2016 Indiana Code TITLE 30. TRUSTS AND FIDUCIARIES ARTICLE 4. TRUST CODE CHAPTER 3. RULES GOVERNING THE RIGHTS, POWERS, DUTIES, LIABILITIES, AND REMEDIES OF THE PARTIES TO A TRUST
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IC 30-4-3
Chapter 3. Rules Governing the Rights, Powers, Duties,
Liabilities, and Remedies of the Parties to a Trust
IC 30-4-3-1
Repealed
(Formerly: Acts 1971,
P.L.238-2005, SEC.63.)
P.L.416,
SEC.4.
Repealed
by
IC 30-4-3-1.3
Revocable trusts; powers of settlor; duties of trustees
Sec. 1.3. (a) While a trust is revocable and the settlor has the
capacity to revoke the trust:
(1) the rights of the beneficiaries are subject to the control of;
and
(2) the duties of the trustee are owed exclusively to;
the settlor.
(b) A settlor is presumed to have capacity for the purposes of
subsection (a) until the trustee receives from at least one (1) licensed
physician written certification that the settlor lacks the capacity to
revoke the trust.
(c) If a revocable trust has more than one (1) settlor, the duties of
the trustee are owed to all of the settlors having capacity to revoke
the trust.
(d) During the period the power may be exercised, the holder of
a power of withdrawal has the rights of a settlor of a revocable trust
under this section to the extent of the property subject to the power.
(e) If a trustee reasonably believes that a settlor of a revocable
trust lacks capacity to revoke the trust, the trustee is authorized to
provide information to the settlor's designated agent (even if the
designated agent is one (1) of two (2) or more trustees) or to any
beneficiary who, if the settlor were deceased, would be entitled to
distributions from the trust.
(f) A person who becomes a successor trustee of a revocable trust
upon the death, resignation, or incapacity of a trustee who was also
a settlor is not liable for any act or failure to act by the settlor while
the settlor was trustee.
(g) A successor trustee of a revocable trust who succeeds a trustee
who was also a settlor of the trust does not have a duty to:
(1) investigate any act or failure to act by the predecessor
trustee;
(2) review any accounting of the predecessor trustee; or
(3) take action on account of any breach of trust by the
predecessor trustee.
As added by P.L.99-2013, SEC.9.
IC 30-4-3-1.5
Revocation or amendment of trust by settlor
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Sec. 1.5. (a) This subsection applies to a trust created under an
instrument executed after June 30, 2005. Unless the terms of a trust
expressly provide that the trust is irrevocable, the settlor may revoke
or amend the trust.
(b) This subsection applies to a revocable trust created or funded
by at least two (2) settlors. Unless the terms of the trust provide
otherwise:
(1) to the extent the trust consists of community property, the
trust may be:
(A) revoked by either spouse acting alone; and
(B) amended only by the joint action of both spouses; and
(2) to the extent the trust consists of property other than
community property, each settlor may revoke or amend the trust
with regard to the part of the trust property attributable to that
settlor's contribution.
(c) The settlor may revoke or amend a revocable trust as follows:
(1) The settlor may comply with a method provided in the terms
of the trust.
(2) If the terms of the trust do not provide a method or the terms
of the trust provide a method that is not expressly made the
exclusive method to revoke or amend the trust, the settlor may
revoke or amend the trust by:
(A) executing a later will or codicil that:
(i) expressly refers to the trust; or
(ii) specifically devises property that would otherwise
have passed according to the terms of the trust; or
(B) any other method that:
(i) is in writing; and
(ii) manifests clear and convincing evidence of the settlor's
intent.
(d) If a revocable trust is revoked, the trustee shall deliver the trust
property as the settlor directs.
(e) A settlor's powers with respect to revocation, amendment, and
distribution of trust property may be exercised by an agent under a
power of attorney only to the extent expressly authorized by the
terms of the trust or the power of attorney.
(f) A guardian of a settlor may exercise the settlor's powers with
respect to revocation, amendment, or distribution of trust property
only with the approval of the court supervising the guardianship.
(g) A trustee who does not know that a trust has been revoked or
amended is not liable to the settlor or settlor's successors in interest
for distributions made and other actions taken on the assumption that
the trust had not been revoked or amended.
As added by P.L.238-2005, SEC.30.
IC 30-4-3-2
Power to restrain transfer of a beneficiary's interest
Sec. 2. (a) The settlor may provide in the terms of the trust that
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the interest of a beneficiary may not be either voluntarily or
involuntarily transferred before payment or delivery of the interest
to the beneficiary by the trustee.
(b) Except as otherwise provided in subsection (c), if the settlor
is also a beneficiary of the trust, a provision restraining the voluntary
or involuntary transfer of his beneficial interest will not prevent his
creditors from satisfying claims from his interest in the trust estate.
(c) Subsection (a) applies to a trust that meets both of the
following requirements, regardless of whether or not the settlor is
also a beneficiary of the trust:
(1) The trust is a qualified trust under 26 U.S.C. 401(a).
(2) The limitations on each beneficiary's control over the
beneficiary's interest in the trust complies with 29 U.S.C.
1056(d).
(d) A trust containing terms authorized under subsection (a) may
be referred to wherever appropriate as a trust with protective
provisions.
(Formerly: Acts 1971, P.L.416, SEC.4.) As amended by
P.L.287-1987, SEC.2.
IC 30-4-3-3
Powers of trustees
Sec. 3. (a) Except as provided in the terms of the trust and subject
to subsection (c), a trustee has the power to perform without court
authorization, except as provided in sections 4(b) and 5(a) of this
chapter, every act necessary or appropriate for the purposes of the
trust including, by way of illustration and not of limitation, the
following powers:
(1) The power to:
(A) deal with the trust estate;
(B) buy, sell, or exchange and convey or transfer all property
(real, personal, or mixed) for cash or on credit and at public
or private sale with or without notice; and
(C) invest and reinvest the trust estate.
(2) The power to receive additions to the assets of the trust.
(3) The power to acquire an undivided interest in a trust asset
in which the trustee, in any trust capacity, holds an undivided
interest.
(4) The power to manage real property in every way, including:
(A) the adjusting of boundaries;
(B) erecting, altering, or demolishing buildings;
(C) dedicating of streets, alleys, or other public uses;
(D) subdividing;
(E) developing;
(F) obtaining vacation of plats;
(G) granting of easements and rights-of-way;
(H) partitioning;
(I) entering into party wall agreements; and
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(J) obtaining title insurance for trust property.
(5) The power to:
(A) grant options concerning disposition of trust property,
including the sale of covered security options; and
(B) take options for acquisition of trust property, including
the purchase back of previously sold covered security
options.
(6) The power to enter into a lease as lessor or lessee, with or
without option to renew.
(7) The power to enter into arrangements for exploration and
removal of minerals or other natural resources and enter into a
pooling or unitization agreement.
(8) The power to continue the operation or management of any
business or other enterprise placed in trust.
(9) The power to:
(A) borrow money, to be repaid from trust property or
otherwise; and
(B) encumber, mortgage, pledge, or grant a security interest
in trust property in connection with the exercise of any
power.
(10) The power to:
(A) advance money for the benefit of the trust estate and for
all expenses or losses sustained in the administration of the
trust; and
(B) collect any money advanced, without interest or with
interest, at no more than the lowest rate prevailing when
advanced.
(11) The power to prosecute or defend actions, claims, or
proceedings for the protection of:
(A) trust property; and
(B) the trustee in the performance of the trustee's duties.
