Indiana § 30-4-2-19 - Trust for noncharitable purpose

§ 30-4-2-19. Trust for noncharitable purpose

Sec. 19. (a) Except as provided in section 18 of this chapter, a trust may be created for a:

(1) noncharitable purpose without a beneficiary; or

(2) noncharitable and valid purpose to be selected by the trustee.

(b) A trust authorized by this section may be enforced for not more than twenty-one (21) years.

(c) A trust authorized by this section may be enforced by the following:

(1) A person appointed in the terms of the trust.

(2) A person appointed by the court, if the terms of the trust do not appoint a person.

(d) Property of a trust authorized by this section may be applied only to the trust's intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the trust's intended use.

(e) Except as provided in the terms of the trust, property not required for the trust's intended use must be distributed to the following:

(1) The settlor, if the settlor is living.

(2) The settlor's successors in interest, if the settlor is deceased.

As added by P.L.238-2005, SEC.27.

IC 30-4-2.1Chapter 2.1. Rules for Interpretation of Trusts

30-4-2.1-1Construction 30-4-2.1-2Adopted children 30-4-2.1-3No contest provision enforceable; exceptions 30-4-2.1-4Children born after trust's creation 30-4-2.1-5Mistaken belief that settlor's child deceased 30-4-2.1-6Void, revoked, or lapsed devise 30-4-2.1-7Beneficiary predeceases settlor 30-4-2.1-8Kindred of the half blood 30-4-2.1-9Applicability of adultery and abandonment forfeiture provisions 30-4-2.1-11Written statement or list disposing of tangible personal property 30-4-2.1-11.1Trust referencing writing; effect to be given to writing 30-4-2.1-12Order of abatement; other rules governing abatement 30-4-2.1-13Repealed 30-4-2.1-14Rules of interpretation concerning discretionary interests 30-4-2.1-14.5"Discretionary interest"; rules of construction 30-4-2.1-15Rules of interpretation concerning a beneficiary's influence over a trust 30-4-2.1-16Rules of interpretation concerning a trustee's independence from the settlor 30-4-2.1-17Limits on creditors of beneficiaries who may replace or remove a trustee or who are also trustees or co-trustees

IC 30-4-2.1-1Construction Sec. 1. In the absence of a contrary intent appearing in the trust, a trust shall be construed in accordance with the rules in this chapter.

As added by P.L.4-2003, SEC.7.

IC 30-4-2.1-2Adopted children Sec. 2. (a) Except as provided in subsection (b), in construing a trust naming as beneficiary a person described by relationship to the settlor or to another, a person adopted before:

(1) the person is twenty-one (21) years of age; and

(2) the death of the settlor;

shall be considered the child of the adopting parent or parents and not the child of the natural or previous adopting parents.

(b) If a natural parent or previous adopting parent marries the adopting parent before the settlor's death, the adopted person shall also be considered the child of the natural or previous adopting parent.

(c) A person adopted by the settlor after the person becomes twenty-one (21) years of age shall be considered the child of the settlor. However, no other person is entitled to establish the relationship to the settlor through the child.

As added by P.L.4-2003, SEC.7.

IC 30-4-2.1-3No contest provision enforceable; exceptions Sec. 3. (a) Except as provided in subsection (b), a no contest provision is enforceable according to the express terms of the no contest provision.

(b) Subsection (a) does not apply to the following proceedings:

(1) An action brought by a beneficiary if good cause is found by a court.

(2) An action brought by a trustee or other fiduciary serving under the terms of the trust that incorporates a no contest provision, unless the trustee or other fiduciary is a beneficiary against whom the no contest provision is otherwise enforceable.

(3) An agreement, including a nonjudicial settlement agreement, among beneficiaries and any other interested persons to settle or resolve any other matter relating to a trust.

(4) An action to determine whether a proposed or pending motion or proceeding constitutes a contest.

(5) An action brought by or on behalf of a beneficiary to seek a ruling regarding the construction or interpretation of a trust.

