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Senate File 240 - IntroducedA Bill ForAn Act 1relating to the creation, administration, and
2termination of custodial trusts.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2IOWA UNIFORM CUSTODIAL TRUST ACT
3 Section 1. NEW SECTION. 633F.1 Definitions.
4For purposes of this chapter:
51. “Adult” means an individual who is at least eighteen
6years of age.
72. “Beneficiary” means an individual for whom property has
8been transferred to or held under a declaration of trust by a
9custodial trustee for the individual’s use and benefit under
10this chapter.
113. “Consent” means affirmation given by a person who is
12not incapacitated; or if a person is incapacitated and there
13is no conflict of interest between the representer and the
14incapacitated person with respect to the fiduciary manner,
15the following may consent on behalf of the incapacitated
16individual:
17a. A conservator may represent and bind the person whose
18estate the conservator controls.
19b. A trustee may represent and bind the beneficiary of a
20trust.
21c. A personal representative may represent and bind the
22persons interested in the decedent’s estate.
23d. If no conservator has been appointed, a parent may
24represent and bind a minor child.
254. “Conservator” means a person appointed or qualified by a
26court to manage the estate of an individual or a person legally
27authorized to perform substantially the same functions.
285. “Court” means the probate court of this state.
296. “Custodial trust property” means an interest in property
30transferred to or held under a declaration of trust by a
31custodial trustee under this chapter and the income from and
32proceeds of that interest.
337. “Custodial trustee” means a person designated as trustee
34of a custodial trust under this chapter or a substitute or
35successor to the person designated.
-1- 18. “Guardian” means a person appointed or qualified by
2a court as a guardian of an individual, including a limited
3guardian, but not a person who is only a court visitor.
49. “Incapacitated” means the inability of an individual to
5manage property or business affairs because the individual is
6any of the following:
7a. An individual whose decision-making is so impaired that
8the individual is unable to make, communicate, or carry out
9important decisions concerning the individual’s financial
10affairs.
11b. Detailed or incarcerated in a penal system.
12c. Outside the United States and unable to return.
13d. A minor.
1410. “Legal representative” means a living person’s
15agent acting under a durable financial power of attorney or
16conservator, a living or deceased person’s trustee acting
17under a revocable trust created by such person, or a deceased
18person’s personal representative.
1911. “Member of the beneficiary’s family” means the following
20persons who are competent adults at the time of acting
21hereunder, with such action to be taken in the following order
22of priority:
23a. The surviving spouse, if not legally separated from the
24beneficiary, whose whereabouts are reasonably ascertainable.
25b. The surviving child of the beneficiary, or, if there
26is more than one, a majority of the surviving children whose
27whereabouts are reasonably ascertainable.
28c. The surviving parents of the beneficiary whose
29whereabouts are reasonably ascertainable.
30d. A surviving grandchild of the beneficiary, or if there is
31more than one, a majority of the surviving grandchildren whose
32whereabouts are reasonably ascertainable.
33e. A surviving sibling of the beneficiary, or if there
34is more than one, a majority of the surviving siblings whose
35whereabouts are reasonably ascertainable.
-2- 1f. A surviving grandparent of the beneficiary, or if there
2is more than one, a majority of the surviving grandparents
3whose whereabouts are reasonably ascertainable.
4g. A person in the next degree of kinship to the beneficiary
5in the order named by law who would inherit the estate of
6the beneficiary under the rules of inheritance for intestate
7succession, or if there is more than one, a majority of
8such surviving persons whose whereabouts are reasonably
9ascertainable.
1012. “Person” means an individual, corporation, business
11trust, estate, trust, partnership, joint venture, association,
12or any other legal or commercial entity.
1313. “Personal representative” means an executor,
14administrator, or special administrator of a decedent’s estate,
15a person legally authorized to perform substantially the same
16functions, or a successor to any of them as defined in section
17633.3.
1814. “State” means a state, territory, or possession of the
19United States, the District of Columbia, or the Commonwealth
20of Puerto Rico.
2115. “Transferor” means a person who creates a custodial
22trust by transfer or declaration.
2316. “Trust company” means a financial institution,
24corporation, or other legal entity, authorized to exercise
25general trust powers.
26 Sec. 2. NEW SECTION. 633F.2 Custodial trust — general.
271. A person may create a custodial trust of property by a
28written transfer of the property to another person, evidenced
29by registration or by other instrument of transfer, executed in
30any lawful manner, naming as beneficiary, an individual who may
31be the transferor, in which the transferee is designated, in
32substance, as custodial trustee under this chapter.
332. A person may create a custodial trust of property by a
34written declaration, evidenced by registration of the property
35or by other instrument of declaration executed in any lawful
-3-1manner, describing the property and naming as beneficiary an
2individual other than the declarant, in which the declarant as
3titleholder is designated, in substance, as custodial trustee
4under this chapter. A registration or other declaration of
5trust for the sole benefit of the declarant is not a custodial
6trust under this chapter.
73. Title to custodial trust property is in the custodial
8trustee and the beneficial interest is in the beneficiary.
94. Except as provided in subsection 5, a transferor shall
10not terminate a custodial trust.
115. The beneficiary, if not incapacitated, or the legal
12representative of an incapacitated beneficiary, may terminate
13a custodial trust by delivering to the custodial trustee a
14writing signed by the beneficiary or legal representative
15declaring the termination. If not previously terminated, the
16custodial trust terminates on the death of the beneficiary.
176. Any person may augment existing custodial trust property
18by the addition of other property pursuant to this chapter,
19only upon receipt and acceptance by the custodial trustee.
207. The transferor may designate, or authorize the
21designation of, a successor custodial trustee in the trust
22instrument.
238. This chapter does not displace or restrict other means
24of creating trusts. A trust whose terms do not conform to this
25chapter may be enforceable according to its terms under other
26law.
27 Sec. 3. NEW SECTION. 633F.3 Custodial trustee for future
28payment or transfer.
291. A person having the right to designate the recipient of
30property payable or transferable upon a future event may create
31a custodial trust upon the occurrence of the future event by
32designating in writing the recipient, followed in substance
33by: “as custodial trustee for __________________ (name of
34beneficiary) under the Iowa Uniform Custodial Trust Act”.
352. Persons may be designated as substitute or successor
-4-1custodial trustees to whom the property must be paid or
2transferred in the order named if the first designated
3custodial trustee is unable or unwilling to serve.
43. A designation under this section may be made in a will,
5a trust, a multiple-party account, an insurance policy, an
6instrument exercising a power of appointment, or a writing
7designating a beneficiary of contractual rights. Otherwise,
8to be effective, the designation must be registered with or
9delivered to the fiduciary, payor, issuer, or obligor of the
10future right.
11 Sec. 4. NEW SECTION. 633F.4 Form and effect of receipt and
12acceptance by custodial trustee — jurisdiction.
131. Obligations of a custodial trustee, including the
14obligation to follow directions of the beneficiary, arise under
15this chapter upon the custodial trustee’s acceptance, express
16or implied, of the custodial trust property.
172. The custodial trustee’s acceptance may be evidenced by a
18writing stating in substance:
19CUSTODIAL TRUSTEE’S RECEIPT AND ACCEPTANCE
20I, _______ (name of custodial trustee) acknowledge receipt
21of the custodial trust property described below or in the
22attached instrument and accept the custodial trust as custodial
23trustee for __________________ (name of beneficiary) under the
24Iowa Uniform Custodial Trust Act. I undertake to administer
25and distribute the custodial trust property pursuant to the
26Iowa Uniform Custodial Trust Act. My obligations as custodial
27trustee are subject to the directions of the beneficiary
28unless the beneficiary is designated as, is, or becomes
29incapacitated. The custodial trust property consists of
30_____________________________.
31Dated: _____________________________
32(Signature of Custodial Trustee)
333. Upon accepting custodial trust property, a person
34designated as custodial trustee under this chapter is subject
35to personal jurisdiction of the court with respect to any
-5-1matter relating to the custodial trust.
2 Sec. 5. NEW SECTION. 633F.5 Transfer to custodial trustee
3by fiduciary or obligor — facility of payment.
41. Unless otherwise directed by an instrument designating
5a custodial trustee pursuant to section 633F.3, a person,
6including a fiduciary other than a custodial trustee, who holds
7property of or owes a debt to an incapacitated individual may
8make a transfer to a beneficiary’s legal representative and
9if none, to a member of the beneficiary’s family, or a trust
10company, as custodial trustee for the use and benefit of the
11incapacitated individual. If the value of the property or
12the debt exceeds fifty thousand dollars, the transfer is not
13effective unless authorized by the court.
142. A written acknowledgment of delivery, signed by a
15custodial trustee, is a sufficient receipt and discharge for
16property transferred to the custodial trustee pursuant to this
17section.
18 Sec. 6. NEW SECTION. 633F.6 Single beneficiaries —
19separate trust accounts.
201. Beneficial interests in a custodial trust shall not be
21created for multiple beneficiaries.
222. All custodial trust property held under this chapter by
23the same custodial trustee for the use and benefit of a single
24beneficiary may be administered as a single custodial trust.
25 Sec. 7. NEW SECTION. 633F.7 General duties of custodial
26trustee.
271. If appropriate, a custodial trustee shall register
28or record the instrument vesting title to custodial trust
29property.
302. If the beneficiary is not incapacitated, a custodial
31trustee shall follow the directions of the beneficiary in the
32management, control, investment, or retention of the custodial
33trust property. In the absence of effective contrary direction
34by the beneficiary while not incapacitated, the custodial
35trustee shall observe the prudent investment standards set
-6-1forth in section 633.123. However, a custodial trustee, in the
2custodial trustee’s discretion, may retain any custodial trust
3property received from the transferor. If a custodial trustee
4has a special skill or expertise or is named custodial trustee
5on the basis of representation of a special skill or expertise,
6the custodial trustee shall use that skill or expertise.
73. Subject to subsection 2, a custodial trustee shall take
8control of and collect, hold, manage, invest, and reinvest
9custodial trust property.
104. A custodial trustee at all times shall keep custodial
11trust property of which the custodial trustee has control,
12separate from all other property in a manner sufficient
13to identify it clearly as custodial trust property of the
14beneficiary. Custodial trust property, the title to which is
15subject to recordation, is so identified if an appropriate
16instrument so identifying the property is recorded, and
17custodial trust property subject to registration is so
18identified if it is registered, or held in an account in the
19name of the custodial trustee, designated in substance: “as
20custodial trustee for __________________ (name of beneficiary)
21under the Iowa Uniform Custodial Trust Act”.
225. A custodial trustee shall keep records of all
23transactions with respect to custodial trust property,
24including information necessary for the preparation of tax
25returns, and shall make the records and information available
26at reasonable times to the beneficiary or legal representative
27of the beneficiary.
286. The exercise of a durable power of attorney for an
29incapacitated beneficiary is not effective to terminate or
30direct the administration or distribution of a custodial trust.
31 Sec. 8. NEW SECTION. 633F.8 General powers of custodial
32trustee.
331. A custodial trustee, acting in a fiduciary capacity, has
34all the rights and powers over custodial trust property which
35an unmarried adult owner has over individually owned property,
-7-1but a custodial trustee may exercise those rights and powers
2in a fiduciary capacity only.
32. This section does not relieve a custodial trustee from
4liability for a violation of section 633F.7.
5 Sec. 9. NEW SECTION. 633F.9 Use of custodial trust
6property.
71. A custodial trustee shall pay to the beneficiary or
8expend for the beneficiary’s use and benefit so much or all
9of the custodial trust property as the beneficiary while not
10incapacitated may direct from time to time.
112. If the beneficiary is incapacitated, the custodial
12trustee shall expend so much or all of the custodial trust
13property as the custodial trustee considers advisable for the
14use and benefit of the beneficiary and individuals who are
15legally entitled to support by the beneficiary. Expenditures
16may be made in the manner, when, and to the extent that the
17custodial trustee determines suitable and proper, without court
18order and without regard to other support, income, or property
19of the beneficiary.
203. To facilitate distributions to the beneficiary, a
21custodial trustee may establish checking, savings, or other
22similar accounts of reasonable amounts under which either
23the custodial trustee or the beneficiary, if authorized, may
24withdraw funds from, or draw checks against, the accounts in
25amounts authorized by the custodian. Funds withdrawn from,
26or checks written against, the account by the beneficiary are
27distributions of custodial trust property by the custodial
28trustee to the beneficiary.
29 Sec. 10. NEW SECTION. 633F.10 Determination of incapacity
30— effect.
311. The custodial trustee shall administer the custodial
32trust as for an incapacitated beneficiary in any of the
33following circumstances:
34a. The custodial trust was created under section 633F.5.
35b. The transferor has so directed in the instrument creating
-8-1the custodial trust.
2c. The custodial trustee has determined that the beneficiary
3is incapacitated.
42. A custodial trustee may determine that the beneficiary is
5incapacitated in reliance upon any of the following:
6a. Previous direction or authority given by the beneficiary
7while not incapacitated, including direction or authority
8pursuant to a durable power of attorney.
