CHAPTER 2. RULES GOVERNING THE CREATION OF TRUSTS
IC 30-4-2
Chapter 2. Rules Governing the Creation of Trusts
IC 30-4-2-1
Written evidence of terms; definite terms; validity of inter vivostrust; existence of trust beneficiaries; creation of trust by exerciseof power of appointment
Sec. 1. (a) A trust in either real or personal property is enforceableonly if there is written evidence of its terms bearing the signature ofthe settlor or the settlor's authorized agent.
(b) Except as required in the applicable probate law for theexecution of wills, no formal language is required to create a trust,but its terms must be sufficiently definite so that the trust property,the identity of the trustee, the nature of the trustee's interest, theidentity of the beneficiary, the nature of the beneficiary's interest andthe purpose of the trust may be ascertained with reasonable certainty.
(c) It is not necessary to the validity of a trust that the trust befunded with or have a corpus that includes property other than thepresent or future, vested or contingent right of the trustee to receiveproceeds or property, including:
(1) as beneficiary of an estate under IC 29-1-6-1;
(2) life insurance benefits under section 5 of this chapter;
(3) retirement plan benefits; or
(4) the proceeds of an individual retirement account.
(d) A trust created under:
(1) section 18 of this chapter for the care of an animal; or
(2) section 19 of this chapter for a noncharitable purpose;
has a beneficiary.
(e) A trust has a beneficiary if the beneficiary can be presentlyascertained or ascertained in the future, subject to any applicable ruleagainst perpetuities.
(f) A power of a trustee to select a beneficiary from an indefiniteclass is valid. If the power is not exercised within a reasonable time,the power fails and the property subject to the power passes to thepersons who would have taken the property had the power not beenconferred.
(g) A trust may be created by exercise of a power of appointmentin favor of a trustee.
(Formerly: Acts 1971, P.L.416, SEC.3.) As amended byP.L.132-1992, SEC.1; P.L.238-2005, SEC.21.
IC 30-4-2-1.5
Trust not created by will; requirements
Sec. 1.5. (a) Except as provided in subsection (b), a trust that isnot created by a will is validly created if the trust's creation complieswith the law of the jurisdiction in which the trust instrument wasexecuted or the law of the jurisdiction in which, at the time ofcreation:
(1) the settlor was domiciled, had a place of abode, or was anational; (2) a trustee was domiciled or had a place of business; or
(3) any trust property is located.
(b) A valid trust must be:
(1) in writing; and
(2) signed by:
(A) the settlor; or
(B) an agent of the settlor who is an attorney in fact.
As added by P.L.238-2005, SEC.22.
IC 30-4-2-2
Acceptance by trustee
Sec. 2. (a) This section applies to the acceptance of a trust by aperson named as trustee.
(b) The appearance of the named person's signature on the writingwhich is the evidence of the trust or on a separate written acceptancewill be conclusive that the named person accepted the trust.
(c) Except as provided in subsection (e), if the named personexercises powers or performs duties under the trust, the namedperson will be presumed to have accepted the trust.
(d) The named person may reject the trust in writing and, if thenamed person does so, will incur no liability. If, after being informedthat the named person has been named as trustee, the named personneither expressly accepts the trust nor exercises powers or performsduties under the trust within a reasonable time, the named person willbe presumed to have rejected the trust.
(e) If there is an immediate risk of damage to the trust estate, thenamed person may act to preserve the trust estate and will not bepresumed to have accepted the trust, provided the named persondelivers a written rejection to the settlor at or within a reasonabletime after the named person acts, or, if the settlor is dead, to thebeneficiary or the court having jurisdiction over the administrationof the trust estate.
(Formerly: Acts 1971, P.L.416, SEC.3.) As amended byP.L.238-2005, SEC.23.
IC 30-4-2-3
Repealed
(Repealed by P.L.293-1983, SEC.2.)
IC 30-4-2-4
Repealed
(Repealed by P.L.293-1983, SEC.2.)
IC 30-4-2-5
Life insurance trusts
Sec. 5. (Life Insurance Trusts)
Proceeds of life insurance policies heretofore made payable to atrustee or trustees named as beneficiary or hereafter to be namedbeneficiary under an inter vivos trust shall be paid directly to thetrustee or trustees and held and disposed of by the trustee or trustees
as provided in the trust agreement or declaration of trust in writingmade and in existence on the date of death of the insured, whether ornot such trust or declaration of trust is amendable or revocable orboth, or whether it may have been amended, and notwithstanding thereservation of any or all rights of ownership under the insurancepolicy or annuity contract; subject, however, to a valid assignment ofany part of the proceeds. It is not necessary to the validity of suchtrust agreement or declaration of trust that it be funded or have acorpus other than the right, which need not be irrevocable, of thetrustee or trustees named therein to receive such proceeds asbeneficiary. A policy of life insurance or annuity contract maydesignate as beneficiary a trustee or trustees named or to be namedby will if the designation is made in accordance with the provisionsof the policy or contract whether or not the will is in existence at thetime of the designation.