(6) An action or objection brought by a beneficiary, executor, or other fiduciary that seeks a ruling on proposed distributions, fiduciary fees, or any other matter where a court has discretion, including actions under IC 30-4-3-22.

(7) An action brought by the attorney general that:

(A) seeks a ruling regarding the construction or interpretation of:

(i) a charitable trust or a trust containing a charitable interest; or

(ii) a no contest provision contained in a trust that purports to penalize a charity or charitable interest; or

(B) institutes any other proceedings relating to a trust if good cause is shown to do so.

As added by P.L.4-2003, SEC.7. Amended by P.L.163-2018, SEC.14.

IC 30-4-2.1-4Children born after trust's creation Sec. 4. (a) Except as provided in subsection (b) and section 5 of this chapter, when a settlor fails to provide in the settlor's trust for a child who is:

(1) born or adopted after the making of the settlor's trust; and

(2) born before or after the settlor's death;

the child is entitled to receive a share in the trust assets. The child's share of the trust assets shall be determined by ascertaining what the child's intestate share would have been under IC 29-1-2-1 if the settlor had died intestate. The child is entitled to receive a share of the trust assets equivalent in value to the intestacy share determined under IC 29-1-2-1.

(b) Subsection (a) does not apply to a child of the settlor if:

(1) it appears from the trust that the settlor intentionally failed to provide in the settlor's trust for the child; or

(2) the settlor:

(A) had at least one (1) child known to the settlor to be living when the trust was executed; and

(B) devised substantially all of the settlor's trust assets to the settlor's surviving spouse.

As added by P.L.4-2003, SEC.7. Amended by P.L.231-2019, SEC.23.

IC 30-4-2.1-5Mistaken belief that settlor's child deceased Sec. 5. (a) Except as provided in subsection (b), if, at the time of the making of the trust, the settlor:

(1) believes a child of the settlor to be dead; and

(2) fails to provide for the child in the settlor's trust;

the child is entitled to receive a share in the trust assets. The child's share of the trust assets shall be determined by ascertaining what the child's intestate share would have been under IC 29-1-2-1 if the settlor had died intestate. The child is entitled to receive a share of the trust assets equivalent in value to the intestacy share determined under IC 29-1-2-1.

(b) Subsection (a) does not apply to a child of the settlor if it appears from the trust or from other evidence that the settlor would not have devised anything to the child had the settlor known that the child was alive.

As added by P.L.4-2003, SEC.7.

IC 30-4-2.1-6Void, revoked, or lapsed devise Sec. 6. If a devise of real or personal property, not included in the residuary clause of the trust:

(1) is void;

(2) is revoked; or

(3) lapses;

the devise becomes a part of the residue and passes to the residuary beneficiary.

As added by P.L.4-2003, SEC.7.

IC 30-4-2.1-7Beneficiary predeceases settlor Sec. 7. (a) As used in this section, "descendant" includes the following:

(1) A child adopted before the child is twenty-one (21) years of age by:

(A) the settlor; or

(B) the settlor's descendants.

(2) A descendant of a child adopted as set forth in subdivision (1).

(3) A child who is born of the mother out of wedlock in either of the following circumstances:

(A) The mother is a descendant of the settlor.

(B) The mother is the settlor.

(4) If the right of a child born out of wedlock to inherit from the father is or has been established in the manner provided under IC 29-1-2-7, the child, in either of the following circumstances:

(A) The father is a descendant of the settlor.

(B) The father is the settlor.

(5) A descendant of a child born out of wedlock as set forth in subdivisions (3) and (4).

(b) If:

(1) an estate, real or personal, is devised to a descendant of the settlor; and

(2) the beneficiary:

(A) dies during the lifetime of the settlor before or after the execution of the trust; and

(B) leaves a descendant who survives the settlor;

the devise does not lapse, but the property devised vests in the surviving descendant of the beneficiary as if the beneficiary had survived the settlor and died intestate.