9b. Written documentation from the beneficiary’s physician.
10c. Other persuasive evidence.
113. If a custodial trustee for an incapacitated beneficiary
12reasonably concludes that the beneficiary’s incapacity has
13ceased, or that circumstances concerning the beneficiary’s
14ability to manage property and business affairs have
15changed since the creation of a custodial trust directing
16administration as for an incapacitated beneficiary, the
17custodial trustee may administer the trust as for a beneficiary
18who is not incapacitated.
194. On petition of the beneficiary, the custodial trustee, or
20other person interested in the custodial trust property or the
21welfare of the beneficiary, the court shall determine whether
22the beneficiary is incapacitated.
235. Absent determination of incapacity of the beneficiary
24under subsection 2 or 4, a custodial trustee who has reason to
25believe that the beneficiary is incapacitated shall administer
26the custodial trust in accordance with the provisions of this
27chapter applicable to an incapacitated beneficiary.
286. Incapacity of a beneficiary does not terminate the
29custodial trust, any designation of a successor custodial
30trustee, rights or powers of the custodial trustee, or any
31immunities of third persons acting on instructions of the
32custodial trustee.
33 Sec. 11. NEW SECTION. 633F.11 Exemption of third person
34from liability.
351. A third person in good faith and without a court order
-9-1may act on instructions of, or otherwise deal with, a person
2purporting to make a transfer as, or purporting to act in the
3capacity of, a custodial trustee.
42. A third person who receives instructions from the
5purported custodial trustee may require such custodial trustee
6to provide proof of their identity and a certification of trust
7or copies of those excerpts from the original trust instrument
8and amendments to the original trust instrument which designate
9the currently acting custodial trustee and confer upon the
10custodial trustee the power to act in the pending transaction.
113. If a certification of trust is provided, it must do all
12of the following:
13a. State the names of all the currently acting trustees.
14b. If there is more than one currently acting trustee,
15state whether the trustees may act individually or must act by
16majority decision or must act by unanimous decision.
17c. State that the trust has not been revoked, modified, or
18amended in any manner that would cause the representations in
19the certification of trust to be incorrect.
20d. Be signed by a currently acting trustee or the attorney
21of a currently acting trustee.
22e. Be dated and certified under penalty of perjury and
23pursuant to the laws of the state of Iowa that it is true and
24correct, or subscribed and sworn to under penalty of perjury
25before a notary public as provided in chapter 9B.
26f. A third person who acts in reliance upon the information
27provided by the custodial trustee, after taking reasonable
28steps to verify the identity of the custodial trustee and
29without knowledge that the representations contained in the
30certification are incorrect, is not liable to any person
31for so acting and may assume without inquiry the existence
32of the facts contained in the certification. The period of
33time to verify the identity of the trustee shall not exceed
34ten business days from the date the third person received
35the requested information. Knowledge shall not be inferred
-10-1solely from the fact that a copy of all or part of the trust
2instrument is held by the third person relying upon the
3trust certification. A transaction, and a lien created by a
4transaction, entered into by the custodial trustee and a person
5acting in reliance upon a certification of trust is enforceable
6against the trust assets.
74. A third person who makes a demand for information from
8the custodial trustee beyond that set forth in subsection
92 shall be liable for damages, including attorney fees,
10incurred as a result of the refusal to accept the information
11provided, if the court determines that the third person acted
12unreasonably in requesting such additional information.
135. If a custodial trustee has provided the information set
14forth in subsection 2, and the third person refuses to follow
15the instructions provided by the custodial trustee within the
16time period set forth in subsection 4, the custodial trustee
17may bring an action under this subsection and the court may
18award any or all of the following to the custodial trustee:
19a. Any damages sustained by the trust.
20b. The costs of the action.
21c. A penalty in an amount of not less than five hundred
22dollars and not more than ten thousand dollars.
23d. Reasonable attorney fees, based on the value of the time
24reasonably expended by the attorney and not on the amount of
25the recovery on behalf of the custodial trustee.
266. An action shall not be brought under this subsection more
27than one year after the date of the occurrence of the alleged
28violation.
29 Sec. 12. NEW SECTION. 633F.12 Liability to third person.
301. A claim based on a contract entered into by a custodial
31trustee acting in a fiduciary capacity, an obligation arising
32from the ownership or control of custodial trust property, or
33a tort committed in the course of administering the custodial
34trust, may be asserted by a third person against the custodial
35trust property by proceeding against the custodial trustee in a
-11-1fiduciary capacity, whether or not the custodial trustee or the
2beneficiary is personally liable.
32. A custodial trustee is not personally liable to a third
4person for any of the following:
5a. On a contract properly entered into in a fiduciary
6capacity unless the custodial trustee fails to reveal that
7capacity or to identify the custodial trust in the contract.
8b. For an obligation arising from control of custodial
9trust property or for a tort committed in the course of the
10administration of the custodial trust unless the custodial
11trustee is personally at fault.
123. A beneficiary is not personally liable to a third
13person for an obligation arising from beneficial ownership of
14custodial trust property or for a tort committed in the course
15of administration of the custodial trust unless the beneficiary
16is personally in possession of the custodial trust property
17giving rise to the liability or is personally at fault.
184. Subsections 2 and 3 do not preclude actions or
19proceedings to establish liability of the custodial trustee or
20beneficiary to the extent the person sued is protected as the
21insured by liability insurance.
22 Sec. 13. NEW SECTION. 633F.13 Declination, resignation,
23incapacity, death, or removal of custodial trustee — designation
24of successor custodial trustee.
251. Before accepting the custodial trust property, a person
26designated as custodial trustee may decline to serve by
27notifying the person who made the designation, the transferor,
28or the transferor’s legal representative. If an event giving
29rise to a transfer has not occurred, the substitute custodial
30trustee designated under section 633F.3 becomes the custodial
31trustee, or, if a substitute custodial trustee has not been
32designated, the person who made the designation may designate
33a substitute custodial trustee pursuant to section 633F.3.
34In other cases, the transferor or the transferor’s legal
35representative may designate a substitute custodial trustee.
-12- 12. A custodial trustee who has accepted the custodial trust
2property may resign by doing all of the following:
3a. Delivering written notice to a successor custodial
4trustee, if any, the beneficiary and, if the beneficiary is
5incapacitated, to the beneficiary’s legal representative, if
6any.
7b. Transferring or registering, or recording an appropriate
8instrument relating to, the custodial trust property, in the
9name of, and delivering the records to, the successor custodial
10trustee identified under subsection 3.
113. If a custodial trustee or successor custodial trustee
12is ineligible, resigns, dies, or becomes incapacitated, the
13successor designated under section 633F.2, subsection 7, or
14section 633F.3 becomes custodial trustee. If there is no
15effective provision for a successor, the beneficiary if not
16incapacitated, or the legal representative of an incapacitated
17beneficiary, may designate a successor custodial trustee. If
18the beneficiary is not incapacitated, but fails to act within
19ninety days after the ineligibility, resignation, death, or
20incapacity of the custodial trustee, or if the beneficiary
21is incapacitated and the beneficiary’s legal representative
22fails to act within ninety days after the ineligibility,
23resignation, death, or incapacity of the custodial trustee,
24then the beneficiary’s legal representative becomes successor
25custodial trustee. If the beneficiary does not have a legal
26representative or the legal representative fails to act, the
27resigning custodial trustee may designate a successor custodial
28trustee.
294. If a successor custodial trustee is not designated
30pursuant to subsection 3, the transferor, the legal
31representative of the transferor or of the custodial trustee,
32a beneficiary’s legal representative and if none, a member of
33the beneficiary’s family, a person interested in the custodial
34trust property may petition the court to designate a successor
35custodial trustee.
-13- 15. A custodial trustee who declines to serve or resigns,
2or the legal representative of a deceased or incapacitated
3custodial trustee, as soon as practicable, shall put the
4custodial trust property and records in the possession and
5control of the successor custodial trustee. The successor
6custodial trustee may enforce the obligation to deliver
7custodial trust property and records and becomes responsible
8for each item as received.
96. A substitute custodial trustee designated under section
10633F.3, the beneficiary, the beneficiary’s legal representative
11and if none, a member of the beneficiary’s family, a person
12interested in the custodial trust property, may petition the
13court to remove the custodial trustee for cause and designate
14a successor custodial trustee, to require the custodial
15trustee to furnish a bond or other security for the faithful
16performance of fiduciary duties, or for other appropriate
17relief.
18 Sec. 14. NEW SECTION. 633F.14 Expenses, compensation, and
19bond of custodial trustee.
20Except as otherwise provided in the instrument creating the
21custodial trust, in an agreement with the beneficiary, or by
22court order, all of the following are true:
23a. A custodial trustee is entitled to reimbursement from
24custodial trust property for reasonable expenses incurred in
25the performance of fiduciary services.
26b. A custodial trustee has a noncumulative election, to be
27made no later than six months after the end of each calendar
28year, to charge a reasonable compensation for fiduciary
29services performed during that year.
30c. A custodial trustee need not furnish a bond or other
31security for the faithful performance of fiduciary duties.
32 Sec. 15. NEW SECTION. 633F.15 Reporting and accounting
33by custodial trustee — determination of liability of custodial
34trustee.
351. Upon the acceptance of custodial trust property, the
-14-1custodial trustee shall provide a written statement describing
2the custodial trust property and shall thereafter provide a
3written statement of the administration of the custodial trust
4property as follows:
5a. Once each year.
6b. Upon request at reasonable times, but not more than
7quarterly during any calendar year, by the beneficiary or the
8beneficiary’s legal representative.
9c. Upon resignation or removal of the custodial trustee.
10d. Upon termination of the custodial trust.
112. The statements must be provided to the beneficiary
12or to the beneficiary’s legal representative, if any. Upon
13termination of the beneficiary’s interest, the custodial
14trustee shall furnish a current statement to the person to whom
15the custodial trust property is to be delivered.
163. A substitute or successor custodial trustee designated
17under section 633F.3, a beneficiary, the beneficiary’s legal
18representative, a member of the beneficiary’s family, or a
19person interested in the custodial trust property may petition
20the court for an accounting by the custodial trustee or the
21custodial trustee’s legal representative.
224. A successor custodial trustee may petition the court for
23an accounting by a predecessor custodial trustee.
245. In an action or proceeding under this chapter or in any
25other proceeding, the court may require or permit the custodial
26trustee or the custodial trustee’s legal representative to
27account. The custodial trustee or the custodial trustee’s
28legal representative may petition the court for approval of
29final accounts.
306. If a custodial trustee is removed, the court shall
31require an accounting and order delivery of the custodial trust
32property and records to the successor custodial trustee and
33the execution of all instruments required for transfer of the
34custodial trust property.
357. On petition of the custodial trustee or any person who
-15-1could petition for an accounting, the court, after notice to
2interested persons, may issue instructions to the custodial
3trustee or review the propriety of the acts of a custodial
4trustee or the reasonableness of compensation determined by the
5custodial trustee for the services of the custodial trustee or
6others.
7 Sec. 16. NEW SECTION. 633F.16 Limitations of action against
8custodial trustee.
91. Except as provided in subsection 3, unless previously
10barred by adjudication, consent, or limitation, a claim for
11relief against a custodial trustee for accounting or breach of
12duty is barred as to a beneficiary, a person to whom custodial
13trust property is to be paid or delivered, or the legal
14representative of an incapacitated or deceased beneficiary or
15payee who either:
16a. Has received an accounting or other statement adequately
17disclosing the matter unless an action or proceeding to assert
18the claim is commenced within one year after receipt of such
19accounting or statement.
20b. Has not received an accounting or other statement
21adequately disclosing the matter unless an action or proceeding
22to assert the claim is commenced within three years after the
23termination of the custodial trust.
242. For the purpose of subsection 1, a beneficiary or a
25person to whom custodial trust property is to be paid or
26delivered, is deemed to have received an accounting or other
27statement, in the following instances:
28a. In the case of an adult who is reasonably capable of
29understanding the accounting or other statement if it is
30personally received by such person.
31b. In the case of an adult who is not reasonably capable
32of understanding the accounting or other statement, if it is
33received by such adult person’s legal representative, and if
34none, then if received by a guardian ad litem, court visitor,
35or other person appointed for this purpose.
-16- 1c. In the case of a minor, if it is received by a person who
2has authority to consent on the minor’s behalf, and if none,
3then if received by a guardian ad litem, court visitor, or
4other person appointed for this purpose.
53. Except as provided in subsection 4, a claim for relief to
6recover from a custodial trustee for fraud, misrepresentation,
7or concealment related to the final settlement of the custodial
8trust or concealment of the existence of the custodial trust,
9is barred unless an action or proceeding to assert the claim
10is commenced within five years after the termination of the
11custodial trust.
124. Unless an accounting or other statement adequately
13disclosing the matter was provided as set forth above, a claim
14for relief is not barred by this section if the claimant is or
15was any of the following:
16a. A minor, until the earlier of one year after the claimant
17becomes an adult or dies; an incapacitated adult, until the
18earliest of one year after the following:
19(1) The appointment of a legal representative.