(Formerly: Acts 1971, P.L.416, SEC.3.)
IC 30-4-2-6
Nature of trustee's estate
Sec. 6. (Nature of the Trustee's Estate)
(a) The trustee takes the title to the trust property.
(b) The extent of the trustee's estate in the trust property is limitedto that which is necessary to enable him to perform the trust.
(Formerly: Acts 1971, P.L.416, SEC.3.)
IC 30-4-2-7
Nature of beneficiary's estate
Sec. 7. (Nature of the Beneficiary's Estate)
(a) The beneficiary takes an equitable interest in the trustproperty.
(b) The extent of the beneficiary's estate shall be determined fromthe terms of the trust. The Rule in Shelley's Case and the Doctrine ofWorthier Title shall not be applied to determine the meaning orapplication of the terms.
(c) Except as provided in 30-4-2-14, if, under the terms of thetrust, the trustee is required at some time to distribute real propertyfrom the trust estate to a beneficiary, that beneficiary's equitableinterest is real property. In all other cases the beneficiary's interest ispersonal property.
(Formerly: Acts 1971, P.L.416, SEC.3.)
IC 30-4-2-8
Merger of estates
Sec. 8. (a) If the settlor transfers both the title and the entireequitable interest in property to the same person as both the soletrustee and the sole beneficiary, no trust will be deemed to have beencreated and the transferee shall treat the property as the transferee'sown.
(b) Except as provided in subsection (c), if the title to the trustproperty and the entire beneficial interest becomes united in one (1)
person the trust terminates. If:
(1) a beneficiary is serving as trustee; and
(2) the trust creates an interest in a beneficiary who is not thetrustee, whether the interest is contingent or vested;
the entire beneficial interest shall not be construed to be united inone (1) person.
(c) The title to the trust property and the entire beneficial interestshall not become united in a beneficiary whose interest is protectedunder a trust with protective provisions, and in that case the courtshall appoint a new trustee to administer the trust for thebeneficiary's benefit.
(Formerly: Acts 1971, P.L.416, SEC.3.) As amended byP.L.200-1991, SEC.2.
IC 30-4-2-9
Necessity of powers or duties
Sec. 9. (Necessity of Powers or Duties)
Subject to 30-4-2-13, if the trustee has neither a power nor a dutyrelated to the administration of the trust, the title to the trust propertywill be treated as having vested directly in the beneficiary on the dateof delivery to the trustee.
(Formerly: Acts 1971, P.L.416, SEC.3.)
IC 30-4-2-10
Capacity of settlor
Sec. 10. (a) If a trust is created by a will, the settlor's capacity thatis required to create the trust is determined by the applicable probatelaw.
(b) The capacity of a settlor that is required to create, amend,revoke, or add property to a revocable trust is the same as thecapacity of a testator that is required to make a will.
(c) To create or add property to an irrevocable trust, the settlor ortransferor must be of sound mind and have a reasonableunderstanding of the nature and effect of the act and the terms of thetrust.
(d) To direct the actions of the trustee of a trust, the settlor orother person must:
(1) have the capacity to hold and deal with property for thesettlor's or person's own benefit;
(2) be at least eighteen (18) years of age; and
(3) be of sound mind.
(Formerly: Acts 1971, P.L.416, SEC.3.) As amended byP.L.238-2005, SEC.24.
IC 30-4-2-11
Capacity of trustee
Sec. 11. (Trustee's Capacity)
(a) If the trustee is a natural person, he must have the capacity totake, hold, and deal with property for his own benefit and must be atleast eighteen (18) years of age, be of sound mind and of good moral
character.
(b) If the trustee is a corporation, it must have the power to take,hold, and deal with property for its own benefit and have the powerto act as a trustee.
(c) Subject to IC 1971, 30-4-2-8, the fact that the person named tobe trustee is also a beneficiary will not disqualify him from acting astrustee if he is otherwise qualified.
(Formerly: Acts 1971, P.L.416, SEC.3; Acts 1973, P.L.293, SEC.6.)
IC 30-4-2-12
Illegality
Sec. 12. (Illegality)
(a) The terms of the trust may not require the trustee to commit acriminal or tortious act or an act which is contrary to public policy.
(b) A trust with terms which violate subsection (a) of this sectionis invalid unless the prohibited term is separable. If the prohibitedterm is separable, only it is invalid and the remainder of the trust isvalid.
(Formerly: Acts 1971, P.L.416, SEC.3.)
IC 30-4-2-13
Application of statute of uses
Sec. 13. (Application of Statute of Uses)
If the trust property includes real property, and, under the termsof the trust,
(a) The beneficiary has the power to manage the trust property,including the power to direct the trustee to sell the property; and
(b) The trustee may sell the trust property only on direction by thebeneficiary or other person or may sell it after a period of timestipulated in the terms of the trust in the absence of a direction:
then 30-4-2-9 shall not apply to defeat the trustee's title.
