liability, as can a beneficiary’s possession of the property causing the claim. Liability protections do not block claims to the extent liability insurance covers the person sued. Third parties acting in good faith can rely on apparent trustees without checking their authority unless they know otherwise.

Trust beneficiaries get reports and oversight

Beginning July 27, 2025, trustees must describe trust assets upon acceptance and provide annual statements to beneficiaries or legal representatives. Statements are also due on reasonable request, resignation, removal, and termination; recipients get a current statement when a beneficiary’s interest ends. Beneficiaries and specified interested people can seek court accountings and review of trustee actions or pay. Trustees can decline before acceptance or resign, and designated successors take over under the law’s order. Without an effective successor, a capable beneficiary can name one; a conservator takes over under that order if the beneficiary is incapacitated or fails to act within 90 days. Other specified interested people can help designate a successor or ask a court to do so. Courts can remove trustees for cause, require security, and order other relief. Removed trustees must account, and departing trustees must deliver assets and records to successors. Accepting trust property, expressly or implicitly, subjects trustees to Washington superior court authority over trust matters.

New trusts with limits on control

Beginning July 27, 2025, Washington allows custodial trusts through written transfers or declarations, including qualifying electronic records and standard property-transfer methods. Trustees hold legal title, beneficiaries hold the right to benefit, and anyone can add property. A declaration cannot create a trust solely for its maker, and the transferor cannot end the trust. People can name trustees for future payments in wills, insurance policies, and other listed documents; other designations require delivery or registration with the payer. Washington law applies when the document refers to this law and a party or property has a qualifying Washington connection. Later moves do not change that rule; trusts under substantially similar state laws remain enforceable in Washington. Qualifying electronic estate-planning records must be readable as text when signed and cannot be wills or parts of wills.

Trustee pay can reduce beneficiary assets

Beginning July 27, 2025, trustees can receive repayment from trust assets for reasonable expenses and elect reasonable pay for services. That pay reduces assets available to beneficiaries. Trustees must elect pay within six months after the service calendar year ends; unused yearly elections do not carry forward. No bond or other security is required by default. The trust document, an agreement with the beneficiary, or a court order can set different rules.

Trust beneficiaries gain safeguards, face limits

Beginning July 27, 2025, trustees must keep trust assets separate, record transactions and tax returns, and allow reasonable record access. They must follow management and spending directions from beneficiaries who are not incapacitated; otherwise, they must use prudent care and applicable special skills. Trustees have Washington trustee powers but remain responsible for breaches of duty. Incapacity rules apply to facility-of-payment trusts, when the transferor directs them, or when the trustee finds incapacity. Trustees can rely on prior directions, a doctor’s certificate, or other persuasive evidence; courts can review incapacity decisions. For incapacitated beneficiaries, trustees can spend some or all assets for them and people they supported when incapacity began or legally must support. No court order or review of other resources is required, and trustees can create withdrawal accounts. A durable power of attorney cannot end or direct an incapacitated beneficiary’s trust. Incapacity does not end the trust or trustee powers; ordinary management can resume when the trustee reasonably finds recovery or changed circumstances.

Trust claims face deadlines with exceptions

Beginning July 27, 2025, accounting and breach-of-duty claims generally have a two-year deadline after receipt of a fully disclosing final account. Without such an account or statement, the deadline is three years after the trust ends. Fraud, misrepresentation, or concealment claims involving final settlement or concealment of the trust have a five-year deadline after termination. Special extensions protect minors, incapacitated adults, and certain deceased adults.

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