20(2) The removal of the incapacity.
21(3) The death of the claimant.
22b. An adult, now deceased, who was not incapacitated, until
23one year after the claimant’s death.
24 Sec. 17. NEW SECTION. 633F.17 Distribution on termination.
251. Upon termination of a custodial trust, the custodial
26trustee shall transfer the unexpended custodial trust property:
27a. To the beneficiary, if not incapacitated or deceased.
28b. To the beneficiary’s legal representative or other
29recipient designated by the court for an incapacitated
30beneficiary.
31c. Upon the beneficiary’s death, in the following order:
32(1) As last directed in a writing signed by the deceased
33beneficiary while not incapacitated and received by the
34custodial trustee during the life of the deceased.
35(2) As designated in the instrument creating the custodial
-17-1trust.
2(3) To the estate of the deceased beneficiary.
32. The direction to the custodial trustee by a beneficiary
4who is not incapacitated, for distribution on termination
5of the custodial trust may be in any written form clearly
6identifying the distributee and may be substantially similar
7to the following:
8I, ________________ (name of beneficiary) hereby direct
9_____________________ (name of custodial trustee) as custodial
10trustee, to transfer and pay the unexpended balance of
11the custodial trust property of which I am beneficiary to
12__________________ as distributee on the termination of the
13trust at my death. In the event of the prior death of _________
14above named as distributee, I designate ________________ as
15distributee of the custodial trust property.
16Signed ______________________ (signature of beneficiary).
17Date ____________________
18Receipt Acknowledged: ____________________(signature of
19Custodial Trustee)
20Date ___________________
213. If, when the custodial trust would otherwise terminate,
22the distributee is incapacitated, the custodial trust continues
23for the use and benefit of the distributee as beneficiary until
24the incapacity is removed or the custodial trust is otherwise
25terminated.
264. Death of a beneficiary does not terminate the power of
27the custodial trustee to discharge obligations of the custodial
28trustee or beneficiary incurred before the termination of the
29custodial trust.
30 Sec. 18. NEW SECTION. 633F.18 Methods and forms for
31creating custodial trusts.
321. If a transaction, including a declaration with respect
33to or a transfer of specific property, otherwise satisfies
34applicable law, the criteria of section 633F.2 are satisfied
35by any of the following:
-18- 1a. The execution and either delivery to the custodial
2trustee or recording of an instrument in substantially the
3following form:
4TRANSFER UNDER THE IOWA UNIFORM CUSTODIAL TRUST ACT
5I, __________ (name of transferor or name and representative
6capacity if a fiduciary), transfer to __________ (name of
7trustee other than transferor), as custodial trustee for
8__________ (name of beneficiary) as beneficiary and __________
9as distributee on termination of the trust in absence of
10direction by the beneficiary under the Iowa Uniform Custodial
11Trust Act, the following:
12__________ (Insert a description of the custodial trust
13property legally sufficient to identify and transfer each item
14of property).
15If __________ (name of trustee other than transferor)
16declines to serve or ceases to serve as custodial trustee for
17any reason, then I designate __________ (name of substitute
18or successor custodial trustee) as substitute or successor
19custodial trustee.
20Dated:_______________
21Signature: _____________________
22b. The execution and the recording or giving notice of its
23execution to the beneficiary of an instrument in substantially
24the following form:
25DECLARATION OF TRUST UNDER IOWA UNIFORM CUSTODIAL TRUST ACT
26I, __________ (name of owner of property), declare that
27henceforth I hold as custodial trustee for __________ (name of
28beneficiary other than transferor) as beneficiary and ________
29as distributee on termination of the trust in absence of
30direction by the beneficiary under the Iowa Uniform Custodial
31Trust Act, the following: __________ (Insert a description of
32the custodial trust property legally sufficient to identify
33and transfer each item of property). If I cease to serve as
34custodial trustee for any reason, then I designate __________
35(name of substitute or successor custodial trustee) as
-19-1successor custodial trustee.
2Dated: ____________________
3Signature: ___________________________
42. Customary methods of transferring or evidencing
5ownership of property may be used to create a custodial trust,
6including any of the following:
7a. Registration of a security in the name of a trust
8company, an adult other than the transferor, or the transferor
9if the beneficiary is other than the transferor, designated in
10substance “as custodial trustee for ________________ (name of
11beneficiary) under the Iowa Uniform Custodial Trust Act”.
12b. Delivery of a certificated security, or a document
13necessary for the transfer of an uncertificated security,
14together with any necessary endorsement, to an adult other than
15the transferor or to a trust company as custodial trustee,
16accompanied by an instrument in substantially the form
17prescribed in subsection 1, paragraph “a”.
18c. Payment of money or transfer of a security held in the
19name of a broker or a financial institution or its nominee to a
20broker or financial institution for credit to an account in the
21name of a trust company, an adult other than the transferor,
22or the transferor if the beneficiary is other than the
23transferor, designated in substance: “as custodial trustee for
24________________ (name of beneficiary) under the Iowa Uniform
25Custodial Trust Act”.
26d. Registration of ownership of a life or endowment
27insurance policy or annuity contract with the issuer in the
28name of a trust company, an adult other than the transferor,
29or the transferor if the beneficiary is other than the
30transferor, designated in substance: “as custodial trustee for
31________________ (name of beneficiary) under the Iowa Uniform
32Custodial Trust Act”.
33e. Delivery of a written assignment to an adult other
34than the transferor or to a trust company whose name in the
35assignment is designated in substance by the words: “as
-20-1custodial trustee for ________________ (name of beneficiary)
2under the Iowa Uniform Custodial Trust Act”.
3f. Irrevocable exercise of a power of appointment, pursuant
4to its terms, in favor of a trust company, an adult other than
5the donee of the power, or the donee who holds the power if
6the beneficiary is other than the donee, whose name in the
7appointment is designated in substance: “as custodial trustee
8for (name of beneficiary) under the Iowa Uniform Custodial
9Trust Act”.
10g. Delivery of a written notification or assignment of a
11right to future payment under a contract to an obligor which
12transfers the right under the contract to a trust company,
13an adult other than the transferor, or the transferor if the
14beneficiary is other than the transferor, whose name in the
15notification or assignment is designated in substance: “as
16custodial trustee for ________________ (name of beneficiary)
17under the Iowa Uniform Custodial Trust Act”.
18h. Execution, delivery, and recordation of a conveyance of
19an interest in real property in the name of a trust company,
20an adult other than the transferor, or the transferor if
21the beneficiary is other than the transferor, designated in
22substance: “as custodial trustee for ________________ (name of
23beneficiary) under the Iowa Uniform Custodial Trust Act”.
24i. Issuance of a certificate of title by an agency of a
25state or of the United States which evidences title to tangible
26personal property:
27(1) Issued in the name of a trust company, an adult other
28than the transferor, or the transferor if the beneficiary
29is other than the transferor, designated in substance: “as
30custodial trustee for ________________ (name of beneficiary)
31under the Iowa Uniform Custodial Trust Act”.
32(2) Delivered to a trust company or an adult other
33than the transferor or endorsed by the transferor to that
34person, designated in substance: “as custodial trustee for
35________________ (name of beneficiary) under the Iowa Uniform
-21-1Custodial Trust Act”.
2j. Execution and delivery of an instrument of gift to a
3trust company or an adult other than the transferor, designated
4in substance: “as custodial trustee for ________________ (name
5of beneficiary) under the Iowa Uniform Custodial Trust Act”.
6 Sec. 19. NEW SECTION. 633F.19 Applicable law.
71. This chapter applies to a transfer or declaration
8creating a custodial trust that refers to this chapter if,
9at the time of the transfer or declaration, the transferor,
10beneficiary, or custodial trustee is a resident of or has its
11principal place of business in this state or custodial trust
12property is located in this state. The custodial trust remains
13subject to this chapter despite a later change in residence or
14principal place of business of the transferor, beneficiary, or
15custodial trustee, or removal of the custodial trust property
16from this state.
172. A transfer made pursuant to an act of another state
18substantially similar to this chapter is governed by the law of
19that state and may be enforced in this State.
20 Sec. 20. NEW SECTION. 633F.20 Uniformity of application
21and construction.
22This chapter shall be applied and construed to effectuate
23its general purpose to make uniform the law with respect to the
24subject of this chapter among states enacting it.
25 Sec. 21. NEW SECTION. 633F.21 Short title.
26This chapter shall be known and may be cited as the “Iowa
27Uniform Custodial Trust Act”.
28DIVISION II
29CONFORMING CHANGES
30 Sec. 22. Section 232D.503, Code 2021, is amended by adding
31the following new subsection:
32 NEW SUBSECTION. 6. If the court orders termination of a
33guardianship established under this chapter and the guardian
34has custody of any assets of a protected person who is a minor
35or was a minor at the time of the minor’s death, the court
-22-1shall order delivery of the minors assets to the minor or to a
2fiduciary acting under one or more of the following:
3a. A conservatorship established for the minor.
4b. A personal representative appointed as a result of the
5minor’s death.
6c. A uniform transfer to minor account established for the
7minor pursuant to chapter 565B or the laws of any other state.
8d. A uniform custodial trust account established for the
9minor pursuant to chapter 633F or the laws of any other state.
10e. A college savings plan account established for the minor
11pursuant to Internal Revenue Code section 529 or Chapter 12D
12or the laws of any other state.
13f. An ABLE account established for the minor with
14disabilities pursuant to Internal Revenue Code section 529A or
15chapter 12I or the laws of any other state.
16 Sec. 23. Section 565B.6, subsection 3, paragraph c, Code
172021, is amended to read as follows:
18c. The transfer is authorized by the court if all transfers,
19including the transfer to be made and prior transfers, exceed
20twenty-five fifty thousand dollars in value. Transfers by a
21personal representative, trustee, or conservator shall not
22be aggregated, but each personal representative, trustee, or
23conservator shall be treated separately.
24 Sec. 24. Section 633.108, Code 2021, is amended to read as
25follows:
26633.108 Small distributions to minors — payment.
271. Whenever a minor person becomes entitled under the terms
28of a will to a bequest or legacy, or to a share of the estate of
29an intestate, and the value of the bequest, legacy, or share
30does not exceed the sum of twenty-five fifty thousand dollars,
31the personal representative may pay the bequest, legacy, or
32share to a custodian under any uniform transfers to minors
33Act interest to a fiduciary acting under one or more of the
34accounts referenced in subsection 2.
352. Receipt by the custodian, when presented to the court or
-23-1filed with the report of distribution of the fiduciary, shall
2have the same force and effect as though the payment had been
3made to a duly appointed and qualified conservator for the
4minor. person entitled to them:
5a. A uniform transfer to minor account established for the
6minor pursuant to chapter 565B or the laws of any other state.
7b. A uniform custodial trust account established for the
8minor pursuant to chapter 633F or the laws of any other state.
9c. A college savings plan account established for the minor
10pursuant to Internal Revenue Code section 529 or chapter 12D.
11d. An ABLE account established for the minor with
12disabilities pursuant to Internal Revenue Code section 529A or
13chapter 12I.
14 Sec. 25. Section 633.675, Code 2021, is amended by adding
15the following new subsection:
16 NEW SUBSECTION. 3A. The court shall terminate a
17conservatorship if it finds by clear and convincing evidence
18all of the following:
19a. The value of the protected person’s property is
20insufficient to justify the cost of administration.
21b. That continued administration of the conservatorship is
22not in the best interest of the protected person.
23c. That a reasonable alternative exists under section
24633.678 for managing the protected person’s assets.
25 Sec. 26. Section 633.678, Code 2021, is amended to read as
26follows:
27633.678 Delivery of assets.
281. Upon the termination of a conservatorship, all assets of
29the conservatorship shall be delivered, under direction of the
30court, to as ordered by the court to any of the following:
31a. Tothe person or persons entitled to them.
32b. To a custodian under a uniform transfers to minor account
33established for the protected person pursuant to chapter 565B
34or the laws of any other state.
35c. To a custodial trustee under a uniform custodial trust
-24-1account established for the protected person pursuant to
2chapter 633F or the laws of any other state.
3d. To an account owner or participant under a college
4savings plan account established for the protected person
5pursuant to Internal Revenue Code section 529 or chapter 12D
6or the laws of any other state.
7e. To the account owner under an ABLE account established
8for the protected person with disabilities pursuant to Internal
9Revenue Code section 529A or chapter 12I or the laws of any
10other state.
112. Delivery of the assets of an adult protected person under
12subsection 1, paragraphs “b” through “e”, shall have the same
13force and effect as if delivery had been made directly to the
14person or persons entitled to them. Delivery of the assets of
15a minor protected person under subsection 1, paragraphs “b”
16 through “e”, shall have the same force and effect as if delivery
17had been made to the protected person after attaining majority.
18 Sec. 27. Section 633.681, Code 2021, is amended to read as
19follows:
20633.681 Assets of minor ward exhausted Exhausted or minimal
21assets of minor protected person.
