CHAPTER 3. RULES GOVERNING THE RIGHTS, POWERS, DUTIES, LIABILITIES, AND REMEDIES OF THE PARTIES TO A TRUST
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Repealed
(Repealed by P.L.238-2005, SEC.63.)
IC 30-4-3-1.5
Revocation or amendment of trust by settlor
Sec. 1.5. (a) This subsection applies to a trust created under aninstrument executed after June 30, 2005. Unless the terms of a trustexpressly provide that the trust is irrevocable, the settlor may revokeor amend the trust.
(b) This subsection applies to a revocable trust created or fundedby at least two (2) settlors. Unless the terms of the trust provideotherwise:
(1) to the extent the trust consists of community property, thetrust 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 thancommunity property, each settlor may revoke or amend the trustwith regard to the part of the trust property attributable to thatsettlor'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 termsof the trust.
(2) If the terms of the trust do not provide a method or the termsof the trust provide a method that is not expressly made theexclusive method to revoke or amend the trust, the settlor mayrevoke 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 otherwisehave 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'sintent.
(d) If a revocable trust is revoked, the trustee shall deliver the trustproperty as the settlor directs.
(e) A settlor's powers with respect to revocation, amendment, anddistribution of trust property may be exercised by an agent under apower of attorney only to the extent expressly authorized by theterms of the trust or the power of attorney.
(f) A guardian of a settlor may exercise the settlor's powers withrespect to revocation, amendment, or distribution of trust propertyonly 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(g) A trustee who does not know that a trust has been revoked or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 interestfor distributions made and other actions taken on the assumption thatthe 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 thatthe interest of a beneficiary may not be either voluntarily orinvoluntarily transferred before payment or delivery of the interestto the beneficiary by the trustee.
(b) Except as otherwise provided in subsection (c), if the settloris also a beneficiary of the trust, a provision restraining the voluntaryor involuntary transfer of his beneficial interest will not prevent hiscreditors from satisfying claims from his interest in the trust estate.
(c) Subsection (a) applies to a trust that meets both of thefollowing requirements, regardless of whether or not the settlor isalso 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 thebeneficiary's interest in the trust complies with 29 U.S.C.1056(d).
(d) A trust containing terms authorized under subsection (a) maybe referred to wherever appropriate as a trust with protectiveprovisions.
(Formerly: Acts 1971, P.L.416, SEC.4.) As amended byP.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 subjectto subsection (c), a trustee has the power to perform without courtauthorization, except as provided in sections 4(b) and 5(a) of thischapter, every act necessary or appropriate for the purposes of thetrust including, by way of illustration and not of limitation, thefollowing 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 publicor 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 assetin which the trustee, in any trust capacity, holds an undividedinterest.
(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
(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, includingthe purchase back of previously sold covered securityoptions.
(6) The power to enter into a lease as lessor or lessee, with orwithout option to renew.
(7) The power to enter into arrangements for exploration andremoval of minerals or other natural resources and enter into apooling or unitization agreement.
(8) The power to continue the operation or management of anybusiness or other enterprise placed in trust.
(9) The power to:
(A) borrow money, to be repaid from trust property orotherwise; and
(B) encumber, mortgage, pledge, or grant a security interestin trust property in connection with the exercise of anypower.
(10) The power to:
(A) advance money for the benefit of the trust estate and forall expenses or losses sustained in the administration of thetrust; and
(B) collect any money advanced, without interest or withinterest, at no more than the lowest rate prevailing whenadvanced.
(11) The power to prosecute or defend actions, claims, orproceedings 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 orarbitration; and
(C) abandon or release, totally or partially, any claimbelonging 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 expensesincurred in the:
(A) acquisition, retention, and maintenance of the trustproperty; and (B) administration of the trust.
(15) The power to:
(A) vote securities, in person or by a general or specialproxy;
(B) hold the securities in the name of a nominee if thetrustee is a corporate trustee; and
(C) effect or approve, and deposit securities in connectionwith, 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 thetrustee's duties.