(12) The power to:
(A) pay or contest any claim;
(B) settle a claim by or against the trust by compromise or
arbitration; and
(C) abandon or release, totally or partially, any claim
belonging to the trust.
(13) The power to insure the:
(A) trust estate against damage or loss; and
(B) trustee against liability with respect to third persons.
(14) The power to pay taxes, assessments, and other expenses
incurred in the:
(A) acquisition, retention, and maintenance of the trust
property; and
(B) administration of the trust.
(15) The power to:
(A) vote securities, in person or by a general or special
proxy;
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(B) hold the securities in the name of a nominee if the
trustee is a corporate trustee; and
(C) effect or approve, and deposit securities in connection
with, any change in the form of the corporation, including:
(i) dissolution;
(ii) liquidation;
(iii) reorganization;
(iv) acquisition; and
(v) merger.
(16) The power to employ persons, including:
(A) attorneys;
(B) accountants;
(C) investment advisors; and
(D) agents;
to advise and assist the trustee in the performance of the
trustee's duties.
(17) The power to effect distribution of property in cash, in
kind, or partly in cash and partly in kind, in divided or
undivided interests.
(18) The power to execute and deliver all instruments necessary
or appropriate to accomplishing or facilitating the exercise of
the trustee's powers.
(19) With respect to an interest in a proprietorship, partnership,
limited liability company, business trust, corporation, or another
form of business or enterprise, the power to:
(A) continue the business or enterprise; and
(B) take any action that may be taken by shareholders,
members, or property owners, including:
(i) merging;
(ii) dissolving; or
(iii) changing the form of business organization or
contributing additional capital.
(20) With respect to possible liability for violation of
environmental law, the power to:
(A) inspect or investigate property:
(i) the trustee holds or has been asked to hold; or
(ii) owned or operated by an organization in which the
trustee holds an interest or has been asked to hold an
interest;
to determine the application of environmental law with
respect to the property;
(B) take action to prevent, abate, or remedy an actual or
potential violation of an environmental law affecting
property held directly or indirectly by the trustee before or
after the assertion of a claim or the initiation of
governmental enforcement;
(C) decline to accept property into the trust or disclaim any
power with respect to property that is or may be burdened
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with liability for violation of environmental law;
(D) compromise claims against the trust that may be asserted
for an alleged violation of environmental law; and
(E) pay the expense of any inspection, review, abatement, or
remedial action to comply with environmental law.
(21) The power to exercise elections with respect to federal,
state, and local taxes.
(22) The power to select a mode of payment under any
employee benefit plan or retirement plan, annuity, or life
insurance payable to the trustee and exercise rights under the
plan, annuity, or insurance, including the right to:
(A) indemnification:
(i) for expenses; and
(ii) against liabilities; and
(B) take appropriate action to collect the proceeds.
(23) The power to make loans out of trust property, including
loans to a beneficiary on terms and conditions the trustee
determines fair and reasonable under the circumstances. The
trustee has a lien on future distributions for repayment of the
loans.
(24) The power to pledge trust property to guarantee loans made
by others to the beneficiary on terms and conditions the trustee
considers to be fair and reasonable under the circumstances.
The trustee has a lien on future distributions for repayment of
the loans.
(25) The power to:
(A) appoint a trustee to act in another jurisdiction with
respect to trust property located in the other jurisdiction;
(B) confer on the appointed trustee all the appointing
trustee's powers and duties;
(C) require the appointed trustee to furnish security; and
(D) remove the appointed trustee.
(26) With regard to a beneficiary who is under a legal disability
or whom the trustee reasonably believes is incapacitated, the
power to pay an amount distributable to the beneficiary by:
(A) paying the amount directly to the beneficiary;
(B) applying the amount for the beneficiary's benefit;
(C) paying the amount to the beneficiary's guardian;
(D) paying the amount to the beneficiary's custodian under
IC 30-2-8.5 to create a custodianship or custodial trust;
(E) paying the amount to an adult relative or another person
having legal or physical care or custody of the beneficiary to
be expended on the beneficiary's behalf, if the trustee does
not know of a guardian, custodian, or custodial trustee; or
(F) managing the amount as a separate fund on the
beneficiary's behalf, subject to the beneficiary's continuing
right to withdraw the distribution.
(27) The power to:
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(A) combine at least two (2) trusts into one (1) trust; or
(B) divide one (1) trust into at least two (2) trusts;
after notice to the qualified beneficiaries, if the result does not
impair the rights of any beneficiary or adversely affect
achievement of the purposes of the trust.
(b) Any act under subsection (a)(4), an option under subsection
(a)(5), a lease under subsection (a)(6), an arrangement under
subsection (a)(7), and an encumbrance, mortgage, pledge, or security
interest under subsection (a)(9) may be for a term either within or
extending beyond the term of the trust.
(c) In acquiring, investing, reinvesting, exchanging, retaining,
selling, and managing property for any trust, the trustee thereof shall
exercise the judgment and care required by IC 30-4-3.5. Within the
limitations of the foregoing standard, the trustee is authorized to
acquire and retain every kind of property, real, personal, or mixed,
and every kind of investment, including specifically, but without in
any way limiting the generality of the foregoing, bonds, debentures,
and other corporate obligations, stocks, preferred or common, and
real estate mortgages, which persons of prudence, discretion, and
intelligence acquire or retain for their own account, and within the
limitations of the foregoing standard, the trustee is authorized to
retain property properly acquired, without limitation as to time and
without regard to its suitability for original purchase. Within the
limitations of the foregoing standard, the trustee is authorized to sell
covered security options and to purchase back previously sold
covered security options.
(d) If a distribution of particular trust assets is to be made to two
(2) or more beneficiaries entitled to receive fractional shares in those
assets, the trustee may distribute the particular assets without
distributing to each beneficiary a pro rata share of each asset.
However, the trustee shall:
(1) distribute to each beneficiary a pro rata share of the total fair
market value of all of the particular assets as of the date of
distribution; and
(2) cause the distribution to result in a fair and equitable
division among the beneficiaries of capital gain or loss on the
assets.
(e) If the trust is terminated or partially terminated, the trustee
may send to the beneficiaries a proposal for distribution. If the
proposal for distribution informs the beneficiary that the beneficiary:
(1) has a right to object to the proposed distribution; and
(2) must object not later than thirty (30) days after the proposal
for distribution was sent;
the right of the beneficiary to object to the proposed distribution
terminates if the beneficiary fails to notify the trustee of an objection
within the time limit set forth in subdivision (2).
(f) When any real or personal property subject to a lien (as
defined by IC 29-1-17-9(a)) is specifically distributable, the
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distributee shall take the property subject to the lien unless the terms
of the trust provide expressly or by necessary implication that the
lien be otherwise paid. If:
(1) an event occurs that makes the property distributable; and
(2) the holder of a lien on the property receives payment on a
claim based upon the obligation secured by the lien;
the property subject to the lien shall be charged with the
reimbursement to the trust of the amount of the payment for the
benefit of the beneficiaries entitled to the distribution, unless the
terms of the trust provide expressly or by necessary implication that
the payment be charged against the residue of the trust estate.
(g) For purposes of subsection (f), a general directive or authority
in the trust for payment of debts does not imply an intent that the
distribution of property subject to a lien be made free from the lien.
(h) IC 32-39-2-8, IC 32-39-2-9, and IC 32-39-2-10 apply to the
right of a trustee acting under a trust to access:
(1) the content of an electronic communication (as defined in
IC 32-39-1-6);
(2) a catalogue of electronic communications (as defined in
IC 32-39-1-5); or
(3) any other digital asset (as defined in IC 32-39-1-10).