221. When the assets of a minor ward’s protected person’s
23 conservatorship are exhausted or consist of personal property
24only of an aggregate value not in excess of twenty-five fifty
25 thousand dollars, the court, upon application or upon its
26own motion, may terminate the conservatorship. The order
27for termination shall direct the conservator to deliver any
28property remaining after the payment of allowed claims and
29expenses of administration to a custodian under any uniform
30transfers to minors Act. fiduciary acting under one or more of
31the following accounts:
32a. A uniform transfer to minor account established for the
33minor pursuant to chapter 565B or the laws of any other state.
34b. A uniform custodial trust account established for the
35minor pursuant to chapter 633F or the laws of any other state.
-25- 1c. A college savings plan account established for the minor
2pursuant to Internal Revenue Code section 529 or chapter 12D
3or the laws of any other state.
4d. An ABLE account established for the minor with
5disabilities pursuant to Internal Revenue Code section 529A or
6chapter 12I or the laws of any other state.
72. Such delivery shall have the same force and effect as
8if delivery had been made to the ward protected person after
9attaining majority.
10EXPLANATION
11The inclusion of this explanation does not constitute agreement with
12the explanation’s substance by the members of the general assembly.
13This bill establishes the Iowa uniform custodial trust Act
14and provides definitions. The Iowa uniform custodial trust
15Act is a statutory standby inter vivos trust for individuals
16represented by attorneys engaged in general rather than
17specialized probate practice.
18The bill allows persons, competent to transfer property,
19to create custodial trusts for the benefit of themselves
20or others, with the beneficial interest in custodial trust
21property in the beneficiary and not in the custodial trustee.
22The bill allows any kind of property, real or personal,
23tangible or intangible, to be made the subject of a transfer
24to a custodial trustee for the benefit of a beneficiary. A
25person may create a custodial trust by a written transfer of
26the property to another person, evidenced by registration
27or by other instrument of transfer executed and naming as
28beneficiary an individual who may be the transferor, in
29which the transferee is designated as custodial trustee, or a
30person may create a custodial trust of property by a written
31declaration, evidenced by registration of the property or by
32other instrument of declaration executed and describing the
33property and naming as beneficiary an individual other than the
34declarant, in which the declarant as titleholder is designated,
35in substance, as custodial trustee. The bill provides that a
-26-1registration or other declaration of trust for the sole benefit
2of the declarant is not a valid custodial trust. Title is
3given to the custodial trustee and the beneficial interest
4is given to the beneficiary. A nonincapacitated beneficiary
5or legal representative of an incapacitated beneficiary may
6terminate a custodial trust by delivering the custodial trustee
7a written notice declaring termination. A successor custodial
8trustee may be designated in the trust document and any
9person may augment the trust property by the addition of other
10property.
11The bill provides how the custodial trustee may make future
12payment or transfer the position of custodial trustee. A
13person who is able to designate the recipient of property
14payable or transferable upon a future event may create a
15custodial trust by designating in writing the recipient. A
16designation of successor trustee may be made in a will, a
17trust, a multiple-party account, an insurance policy, an
18instrument exercising a power of appointment, or a writing
19designating a beneficiary of contractual rights. The
20designation can also be delivered or registered to the
21fiduciary, payor, insurer, or obligor of the future right.
22The bill provides a form and effect of receipt and acceptance
23by custodial trustee. The form provides the name of the
24custodial trustee, the name of the beneficiary, the property
25the trust consists of, and date and signature of the custodial
26trustee. It also provides that upon accepting custodial trust
27property, the custodial trustee is subjected to personal
28jurisdiction of the court with respect to any matter relating
29to the custodial trust.
30The bill provides that unless otherwise directed by an
31instrument designating a custodial trustee, a person, who holds
32property of or owes a debt to an incapacitated individual, may
33make a transfer to a beneficiary’s legal representative and
34if none, to a member of the beneficiary’s family, or a trust
35company, as custodial trustee for the use and benefit of the
-27-1incapacitated individual. If the value of the property or the
2debt exceeds $50,000, the transfer is not effective unless
3authorized by the court. A signed written acknowledgment of
4delivery by a custodial trustee is a sufficient receipt and
5discharge for property transferred to the custodial trustee.
6The bill provides that a custodial trust cannot create
7beneficial interests for multiple beneficiaries. The bill
8provides that all custodial property held by the same custodial
9trustee for a single beneficiary may be administered as a
10single custodial trust.
11The bill provides general duties of a custodial trustee
12which include: registering or recording the instrument vesting
13title to custodial trust property, if appropriate; following
14the directions of the nonincapacitated beneficiary in the
15management, control, investment, or retention of the custodial
16trust property; observing the prudent investment standards set
17forth in Code section 633.123 if there is not clear directives
18from the beneficiary prior to being incapacitated; retaining
19any custodial trust property received from the transferor; and
20controlling, collecting, holding, managing, investing, and
21reinvesting custodial trust property. The bill provides that
22if a custodial trustee has a special skill or expertise or is
23named custodial trustee on the basis of representation of a
24special skill or expertise, the custodial trustee shall use
25that skill or expertise in making decisions for the custodial
26trust property. The bill provides that a custodial trustee
27at all times shall keep custodial trust property of which the
28custodial trustee has control separate from all other property
29in a manner sufficient to identify it clearly as custodial
30trust property of the beneficiary. The bill provides that a
31custodial trustee shall keep records of all transactions with
32respect to custodial trust property, including information
33necessary for the preparation of tax returns, and shall make
34the records and information available at reasonable times to
35the beneficiary or legal representative of the beneficiary.
-28-1Furthermore, the exercise of a durable power of attorney for
2an incapacitated beneficiary is not effective to terminate or
3direct the administration or distribution of a custodial trust.
4The bill provides that the custodial trustee has all the
5rights and powers over custodial trust property which a
6person has over individually owned property which may only be
7exercised in a fiduciary capacity.
8The bill provides how the custodial trust may be used. If
9the beneficiary is not incapacitated, the custodial trustee
10shall pay or expend for the beneficiary’s use or benefit the
11amount of the custodial trust property at the beneficiary’s
12directive. If the beneficiary is incapacitated, the custodial
13trustee shall be allowed to distribute the amount of the
14custodial trust property as deemed advisable for the use and
15benefit of the beneficiary and individuals who are entitled
16to support by the beneficiary. The custodial trustee has
17discretion in determining the manner, when, and to the
18extent that the expenditures are made without court order and
19without regard to other support, income, or property of the
20beneficiary.
21The bill provides that a custodial trustee may determine
22a beneficiary incapacitated relying upon previous direction
23or authority given by the beneficiary while not incapacitated
24including direction or authority pursuant to a durable power
25of attorney; written documentation from the beneficiary’s
26physician; on the petition of the beneficiary, the custodial
27trustee, or other interested person in the custodial trust
28property, the court may determine whether the beneficiary is
29incapacitated; or other persuasive evidence. The bill also
30provides that if a custodial trustee deems that a beneficiary’s
31incapacity has ceased or that the circumstances concerning
32the beneficiary’s ability to manage the property and business
33affairs have changed, the custodial trustee may administer
34the trust as for a beneficiary who is not incapacitated. The
35bill provides when a determination of incapacity has not been
-29-1made, a custodial trustee who has reason to believe that the
2beneficiary is incapacitated shall administer the custodial
3trust in accordance with provisions of the bill applicable
4to an incapacitated beneficiary. A beneficiary being found
5to be incapacitated does not terminate the custodial trust,
6any designation of the successor custodial trustee, rights
7or powers of the custodial trustee, or any immunities of a
8third-person action on the instructions of the custodial
9trustee.
10The bill provides that a third party acting in good faith
11has no need to determine the custodial trustee’s authority to
12bind the beneficiary with respect to property and investment
13matters. The bill generally limits the claims of third
14parties to recourse against the custodial property, with the
15beneficiary insulated against personal liability unless the
16beneficiary is personally at fault and the custodial trustee is
17similarly insulated unless the custodial trustee is personally
18at fault or failed to disclose the custodial capacity when
19entering into a contract.
20The bill provides for declination, resignation, incapacity,
21death, or removal of the custodial trustee. A custodial
22trustee may decline the appointment by notifying the person
23who made the designation prior to accepting the custodial
24trust property. If a substitute custodial trustee has not
25been appointed, the person who made the initial designation
26may designate a substitute custodial trustee who becomes
27the custodial trustee. Otherwise, the transferor’s legal
28representative may designate a substitute custodial trustee.
29A custodial trustee, who has accepted the custodial trust
30property, may resign by delivering written notice to a
31successor custodial trustee, the beneficiary, and, if the
32beneficiary is incapacitated, to the beneficiary’s legal
33representative, and transferring, registering, or recording an
34appropriate instrument relating to the custodial trust property
35in the name of, and delivering the records to, the successor
-30-1custodial trustee.
2The bill provides that if the custodial trustee or successor
3custodial trustee dies, resigns, or becomes incapacitated,
4the successor custodial trustee designated becomes the
5custodial trustee. If the successor is not identified,
6the competent beneficiary or the legal representative of an
7incapacitated beneficiary may designate a successor custodial
8trustee. If the beneficiary fails to act in 90 days, the
9legal representative becomes the custodial trustee. If the
10incapacitated beneficiary does not have a legal representative
11or the legal representative fails to act, the resigning
12custodial trustee may designate a successor custodial trustee.
13The court may also be petitioned to designate a successor
14custodial trustee if a successor custodial trustee is not
15designated.
16The bill provides that a substitute custodial trustee,
17the beneficiary, the beneficiary’s legal representative, and
18if none, a member of the beneficiary’s family, or a person
19interested in the custodial trust property, may petition the
20court to remove the custodial trustee for cause and designate
21a successor custodial trustee, to require the custodial
22trustee to furnish a bond or other security for the faithful
23performance of fiduciary duties, or for other appropriate
24relief.
25The bill provides means of monitoring and enforcing the
26custodial trust including provisions requiring the custodial
27trustee to keep the beneficiary informed, requiring accounting
28by the custodial trustee, providing protection for the
29custodial trustee by the statutes of limitation on proceedings
30against the custodial trustee, and relating to the distribution
31of the assets on termination of the custodial trust.
32The bill provides that upon termination of the custodial
33trust, the custodial property shall be transferred to
34the beneficiary, if not incapacitated or deceased; to
35the beneficiary’s legal representative or other recipient
-31-1designated by the court for an incapacitated beneficiary;
2or upon the death of the beneficiaries as last directed in
3a writing signed by the beneficiary while not incapacitated
4and received by the custodial trustee prior to the death, as
5designated in the instrument that created the custodial trust,
6or to the estate of the deceased beneficiary.
7The bill provides the appropriate methods and forms to be
8used for creating a custodial trust. The bill provides that
9a custodial trust created under the bill remains subject to
10the bill despite a subsequent change in the residence of the
11transferor, the beneficiary, or the custodial trustee or the
12removal of the custodial trust property from the state of
13original location.
14The bill amends the Code section on termination and
15modification of guardianship (Code section 232D.503) and
16provides that if the court orders termination of a guardianship
17and the guardian has custody of the assets, the court must
18order delivery of the assets to the minor or fiduciary acting
19under one of the following accounts: uniform transfer to minor
20account established for the minor; a uniform custodial trust
21account established for the minor; an educational savings plan
22trust account; or an ABLE savings plan trust account.
23The bill amends the amount of money that may be transferred
24by a fiduciary and the small distribution from $25,000 to
25$50,000. The bill provides that a person is entitled to
26the small distributions to any of the following: a uniform
27transfer to minor account established for the minor; a
28uniform custodial trust account established for the minor; an
29educational savings plan trust account; or an ABLE savings plan
30trust account.
31The bill amends the cause for termination in a
32conservatorship by adding the following three conditions: the
33value of the protected person’s property is insufficient to
34justify the cost of administration involved; that continued
35administration of the conservatorship is not in the best
-32-1interest of the protected person; and that a reasonable
2alternative exists under Code section 633.678 for managing the
3protected person’s assets by clear and convincing evidence.
4Under current law, the court must only find that the basis for
5appointment provided in Code section 633.553 or 633.554 is not
6satisfied.
7The bill amends the Code section regarding the delivery of
8assets upon termination of a conservatorship by including that
9the delivery shall be made to the following parties as ordered
10by the court: to a custodian under a uniform transfers to a
11minor account; to a custodial trustee; to an account owner or
12participant under a educational savings plan trust account; or
13an ABLE savings plan trust account owner. Current Code only
14provides for the assets to the person or persons entitled to
15them.
16The bill provides that the order for termination shall
17direct the conservator to deliver any property remaining after
18the payment of allowed claims and expenses of administration
19to the fiduciary acting under one or more of the following
20accounts: a uniform transfer to minor account established for
21the minor; a uniform custodial trust account established for
22the minor; an educational savings plan trust account; or an
23ABLE savings plan trust account. The bill also increases the
24threshold at which a court may terminate a conservatorship for
25having minimal assets of a minor protected person from $25,000
26to $50,000.
