The Uniform Trust Code (UTC) is code that is used by some states to create uniformity in their body of trust laws.  It generally covers the creation, editing, validity, and enforcement of trusts, as well as the resolving of trust disputes.  About half of the U.S. states use the UTC as a default trust statute, or have adopted a modified version of it. 

What is the Uniform Custodial Trust Act (UCTA)?

The Uniform Custodial Trust Act (UCTA) is a specific piece of trusts legislation that was passed in 1987.  Among other things, it allows persons to make a simplified version of a custodial trust.  This allows the benefits of a trust to be made available without having to devote precious funds to the trust creation process. 

Under the UCTA, a person can create a custodial trust simply by executing a statement that the property or funds are being placed in custodial trust according to the Act.  This can be a separate document or a provision in an existing document.  The obligations of the trustee arise if they accept the property, which will then be transferred to the named beneficiary according to the trust provisions. 

What is a Custodial Trust?

According to the UCTA, a custodial trust differs from a regular trust in the amount of control the beneficiaries have over the trust property (and to some extent, over the trustee).  Under common law trust rules, the trust property usually cannot be subject to the direction of the beneficiaries. 

However, under a UCTA custodial trust, the beneficiaries may:

  • Terminate their own share of the trust
  • Direct trust payments to themselves
  • Direct trustee management and investment of trust properties, to a certain degree
  • Direct the trustee to distribute their trust share to another person at the time of their own death
  • Allow the trustee to assume control of their interest in the event that they become incapacitated

This amount of control exercised by the beneficiaries is one of the reasons why a trust under the Act is called a “custodial” trust.  That is, the beneficiaries are seen as “custodians” of the trust property, with the trustee performing more administrative functions rather than assuming a major decision-making role.

Who Usually Uses a Custodial Trust?

Anyone can create a custodial trust, given that they follow the guidelines provided under the UCTA.  Generally speaking, custodial trusts are usually used by:

  • Persons wishing that they can manage their property in the event that they become incapacitated
  • Persons who need to manage property without the use of a power of attorney (such as those going on extended travels or trips)
  • Older persons with accumulated assets

Do I Need a Lawyer for Help With the Uniform Trust Code and Custodial Trusts?

A custodial trust is a very specific type of trust.  You may wish to hire an estate lawyer if you need help creating, reviewing, or enforcing a custodial trust.  Your attorney can advise you on how the UCTA works, and what rights and options you have.  There may be several limitations in addition to the benefits of a custodial trust, which your lawyer can inform you about.  Also, an attorney near you can help you file a lawsuit if you need to file a claim with the court regarding a trust matter.