(Formerly: Acts 1971, P.L.416, SEC.4.) As amended by Acts 1977,
P.L.300, SEC.1; P.L.277-1983, SEC.1; P.L.137-1999, SEC.1;
P.L.238-2005, SEC.31; P.L.51-2014, SEC.20; P.L.137-2016, SEC.8.
IC 30-4-3-3.2
Perpetual care fund trusts; trustee withdrawals
Sec. 3.2. The trustee of a trust established as the perpetual care
fund of a cemetery under IC 23-14-48-2 may, under IC 23-14-48-2.2,
without court authorization, withdraw from the trust the amounts
allowed by IC 23-14-48-2 to pay the cost of perpetual care of the
cemetery, notwithstanding any provision in the terms of the trust that
would restrict withdrawals from the trust to less than the withdrawals
allowed by IC 23-14-48-2.
As added by P.L.163-2016, SEC.2.
IC 30-4-3-4
Exercise of powers by multiple, successor, or surviving trustees
Sec. 4. (Exercise of Powers by Multiple, Successor, or Surviving
Trustees)
Unless the terms of the trust provide otherwise:
(a) Any power vested in two (2) trustees must be exercised by
them jointly; any power vested in three (3) or more trustees must be
exercised by a majority.
(b) If there are two (2) or more trustees and they are unable to
exercise a power under subsection (a) of this section:
(1) If there is an immediate risk of irreparable damage to the trust
property or the interest of any beneficiary before court approval
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could be obtained, any trustee may exercise the power and petition
the court for approval after the power has been exercised; but
(2) if there is no immediate risk of irreparable damage to the trust
property or the interest of any beneficiary, any trustee may petition
the court for permission to exercise the power, but none may exercise
the power prior to obtaining permission from the court.
(c) A co-trustee is excused from liability incurred because of the
exercise by a majority of a power vested in three (3) or more trustees
if he:
(1) refuses to join in the exercise of the power and mails a written
dissent to any of the co-trustees; or
(2) if the power was exercised without his knowledge, mails a
written dissent to any co-trustee within a reasonable time after being
informed that it has been exercised.
(d) A successor trustee, additional trustee or surviving or
remaining co-trustee may exercise all powers previously vested in the
predecessor trustee or co-trustee.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-5
Conflict of interest in exercise of powers
Sec. 5. (a) If the duty of the trustee in the exercise of any power
conflicts with the trustee's individual interest or the trustee's interest
as trustee of another trust, the power may be exercised only under
one (1) of the following circumstances:
(1) The trustee receives court authorization to exercise the
power with notice to interested persons as the court may direct.
(2) The trustee gives notice of the proposed action in
accordance with IC 30-2-14-16 and:
(A) the trustee receives the written authorization of all
interested persons to the proposed action within the period
specified in the notice of the proposed action; or
(B) a beneficiary objects to the proposed action within the
period specified in the notice of the proposed action, but the
trustee receives court authorization to exercise the power.
(3) The exercise of the power is specifically authorized by the
terms of the trust.
(b) For purposes of this section, the interest of an affiliate of the
trustee will be deemed to be the interest of the trustee.
(Formerly: Acts 1971, P.L.416, SEC.4.) As amended by P.L.61-2006,
SEC.7.
IC 30-4-3-6
Duties of trustee
Sec. 6. (a) The trustee has a duty to administer a trust according
to the terms of the trust.
(b) Unless the terms of the trust or the provisions of section 1.3 of
this chapter provide otherwise, the trustee also has a duty to do the
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following:
(1) Administer the trust in a manner consistent with
IC 30-4-3.5.
(2) Take possession of and maintain control over the trust
property.
(3) Preserve the trust property.
(4) Make the trust property productive for both the income and
remainder beneficiary. As used in this subdivision, "productive"
includes the production of income or investment for potential
appreciation.
(5) Keep the trust property separate from the trustee's individual
property and separate from or clearly identifiable from property
subject to another trust.
(6) Maintain clear and accurate accounts with respect to the
trust estate.
(7) Keep the following beneficiaries reasonably informed about
the administration of the trust and of the material facts
necessary for the beneficiaries to protect their interests:
(A) A current income beneficiary.
(B) A beneficiary who will become an income beneficiary
upon the expiration of the term of the current income
beneficiary, if the trust has become irrevocable by:
(i) the terms of the trust instrument; or
(ii) the death of the settlor.
A trustee satisfies the requirements of this subdivision by
providing a beneficiary described in clause (A) or (B), upon the
beneficiary's written request, access to the trust's accounting
and financial records concerning the administration of trust
property and the administration of the trust.
(8) Upon:
(A) the trust becoming irrevocable:
(i) by the terms of the trust instrument; or
(ii) by the death of the settlor; and
(B) the written request of an income beneficiary or
remainderman;
promptly provide a copy of the complete trust instrument to the
income beneficiary or remainderman.
(9) Take whatever action is reasonable to realize on claims
constituting part of the trust property.
(10) Defend actions involving the trust estate.
(11) Supervise any person to whom authority has been
delegated.
(12) Determine the trust beneficiaries by acting on information:
(A) the trustee, by reasonable inquiry, considers reliable; and
(B) with respect to heirship, relationship, survivorship, or
any other issue relative to determining a trust beneficiary.
(Formerly: Acts 1971, P.L.416, SEC.4.) As amended by
P.L.198-1996, SEC.1; P.L.137-1999, SEC.2; P.L.238-2005, SEC.32;
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P.L.51-2014, SEC.21; P.L.83-2014, SEC.8; P.L.5-2015, SEC.63.
IC 30-4-3-6.5
Liability of trustee for lack of knowledge of event affecting
administration or distribution of trust
Sec. 6.5. If the happening of an event, including:
(1) marriage;
(2) divorce;
(3) performance of educational requirements; or
(4) death;
affects the administration or distribution of a trust, a trustee who has
exercised reasonable care to ascertain the happening of the event is
not liable for a loss resulting from the trustee's lack of knowledge.
As added by P.L.238-2005, SEC.33.
IC 30-4-3-7
Self-dealing; transactions between trusts
Sec. 7. (a) Unless the terms of the trust provide otherwise or the
transaction is authorized under IC 28-1-12-8 or IC 28-6.1-6-26, the
trustee has a duty:
(1) not to loan funds to the trustee or an affiliate;
(2) not to purchase or participate in the purchase of trust
property from the trust for the trustee's own or an affiliate's
account;
(3) not to sell or participate in the sale of the trustee's own or an
affiliate's property to the trust; or
(4) if a corporate trustee, not to purchase for or retain in the
trust its own or a parent or subsidiary corporation's stock,
bonds, or other capital securities. However, the trustee may
retain such securities already held in trusts created prior to
September 2, 1971.
(b) Unless the terms of the trust provide otherwise, a corporate
trustee may invest in, purchase for, or retain in the trust its own or an
affiliate's obligations, including savings accounts and certificates of
deposit, without the investment, purchase, or retention constituting
a conflict of interest under section 5 of this chapter.
(c) Unless the terms of the trust provide otherwise, a corporate
trustee does not violate subsection (a) by investing in, purchasing for,
or retaining in the trust its own or an affiliate's obligations, including
savings accounts and certificates of deposit, if the payment of each
obligation is fully insured by the Federal Deposit Insurance
Corporation, the National Credit Union Share Insurance Fund, or any
insurer approved by the department of financial institutions under
IC 28-7-1-31.5.
(d) If the terms of the trust permit the trustee to deal with a
beneficiary for the trustee's own account, the trustee has a duty to
deal fairly with and to disclose to the beneficiary all material facts
related to the transaction which the trustee knows or should know.