-33-cm/jh
2termination of custodial trusts.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2IOWA UNIFORM CUSTODIAL TRUST ACT
3 Section 1. NEW SECTION. 633F.1 Definitions.
4For purposes of this chapter:
51. “Adult” means an individual who is at least eighteen
6years of age.
72. “Beneficiary” means an individual for whom property has
8been transferred to or held under a declaration of trust by a
9custodial trustee for the individual’s use and benefit under
10this chapter.
113. “Consent” means affirmation given by a person who is
12not incapacitated; or if a person is incapacitated and there
13is no conflict of interest between the representer and the
14incapacitated person with respect to the fiduciary manner,
15the following may consent on behalf of the incapacitated
16individual:
17a. A conservator may represent and bind the person whose
18estate the conservator controls.
19b. A trustee may represent and bind the beneficiary of a
20trust.
21c. A personal representative may represent and bind the
22persons interested in the decedent’s estate.
23d. If no conservator has been appointed, a parent may
24represent and bind a minor child.
254. “Conservator” means a person appointed or qualified by a
26court to manage the estate of an individual or a person legally
27authorized to perform substantially the same functions.
285. “Court” means the probate court of this state.
296. “Custodial trust property” means an interest in property
30transferred to or held under a declaration of trust by a
31custodial trustee under this chapter and the income from and
32proceeds of that interest.
337. “Custodial trustee” means a person designated as trustee
34of a custodial trust under this chapter or a substitute or
35successor to the person designated.
-1- 18. “Guardian” means a person appointed or qualified by
2a court as a guardian of an individual, including a limited
3guardian, but not a person who is only a court visitor.
49. “Incapacitated” means the inability of an individual to
5manage property or business affairs because the individual is
6any of the following:
7a. An individual whose decision-making is so impaired that
8the individual is unable to make, communicate, or carry out
9important decisions concerning the individual’s financial
10affairs.
11b. Detailed or incarcerated in a penal system.
12c. Outside the United States and unable to return.
13d. A minor.
1410. “Legal representative” means a living person’s
15agent acting under a durable financial power of attorney or
16conservator, a living or deceased person’s trustee acting
17under a revocable trust created by such person, or a deceased
18person’s personal representative.
1911. “Member of the beneficiary’s family” means the following
20persons who are competent adults at the time of acting
21hereunder, with such action to be taken in the following order
22of priority:
23a. The surviving spouse, if not legally separated from the
24beneficiary, whose whereabouts are reasonably ascertainable.
25b. The surviving child of the beneficiary, or, if there
26is more than one, a majority of the surviving children whose
27whereabouts are reasonably ascertainable.
28c. The surviving parents of the beneficiary whose
29whereabouts are reasonably ascertainable.
30d. A surviving grandchild of the beneficiary, or if there is
31more than one, a majority of the surviving grandchildren whose
32whereabouts are reasonably ascertainable.
33e. A surviving sibling of the beneficiary, or if there
34is more than one, a majority of the surviving siblings whose
35whereabouts are reasonably ascertainable.
-2- 1f. A surviving grandparent of the beneficiary, or if there
2is more than one, a majority of the surviving grandparents
3whose whereabouts are reasonably ascertainable.
4g. A person in the next degree of kinship to the beneficiary
5in the order named by law who would inherit the estate of
6the beneficiary under the rules of inheritance for intestate
7succession, or if there is more than one, a majority of
8such surviving persons whose whereabouts are reasonably
9ascertainable.
1012. “Person” means an individual, corporation, business
11trust, estate, trust, partnership, joint venture, association,
12or any other legal or commercial entity.
1313. “Personal representative” means an executor,
14administrator, or special administrator of a decedent’s estate,
15a person legally authorized to perform substantially the same
16functions, or a successor to any of them as defined in section
17633.3.
1814. “State” means a state, territory, or possession of the
19United States, the District of Columbia, or the Commonwealth
20of Puerto Rico.
2115. “Transferor” means a person who creates a custodial
22trust by transfer or declaration.
2316. “Trust company” means a financial institution,
24corporation, or other legal entity, authorized to exercise
25general trust powers.
26 Sec. 2. NEW SECTION. 633F.2 Custodial trust — general.
271. A person may create a custodial trust of property by a
28written transfer of the property to another person, evidenced
29by registration or by other instrument of transfer, executed in
30any lawful manner, naming as beneficiary, an individual who may
31be the transferor, in which the transferee is designated, in
32substance, as custodial trustee under this chapter.
332. A person may create a custodial trust of property by a
34written declaration, evidenced by registration of the property
35or by other instrument of declaration executed in any lawful
-3-1manner, describing the property and naming as beneficiary an
2individual other than the declarant, in which the declarant as
3titleholder is designated, in substance, as custodial trustee
4under this chapter. A registration or other declaration of
5trust for the sole benefit of the declarant is not a custodial
6trust under this chapter.
73. Title to custodial trust property is in the custodial
8trustee and the beneficial interest is in the beneficiary.
94. Except as provided in subsection 5, a transferor shall
10not terminate a custodial trust.
115. The beneficiary, if not incapacitated, or the legal
12representative of an incapacitated beneficiary, may terminate
13a custodial trust by delivering to the custodial trustee a
14writing signed by the beneficiary or legal representative
15declaring the termination. If not previously terminated, the
16custodial trust terminates on the death of the beneficiary.
176. Any person may augment existing custodial trust property
18by the addition of other property pursuant to this chapter,
19only upon receipt and acceptance by the custodial trustee.
207. The transferor may designate, or authorize the
21designation of, a successor custodial trustee in the trust
22instrument.
238. This chapter does not displace or restrict other means
24of creating trusts. A trust whose terms do not conform to this
25chapter may be enforceable according to its terms under other
26law.
27 Sec. 3. NEW SECTION. 633F.3 Custodial trustee for future
28payment or transfer.
291. A person having the right to designate the recipient of
30property payable or transferable upon a future event may create
31a custodial trust upon the occurrence of the future event by
32designating in writing the recipient, followed in substance
33by: “as custodial trustee for __________________ (name of
34beneficiary) under the Iowa Uniform Custodial Trust Act”.
352. Persons may be designated as substitute or successor
-4-1custodial trustees to whom the property must be paid or
2transferred in the order named if the first designated
3custodial trustee is unable or unwilling to serve.
43. A designation under this section may be made in a will,
5a trust, a multiple-party account, an insurance policy, an
6instrument exercising a power of appointment, or a writing
7designating a beneficiary of contractual rights. Otherwise,
8to be effective, the designation must be registered with or
9delivered to the fiduciary, payor, issuer, or obligor of the
10future right.
11 Sec. 4. NEW SECTION. 633F.4 Form and effect of receipt and
12acceptance by custodial trustee — jurisdiction.
131. Obligations of a custodial trustee, including the
14obligation to follow directions of the beneficiary, arise under
15this chapter upon the custodial trustee’s acceptance, express
16or implied, of the custodial trust property.
172. The custodial trustee’s acceptance may be evidenced by a
18writing stating in substance:
19CUSTODIAL TRUSTEE’S RECEIPT AND ACCEPTANCE
20I, _______ (name of custodial trustee) acknowledge receipt
21of the custodial trust property described below or in the
22attached instrument and accept the custodial trust as custodial
23trustee for __________________ (name of beneficiary) under the
24Iowa Uniform Custodial Trust Act. I undertake to administer
25and distribute the custodial trust property pursuant to the
26Iowa Uniform Custodial Trust Act. My obligations as custodial
27trustee are subject to the directions of the beneficiary
28unless the beneficiary is designated as, is, or becomes
29incapacitated. The custodial trust property consists of
30_____________________________.
31Dated: _____________________________
32(Signature of Custodial Trustee)
333. Upon accepting custodial trust property, a person
34designated as custodial trustee under this chapter is subject
35to personal jurisdiction of the court with respect to any
-5-1matter relating to the custodial trust.
2 Sec. 5. NEW SECTION. 633F.5 Transfer to custodial trustee
3by fiduciary or obligor — facility of payment.
41. Unless otherwise directed by an instrument designating
5a custodial trustee pursuant to section 633F.3, a person,
6including a fiduciary other than a custodial trustee, who holds
7property of or owes a debt to an incapacitated individual may
8make a transfer to a beneficiary’s legal representative and
9if none, to a member of the beneficiary’s family, or a trust
10company, as custodial trustee for the use and benefit of the
11incapacitated individual. If the value of the property or
12the debt exceeds fifty thousand dollars, the transfer is not
13effective unless authorized by the court.
142. A written acknowledgment of delivery, signed by a
15custodial trustee, is a sufficient receipt and discharge for
16property transferred to the custodial trustee pursuant to this
17section.
18 Sec. 6. NEW SECTION. 633F.6 Single beneficiaries —
19separate trust accounts.
201. Beneficial interests in a custodial trust shall not be
21created for multiple beneficiaries.
222. All custodial trust property held under this chapter by
23the same custodial trustee for the use and benefit of a single
24beneficiary may be administered as a single custodial trust.
25 Sec. 7. NEW SECTION. 633F.7 General duties of custodial
26trustee.
271. If appropriate, a custodial trustee shall register
28or record the instrument vesting title to custodial trust
29property.
302. If the beneficiary is not incapacitated, a custodial
31trustee shall follow the directions of the beneficiary in the
32management, control, investment, or retention of the custodial
33trust property. In the absence of effective contrary direction
34by the beneficiary while not incapacitated, the custodial
35trustee shall observe the prudent investment standards set
-6-1forth in section 633.123. However, a custodial trustee, in the
2custodial trustee’s discretion, may retain any custodial trust
3property received from the transferor. If a custodial trustee
4has a special skill or expertise or is named custodial trustee
5on the basis of representation of a special skill or expertise,
6the custodial trustee shall use that skill or expertise.
73. Subject to subsection 2, a custodial trustee shall take
8control of and collect, hold, manage, invest, and reinvest
9custodial trust property.
104. A custodial trustee at all times shall keep custodial
11trust property of which the custodial trustee has control,
12separate from all other property in a manner sufficient
13to identify it clearly as custodial trust property of the
14beneficiary. Custodial trust property, the title to which is
15subject to recordation, is so identified if an appropriate
16instrument so identifying the property is recorded, and
17custodial trust property subject to registration is so
18identified if it is registered, or held in an account in the
19name of the custodial trustee, designated in substance: “as
20custodial trustee for __________________ (name of beneficiary)
21under the Iowa Uniform Custodial Trust Act”.
225. A custodial trustee shall keep records of all
23transactions with respect to custodial trust property,
24including information necessary for the preparation of tax
25returns, and shall make the records and information available
26at reasonable times to the beneficiary or legal representative
27of the beneficiary.
286. The exercise of a durable power of attorney for an
29incapacitated beneficiary is not effective to terminate or
30direct the administration or distribution of a custodial trust.
31 Sec. 8. NEW SECTION. 633F.8 General powers of custodial
32trustee.
331. A custodial trustee, acting in a fiduciary capacity, has
34all the rights and powers over custodial trust property which
35an unmarried adult owner has over individually owned property,
-7-1but a custodial trustee may exercise those rights and powers
2in a fiduciary capacity only.
32. This section does not relieve a custodial trustee from
4liability for a violation of section 633F.7.
5 Sec. 9. NEW SECTION. 633F.9 Use of custodial trust
6property.
71. A custodial trustee shall pay to the beneficiary or
8expend for the beneficiary’s use and benefit so much or all
9of the custodial trust property as the beneficiary while not
10incapacitated may direct from time to time.
112. If the beneficiary is incapacitated, the custodial
12trustee shall expend so much or all of the custodial trust
13property as the custodial trustee considers advisable for the
14use and benefit of the beneficiary and individuals who are
15legally entitled to support by the beneficiary. Expenditures
16may be made in the manner, when, and to the extent that the
17custodial trustee determines suitable and proper, without court
18order and without regard to other support, income, or property
19of the beneficiary.
203. To facilitate distributions to the beneficiary, a
21custodial trustee may establish checking, savings, or other
22similar accounts of reasonable amounts under which either
23the custodial trustee or the beneficiary, if authorized, may
24withdraw funds from, or draw checks against, the accounts in
25amounts authorized by the custodian. Funds withdrawn from,
26or checks written against, the account by the beneficiary are
27distributions of custodial trust property by the custodial
28trustee to the beneficiary.
29 Sec. 10. NEW SECTION. 633F.10 Determination of incapacity
30— effect.
311. The custodial trustee shall administer the custodial
32trust as for an incapacitated beneficiary in any of the
33following circumstances:
34a. The custodial trust was created under section 633F.5.
35b. The transferor has so directed in the instrument creating
-8-1the custodial trust.
2c. The custodial trustee has determined that the beneficiary
3is incapacitated.
42. A custodial trustee may determine that the beneficiary is
5incapacitated in reliance upon any of the following:
6a. Previous direction or authority given by the beneficiary
7while not incapacitated, including direction or authority
8pursuant to a durable power of attorney.
