Definition: Custodianship

A custodianship is a legal device through which a testator can leave property in a will to a beneficiary who is not yet 25 years old at the time of the testator’s death. The property becomes “custodial property” and is managed and controlled by a third-party fiduciary, known as a custodian, for the benefit of the young beneficiary (or beneficiaries). When a custodianship is created by a will, custodial property is held in custodianship until the earlier of the beneficiary’s death or the beneficiary reaching 21 years old, at which time the custodial property is distributed to the beneficiary. The testator can delay the time of this distribution until the earlier of the beneficiary’s death or the beneficiary reaching 25 years old, if the testator includes this time extension when nominating the custodian in the will.

A custodian is required to take control of the custodial property and collect, hold, manage, invest, and reinvest it. The custodian has to keep custodial property separate from his/her own property and keep records of all transactions with respect to custodial property. While the custodianship is ongoing, the custodian is allowed (but not required) to give custodial property to the beneficiary, or pay expenses on the beneficiary’s behalf, as the custodian considers advisable. In some instances, the beneficiary (or another person on the beneficiary’s behalf) can ask a court to order the custodian to make such payments on the beneficiary’s behalf.

Custodianships in Washington State are governed by the Uniform Transfers to Minors Act.1