(Formerly: Acts 1971, P.L.416, SEC.3.) As amended by Acts 1979,P.L.268, SEC.8.
IC 30-4-2-14
Assignment of beneficiary's interest
Sec. 14. (Assignment of Beneficiary's Interest)
(a) If the terms of the trust give the trustee the power to sell thetrust property upon direction by the beneficiary or other person or tosell it after a stipulated period of time in the absence of a directionas provided in 30-4-2-13, the beneficiary may treat his interest aspersonal property and may assign it to any person notwithstandingthe provisions of 30-4-2-7(c).
(b) The trustee will be bound by an assignment made undersubsection (a) of this section only after he receives written notice ofit.
(Formerly: Acts 1971, P.L.416, SEC.3.)
IC 30-4-2-15
Divorce or annulment of marriage; effect on revocable trust Sec. 15. (a) This section does not apply to a trust:
(1) that is irrevocable on the date of a divorce or an annulment;or
(2) created by:
(A) the settlor and the settlor's spouse or former spouseunder a written agreement with each other that requires thecreation of the trust; or
(B) a court order.
(b) If, after creating a revocable trust, the settlor is divorced or themarriage of the settlor to the settlor's spouse is annulled, the settlor'sformer spouse shall for the purposes of the trust be treated as if thespouse had died before the settlor died.
As added by P.L.200-1991, SEC.3.
IC 30-4-2-16
Election by surviving spouse to take share against settlor's will;distribution of remainder
Sec. 16. (a) This section applies to:
(1) property in a trust that is subject to a spouse's right ofelection under IC 29-1-3; and
(2) a trust that receives property from the settlor's estate;
if the settlor's spouse files an effective election to take a share of thesettlor's estate against the settlor's will under IC 29-1-3.
(b) The trustee shall dispose of the assets received from thesettlor's estate and the portion of the trust remaining after thespouse's election as if the settlor's spouse had died before the settlordied.
As added by P.L.200-1991, SEC.4.
IC 30-4-2-17
Valid purposes of charitable trust; selection of purpose orbeneficiary if not specified by trust
Sec. 17. (a) A charitable trust may be created for the followingpurposes:
(1) The relief of poverty.
(2) The advancement of education or religion.
(3) The promotion of health.
(4) Governmental and municipal purposes.
(5) A purpose that is beneficial to the community.
(b) If the terms of a charitable trust do not indicate a particularcharitable purpose or beneficiary, the court may select at least one(1) charitable purpose or beneficiary. The selection must beconsistent with the settlor's intention to the extent the intention canbe ascertained.
(c) The settlor of a charitable trust, among other persons, maymaintain a proceeding to enforce the charitable trust.
As added by P.L.238-2005, SEC.25.
IC 30-4-2-18
Trust for care of animal Sec. 18. (a) A trust may be created to provide for the care of ananimal alive during the settlor's lifetime.
(b) A trust authorized by this section terminates as follows:
(1) If the trust is created to provide for the care of one (1)animal alive during the settlor's lifetime, the trust terminates onthe death of the animal.
(2) If the trust is created to provide for the care of more thanone (1) animal alive during the settlor's lifetime, the trustterminates on the death of the last surviving animal.
(c) A trust authorized by this section may be enforced by thefollowing:
(1) A person appointed in the terms of the trust.
(2) A person appointed by the court, if the terms of the trust donot appoint a person.
(d) A person having an interest in the welfare of an animal forwhose care a trust is established may request the court to:
(1) appoint a person to enforce the trust; or
(2) remove a person appointed to enforce the trust.
(e) Property of a trust authorized by this section may be appliedonly to the trust's intended use, except to the extent the courtdetermines that the value of the trust property exceeds the amountrequired for the trust's intended use.
(f) Except as provided in the terms of the trust, property notrequired for the trust's intended use must be distributed to thefollowing:
(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.26.
IC 30-4-2-19
Trust for noncharitable purpose
Sec. 19. (a) Except as provided in section 18 of this chapter, atrust may be created for a:
(1) noncharitable purpose without a beneficiary; or
(2) noncharitable and valid purpose to be selected by thetrustee.
(b) A trust authorized by this section may be enforced for notmore than twenty-one (21) years.
(c) A trust authorized by this section may be enforced by thefollowing:
(1) A person appointed in the terms of the trust.
(2) A person appointed by the court, if the terms of the trust donot appoint a person.
(d) Property of a trust authorized by this section may be appliedonly to the trust's intended use, except to the extent the courtdetermines that the value of the trust property exceeds the amountrequired for the trust's intended use.
(e) Except as provided in the terms of the trust, property notrequired for the trust's intended use must be distributed to thefollowing: (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.