9b. Written documentation from the beneficiary’s physician.
10c. Other persuasive evidence.
113. If a custodial trustee for an incapacitated beneficiary
12reasonably concludes that the beneficiary’s incapacity has
13ceased, or that circumstances concerning the beneficiary’s
14ability to manage property and business affairs have
15changed since the creation of a custodial trust directing
16administration as for an incapacitated beneficiary, the
17custodial trustee may administer the trust as for a beneficiary
18who is not incapacitated.
194. On petition of the beneficiary, the custodial trustee, or
20other person interested in the custodial trust property or the
21welfare of the beneficiary, the court shall determine whether
22the beneficiary is incapacitated.
235. Absent determination of incapacity of the beneficiary
24under subsection 2 or 4, a custodial trustee who has reason to
25believe that the beneficiary is incapacitated shall administer
26the custodial trust in accordance with the provisions of this
27chapter applicable to an incapacitated beneficiary.
286. Incapacity of a beneficiary does not terminate the
29custodial trust, any designation of a successor custodial
30trustee, rights or powers of the custodial trustee, or any
31immunities of third persons acting on instructions of the
32custodial trustee.
33 Sec. 11. NEW SECTION. 633F.11 Exemption of third person
34from liability.
351. A third person in good faith and without a court order
-9-1may act on instructions of, or otherwise deal with, a person
2purporting to make a transfer as, or purporting to act in the
3capacity of, a custodial trustee.
42. A third person who receives instructions from the
5purported custodial trustee may require such custodial trustee
6to provide proof of their identity and a certification of trust
7or copies of those excerpts from the original trust instrument
8and amendments to the original trust instrument which designate
9the currently acting custodial trustee and confer upon the
10custodial trustee the power to act in the pending transaction.
113. If a certification of trust is provided, it must do all
12of the following:
13a. State the names of all the currently acting trustees.
14b. If there is more than one currently acting trustee,
15state whether the trustees may act individually or must act by
16majority decision or must act by unanimous decision.
17c. State that the trust has not been revoked, modified, or
18amended in any manner that would cause the representations in
19the certification of trust to be incorrect.
20d. Be signed by a currently acting trustee or the attorney
21of a currently acting trustee.
22e. Be dated and certified under penalty of perjury and
23pursuant to the laws of the state of Iowa that it is true and
24correct, or subscribed and sworn to under penalty of perjury
25before a notary public as provided in chapter 9B.
26f. A third person who acts in reliance upon the information
27provided by the custodial trustee, after taking reasonable
28steps to verify the identity of the custodial trustee and
29without knowledge that the representations contained in the
30certification are incorrect, is not liable to any person
31for so acting and may assume without inquiry the existence
32of the facts contained in the certification. The period of
33time to verify the identity of the trustee shall not exceed
34ten business days from the date the third person received
35the requested information. Knowledge shall not be inferred
-10-1solely from the fact that a copy of all or part of the trust
2instrument is held by the third person relying upon the
3trust certification. A transaction, and a lien created by a
4transaction, entered into by the custodial trustee and a person
5acting in reliance upon a certification of trust is enforceable
6against the trust assets.
74. A third person who makes a demand for information from
8the custodial trustee beyond that set forth in subsection
92 shall be liable for damages, including attorney fees,
10incurred as a result of the refusal to accept the information
11provided, if the court determines that the third person acted
12unreasonably in requesting such additional information.
135. If a custodial trustee has provided the information set
14forth in subsection 2, and the third person refuses to follow
15the instructions provided by the custodial trustee within the
16time period set forth in subsection 4, the custodial trustee
17may bring an action under this subsection and the court may
18award any or all of the following to the custodial trustee:
19a. Any damages sustained by the trust.
20b. The costs of the action.
21c. A penalty in an amount of not less than five hundred
22dollars and not more than ten thousand dollars.
23d. Reasonable attorney fees, based on the value of the time
24reasonably expended by the attorney and not on the amount of
25the recovery on behalf of the custodial trustee.
266. An action shall not be brought under this subsection more
27than one year after the date of the occurrence of the alleged
28violation.
29 Sec. 12. NEW SECTION. 633F.12 Liability to third person.
301. A claim based on a contract entered into by a custodial
31trustee acting in a fiduciary capacity, an obligation arising
32from the ownership or control of custodial trust property, or
33a tort committed in the course of administering the custodial
34trust, may be asserted by a third person against the custodial
35trust property by proceeding against the custodial trustee in a
-11-1fiduciary capacity, whether or not the custodial trustee or the
2beneficiary is personally liable.
32. A custodial trustee is not personally liable to a third
4person for any of the following:
5a. On a contract properly entered into in a fiduciary
6capacity unless the custodial trustee fails to reveal that
7capacity or to identify the custodial trust in the contract.
8b. For an obligation arising from control of custodial
9trust property or for a tort committed in the course of the
10administration of the custodial trust unless the custodial
11trustee is personally at fault.
123. A beneficiary is not personally liable to a third
13person for an obligation arising from beneficial ownership of
14custodial trust property or for a tort committed in the course
15of administration of the custodial trust unless the beneficiary
16is personally in possession of the custodial trust property
17giving rise to the liability or is personally at fault.
184. Subsections 2 and 3 do not preclude actions or
19proceedings to establish liability of the custodial trustee or
20beneficiary to the extent the person sued is protected as the
21insured by liability insurance.
22 Sec. 13. NEW SECTION. 633F.13 Declination, resignation,
23incapacity, death, or removal of custodial trustee — designation
24of successor custodial trustee.
251. Before accepting the custodial trust property, a person
26designated as custodial trustee may decline to serve by
27notifying the person who made the designation, the transferor,
28or the transferor’s legal representative. If an event giving
29rise to a transfer has not occurred, the substitute custodial
30trustee designated under section 633F.3 becomes the custodial
31trustee, or, if a substitute custodial trustee has not been
32designated, the person who made the designation may designate
33a substitute custodial trustee pursuant to section 633F.3.
34In other cases, the transferor or the transferor’s legal
35representative may designate a substitute custodial trustee.
-12- 12. A custodial trustee who has accepted the custodial trust
2property may resign by doing all of the following:
3a. Delivering written notice to a successor custodial
4trustee, if any, the beneficiary and, if the beneficiary is
5incapacitated, to the beneficiary’s legal representative, if
6any.
7b. Transferring or registering, or recording an appropriate
8instrument relating to, the custodial trust property, in the
9name of, and delivering the records to, the successor custodial
10trustee identified under subsection 3.
113. If a custodial trustee or successor custodial trustee
12is ineligible, resigns, dies, or becomes incapacitated, the
13successor designated under section 633F.2, subsection 7, or
14section 633F.3 becomes custodial trustee. If there is no
15effective provision for a successor, the beneficiary if not
16incapacitated, or the legal representative of an incapacitated
17beneficiary, may designate a successor custodial trustee. If
18the beneficiary is not incapacitated, but fails to act within
19ninety days after the ineligibility, resignation, death, or
20incapacity of the custodial trustee, or if the beneficiary
21is incapacitated and the beneficiary’s legal representative
22fails to act within ninety days after the ineligibility,
23resignation, death, or incapacity of the custodial trustee,
24then the beneficiary’s legal representative becomes successor
25custodial trustee. If the beneficiary does not have a legal
26representative or the legal representative fails to act, the
27resigning custodial trustee may designate a successor custodial
28trustee.
294. If a successor custodial trustee is not designated
30pursuant to subsection 3, the transferor, the legal
31representative of the transferor or of the custodial trustee,
32a beneficiary’s legal representative and if none, a member of
33the beneficiary’s family, a person interested in the custodial
34trust property may petition the court to designate a successor
35custodial trustee.
-13- 15. A custodial trustee who declines to serve or resigns,
2or the legal representative of a deceased or incapacitated
3custodial trustee, as soon as practicable, shall put the
4custodial trust property and records in the possession and
5control of the successor custodial trustee. The successor
6custodial trustee may enforce the obligation to deliver
7custodial trust property and records and becomes responsible
8for each item as received.
96. A substitute custodial trustee designated under section
10633F.3, the beneficiary, the beneficiary’s legal representative
11and if none, a member of the beneficiary’s family, a person
12interested in the custodial trust property, may petition the
13court to remove the custodial trustee for cause and designate
14a successor custodial trustee, to require the custodial
15trustee to furnish a bond or other security for the faithful
16performance of fiduciary duties, or for other appropriate
17relief.
18 Sec. 14. NEW SECTION. 633F.14 Expenses, compensation, and
19bond of custodial trustee.
20Except as otherwise provided in the instrument creating the
21custodial trust, in an agreement with the beneficiary, or by
22court order, all of the following are true:
23a. A custodial trustee is entitled to reimbursement from
24custodial trust property for reasonable expenses incurred in
25the performance of fiduciary services.
26b. A custodial trustee has a noncumulative election, to be
27made no later than six months after the end of each calendar
28year, to charge a reasonable compensation for fiduciary
29services performed during that year.
30c. A custodial trustee need not furnish a bond or other
31security for the faithful performance of fiduciary duties.
32 Sec. 15. NEW SECTION. 633F.15 Reporting and accounting
33by custodial trustee — determination of liability of custodial
34trustee.
351. Upon the acceptance of custodial trust property, the
-14-1custodial trustee shall provide a written statement describing
2the custodial trust property and shall thereafter provide a
3written statement of the administration of the custodial trust
4property as follows:
5a. Once each year.
6b. Upon request at reasonable times, but not more than
7quarterly during any calendar year, by the beneficiary or the
8beneficiary’s legal representative.
9c. Upon resignation or removal of the custodial trustee.
10d. Upon termination of the custodial trust.
112. The statements must be provided to the beneficiary
12or to the beneficiary’s legal representative, if any. Upon
13termination of the beneficiary’s interest, the custodial
14trustee shall furnish a current statement to the person to whom
15the custodial trust property is to be delivered.
163. A substitute or successor custodial trustee designated
17under section 633F.3, a beneficiary, the beneficiary’s legal
18representative, a member of the beneficiary’s family, or a
19person interested in the custodial trust property may petition
20the court for an accounting by the custodial trustee or the
21custodial trustee’s legal representative.
224. A successor custodial trustee may petition the court for
23an accounting by a predecessor custodial trustee.
245. In an action or proceeding under this chapter or in any
25other proceeding, the court may require or permit the custodial
26trustee or the custodial trustee’s legal representative to
27account. The custodial trustee or the custodial trustee’s
28legal representative may petition the court for approval of
29final accounts.
306. If a custodial trustee is removed, the court shall
31require an accounting and order delivery of the custodial trust
32property and records to the successor custodial trustee and
33the execution of all instruments required for transfer of the
34custodial trust property.
357. On petition of the custodial trustee or any person who
-15-1could petition for an accounting, the court, after notice to
2interested persons, may issue instructions to the custodial
3trustee or review the propriety of the acts of a custodial
4trustee or the reasonableness of compensation determined by the
5custodial trustee for the services of the custodial trustee or
6others.
7 Sec. 16. NEW SECTION. 633F.16 Limitations of action against
8custodial trustee.
91. Except as provided in subsection 3, unless previously
10barred by adjudication, consent, or limitation, a claim for
11relief against a custodial trustee for accounting or breach of
12duty is barred as to a beneficiary, a person to whom custodial
13trust property is to be paid or delivered, or the legal
14representative of an incapacitated or deceased beneficiary or
15payee who either:
16a. Has received an accounting or other statement adequately
17disclosing the matter unless an action or proceeding to assert
18the claim is commenced within one year after receipt of such
19accounting or statement.
20b. Has not received an accounting or other statement
21adequately disclosing the matter unless an action or proceeding
22to assert the claim is commenced within three years after the
23termination of the custodial trust.
242. For the purpose of subsection 1, a beneficiary or a
25person to whom custodial trust property is to be paid or
26delivered, is deemed to have received an accounting or other
27statement, in the following instances:
28a. In the case of an adult who is reasonably capable of
29understanding the accounting or other statement if it is
30personally received by such person.
31b. In the case of an adult who is not reasonably capable
32of understanding the accounting or other statement, if it is
33received by such adult person’s legal representative, and if
34none, then if received by a guardian ad litem, court visitor,
35or other person appointed for this purpose.
-16- 1c. In the case of a minor, if it is received by a person who
2has authority to consent on the minor’s behalf, and if none,
3then if received by a guardian ad litem, court visitor, or
4other person appointed for this purpose.
53. Except as provided in subsection 4, a claim for relief to
6recover from a custodial trustee for fraud, misrepresentation,
7or concealment related to the final settlement of the custodial
8trust or concealment of the existence of the custodial trust,
9is barred unless an action or proceeding to assert the claim
10is commenced within five years after the termination of the
11custodial trust.
124. Unless an accounting or other statement adequately
13disclosing the matter was provided as set forth above, a claim
14for relief is not barred by this section if the claimant is or
15was any of the following:
16a. A minor, until the earlier of one year after the claimant
17becomes an adult or dies; an incapacitated adult, until the
18earliest of one year after the following:
19(1) The appointment of a legal representative.