(17) The power to effect distribution of property in cash, inkind, or partly in cash and partly in kind, in divided orundivided interests.
(18) The power to execute and deliver all instruments necessaryor appropriate to accomplishing or facilitating the exercise ofthe trustee's powers.
(19) With respect to an interest in a proprietorship, partnership,limited liability company, business trust, corporation, or anotherform 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 orcontributing additional capital.
(20) With respect to possible liability for violation ofenvironmental 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 thetrustee holds an interest or has been asked to hold aninterest;
to determine the application of environmental law withrespect to the property;
(B) take action to prevent, abate, or remedy an actual orpotential violation of an environmental law affectingproperty held directly or indirectly by the trustee before orafter the assertion of a claim or the initiation ofgovernmental enforcement; (C) decline to accept property into the trust or disclaim anypower with respect to property that is or may be burdenedwith liability for violation of environmental law;
(D) compromise claims against the trust that may be assertedfor an alleged violation of environmental law; and
(E) pay the expense of any inspection, review, abatement, orremedial 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 anyemployee benefit plan or retirement plan, annuity, or lifeinsurance payable to the trustee and exercise rights under theplan, 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, includingloans to a beneficiary on terms and conditions the trusteedetermines fair and reasonable under the circumstances. Thetrustee has a lien on future distributions for repayment of theloans.
(24) The power to pledge trust property to guarantee loans madeby others to the beneficiary on terms and conditions the trusteeconsiders to be fair and reasonable under the circumstances.The trustee has a lien on future distributions for repayment ofthe loans.
(25) The power to:
(A) appoint a trustee to act in another jurisdiction withrespect to trust property located in the other jurisdiction;
(B) confer on the appointed trustee all the appointingtrustee'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 disabilityor whom the trustee reasonably believes is incapacitated, thepower 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 underIC 30-2-8.5 to create a custodianship or custodial trust;
(E) paying the amount to an adult relative or another personhaving legal or physical care or custody of the beneficiary tobe expended on the beneficiary's behalf, if the trustee doesnot know of a guardian, custodian, or custodial trustee; or
(F) managing the amount as a separate fund on thebeneficiary's behalf, subject to the beneficiary's continuingright to withdraw the distribution.
(27) The power to: (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 notimpair the rights of any beneficiary or adversely affectachievement 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 undersubsection (a)(7), and an encumbrance, mortgage, pledge, or securityinterest under subsection (a)(9) may be for a term either within orextending beyond the term of the trust.
(c) In acquiring, investing, reinvesting, exchanging, retaining,selling, and managing property for any trust, the trustee thereof shallexercise the judgment and care required by IC 30-4-3.5. Within thelimitations of the foregoing standard, the trustee is authorized toacquire and retain every kind of property, real, personal, or mixed,and every kind of investment, including specifically, but without inany way limiting the generality of the foregoing, bonds, debentures,and other corporate obligations, stocks, preferred or common, andreal estate mortgages, which persons of prudence, discretion, andintelligence acquire or retain for their own account, and within thelimitations of the foregoing standard, the trustee is authorized toretain property properly acquired, without limitation as to time andwithout regard to its suitability for original purchase. Within thelimitations of the foregoing standard, the trustee is authorized to sellcovered security options and to purchase back previously soldcovered 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 thoseassets, the trustee may distribute the particular assets withoutdistributing 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 fairmarket value of all of the particular assets as of the date ofdistribution; and
(2) cause the distribution to result in a fair and equitabledivision among the beneficiaries of capital gain or loss on theassets.
(e) If the trust is terminated or partially terminated, the trusteemay send to the beneficiaries a proposal for distribution. If theproposal 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 proposalfor distribution was sent;
the right of the beneficiary to object to the proposed distributionterminates if the beneficiary fails to notify the trustee of an objectionwithin the time limit set forth in subdivision (2).
