What Is the Custodian of an Estate?

By Lee Carroll

In regard to estate planning and trusts, the custodian of an estate is the person or trust company responsible for managing the money, real estate or other property placed in custodial trust for a minor child. The trust becomes part of the child’s personal estate. Any person who sets up a custodial trust for a child can name herself custodian or appoint someone else.


Most adults are eligible for custodianship. Any person who creates a custodial trust, known as the transferor, can be its custodian. If a parent creates the trust and acts as custodian, she should have a valid will naming a successor in the event she dies before the child reaches the age of majority. She should also name a substitute custodian in case she becomes unable to perform. Trust companies are professional organizations that specialize in estate asset management and usually require payment for their services.


The primary job of a custodian is to keep the property in trust safe until the child reaches the age of majority. The custodian should invest cautiously and secure professional upkeep of real property to prevent loss and encourage gain. In many cases, she can also distribute money from the account to the parents or guardian for the child’s welfare and enjoyment. A minor child must file an estate or income tax return if the property in trust accrues a certain amount of interest. The custodian receives tax information from the bank where the trust account is held and she must provide that information to the child’s guardian or parent. The custodian must never treat the property in trust as her own, even if she is the transferor, nor use it as collateral for any personal benefit. Custodial trusts are the sole property of the child. They are irrevocable, strictly governed and cannot be taken back by the transferor or used by the custodian for any reason. When the trust is closed, the custodian must provide an accounting of the assets. She may also be required to provide an accounting to the court periodically before the account is closed.

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Remedies for Poor Performance

If a custodian mismanages the property, she can be replaced. If the mishandling causes significant loss, she could face legal action. Older children, although the requirements and age vary by state, can sometimes petition the court for a replacement custodian without an adult’s approval. If the child is too young, any concerned adult can petition the court for a replacement custodian.


Custodial trusts end the day the child reaches the age of majority. At that time, the account is closed by the custodian and the child gains free access to the property. If the custodian cannot continue her service until the child reaches the age of majority, a replacement custodian is necessary. A custodian does not name her successor or replacement unless she is the transferor. If an appointed custodian can no longer perform, the court will appoint one based on the wishes of the transferor, specific instructions in the transferor’s will if she dies or, as a last resort, the discretion of the court. Custodial trusts are governed by hard and fast rules. There is generally no legal justification for a custodian to retain control over a trust after the child becomes an adult. If the child has a mental or physical handicap that seriously and permanently impairs his ability to care for himself before the trust is created, other means of providing for the child besides a custodial trust should be considered.

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What Is the Difference Between a Guardian Account & a Custodial Account?


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