As added by P.L.4-2003, SEC.7.

IC 30-4-2.1-8Kindred of the half blood Sec. 8. Kindred of the half blood are entitled to receive the same trust interest that they would have received if they had been of the whole blood.

As added by P.L.4-2003, SEC.7.

IC 30-4-2.1-9Applicability of adultery and abandonment forfeiture provisions Sec. 9. A trust of a deceased spouse is subject to the following:

(1) IC 29-1-2-14.

(2) IC 29-1-2-15.

As added by P.L.238-2005, SEC.28.

IC 30-4-2.1-11Written statement or list disposing of tangible personal property Sec. 11. (a) A written statement or list that:

(1) complies with this section; and

(2) is referred to in a settlor's trust that was revocable during the settlor's lifetime;

may be used to dispose of items of tangible personal property, other than property used in a trade or business, not otherwise specifically disposed of by the trust.

(b) To be admissible under this section as evidence of the intended disposition, the writing must be signed by the settlor and must describe the items and the beneficiaries with reasonable certainty. The writing may be prepared before or after the execution of the trust. The writing may be altered by the settlor after the writing is prepared. The writing may have no significance apart from the writing's effect on the dispositions made by the trust.

(c) If more than one (1) otherwise effective writing exists, then, to the extent of a conflict among the writings, the provisions of the most recent writing revoke the inconsistent provisions of each earlier writing.

As added by P.L.238-2005, SEC.29.

IC 30-4-2.1-11.1Trust referencing writing; effect to be given to writing Sec. 11.1. Except as provided in section 11 of this chapter, if a trust refers to a writing of any kind, the referenced writing, whether subsequently amended or revoked, as it existed at the time of the execution of the trust, shall be given the same effect as if set forth at length in the trust, if the referenced writing is clearly identified in the trust and is in existence at the time of the execution of the trust.

As added by P.L.81-2015, SEC.19.

IC 30-4-2.1-12Order of abatement; other rules governing abatement Sec. 12. (a) If a trust is terminated or partially terminated and the available trust property is not sufficient to fully satisfy the interests of all beneficiaries, the interests must be abated in the following order:

(1) The interests that would be characterized as residuary devises if the trust were a will.

(2) The interests that would be characterized as general devises if the trust were a will.

(3) The interests that would be characterized as specific devises if the trust were a will.

The amount abated for each beneficiary within each classification described in subdivisions (1) through (3) must be proportional to the amount of property that each beneficiary would have received if full distribution of the trust property had been made in accordance with the terms of the trust instrument.

(b) If:

(1) a trust instrument expresses an order of abatement that differs from the order set forth in subsection (a); or

(2) the order of abatement stated in subsection (a) would impair an express or implied purpose of the trust;

the interests of the beneficiaries must be abated in the manner determined appropriate to give effect to the settlor's intent.

(c) If, under the terms of a trust that was revocable at the time of the settlor's death, the subject of a preferred devise is sold or used to pay debts, expenses, taxes, or other obligations incident to the settlement of the settlor's affairs, abatement must be achieved by adjustment in, or contribution from, other interests in the remaining trust property.

(d) Where applicable, the abatement of beneficiary interests in a trust is subject to IC 32-17-13-4.

As added by P.L.101-2008, SEC.8.

IC 30-4-2.1-13RepealedAs added by P.L.6-2010, SEC.13. Repealed by P.L.149-2012, SEC.12.

IC 30-4-2.1-14Rules of interpretation concerning discretionary interests Sec. 14. (a) The following rules apply only to discretionary interests (as defined in section 14.5 of this chapter):

(1) A discretionary interest is a mere expectancy that is neither a property interest nor an enforceable right.

(2) A creditor may not:

(A) require a trustee to exercise the trustee's discretion to make a distribution; or

(B) cause a court to foreclose a discretionary interest.

(3) A court may review a trustee's distribution discretion only if the trustee acts dishonestly or with an improper motive.