20(2) The removal of the incapacity.
21(3) The death of the claimant.
22b. An adult, now deceased, who was not incapacitated, until
23one year after the claimant’s death.
24 Sec. 17. NEW SECTION. 633F.17 Distribution on termination.
251. Upon termination of a custodial trust, the custodial
26trustee shall transfer the unexpended custodial trust property:
27a. To the beneficiary, if not incapacitated or deceased.
28b. To the beneficiary’s legal representative or other
29recipient designated by the court for an incapacitated
30beneficiary.
31c. Upon the beneficiary’s death, in the following order:
32(1) As last directed in a writing signed by the deceased
33beneficiary while not incapacitated and received by the
34custodial trustee during the life of the deceased.
35(2) As designated in the instrument creating the custodial
-17-1trust.
2(3) To the estate of the deceased beneficiary.
32. The direction to the custodial trustee by a beneficiary
4who is not incapacitated, for distribution on termination
5of the custodial trust may be in any written form clearly
6identifying the distributee and may be substantially similar
7to the following:
8I, ________________ (name of beneficiary) hereby direct
9_____________________ (name of custodial trustee) as custodial
10trustee, to transfer and pay the unexpended balance of
11the custodial trust property of which I am beneficiary to
12__________________ as distributee on the termination of the
13trust at my death. In the event of the prior death of _________
14above named as distributee, I designate ________________ as
15distributee of the custodial trust property.
16Signed ______________________ (signature of beneficiary).
17Date ____________________
18Receipt Acknowledged: ____________________(signature of
19Custodial Trustee)
20Date ___________________
213. If, when the custodial trust would otherwise terminate,
22the distributee is incapacitated, the custodial trust continues
23for the use and benefit of the distributee as beneficiary until
24the incapacity is removed or the custodial trust is otherwise
25terminated.
264. Death of a beneficiary does not terminate the power of
27the custodial trustee to discharge obligations of the custodial
28trustee or beneficiary incurred before the termination of the
29custodial trust.
30 Sec. 18. NEW SECTION. 633F.18 Methods and forms for
31creating custodial trusts.
321. If a transaction, including a declaration with respect
33to or a transfer of specific property, otherwise satisfies
34applicable law, the criteria of section 633F.2 are satisfied
35by any of the following:
-18- 1a. The execution and either delivery to the custodial
2trustee or recording of an instrument in substantially the
3following form:
4TRANSFER UNDER THE IOWA UNIFORM CUSTODIAL TRUST ACT
5I, __________ (name of transferor or name and representative
6capacity if a fiduciary), transfer to __________ (name of
7trustee other than transferor), as custodial trustee for
8__________ (name of beneficiary) as beneficiary and __________
9as distributee on termination of the trust in absence of
10direction by the beneficiary under the Iowa Uniform Custodial
11Trust Act, the following:
12__________ (Insert a description of the custodial trust
13property legally sufficient to identify and transfer each item
14of property).
15If __________ (name of trustee other than transferor)
16declines to serve or ceases to serve as custodial trustee for
17any reason, then I designate __________ (name of substitute
18or successor custodial trustee) as substitute or successor
19custodial trustee.
20Dated:_______________
21Signature: _____________________
22b. The execution and the recording or giving notice of its
23execution to the beneficiary of an instrument in substantially
24the following form:
25DECLARATION OF TRUST UNDER IOWA UNIFORM CUSTODIAL TRUST ACT
26I, __________ (name of owner of property), declare that
27henceforth I hold as custodial trustee for __________ (name of
28beneficiary other than transferor) as beneficiary and ________
29as distributee on termination of the trust in absence of
30direction by the beneficiary under the Iowa Uniform Custodial
31Trust Act, the following: __________ (Insert a description of
32the custodial trust property legally sufficient to identify
33and transfer each item of property). If I cease to serve as
34custodial trustee for any reason, then I designate __________
35(name of substitute or successor custodial trustee) as
-19-1successor custodial trustee.
2Dated: ____________________
3Signature: ___________________________
42. Customary methods of transferring or evidencing
5ownership of property may be used to create a custodial trust,
6including any of the following:
7a. Registration of a security in the name of a trust
8company, an adult other than the transferor, or the transferor
9if the beneficiary is other than the transferor, designated in
10substance “as custodial trustee for ________________ (name of
11beneficiary) under the Iowa Uniform Custodial Trust Act”.
12b. Delivery of a certificated security, or a document
13necessary for the transfer of an uncertificated security,
14together with any necessary endorsement, to an adult other than
15the transferor or to a trust company as custodial trustee,
16accompanied by an instrument in substantially the form
17prescribed in subsection 1, paragraph “a”.
18c. Payment of money or transfer of a security held in the
19name of a broker or a financial institution or its nominee to a
20broker or financial institution for credit to an account in the
21name of a trust company, an adult other than the transferor,
22or the transferor if the beneficiary is other than the
23transferor, designated in substance: “as custodial trustee for
24________________ (name of beneficiary) under the Iowa Uniform
25Custodial Trust Act”.
26d. Registration of ownership of a life or endowment
27insurance policy or annuity contract with the issuer in the
28name of a trust company, an adult other than the transferor,
29or the transferor if the beneficiary is other than the
30transferor, designated in substance: “as custodial trustee for
31________________ (name of beneficiary) under the Iowa Uniform
32Custodial Trust Act”.
33e. Delivery of a written assignment to an adult other
34than the transferor or to a trust company whose name in the
35assignment is designated in substance by the words: “as
-20-1custodial trustee for ________________ (name of beneficiary)
2under the Iowa Uniform Custodial Trust Act”.
3f. Irrevocable exercise of a power of appointment, pursuant
4to its terms, in favor of a trust company, an adult other than
5the donee of the power, or the donee who holds the power if
6the beneficiary is other than the donee, whose name in the
7appointment is designated in substance: “as custodial trustee
8for (name of beneficiary) under the Iowa Uniform Custodial
9Trust Act”.
10g. Delivery of a written notification or assignment of a
11right to future payment under a contract to an obligor which
12transfers the right under the contract to a trust company,
13an adult other than the transferor, or the transferor if the
14beneficiary is other than the transferor, whose name in the
15notification or assignment is designated in substance: “as
16custodial trustee for ________________ (name of beneficiary)
17under the Iowa Uniform Custodial Trust Act”.
18h. Execution, delivery, and recordation of a conveyance of
19an interest in real property in the name of a trust company,
20an adult other than the transferor, or the transferor if
21the beneficiary is other than the transferor, designated in
22substance: “as custodial trustee for ________________ (name of
23beneficiary) under the Iowa Uniform Custodial Trust Act”.
24i. Issuance of a certificate of title by an agency of a
25state or of the United States which evidences title to tangible
26personal property:
27(1) Issued in the name of a trust company, an adult other
28than the transferor, or the transferor if the beneficiary
29is other than the transferor, designated in substance: “as
30custodial trustee for ________________ (name of beneficiary)
31under the Iowa Uniform Custodial Trust Act”.
32(2) Delivered to a trust company or an adult other
33than the transferor or endorsed by the transferor to that
34person, designated in substance: “as custodial trustee for
35________________ (name of beneficiary) under the Iowa Uniform
-21-1Custodial Trust Act”.
2j. Execution and delivery of an instrument of gift to a
3trust company or an adult other than the transferor, designated
4in substance: “as custodial trustee for ________________ (name
5of beneficiary) under the Iowa Uniform Custodial Trust Act”.
6 Sec. 19. NEW SECTION. 633F.19 Applicable law.
71. This chapter applies to a transfer or declaration
8creating a custodial trust that refers to this chapter if,
9at the time of the transfer or declaration, the transferor,
10beneficiary, or custodial trustee is a resident of or has its
11principal place of business in this state or custodial trust
12property is located in this state. The custodial trust remains
13subject to this chapter despite a later change in residence or
14principal place of business of the transferor, beneficiary, or
15custodial trustee, or removal of the custodial trust property
16from this state.
172. A transfer made pursuant to an act of another state
18substantially similar to this chapter is governed by the law of
19that state and may be enforced in this State.
20 Sec. 20. NEW SECTION. 633F.20 Uniformity of application
21and construction.
22This chapter shall be applied and construed to effectuate
23its general purpose to make uniform the law with respect to the
24subject of this chapter among states enacting it.
25 Sec. 21. NEW SECTION. 633F.21 Short title.
26This chapter shall be known and may be cited as the “Iowa
27Uniform Custodial Trust Act”.
28DIVISION II
29CONFORMING CHANGES
30 Sec. 22. Section 232D.503, Code 2021, is amended by adding
31the following new subsection:
32 NEW SUBSECTION. 6. If the court orders termination of a
33guardianship established under this chapter and the guardian
34has custody of any assets of a protected person who is a minor
35or was a minor at the time of the minor’s death, the court
-22-1shall order delivery of the minors assets to the minor or to a
2fiduciary acting under one or more of the following:
3a. A conservatorship established for the minor.
4b. A personal representative appointed as a result of the
5minor’s death.
6c. A uniform transfer to minor account established for the
7minor pursuant to chapter 565B or the laws of any other state.
8d. A uniform custodial trust account established for the
9minor pursuant to chapter 633F or the laws of any other state.
10e. A college savings plan account established for the minor
11pursuant to Internal Revenue Code section 529 or Chapter 12D
12or the laws of any other state.
13f. An ABLE account established for the minor with
14disabilities pursuant to Internal Revenue Code section 529A or
15chapter 12I or the laws of any other state.
16 Sec. 23. Section 565B.6, subsection 3, paragraph c, Code
172021, is amended to read as follows:
18c. The transfer is authorized by the court if all transfers,
19including the transfer to be made and prior transfers, exceed
20twenty-five fifty thousand dollars in value. Transfers by a
21personal representative, trustee, or conservator shall not
22be aggregated, but each personal representative, trustee, or
23conservator shall be treated separately.
24 Sec. 24. Section 633.108, Code 2021, is amended to read as
25follows:
26633.108 Small distributions to minors — payment.
271. Whenever a minor person becomes entitled under the terms
28of a will to a bequest or legacy, or to a share of the estate of
29an intestate, and the value of the bequest, legacy, or share
30does not exceed the sum of twenty-five fifty thousand dollars,
31the personal representative may pay the bequest, legacy, or
32share to a custodian under any uniform transfers to minors
33Act interest to a fiduciary acting under one or more of the
34accounts referenced in subsection 2.
352. Receipt by the custodian, when presented to the court or
-23-1filed with the report of distribution of the fiduciary, shall
2have the same force and effect as though the payment had been
3made to a duly appointed and qualified conservator for the
4minor. person entitled to them:
5a. A uniform transfer to minor account established for the
6minor pursuant to chapter 565B or the laws of any other state.
7b. A uniform custodial trust account established for the
8minor pursuant to chapter 633F or the laws of any other state.
9c. A college savings plan account established for the minor
10pursuant to Internal Revenue Code section 529 or chapter 12D.
11d. An ABLE account established for the minor with
12disabilities pursuant to Internal Revenue Code section 529A or
13chapter 12I.
14 Sec. 25. Section 633.675, Code 2021, is amended by adding
15the following new subsection:
16 NEW SUBSECTION. 3A. The court shall terminate a
17conservatorship if it finds by clear and convincing evidence
18all of the following:
19a. The value of the protected person’s property is
20insufficient to justify the cost of administration.
21b. That continued administration of the conservatorship is
22not in the best interest of the protected person.
23c. That a reasonable alternative exists under section
24633.678 for managing the protected person’s assets.
25 Sec. 26. Section 633.678, Code 2021, is amended to read as
26follows:
27633.678 Delivery of assets.
281. Upon the termination of a conservatorship, all assets of
29the conservatorship shall be delivered, under direction of the
30court, to as ordered by the court to any of the following:
31a. Tothe person or persons entitled to them.
32b. To a custodian under a uniform transfers to minor account
33established for the protected person pursuant to chapter 565B
34or the laws of any other state.
35c. To a custodial trustee under a uniform custodial trust
-24-1account established for the protected person pursuant to
2chapter 633F or the laws of any other state.
3d. To an account owner or participant under a college
4savings plan account established for the protected person
5pursuant to Internal Revenue Code section 529 or chapter 12D
6or the laws of any other state.
7e. To the account owner under an ABLE account established
8for the protected person with disabilities pursuant to Internal
9Revenue Code section 529A or chapter 12I or the laws of any
10other state.
112. Delivery of the assets of an adult protected person under
12subsection 1, paragraphs “b” through “e”, shall have the same
13force and effect as if delivery had been made directly to the
14person or persons entitled to them. Delivery of the assets of
15a minor protected person under subsection 1, paragraphs “b”
16 through “e”, shall have the same force and effect as if delivery
17had been made to the protected person after attaining majority.
18 Sec. 27. Section 633.681, Code 2021, is amended to read as
19follows:
20633.681 Assets of minor ward exhausted Exhausted or minimal
21assets of minor protected person.
