Committee hears Uniform Custodial Trusts Act proposal to simplify trusts for individuals and families

Committee staff presented engrossed Senate Bill 5,037, which would adopt the Uniform Custodial Trusts Act to govern creation, administration and termination of custodial trusts in Washington.

Yolanda Baker, staff to the committee, said a custodial trust allows a trustee to hold and manage property for a beneficiary and can be created by written transfer or declaration. Baker explained that a distinguishing feature of custodial trusts is the beneficiary’s power, when not incapacitated, to direct investments and distributions; if the beneficiary is incapacitated the trustee must administer the trust under a prudent‑person standard and may expend funds for the beneficiary and dependents.

Sponsor Sen. Jeff Holy told the committee the measure is technical and intended to reduce formality and cost for small fiduciary arrangements while preserving court oversight when disputes arise. He said the act lets people create custodial trusts with less expensive procedures and still allows parties to petition courts for relief when necessary.

The bill sets procedures for successor trustees, clarifies trustee duties and protects third parties who deal in good faith with custodial trustees, Baker said. Staff referred members to the bill analysis for statutory text and examples.

Why it matters: The proposal aims to make a recognized fiduciary tool more accessible for families — for example, to hold payments for an incapacitated person without a conservator — potentially reducing costs and delays that can arise from formal guardianship or conservatorship proceedings.

What’s next: The bill was presented for information; staff indicated a willingness to answer follow‑up questions by email and no committee vote was recorded at the hearing.