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(e) Unless the terms of the trust provide otherwise, the trustee
may sell, exchange, or participate in the sale or exchange of trust
property from one (1) trust to the trustee as trustee of another trust,
provided the sale or exchange is fair and reasonable with respect to
the beneficiaries of both trusts and the trustee discloses to the
beneficiaries of both trusts all material facts related to the sale or
exchange which the trustee knows or should know.
(f) This section does not prohibit a trustee from enforcing or
fulfilling any enforceable contract or agreement:
(1) executed during the settlor's lifetime; and
(2) between the settlor and the trustee in the trustee's individual
capacity.
(Formerly: Acts 1971, P.L.416, SEC.4.) As amended by Acts 1982,
P.L.171, SEC.118; P.L.174-1986, SEC.1; P.L.8-1991, SEC.34;
P.L.176-1996, SEC.34; P.L.238-2005, SEC.34; P.L.202-2007,
SEC.3; P.L.226-2007, SEC.22; P.L.89-2011, SEC.75.
IC 30-4-3-8
Duties of co-trustees
Sec. 8. (Duties of Co-Trustee)
Unless the terms of the trust provide otherwise, if there are two
(2) or more trustees, each has a duty to:
(a) participate in the administration of the trust;
(b) take whatever action is reasonable to prevent a co-trustee from
committing a breach of trust; and
(c) take whatever action is reasonable to compel a co-trustee to
redress a breach of trust.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-9
Duty of trustee under control of third persons
Sec. 9. (Duty of Trustee under Control of Third Person)
(a) If the terms of the trust give a person a power to direct the
trustee in the administration of the trust and those terms expressly
direct the trustee to rely, or relieve the trustee from liability if he
does rely, on that person's directions, the trustee may do so and will
incur no liability for any loss to the trust estate.
(b) If the terms of the trust give a person a power to direct the
trustee in the administration of the trust, except as provided in
subsection (a) of this section:
(1) If the person holds the power as a fiduciary, the trustee has a
duty to refuse to comply with any direction which he knows or
should know would constitute a breach of a duty owed by that person
as a fiduciary.
(2) If the person holds the power solely for his own benefit, the
trustee may refuse to comply only if the attempted exercise of the
power violates the terms of the trust with respect to that power.
(Formerly: Acts 1971, P.L.416, SEC.4.)
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IC 30-4-3-10
Liability to third persons
Sec. 10. (Liability to Third Persons)
(a) Unless the terms of the contract or other non-negotiable
obligation expressly provide otherwise, the trustee is not personally
liable on a contract or other non-negotiable obligation with a third
person made by him in the administration of the trust.
(b) When a third person is entitled to compensation for injury
suffered in the course of the administration of the trust:
(1) If the injury is the result of the trustee's personal act or
omission as trustee, the trustee will be personally liable and the
injured party will be entitled to satisfaction of his claim from the
trustee's individual property first and then, to the extent the claim is
yet unsatisfied, from the trust estate.
(2) If the injury is the result of the act or omission of an agent of
the trustee, and the agent was properly selected and supervised and
there was no improper delegation of authority to the agent, the
injured party will be entitled to satisfaction of his claim from the
trust estate first and then, to the extent that the claim is yet
unsatisfied, from the trustee's individual property.
(3) If the injury is the result of the act or omission of the settlor or
his agent, and not that of the trustee or his agent, the injured party
will be entitled to satisfaction of his claim from the trust estate and
not from the trustee's individual property.
(4) The question of ultimate liability as between the trust estate
and the trustee individually, if it is to be determined, shall be
determined in a proceeding for accounting, surcharge or
indemnification.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-11
Potential liability of trustee to beneficiary; remedies; removal of
trustee
Sec. 11. (a) The trustee is accountable to the beneficiary for the
trust estate.
(b) If the trustee commits a breach of trust, the trustee is liable to
the beneficiary for:
(1) any loss or depreciation in the value of the trust property as
a result of the breach;
(2) any profit made by the trustee through the breach;
(3) any reasonable profit which would have accrued on the trust
property in the absence of a breach; and
(4) reasonable attorney's fees incurred by the beneficiary in
bringing an action on the breach.
(c) In the absence of a breach of trust, the trustee has no liability
to the beneficiary either for any loss or depreciation in value of the
trust property or for a failure to make a profit. However, if:
(1) a loss or depreciation in value of the trust property; or
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(2) the trust's failure to make a profit;
is the result of a violation by the trustee of IC 28-1-12-8 or
IC 28-6.1-6-26, one (1) or more beneficiaries of the trust may
petition the court for any remedy described in subsection (b) or for
removal of the trustee under section 22(a)(4) of this chapter,
regardless of whether the transaction under IC 28-1-12-8 or
IC 28-6.1-6-26 constitutes or involves a breach of trust. The court
may award one (1) or more remedies described in subsection (b) or
remove the trustee, or both, if the court determines that the remedy
or the removal of the trustee is in the best interests of all
beneficiaries of the trust. The burden of proof is on the one (1) or
more petitioning beneficiaries to demonstrate that the remedy or the
removal of the trustee is in the best interests of all beneficiaries of
the trust.
(d) The trustee is liable to the beneficiary for acts of an agent
which, if committed by the trustee, would be a breach of the trust if
the trustee:
(1) directs or permits the act of the agent;
(2) delegates the authority to perform an act to the agent which
the trustee is under a duty not to delegate;
(3) fails to use reasonable care in the selection or retention of
the agent;
(4) fails to exercise proper supervision over the conduct of the
agent;
(5) approves, acquiesces in, or conceals the act of the agent; or
(6) fails to use reasonable effort to compel the agent to
reimburse the trust estate for any loss or to account to the trust
estate for any profit.
(Formerly: Acts 1971, P.L.416, SEC.4.) As amended by
P.L.202-2007, SEC.4; P.L.226-2007, SEC.23; P.L.3-2008, SEC.228.
IC 30-4-3-12
Liability for breach of trust by co-trustee
Sec. 12. (Liability for Breach of Trust by Co-Trustee)
A trustee becomes liable to the beneficiary for a breach of trust
committed by his co-trustee if he:
(a) participates in the breach of trust;
(b) improperly delegates the administration of the trust to the
co-trustee;
(c) approves, acquiesces in or conceals a breach of trust;
(d) enables the co-trustee to commit a breach of trust by his
failure to exercise care in the administration of the trust; or
(e) fails to use reasonable effort to compel the co-trustee, or, if the
co-trustee has died, his estate, to redress a breach of trust.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-13
Liability of a successor trustee
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Sec. 13. (Liability of a Successor Trustee)
A successor trustee becomes liable for a breach of trust of his
predecessor if he:
(a) fails to take whatever action is necessary to compel the
predecessor trustee to deliver the trust property; or
(b) fails to make a reasonable effort to compel a redress of a
breach of trust committed by the predecessor trustee.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-14
Contribution and indemnity
Sec. 14. (Contribution and Indemnity)
(a) Except as stated in subsection (b) of this section, if two (2) or
more co-trustees are liable to the beneficiary, each co-trustee is
entitled to contribution from the other, provided, however, that:
(1) if one (1) co-trustee is substantially more at fault than another,
the co-trustee who is most at fault is not entitled to contribution, and
the other co-trustee is entitled to indemnity from him; or
(2) if one (1) of the co-trustees receives a profit from the
administration of the trust or a benefit from a breach of trust, the
other co-trustee is entitled to indemnity from him to the extent of the
profit or benefit received by that co-trustee.