(b) Words such as sole, absolute, uncontrolled, or unfettered discretion dispense with the trustee acting reasonably.

(c) Absent express language to the contrary, if the distribution language in a discretionary interest permits unequal distributions between beneficiaries or distributions to the exclusion of other beneficiaries, a trustee may, in the trustee's discretion, distribute all of the accumulated, accrued, or undistributed income and principal to one (1) beneficiary to the exclusion of the other beneficiaries.

(d) Regardless of whether a beneficiary has any outstanding creditors, a trustee of a discretionary interest may directly pay any expense on behalf of the beneficiary and may exhaust the income and principal of the trust for the benefit of the beneficiary. A trustee is not liable to a creditor for paying the expenses of a beneficiary who holds a discretionary interest.

As added by P.L.6-2010, SEC.14. Amended by P.L.36-2011, SEC.7; P.L.6-2012, SEC.202.

IC 30-4-2.1-14.5"Discretionary interest"; rules of construction Sec. 14.5. (a) As used in this section and section 14 of this chapter, "discretionary interest" refers to any interest over which the trustee has any discretion to make or withhold a distribution.

(b) A discretionary interest may be evidenced by permissive language such as "may make distributions" or may be evidenced by mandatory distribution language that is negated by the discretionary language of the trust such as "the trustee shall make distributions in the trustee's sole and absolute discretion".

(c) An interest that includes distribution language that appears mandatory but is subsequently qualified by discretionary distribution language is considered a discretionary interest.

(d) Trust provisions that create discretionary interests include the following examples:

(1) "The trustee may, in the trustee's sole and absolute discretion, make distributions for health, education, maintenance, and support.".

(2) "The trustee shall, in the trustee's sole and absolute discretion, make distributions for health, education, maintenance, and support.".

(3) "The trustee may make distributions for health, education, maintenance, and support.".

(4) "The trustee shall make distributions for health, education, maintenance, and support. The trustee may exclude any beneficiary or make unequal distributions among the beneficiaries.".

(5) "The trustee may make distributions for health, education, maintenance, support, comfort, and general welfare.".

As added by P.L.36-2011, SEC.8.

IC 30-4-2.1-15Rules of interpretation concerning a beneficiary's influence over a trust Sec. 15. If a party challenges a settlor or a beneficiary's influence over a trust, none of the following factors, alone or in combination, may be considered dominion and control over a trust:

(1) A beneficiary serving as a trustee or co-trustee.

(2) The settlor or beneficiary holds an unrestricted power to remove or replace a trustee.

(3) The settlor or a beneficiary:

(A) is a trust administrator, a general partner of a partnership, a manager of a limited liability company, or an officer of a corporation; or

(B) has any other managerial function in any other entity;

that is owned in whole or in part by the trust.

(4) A person related by blood or adoption to a settlor or beneficiary is appointed as trustee.

(5) An agent, accountant, attorney, financial adviser, or friend of the settlor or a beneficiary is appointed as trustee.

(6) A business associate of the settlor or a beneficiary is appointed as trustee.

(7) A beneficiary holds any power of appointment over part or all of the trust property.

(8) The settlor holds a power to substitute property of equivalent value.

(9) The trustee may loan trust property to the settlor for less than a full and adequate rate of interest or without adequate security.

(10) The trust contains broad purposes or highly discretionary distribution language.

(11) The trust has only one (1) beneficiary eligible for current distributions.

As added by P.L.6-2010, SEC.15.

IC 30-4-2.1-16Rules of interpretation concerning a trustee's independence from the settlor Sec. 16. Absent clear and convincing evidence otherwise, a settlor of an irrevocable trust may not be considered the alter ego of a trustee. The following factors, alone or in combination, are not sufficient evidence to conclude that the settlor controls a trustee or is the alter ego of the trustee:

(1) Any combination of the factors listed in section 15 of this chapter.

(2) Isolated occurrences of the settlor signing checks, making disbursements, or executing other documents related to the trust as a trustee when the settlor is, in fact, not a trustee.