(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.
IC 30-4-3-4
Exercise of powers by multiple, successor, or surviving trustees
Sec. 4. (Exercise of Powers by Multiple, Successor, or SurvivingTrustees)
Unless the terms of the trust provide otherwise:
(a) Any power vested in two (2) trustees must be exercised bythem jointly; any power vested in three (3) or more trustees must beexercised by a majority.
(b) If there are two (2) or more trustees and they are unable toexercise a power under subsection (a) of this section:
(1) If there is an immediate risk of irreparable damage to the trustproperty or the interest of any beneficiary before court approvalcould be obtained, any trustee may exercise the power and petitionthe court for approval after the power has been exercised; but
(2) if there is no immediate risk of irreparable damage to the trustproperty or the interest of any beneficiary, any trustee may petitionthe court for permission to exercise the power, but none may exercisethe power prior to obtaining permission from the court.
(c) A co-trustee is excused from liability incurred because of theexercise by a majority of a power vested in three (3) or more trusteesif he:
(1) refuses to join in the exercise of the power and mails a writtendissent to any of the co-trustees; or
(2) if the power was exercised without his knowledge, mails awritten dissent to any co-trustee within a reasonable time after beinginformed that it has been exercised.
(d) A successor trustee, additional trustee or surviving orremaining co-trustee may exercise all powers previously vested in thepredecessor 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 powerconflicts with the trustee's individual interest or the trustee's interestas trustee of another trust, the power may be exercised only underone (1) of the following circumstances:
(1) The trustee receives court authorization to exercise thepower with notice to interested persons as the court may direct.
(2) The trustee gives notice of the proposed action inaccordance with IC 30-2-14-16 and:
(A) the trustee receives the written authorization of allinterested persons to the proposed action within the periodspecified in the notice of the proposed action; or
(B) a beneficiary objects to the proposed action within theperiod specified in the notice of the proposed action, but thetrustee receives court authorization to exercise the power.
(3) The exercise of the power is specifically authorized by theterms 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 accordingto its terms.
(b) Unless the terms of the trust provide otherwise, the trustee alsohas a duty to do the following:
(1) Administer the trust in a manner consistent withIC 30-4-3.5.
(2) Take possession of and maintain control over the trustproperty.
(3) Preserve the trust property.
(4) Make the trust property productive for both the income andremainder beneficiary. As used in this subdivision, "productive"includes the production of income or investment for potentialappreciation.
(5) Keep the trust property separate from the trustee's individualproperty and separate from or clearly identifiable from propertysubject to another trust.
(6) Maintain clear and accurate accounts with respect to thetrust estate.
(7) Upon reasonable request, give the beneficiary complete andaccurate information concerning any matter related to theadministration of the trust and permit the beneficiary or thebeneficiary's agent to inspect the trust property, the trustee'saccounts, and any other documents concerning theadministration of the trust.
(8) Take whatever action is reasonable to realize on claimsconstituting part of the trust property.
(9) Defend actions involving the trust estate.
(10) Supervise any person to whom authority has beendelegated.
(11) Determine the trust beneficiaries by acting on information:
(A) the trustee, by reasonable inquiry, considers reliable; and
(B) with respect to heirship, relationship, survivorship, orany other issue relative to determining a trust beneficiary.
(Formerly: Acts 1971, P.L.416, SEC.4.) As amended byP.L.198-1996, SEC.1; P.L.137-1999, SEC.2; P.L.238-2005, SEC.32.
IC 30-4-3-6.5
Liability of trustee for lack of knowledge of event affectingadministration 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 hasexercised reasonable care to ascertain the happening of the event isnot 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 thetransaction is authorized under IC 28-1-12-8 or IC 28-6.1-6-26, thetrustee has a duty:
(1) not to loan funds to the trustee or an affiliate;
(2) not to purchase or participate in the purchase of trustproperty from the trust for the trustee's own or an affiliate'saccount;
(3) not to sell or participate in the sale of the trustee's own or anaffiliate's property to the trust; or
(4) if a corporate trustee, not to purchase for or retain in thetrust its own or a parent or subsidiary corporation's stock,bonds, or other capital securities. However, the trustee mayretain such securities already held in trusts created prior toSeptember 2, 1971.