(b) If a trustee commits a breach of trust in bad faith, he is not
entitled to either contribution or indemnity from his co-trustee.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-15
Remedies of trustee against third persons
Sec. 15. (Remedies of the Trustee against Third Persons)
The trustee may maintain in his representative capacity a civil
action for any legal or equitable remedy against a third person that
he could maintain in his own right if he were the owner.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-16
Remedies among co-trustees
Sec. 16. (Remedies among Co-Trustees)
Any trustee may maintain an action against a co-trustee to:
(a) compel him to perform his duties under the trust;
(b) enjoin him from committing a breach of trust; or
(c) compel him to redress a breach of trust committed by him.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-17
Remedies of trustee against beneficiary
Sec. 17. (Remedies of Trustee against Beneficiary)
The trustee may maintain a civil action against a beneficiary for
any legal or equitable remedy, including, among others, a charge
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against the beneficiary's interest in the trust estate, in any case in
which the beneficiary is liable under 30-4-3-20.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-18
Other remedies of the trustee
Sec. 18. (Other Remedies of the Trustee)
(a) If there is reasonable doubt with respect to any matter relating
to the administration of the trust, the trustee is entitled to be
instructed by the court.
(b) The trustee is entitled to a review and settlement by the court
of the accounts of his administration.
(c) The trustee is entitled to a lien against the trust estate:
(1) for any advances made by him under 30-4-3-3(a) (10); and
(2) for the value of his services for which he is entitled to, but has
not received, compensation as provided either under the terms of the
trust or under 30-4-5-16.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-19
Relief of trustee's liability for breach of trust
Sec. 19. (Relief of Trustee's Liability for Breach of Trust)
(a) Unless the terms of the trust provide otherwise or unless if to
do so would frustrate, impair or defeat the purposes of the trust, a
beneficiary, except as provided in subsection (b) of this section,
relieves the trustee from liability for breach of trust as to that
beneficiary's interest if he:
(1) consents to or acquiesces in the act or omission which
constitutes a breach of trust;
(2) agrees to release or discharge the trustee from liability for
breach of trust after the act or omission constituting the breach
occurs;
(3) elects, under an option to affirm or reject a transaction entered
into as a breach of trust, to affirm the transaction; or
(4) participates in the act of the trustee which constitutes the
breach of trust.
(b) The consent, acquiescence, agreement to release or discharge,
affirmance, or participation by a beneficiary will not relieve the
trustee from liability if:
(1) at the time it was given the beneficiary was under an
incapacity;
(2) at the time it was given the beneficiary did not know of his
rights or all of the material facts which the trustee knew or should
have known;
(3) it was induced by the trustee's improper conduct;
(4) the trustee had an adverse interest in the transaction and the
transaction was not fair and reasonable; or
(5) the trustee pays or delivers a beneficiary's interest to that
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beneficiary contrary to the terms of a trust with protective provisions.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-20
Liability of beneficiary
Sec. 20. (Liability of Beneficiary)
(a) A beneficiary is liable for loss to the trust estate if he has:
(1) misappropriated or otherwise wrongfully dealt with the trust
property;
(2) expressly consented to, participated in or agreed with the
trustee to be liable for a breach of trust committed by the trustee;
(3) failed to repay an advance or loan of trust funds;
(4) failed to repay a distribution or disbursement from the trust
estate in excess of that to which he is entitled; or
(5) breached a contract to pay money or deliver property to the
trustee to be held by the trustee as part of the trust estate.
(b) Unless the terms of the trust provide otherwise a beneficiary
of a trust is liable to the extent of his interest in the trust estate for
the amount of any debt owed the trust estate by him.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-21
Remedies of beneficiary against third persons
Sec. 21. (Remedies of the Beneficiary against Third Persons)
If the trustee has a claim against a third person for which he may
maintain a civil action under 30-4-3-15 but he is unable, unwilling or
neglects to commence the action within a reasonable time not to
exceed thirty (30) days after written demand, any beneficiary may
commence the action in his own right for the benefit of all the
beneficiaries.
(Formerly: Acts 1971, P.L.416, SEC.4; Acts 1972, P.L.11, SEC.13.)
IC 30-4-3-22
Remedies of the beneficiary against the trustee
Sec. 22. (Remedies of the Beneficiary against the Trustee)
(a) A beneficiary of a trust may maintain an action:
(1) to compel the trustee to perform his duties;
(2) to enjoin the trustee from committing an act which may be a
breach of trust;
(3) to compel the trustee to redress a breach of trust; or
(4) to remove a trustee for cause and to appoint a successor
trustee.
(b) If the trustee acquires property and wrongfully holds it outside
the trust, a beneficiary is entitled at his option to either:
(1) require the property to be transferred to the trust or
(2) impose an equitable lien upon it to secure his claim for
damages for breach of trust.
(c) If the trustee commingles the trust funds or property with his
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own funds or property or converts the trust fund or property into
another form which is wrongfully held outside the trust:
(1) if the fund or property can be traced and identified, the
beneficiary is entitled to restoration of the fund or property to the
trust; or
(2) if the fund or property cannot be traced and identified,
(A) In a case of commingling of funds or property, the beneficiary
is entitled to a lien against the trustee's individual property from the
date and in the amount of the fund or the value of the property at the
time of the commingling.
(B) In a case of conversion of property, the beneficiary is entitled
to a lien against the trustee's individual property from the date and
according to the value of the property at the time of the conversion.
(d) If the trustee is also a beneficiary, the other beneficiaries will
be entitled to a charge against the trustee's beneficial interest to
secure their claims against him for a breach of trust.
(e) If a beneficiary successfully maintains an action under
subsection (a) of this section or is entitled to a judgment under
subsections (b), (c), or (d) of this section, he is entitled to a judgment
for reasonable attorney's fees.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-23
Remedy of a beneficiary against a co-beneficiary
Sec. 23. (Remedy of a Beneficiary against a Co-Beneficiary)
(a) If no recovery can be made from the trustee for a breach of
trust, a beneficiary may maintain an action against a co-beneficiary
who consented to the breach for a redress of the breach, if the
co-beneficiary:
(1) knows or should have known that the act of the trustee to
which he consented constituted a breach of trust;
(2) agreed with the trustee or the other beneficiaries to be liable
for any loss which might result from the act constituting the breach;
or
(3) participated in the act constituting the breach.
(b) The consenting co-beneficiary shall be personally liable for
any loss for which the other beneficiaries are entitled to redress
under subsection (a) of this section and his beneficial interest in the
trust estate may be charged for the amount of the loss if the court
deems it proper to do so.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-24
Repealed
(Formerly: Acts 1971,
P.L.238-2005, SEC.63.)
IC 30-4-3-24.4
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P.L.416,
SEC.4.
Repealed
by
Modification or termination of trust by court
Sec. 24.4. (a) The court may modify the administrative or
dispositive terms of a trust if, because of circumstances not
anticipated by the settlor, modification or termination will further the
purposes of the trust. To the extent practicable, the modification
must be made in accordance with the settlor's probable intention.
(b) The court may modify the administrative terms of a trust or
terminate the trust if:
(1) the purpose of the trust has been fulfilled; or
(2) continuation of the trust on the trust's existing terms would:
(A) be illegal, impossible, impracticable, or wasteful; or
(B) impair the trust's administration.
(c) If the trust terminates under this section, the court shall direct
the trustee to distribute the trust property in a manner consistent with
the purposes of the trust.