221. When the assets of a minor ward’s protected person’s
23 conservatorship are exhausted or consist of personal property
24only of an aggregate value not in excess of twenty-five fifty
25 thousand dollars, the court, upon application or upon its
26own motion, may terminate the conservatorship. The order
27for termination shall direct the conservator to deliver any
28property remaining after the payment of allowed claims and
29expenses of administration to a custodian under any uniform
30transfers to minors Act. fiduciary acting under one or more of
31the following accounts:
32a. A uniform transfer to minor account established for the
33minor pursuant to chapter 565B or the laws of any other state.
34b. A uniform custodial trust account established for the
35minor pursuant to chapter 633F or the laws of any other state.
-25- 1c. A college savings plan account established for the minor
2pursuant to Internal Revenue Code section 529 or chapter 12D
3or the laws of any other state.
4d. An ABLE account established for the minor with
5disabilities pursuant to Internal Revenue Code section 529A or
6chapter 12I or the laws of any other state.
72. Such delivery shall have the same force and effect as
8if delivery had been made to the ward protected person after
9attaining majority.
10EXPLANATION
11The inclusion of this explanation does not constitute agreement with
12the explanation’s substance by the members of the general assembly.
13This bill establishes the Iowa uniform custodial trust Act
14and provides definitions. The Iowa uniform custodial trust
15Act is a statutory standby inter vivos trust for individuals
16represented by attorneys engaged in general rather than
17specialized probate practice.
18The bill allows persons, competent to transfer property,
19to create custodial trusts for the benefit of themselves
20or others, with the beneficial interest in custodial trust
21property in the beneficiary and not in the custodial trustee.
22The bill allows any kind of property, real or personal,
23tangible or intangible, to be made the subject of a transfer
24to a custodial trustee for the benefit of a beneficiary. A
25person may create a custodial trust by a written transfer of
26the property to another person, evidenced by registration
27or by other instrument of transfer executed and naming as
28beneficiary an individual who may be the transferor, in
29which the transferee is designated as custodial trustee, or a
30person may create a custodial trust of property by a written
31declaration, evidenced by registration of the property or by
32other instrument of declaration executed and describing the
33property and naming as beneficiary an individual other than the
34declarant, in which the declarant as titleholder is designated,
35in substance, as custodial trustee. The bill provides that a
-26-1registration or other declaration of trust for the sole benefit
2of the declarant is not a valid custodial trust. Title is
3given to the custodial trustee and the beneficial interest
4is given to the beneficiary. A nonincapacitated beneficiary
5or legal representative of an incapacitated beneficiary may
6terminate a custodial trust by delivering the custodial trustee
7a written notice declaring termination. A successor custodial
8trustee may be designated in the trust document and any
9person may augment the trust property by the addition of other
10property.
11The bill provides how the custodial trustee may make future
12payment or transfer the position of custodial trustee. A
13person who is able to designate the recipient of property
14payable or transferable upon a future event may create a
15custodial trust by designating in writing the recipient. A
16designation of successor trustee may be made in a will, a
17trust, a multiple-party account, an insurance policy, an
18instrument exercising a power of appointment, or a writing
19designating a beneficiary of contractual rights. The
20designation can also be delivered or registered to the
21fiduciary, payor, insurer, or obligor of the future right.
22The bill provides a form and effect of receipt and acceptance
23by custodial trustee. The form provides the name of the
24custodial trustee, the name of the beneficiary, the property
25the trust consists of, and date and signature of the custodial
26trustee. It also provides that upon accepting custodial trust
27property, the custodial trustee is subjected to personal
28jurisdiction of the court with respect to any matter relating
29to the custodial trust.
30The bill provides that unless otherwise directed by an
31instrument designating a custodial trustee, a person, who holds
32property of or owes a debt to an incapacitated individual, may
33make a transfer to a beneficiary’s legal representative and
34if none, to a member of the beneficiary’s family, or a trust
35company, as custodial trustee for the use and benefit of the
-27-1incapacitated individual. If the value of the property or the
2debt exceeds $50,000, the transfer is not effective unless
3authorized by the court. A signed written acknowledgment of
4delivery by a custodial trustee is a sufficient receipt and
5discharge for property transferred to the custodial trustee.
6The bill provides that a custodial trust cannot create
7beneficial interests for multiple beneficiaries. The bill
8provides that all custodial property held by the same custodial
9trustee for a single beneficiary may be administered as a
10single custodial trust.
11The bill provides general duties of a custodial trustee
12which include: registering or recording the instrument vesting
13title to custodial trust property, if appropriate; following
14the directions of the nonincapacitated beneficiary in the
15management, control, investment, or retention of the custodial
16trust property; observing the prudent investment standards set
17forth in Code section 633.123 if there is not clear directives
18from the beneficiary prior to being incapacitated; retaining
19any custodial trust property received from the transferor; and
20controlling, collecting, holding, managing, investing, and
21reinvesting custodial trust property. The bill provides that
22if a custodial trustee has a special skill or expertise or is
23named custodial trustee on the basis of representation of a
24special skill or expertise, the custodial trustee shall use
25that skill or expertise in making decisions for the custodial
26trust property. The bill provides that a custodial trustee
27at all times shall keep custodial trust property of which the
28custodial trustee has control separate from all other property
29in a manner sufficient to identify it clearly as custodial
30trust property of the beneficiary. The bill provides that a
31custodial trustee shall keep records of all transactions with
32respect to custodial trust property, including information
33necessary for the preparation of tax returns, and shall make
34the records and information available at reasonable times to
35the beneficiary or legal representative of the beneficiary.
-28-1Furthermore, the exercise of a durable power of attorney for
2an incapacitated beneficiary is not effective to terminate or
3direct the administration or distribution of a custodial trust.
4The bill provides that the custodial trustee has all the
5rights and powers over custodial trust property which a
6person has over individually owned property which may only be
7exercised in a fiduciary capacity.
8The bill provides how the custodial trust may be used. If
9the beneficiary is not incapacitated, the custodial trustee
10shall pay or expend for the beneficiary’s use or benefit the
11amount of the custodial trust property at the beneficiary’s
12directive. If the beneficiary is incapacitated, the custodial
13trustee shall be allowed to distribute the amount of the
14custodial trust property as deemed advisable for the use and
15benefit of the beneficiary and individuals who are entitled
16to support by the beneficiary. The custodial trustee has
17discretion in determining the manner, when, and to the
18extent that the expenditures are made without court order and
19without regard to other support, income, or property of the
20beneficiary.
21The bill provides that a custodial trustee may determine
22a beneficiary incapacitated relying upon previous direction
23or authority given by the beneficiary while not incapacitated
24including direction or authority pursuant to a durable power
25of attorney; written documentation from the beneficiary’s
26physician; on the petition of the beneficiary, the custodial
27trustee, or other interested person in the custodial trust
28property, the court may determine whether the beneficiary is
29incapacitated; or other persuasive evidence. The bill also
30provides that if a custodial trustee deems that a beneficiary’s
31incapacity has ceased or that the circumstances concerning
32the beneficiary’s ability to manage the property and business
33affairs have changed, the custodial trustee may administer
34the trust as for a beneficiary who is not incapacitated. The
35bill provides when a determination of incapacity has not been
-29-1made, a custodial trustee who has reason to believe that the
2beneficiary is incapacitated shall administer the custodial
3trust in accordance with provisions of the bill applicable
4to an incapacitated beneficiary. A beneficiary being found
5to be incapacitated does not terminate the custodial trust,
6any designation of the successor custodial trustee, rights
7or powers of the custodial trustee, or any immunities of a
8third-person action on the instructions of the custodial
9trustee.
10The bill provides that a third party acting in good faith
11has no need to determine the custodial trustee’s authority to
12bind the beneficiary with respect to property and investment
13matters. The bill generally limits the claims of third
14parties to recourse against the custodial property, with the
15beneficiary insulated against personal liability unless the
16beneficiary is personally at fault and the custodial trustee is
17similarly insulated unless the custodial trustee is personally
18at fault or failed to disclose the custodial capacity when
19entering into a contract.
20The bill provides for declination, resignation, incapacity,
21death, or removal of the custodial trustee. A custodial
22trustee may decline the appointment by notifying the person
23who made the designation prior to accepting the custodial
24trust property. If a substitute custodial trustee has not
25been appointed, the person who made the initial designation
26may designate a substitute custodial trustee who becomes
27the custodial trustee. Otherwise, the transferor’s legal
28representative may designate a substitute custodial trustee.
29A custodial trustee, who has accepted the custodial trust
30property, may resign by delivering written notice to a
31successor custodial trustee, the beneficiary, and, if the
32beneficiary is incapacitated, to the beneficiary’s legal
33representative, and transferring, registering, or recording an
34appropriate instrument relating to the custodial trust property
35in the name of, and delivering the records to, the successor
-30-1custodial trustee.
2The bill provides that if the custodial trustee or successor
3custodial trustee dies, resigns, or becomes incapacitated,
4the successor custodial trustee designated becomes the
5custodial trustee. If the successor is not identified,
6the competent beneficiary or the legal representative of an
7incapacitated beneficiary may designate a successor custodial
8trustee. If the beneficiary fails to act in 90 days, the
9legal representative becomes the custodial trustee. If the
10incapacitated beneficiary does not have a legal representative
11or the legal representative fails to act, the resigning
12custodial trustee may designate a successor custodial trustee.
13The court may also be petitioned to designate a successor
14custodial trustee if a successor custodial trustee is not
15designated.
16The bill provides that a substitute custodial trustee,
17the beneficiary, the beneficiary’s legal representative, and
18if none, a member of the beneficiary’s family, or a person
19interested in the custodial trust property, may petition the
20court to remove the custodial trustee for cause and designate
21a successor custodial trustee, to require the custodial
22trustee to furnish a bond or other security for the faithful
23performance of fiduciary duties, or for other appropriate
24relief.
25The bill provides means of monitoring and enforcing the
26custodial trust including provisions requiring the custodial
27trustee to keep the beneficiary informed, requiring accounting
28by the custodial trustee, providing protection for the
29custodial trustee by the statutes of limitation on proceedings
30against the custodial trustee, and relating to the distribution
31of the assets on termination of the custodial trust.
32The bill provides that upon termination of the custodial
33trust, the custodial property shall be transferred to
34the beneficiary, if not incapacitated or deceased; to
35the beneficiary’s legal representative or other recipient
-31-1designated by the court for an incapacitated beneficiary;
2or upon the death of the beneficiaries as last directed in
3a writing signed by the beneficiary while not incapacitated
4and received by the custodial trustee prior to the death, as
5designated in the instrument that created the custodial trust,
6or to the estate of the deceased beneficiary.
7The bill provides the appropriate methods and forms to be
8used for creating a custodial trust. The bill provides that
9a custodial trust created under the bill remains subject to
10the bill despite a subsequent change in the residence of the
11transferor, the beneficiary, or the custodial trustee or the
12removal of the custodial trust property from the state of
13original location.
14The bill amends the Code section on termination and
15modification of guardianship (Code section 232D.503) and
16provides that if the court orders termination of a guardianship
17and the guardian has custody of the assets, the court must
18order delivery of the assets to the minor or fiduciary acting
19under one of the following accounts: uniform transfer to minor
20account established for the minor; a uniform custodial trust
21account established for the minor; an educational savings plan
22trust account; or an ABLE savings plan trust account.
23The bill amends the amount of money that may be transferred
24by a fiduciary and the small distribution from $25,000 to
25$50,000. The bill provides that a person is entitled to
26the small distributions to any of the following: a uniform
27transfer to minor account established for the minor; a
28uniform custodial trust account established for the minor; an
29educational savings plan trust account; or an ABLE savings plan
30trust account.
31The bill amends the cause for termination in a
32conservatorship by adding the following three conditions: the
33value of the protected person’s property is insufficient to
34justify the cost of administration involved; that continued
35administration of the conservatorship is not in the best
-32-1interest of the protected person; and that a reasonable
2alternative exists under Code section 633.678 for managing the
3protected person’s assets by clear and convincing evidence.
4Under current law, the court must only find that the basis for
5appointment provided in Code section 633.553 or 633.554 is not
6satisfied.
7The bill amends the Code section regarding the delivery of
8assets upon termination of a conservatorship by including that
9the delivery shall be made to the following parties as ordered
10by the court: to a custodian under a uniform transfers to a
11minor account; to a custodial trustee; to an account owner or
12participant under a educational savings plan trust account; or
13an ABLE savings plan trust account owner. Current Code only
14provides for the assets to the person or persons entitled to
15them.
16The bill provides that the order for termination shall
17direct the conservator to deliver any property remaining after
18the payment of allowed claims and expenses of administration
19to the fiduciary acting under one or more of the following
20accounts: a uniform transfer to minor account established for
21the minor; a uniform custodial trust account established for
22the minor; an educational savings plan trust account; or an
23ABLE savings plan trust account. The bill also increases the
24threshold at which a court may terminate a conservatorship for
25having minimal assets of a minor protected person from $25,000
26to $50,000.
-33-cm/jh