(b) Unless the terms of the trust provide otherwise, a corporatetrustee may invest in, purchase for, or retain in the trust its own or anaffiliate's obligations, including savings accounts and certificates ofdeposit, without the investment, purchase, or retention constitutinga conflict of interest under section 5 of this chapter.
(c) Unless the terms of the trust provide otherwise, a corporatetrustee does not violate subsection (a) by investing in, purchasing for,or retaining in the trust its own or an affiliate's obligations, includingsavings accounts and certificates of deposit, if the payment of eachobligation is fully insured by the Bank Insurance Fund or the SavingsAssociation Insurance Fund of the Federal Deposit InsuranceCorporation, the National Credit Union Share Insurance Fund, or anyinsurer approved by the department of financial institutions underIC 28-7-1-31.5.
(d) If the terms of the trust permit the trustee to deal with abeneficiary for the trustee's own account, the trustee has a duty todeal fairly with and to disclose to the beneficiary all material factsrelated to the transaction which the trustee knows or should know.
(e) Unless the terms of the trust provide otherwise, the trusteemay sell, exchange, or participate in the sale or exchange of trustproperty from one (1) trust to the trustee as trustee of another trust,provided the sale or exchange is fair and reasonable with respect tothe beneficiaries of both trusts and the trustee discloses to thebeneficiaries of both trusts all material facts related to the sale orexchange which the trustee knows or should know.
(f) This section does not prohibit a trustee from enforcing orfulfilling 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.
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 fromcommitting a breach of trust; and
(c) take whatever action is reasonable to compel a co-trustee toredress 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 thetrustee in the administration of the trust and those terms expresslydirect the trustee to rely, or relieve the trustee from liability if hedoes rely, on that person's directions, the trustee may do so and willincur no liability for any loss to the trust estate.
(b) If the terms of the trust give a person a power to direct thetrustee in the administration of the trust, except as provided insubsection (a) of this section:
(1) If the person holds the power as a fiduciary, the trustee has aduty to refuse to comply with any direction which he knows orshould know would constitute a breach of a duty owed by that personas a fiduciary.
(2) If the person holds the power solely for his own benefit, thetrustee may refuse to comply only if the attempted exercise of thepower violates the terms of the trust with respect to that power.
(Formerly: Acts 1971, P.L.416, SEC.4.)
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-negotiableobligation expressly provide otherwise, the trustee is not personallyliable on a contract or other non-negotiable obligation with a thirdperson made by him in the administration of the trust.
(b) When a third person is entitled to compensation for injurysuffered in the course of the administration of the trust:
(1) If the injury is the result of the trustee's personal act oromission as trustee, the trustee will be personally liable and theinjured party will be entitled to satisfaction of his claim from the
trustee's individual property first and then, to the extent the claim isyet unsatisfied, from the trust estate.
(2) If the injury is the result of the act or omission of an agent ofthe trustee, and the agent was properly selected and supervised andthere was no improper delegation of authority to the agent, theinjured party will be entitled to satisfaction of his claim from thetrust estate first and then, to the extent that the claim is yetunsatisfied, from the trustee's individual property.
(3) If the injury is the result of the act or omission of the settlor orhis agent, and not that of the trustee or his agent, the injured partywill be entitled to satisfaction of his claim from the trust estate andnot from the trustee's individual property.
(4) The question of ultimate liability as between the trust estateand the trustee individually, if it is to be determined, shall bedetermined in a proceeding for accounting, surcharge orindemnification.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-11
Potential of liability of trustee to beneficiary; remedies; removal oftrustee
Sec. 11. (a) The trustee is accountable to the beneficiary for thetrust estate.