(d) The court may modify the terms of a trust to give the settlor
the power to revoke and modify the trust if the:
(1) settlor intended to reserve the power;
(2) settlor believed the power was reserved; and
(3) power was omitted from the terms of the trust by mistake.
As added by P.L.238-2005, SEC.35.
IC 30-4-3-24.5
Termination by trustee of trust with value less than $75,000
Sec. 24.5. (a) This section does not apply to an easement for
conservation or preservation.
(b) This subsection applies to a trust consisting of trust property
having a total value of less than seventy-five thousand dollars
($75,000). Unless the terms of the trust provide otherwise, the trustee
may terminate the trust:
(1) if the trustee concludes the value of the trust property is
insufficient to justify the cost of administration; and
(2) after providing notice of the trust termination to qualified
beneficiaries.
(c) The court may:
(1) modify or terminate a trust; or
(2) remove the trustee and appoint a different trustee;
if the court determines that the value of the trust property is
insufficient to justify the cost of administration. If a trust terminates
under this subsection, the court shall direct the trustee to distribute
the trust property in a manner consistent with the purposes of the
trust.
(d) If a trust terminates under subsection (b), the trustee shall
distribute the trust property in a manner consistent with the purposes
of the trust.
As added by P.L.238-2005, SEC.36.
IC 30-4-3-25
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Rescission and reformation
Sec. 25. (Recission and Reformation)
Upon petition by an interested party, the court may rescind or
reform a trust according to the same general rules applying to
recission or reformation of non-trust transfers of property.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-25.5
Distribution of terminated trust; payment of federal and state taxes
Sec. 25.5. (a) This section applies beginning October 1, 2009.
(b) Except as provided in subsection (d), when a trust created to
comply with 42 U.S.C. 1396p(d)(4)(A) is terminated, the trustee
shall not distribute trust property to any person entitled to payment
from the trust until the office of Medicaid policy and planning has
been fully reimbursed for assistance rendered to the person for whom
the trust was created.
(c) The primary purpose of a trust described in subsection (b) is
to ensure that the state is repaid Medicaid benefits provided in return
for excepting the trust from the general requirements of 42 U.S.C.
1396(d).
(d) A trustee may pay federal and state taxes from the trust before
reimbursing the office of Medicaid policy and planning.
As added by P.L.14-2009, SEC.3.
IC 30-4-3-26
Power to direct a deviation from the terms of the trust
Sec. 26. (Power to Direct a Deviation from the Terms of the
Trust)
(a) Upon petition by the trustee or a beneficiary, the court shall
direct or permit the trustee to deviate from a term of the trust if,
owing to circumstances not known to the settlor and not anticipated
by him, compliance would defeat or substantially impair the
accomplishment of the purposes of the trust. In that case, if necessary
to carry out the purposes of the trust, the court may direct or permit
the trustee to do acts which are not authorized or are forbidden by the
terms of the trust, or may prohibit the trustee from performing acts
required by the terms of the trust.
(b) The trustee may deviate from the terms of the trust as provided
in subsection (a) of this section, without first obtaining the
permission of the court, if there is an emergency or if he reasonably
believes that there is an emergency, and before deviating he has no
opportunity to apply to the court for permission to deviate.
(c) The trustee is liable for any loss or damage which results if he
fails to apply to the court for permission to deviate from the terms of
the trust, when he knows or should know that, owing to
circumstances not known to the settlor and not anticipated by him,
compliance will defeat or substantially impair the accomplishment
of the purposes of the trust.
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(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-27
Cy pres doctrine
Sec. 27. (a) If property is given to a trust for a benevolent public
purpose and the property is to be applied to a particular charitable
purpose, and it is or becomes impossible, impracticable, wasteful, or
illegal to carry out the particular purpose, and if the settlor
manifested a more general intention to devote the property to
charitable purposes, the trust need not fail, but the court may direct
the application of the property to some charitable purpose which falls
within the general charitable intention of the settlor.
(b) The terms of a charitable trust that would result in the
distribution of the trust property to a noncharitable beneficiary
prevails over the power of the court under subsection (a) to apply the
cy pres doctrine to modify or terminate the trust only if, when the
provision takes effect:
(1) the trust property is to revert to the settlor and the settlor is
still alive; or
(2) less than twenty-one (21) years have elapsed since the trust
was created.
(c) A living heir of the settlor or a living beneficiary named in the
original trust agreement may present evidence to the court of:
(1) the heir's or beneficiary's opinion of the settlor's intent; and
(2) the heir's or beneficiary's wishes;
regarding the property given in trust.
(Formerly: Acts 1971, P.L.416, SEC.4.) As amended by P.L.41-2000,
SEC.3; P.L.238-2005, SEC.37.
IC 30-4-3-28
Repealed
(Formerly: Acts 1971,
P.L.238-2005, SEC.63.)
P.L.416,
SEC.4.
Repealed
by
IC 30-4-3-29
Removal, resignation, and appointment of trustees
Sec. 29. (a) A trustee may be removed as follows:
(1) By the court.
(2) By the person, if any, who by the terms of the trust is
authorized to remove the trustee.
(3) Unless the terms of the trust instrument provide otherwise,
by a beneficiary of the trust whose petition is granted by the
court under subsection (d).
(b) Unless the terms of the trust requires a different time, the
trustee may resign:
(1) if the trustee gives at least thirty (30) days notice to:
(A) the qualified beneficiaries;
(B) the settlor, if living; and
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(C) all cotrustees; or
(2) with the approval of the court.
In approving a resignation, the court may issue orders and impose
conditions reasonably necessary for the protection of the trust
property. Any liability of a resigning trustee or of any sureties on the
trustee's bond for acts or omissions of the trustee is not discharged or
affected by the trustee's resignation.
(c) For good cause shown, the court may at any time appoint a
temporary trustee for such period of time, and to perform such duties,
as the court may direct.
(d) This subsection applies only to a trust executed after June 30,
1996. A beneficiary of a trust may petition the court for the removal
of a corporate trustee if there has been a change in control of the
corporate trustee after the date of the execution of the trust. The
court may remove the corporate trustee if the court determines the
removal is in the best interests of all the beneficiaries of the trust. For
purposes of this subsection a change in control of the corporate
trustee occurs whenever a person or group of persons acting in
concert acquires the beneficial ownership of an aggregate of at least
twenty-five percent (25%) of the outstanding shares of voting stock
of:
(1) a trustee; or
(2) a corporation controlling a trustee;
after June 30, 1996.
(e) A trustee who has resigned or been removed shall
expeditiously deliver the trust property within the trustee's
possession to the cotrustee, successor trustee, or other person entitled
to the trust property. A trustee who has resigned or been removed has
the duties of trustee and the powers necessary to protect the trust
property:
(1) unless a cotrustee remains in the office of trustee or the
court orders otherwise; and
(2) until the trust property is delivered to a successor trustee or
other person entitled to the trust property.
(Formerly: Acts 1971, P.L.416, SEC.4.) As amended by
P.L.199-1996, SEC.1; P.L.165-2002, SEC.6; P.L.238-2005, SEC.38.
IC 30-4-3-29.5
Corporate trustee that acquires trust due to change in control
Sec. 29.5. (a) Except as provided in subsection (b) and unless the
trust instrument provides otherwise, a corporate trustee that acquires
a trust as a result of a change in control may not:
(1) decline to accept the trust property;
(2) resign as trustee; or
(3) otherwise refuse to administer the trust;
based upon the amount of property or funds held in the trust estate.
(b) A court may, at the court's discretion, allow a trustee described
in subsection (a) to resign if:
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(1) the trustee petitions the court; and
(2) the court determines that the trustee's resignation will be in
the best interests of all the beneficiaries of the trust.