(3) Requesting a trustee to make distributions on behalf of a beneficiary.

(4) Requesting a trustee to hold, purchase, or sell any trust property.

As added by P.L.6-2010, SEC.16.

IC 30-4-2.1-17Limits on creditors of beneficiaries who may replace or remove a trustee or who are also trustees or co-trustees Sec. 17. (a) A creditor may not reach, exercise, or otherwise acquire an interest of a beneficiary or any other person who holds an unconditional or conditional removal or replacement power over a trustee. A power described in this subsection is personal to a beneficiary or other person and may not be exercised by the person's creditors. A court may not direct a person to exercise the power.

(b) A creditor may not:

(1) reach an interest of a beneficiary who is also a trustee or co-trustee; or

(2) otherwise compel a distribution to a beneficiary who is also a trustee or co-trustee.

(c) A court may not foreclose against an interest held by a beneficiary described in subsection (b).

As added by P.L.6-2010, SEC.17.

IC 30-4-3Chapter 3. Rules Governing the Rights, Powers, Duties, Liabilities, and Remedies of the Parties to a Trust

30-4-3-1Repealed 30-4-3-1.3Revocable trusts; powers of settlor; duties of trustees 30-4-3-1.5Revocation or amendment of trust by settlor 30-4-3-2Power to restrain transfer of a beneficiary's interest 30-4-3-3Powers of trustees 30-4-3-3.2Perpetual care fund trusts; trustee withdrawals 30-4-3-4Exercise of powers by multiple, successor, or surviving trustees 30-4-3-5Conflict of interest in exercise of powers 30-4-3-6Duties of trustee 30-4-3-6.5Liability of trustee for lack of knowledge of event affecting administration or distribution of trust 30-4-3-7Self-dealing; transactions between trusts 30-4-3-7.5Transactions authorized 30-4-3-8Duties of co-trustees 30-4-3-9Duty of trustee under control of third persons 30-4-3-10Liability to third persons 30-4-3-11Potential liability of trustee to beneficiary; remedies; removal of trustee 30-4-3-12Liability for breach of trust by co-trustee 30-4-3-13Liability of a successor trustee 30-4-3-14Contribution and indemnity 30-4-3-15Remedies of trustee against third persons 30-4-3-16Remedies among co-trustees 30-4-3-17Remedies of trustee against beneficiary 30-4-3-18Other remedies of the trustee 30-4-3-19Relief of trustee's liability for breach of trust 30-4-3-20Liability of beneficiary 30-4-3-21Remedies of beneficiary against third persons 30-4-3-22Remedies of the beneficiary against the trustee 30-4-3-23Remedy of a beneficiary against a co-beneficiary 30-4-3-24Repealed 30-4-3-24.4Modification or termination of trust by court 30-4-3-24.5Termination by trustee of trust with value less than $75,000 30-4-3-25Rescission and reformation 30-4-3-25.5Distribution of terminated trust; payment of federal and state taxes 30-4-3-26Power to direct a deviation from the terms of the trust 30-4-3-27Cy pres doctrine 30-4-3-28Repealed 30-4-3-29Removal, resignation, and appointment of trustees 30-4-3-29.3Power to appoint a successor trustee 30-4-3-29.5Corporate trustee that acquires trust due to change in control 30-4-3-30Effect of this article on the court's equity powers 30-4-3-31Judicial modification of trusts for benevolent public purpose and certain transfers not in trust; federal compliance 30-4-3-32Trustee's liability for breach of trust 30-4-3-33Trustee vacancies; priority for filling vacancy 30-4-3-34Petition to determine heirs and interests in trust estate 30-4-3-35Matrimonial trusts; election; effect of the death of a spouse or the dissolution of the marriage; revocation 30-4-3-36Repealed 30-4-3-37Unclaimed trust shares; disposition procedures 30-4-3-38Grantor trust; reimbursement to deemed owner