1. (a) The custodial trustee shall administer the custodial trust as for an incapacitated beneficiary if:

   1. (1) the custodial trust was created under section 25 of this chapter;
   2. (2) the transferor has so directed in the instrument creating the custodial trust; or
   3. (3) the custodial trustee has determined that the beneficiary is incapacitated.

2. (b) A custodial trustee may determine that the beneficiary is incapacitated in reliance upon:

   1. (1) previous direction or authority given by the beneficiary while not incapacitated, including direction or authority under a durable power of attorney;
   2. (2) the certificate of the beneficiary's physician; or
   3. (3) other persuasive evidence.

3. (c) If a custodial trustee for an incapacitated beneficiary reasonably concludes that:

   1. (1) the beneficiary's incapacity has ceased; or

   2. (2) circumstances concerning the beneficiary's ability to manage property and business affairs have changed since the creation of a custodial trust directing administration as for an incapacitated beneficiary;

      the custodial trustee may administer the trust as for a beneficiary who is not incapacitated.

4. (d) Upon the petition of:

   1. (1) the beneficiary;
   2. (2) the custodial trustee; or

   3. (3) another person interested in:

      1. (A) the custodial trust property; or

      2. (B) the welfare of the beneficiary;

         the court shall determine whether the beneficiary is incapacitated.

5. (e) If:

   1. (1) the custodial trustee or a court has not determined that a beneficiary is incapacitated under subsection (b) or (d); and

   2. (2) the custodial trustee has reason to believe that the beneficiary is incapacitated;

      the custodial trustee shall administer the custodial trust in accordance with the provisions of this chapter applicable to an incapacitated beneficiary.

6. (f) Incapacity of a beneficiary does not terminate:

   1. (1) the custodial trust;
   2. (2) any designation of a successor custodial trustee;
   3. (3) rights or powers of the custodial trustee; or
   4. (4) any immunities of third persons acting on the instructions of the custodial trustee.

As added by P.L.3-2003, SEC.1.