As added by P.L.199-1996, SEC.2.
IC 30-4-3-30
Effect of this article on the court's equity powers
Sec. 30. (Effect of This Article on the Court's Equity Powers)
Except as otherwise provided in this article, the article shall not
be construed to limit the general equity powers of the court over the
administration of trusts.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-31
Judicial modification of trusts for benevolent public purpose and
certain transfers not in trust; federal compliance
Sec. 31. (a) This section is enacted for the purpose of confirming
the power of Indiana courts to modify trusts for a benevolent public
purpose, and transfers not in trust as described in Section
170(f)(3)(A) of the Internal Revenue Code, to effect compliance with
Sections 170, 664, 2055, 2106, and 2522 of the Internal Revenue
Code so that these trusts and transfers may obtain the income tax
exemption afforded by Section 664 of the Internal Revenue Code and
donors or other contributors of gifts or contributions to these trusts
and transfers may secure the income, estate, and gift tax charitable
deductions granted by Sections 170, 2055, 2106, and 2522 of the
Internal Revenue Code.
(b) Upon petition, any court of general or probate jurisdiction in
Indiana may, in its discretion, modify the instrument of an inter vivos
or testamentary trust for a benevolent public purpose, or transfer not
in trust as described in Section 170(f)(3)(A) of the Internal Revenue
Code, so that the trust or transfer complies with and conforms to the
provisions of Sections 170, 664, 2055, 2106, and 2522 of the Internal
Revenue Code and regulations thereunder from the date of the trust's
or transfer's creation, if consent to the modification is given by:
(1) all beneficiaries of the trust or transfer; and
(2) the settlor of the trust or transfer if the settlor is living at the
date of modification.
(Formerly: Acts 1973, P.L.294, SEC.1.) As amended by Acts 1977,
P.L.301, SEC.1; Acts 1982, P.L.180, SEC.1; P.L.2-1987, SEC.46;
P.L.41-2000, SEC.4.
IC 30-4-3-32
Trustee's liability for breach of trust
Sec. 32. (a) Except as stated in subsections (b) and (c), the trustee,
by provisions of the trust, can be relieved of liability for breach of
trust.
(b) A provision in the trust instrument is not effective to relieve
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the trustee of liability for breach of trust committed in bad faith,
intentionally, or with reckless indifference to the interest of the
beneficiary, or of liability for any profit that the trustee has derived
from a breach of trust.
(c) A provision that relieves the trustee of liability for breach of
trust is ineffective if it is inserted in the trust instrument as the result
of an abuse by the trustee of a fiduciary or confidential relationship
to the settlor.
As added by P.L.149-1984, SEC.1.
IC 30-4-3-33
Trustee vacancies; priority for filling vacancy
Sec. 33. (a) In addition to the terms of a trust regarding the
circumstances under which a trustee vacancy occurs, a trustee
vacancy occurs if:
(1) a person designated as trustee does not accept being trustee;
(2) a person designated as trustee cannot be identified or does
not exist;
(3) a trustee resigns;
(4) a trustee is disqualified or removed;
(5) a trustee dies; or
(6) the person designated as trustee lacks capacity.
(b) Except as provided in the terms of a trust, if a trust has at least
two (2) cotrustees and at least one (1) cotrustee remains in office, a
cotrustee vacancy is not required to be filled. A cotrustee vacancy
must be filled if the trust has no remaining cotrustee.
(c) Except as provided in the terms of a trust, a trustee vacancy of
a noncharitable trust that is required to be filled must be filled
according to the following priority:
(1) A person designated in the terms of the trust to act as
successor trustee.
(2) A person appointed by a majority of the qualified
beneficiaries.
(3) A person appointed by the court.
(d) Except as provided in the terms of a trust, a trustee vacancy of
a charitable trust that is required to be filled must be filled according
to the following priority:
(1) A person designated in the terms of the trust to be successor
trustee.
(2) A person:
(A) selected by the charitable organizations expressly
designated to receive distributions under the terms of the
trust; and
(B) whose selection is approved by the attorney general.
(3) A person appointed by the court.
(e) Regardless of whether a trustee vacancy exists or is required
to be filled, the court may appoint an additional trustee or a special
fiduciary if the court considers the appointment necessary for the
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administration of the trust.
As added by P.L.238-2005, SEC.39.
IC 30-4-3-34
Petition to determine heirs and interests in trust estate
Sec. 34. (a) At any time during the administration of a trust, a
trustee or any interested person may petition the court to determine
the:
(1) heirs of:
(A) the settlor; or
(B) any person named in the trust; and
(2) respective interests of the persons described in subdivision
(1) in the trust estate or any part of the trust estate.
(b) If a petition is filed under this section, the court shall fix the
time for a hearing on the petition. Notice of the hearing shall be
given in the following manner:
(1) Personally or by mail to persons who are named in the trust
and:
(A) are known to claim;
(B) are believed to claim; or
(C) have;
an interest in the trust estate or any part of the trust estate as
heir or through an heir of the settlor.
(2) By publication to any unknown heirs.
(c) When a hearing is held on the petition, the issues set forth in
the petition under subsection (a) may be determined by:
(1) competent evidence; or
(2) affidavit, if there are no objections.
A record shall be made of the oral evidence. The record and
affidavits must be a part of the files in the trust proceeding.
(d) If there is satisfactory proof, the court shall make a decree that
determines the issues set forth in the petition under subsection (a).
The court's decree is conclusive of the facts determined by the court
with regard to any interested person who has been notified personally
or by mail in accordance with subsection (b)(1), subject to the
interested person's right of appeal.
(e) An act of the trustee is valid with regard to the rights and
liabilities of a purchaser, a lessee, or other person who deals with the
trustee for value and in good faith, if the trustee acts in:
(1) accordance with the facts as determined by the court's
decree under subsection (d);
(2) accordance with the law; and
(3) good faith.
As added by P.L.238-2005, SEC.40.
IC 30-4-3-35
Matrimonial trusts; election; effect of the death of a spouse or the
dissolution of the marriage; revocation
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Sec. 35. (a) This section is intended to ensure that if real property
is transferred to one (1) or more revocable trusts created by a
husband and wife for estate planning purposes, the husband and wife
will maintain real estate ownership protections equivalent to those
they would have if they owned that real property in an estate by the
entireties including an estate by the entireties created under
IC 32-17-3-1.
(b) As used in this section, "joint matrimonial trust" means a
single inter vivos trust established under this section by settlors who
are husband and wife.
(c) As used in this section, "matrimonial property" means real
property that:
(1) is subject to a written election to treat the property as
matrimonial property under this section; and
(2) is owned by a matrimonial trust.
(d) As used in this section, "matrimonial trust" means a trust
established under this section to own matrimonial property.
(e) As used in this section, "separate matrimonial trust" means a
separate trust that is also a matrimonial trust.
(f) As used in this section, "separate trust" means a trust
established by one (1) individual.
(g) A matrimonial trust may be established:
(1) jointly by a husband and wife; or
(2) in two (2) or more separate trusts.
(h) A husband and wife may elect to treat real property as
matrimonial property with a written statement of the election:
(1) in an instrument or instruments conveying the real property
to a matrimonial trust or trusts; or
(2) in a separate writing that must be recorded in the county
where the real property is situated and indexed in the records of
the county recorder's office to the instrument or instruments that
convey the real property to a matrimonial trust or trusts.
(i) A guardian of a husband or wife may make an election under
this section:
(1) without the approval of the court if the guardian has
unlimited powers under IC 29-3-8-4; and
(2) with the approval of the court in all other cases.
(j) An attorney in fact of a husband and wife may join in the
making of an election under this section under the powers conferred
upon the attorney in fact by IC 30-5-5-2 if the power of attorney is
recorded in the county where the real property is situated and
indexed in the records of the county recorder's office to the
instrument or instruments that convey the real property to a
matrimonial trust or trusts.
(k) The terms of a separate matrimonial trust or a joint
matrimonial trust may (but are not required to) restrict the sale or
transfer of the matrimonial property for:
(1) the lifetime of the settlor who dies first;
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(2) the lifetime of the surviving settlor; or
(3) another defined time period.
(l) An interest in matrimonial property is not severable during the
marriage of the husband and wife unless:
(1) both the husband and wife join in the severance in writing;
or
(2) a third party owns and forecloses a mortgage or other lien
against the interests of both the husband and wife in the
matrimonial property.
(m) Notwithstanding any other provision of this section, the legal
rights of a lienholder that exist at the time of an election to treat the
real property subject to the lien as matrimonial property may not be
subject to a severance described in subsection (l) without the
lienholder's written consent.
(n) To the extent that a matrimonial trust continues to be a
matrimonial trust after the death of a settlor (as provided by
subsections (p) and (r));
(1) real property held or owned in a separate trust and for which
an earlier election was made under this section continues to be
matrimonial property; and
(2) an unsecured creditor or judgment lien creditor who has a
claim only against the deceased settlor but not against the
surviving settlor cannot enforce that claim against the deceased
settlor's interest or the surviving settlor's interest in the
matrimonial property.
(o) After the death of a settlor of a matrimonial trust (whether
separate or joint), the issue of whether the surviving settlor's interest
in the matrimonial property will be exposed to the claims of the
surviving settlor's existing creditors or new creditors must be
determined according to:
(1) the nature and extent of the surviving settlor's interest in the
matrimonial property under the terms of the deceased settlor's
separate trust or the joint trust;
(2) all other relevant facts and circumstances; and
(3) pertinent principles of nontrust law outside this article.
(p) Matrimonial property held in a separate matrimonial trust or
in a joint matrimonial trust continues to be matrimonial property
after the death of one (1) settlor:
(1) if the settlors reserved a life estate in the matrimonial
property for each settlor when they conveyed the matrimonial
property to the matrimonial trust or trusts; or
(2) if the deceased settlor's separate trust provides to the
surviving settlor:
(A) a life estate;
(B) an interest that qualifies for a deduction from the gross
estate of the decedent under Section 2056 of the Internal
Revenue Code regardless of whether an election is made to
qualify the interest for the deduction; or
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(C) in some respect the current right to occupy or receive
rent, royalties, or other kinds of income with respect to the
matrimonial property.
(q) A separate matrimonial trust established by a deceased settlor
ceases to be a matrimonial trust upon the termination of payments to
the surviving settlor as a result of the surviving settlor's death or as
a result of the surviving settlor's valid disclaimer of all interests in
the matrimonial property held in the deceased settlor's trust.
(r) A separate matrimonial trust established by a settlor who
remains alive continues to be a matrimonial trust during that settlor's
remaining lifetime, so long as the settlor retains the right to use or
occupy matrimonial property held in the settlor's separate trust.
(s) A matrimonial trust ceases to be a matrimonial trust upon the
dissolution of the marriage of the settlors.
(t) A husband and wife may revoke a matrimonial trust by
together executing a writing expressing the revocation.
As added by P.L.6-2010, SEC.18. Amended by P.L.36-2011, SEC.9;
P.L.99-2013, SEC.10.
IC 30-4-3-36
Trust decanting; notice; rules of construction
Sec. 36. (a) Unless a trust expressly provides otherwise, a trustee
who has discretion under the terms of a trust (referred to in this
section as the "first trust") to invade the principal of the trust to make
distributions to or for the benefit of one (1) or more persons may
instead exercise the power by appointing all or part of the principal
of the first trust in favor of a trustee of another trust (referred to in
this section as the "second trust") for the benefit of one (1) or more
persons under the same trust instrument or under a different trust
instrument as long as:
(1) the beneficiaries of the second trust are the same as the
beneficiaries of the first trust;
(2) the second trust does not reduce any income, annuity, or
unitrust interest in the assets of the first trust; and
(3) if any contributions to the first trust qualified for a marital
or charitable deduction for purposes of the federal income, gift,
or estate taxes, the second trust does not contain any provision
that, if included in the first trust, would have prevented the first
trust from qualifying for a deduction or reduced the amount of
a deduction.
(b) The exercise of a power to invade principal under subsection
(a) must be by an instrument that is:
(1) in writing;
(2) signed and acknowledged by the trustee; and
(3) filed with the records of the first trust.
(c) The exercise of a power to invade principal under subsection
(a) is considered the exercise of a power of appointment, other than
a power to appoint to the trustee, the trustee's creditors, the trustee's
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estate, or the creditors of the trustee's estate. The exercise of the
power does not extend the time at which the permissible period of
the rule against perpetuities begins and the law that determines the
permissible period of the rule against perpetuities of the first trust.
(d) The trustee shall notify in writing all qualified beneficiaries of
the first trust at least sixty (60) days before the effective date of the
trustee's exercise of the power to invade principal under subsection
(a) of the manner in which the trustee intends to exercise the power.
A copy of the proposed instrument exercising the power satisfies the
trustee's notice obligation under this subsection. If all qualified
beneficiaries waive the notice period by signed written instrument
delivered to the trustee, the trustee's power to invade principal may
be exercised immediately. The trustee's notice under this subsection
does not limit the right of any beneficiary to object to the exercise of
the trustee's power to invade principal, except as otherwise provided
by this article.
(e) The exercise of the power to invade principal under subsection
(a) is not prohibited by a spendthrift clause or by a provision in the
trust instrument that prohibits amending or revoking the trust.
(f) This section is not intended to create or imply a duty to
exercise a power to invade principal. No inference of impropriety
may be made as a result of a trustee not exercising the power to
invade principal conferred under subsection (a).
(g) This section may not be construed to abridge the right of any
trustee who has a power of invasion to appoint property in further
trust that arises under the terms of the first trust, under any other
provision of this article or any other statute, or under common law.
As added by P.L.6-2010, SEC.19. Amended by P.L.51-2014, SEC.22.
IC 30-4-3-37
Unclaimed trust shares; disposition procedures
Sec. 37. (a) If a beneficiary of a trust cannot be found after a
reasonable search, the trustee may file a petition setting out the facts
of the unsuccessful search. The court may order the trustee to sell the
shares of the trust to which the beneficiary is entitled and to pay the
proceeds to the clerk of the court. The clerk shall hold the proceeds
for the use and benefit of the person or persons thereafter determined
by law to be entitled to the proceeds.
(b) If a trustee pays any money to the clerk of the court under this
section, the trustee shall file a receipt with the court. Filing the
receipt is sufficient to discharge the trustee in the same manner and
to the same extent as though the trustee had paid or distributed the
appropriate share of the trust to the unlocated beneficiary.
(c) This section does not apply to stocks, dividends, capital
credits, patronage, refunds, utility deposits, membership fees,
account balances, or book equities for which the owner cannot be
found that are the result of distributable savings of a rural electric
membership corporation formed under IC 8-1-13, a rural telephone
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cooperative corporation formed under IC 8-1-17, or an agricultural
cooperative association formed under IC 15-12-1.
As added by P.L.6-2010, SEC.20.
Indiana Code 2016
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