(b) If the trustee commits a breach of trust, the trustee is liable tothe beneficiary for:
(1) any loss or depreciation in the value of the trust property asa result of the breach;
(2) any profit made by the trustee through the breach;
(3) any reasonable profit which would have accrued on the trustproperty in the absence of a breach; and
(4) reasonable attorney's fees incurred by the beneficiary inbringing an action on the breach.
(c) In the absence of a breach of trust, the trustee has no liabilityto the beneficiary either for any loss or depreciation in value of thetrust property or for a failure to make a profit. However, if:
(1) a loss or depreciation in value of the trust property; or
(2) the trust's failure to make a profit;
is the result of a violation by the trustee of IC 28-1-12-8 orIC 28-6.1-6-26, one (1) or more beneficiaries of the trust maypetition the court for any remedy described in subsection (b) or forremoval of the trustee under section 22(a)(4) of this chapter,regardless of whether the transaction under IC 28-1-12-8 orIC 28-6.1-6-26 constitutes or involves a breach of trust. The courtmay award one (1) or more remedies described in subsection (b) orremove the trustee, or both, if the court determines that the remedyor the removal of the trustee is in the best interests of allbeneficiaries of the trust. The burden of proof is on the one (1) ormore petitioning beneficiaries to demonstrate that the remedy or theremoval of the trustee is in the best interests of all beneficiaries ofthe trust. (d) The trustee is liable to the beneficiary for acts of an agentwhich, if committed by the trustee, would be a breach of the trust ifthe trustee:
(1) directs or permits the act of the agent;
(2) delegates the authority to perform an act to the agent whichthe trustee is under a duty not to delegate;
(3) fails to use reasonable care in the selection or retention ofthe agent;
(4) fails to exercise proper supervision over the conduct of theagent;
(5) approves, acquiesces in, or conceals the act of the agent; or
(6) fails to use reasonable effort to compel the agent toreimburse the trust estate for any loss or to account to the trustestate for any profit.
(Formerly: Acts 1971, P.L.416, SEC.4.) As amended byP.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 trustcommitted by his co-trustee if he:
(a) participates in the breach of trust;
(b) improperly delegates the administration of the trust to theco-trustee;
(c) approves, acquiesces in or conceals a breach of trust;
(d) enables the co-trustee to commit a breach of trust by hisfailure to exercise care in the administration of the trust; or
(e) fails to use reasonable effort to compel the co-trustee, or, if theco-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
Sec. 13. (Liability of a Successor Trustee)
A successor trustee becomes liable for a breach of trust of hispredecessor if he:
(a) fails to take whatever action is necessary to compel thepredecessor trustee to deliver the trust property; or
(b) fails to make a reasonable effort to compel a redress of abreach 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) ormore co-trustees are liable to the beneficiary, each co-trustee isentitled 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, andthe other co-trustee is entitled to indemnity from him; or
(2) if one (1) of the co-trustees receives a profit from theadministration of the trust or a benefit from a breach of trust, theother co-trustee is entitled to indemnity from him to the extent of theprofit or benefit received by that co-trustee.
(b) If a trustee commits a breach of trust in bad faith, he is notentitled 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 civilaction for any legal or equitable remedy against a third person thathe 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 forany legal or equitable remedy, including, among others, a chargeagainst the beneficiary's interest in the trust estate, in any case inwhich 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 relatingto the administration of the trust, the trustee is entitled to beinstructed by the court.
(b) The trustee is entitled to a review and settlement by the courtof 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 hasnot received, compensation as provided either under the terms of thetrust 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 todo so would frustrate, impair or defeat the purposes of the trust, abeneficiary, except as provided in subsection (b) of this section,relieves the trustee from liability for breach of trust as to thatbeneficiary's interest if he:
(1) consents to or acquiesces in the act or omission whichconstitutes a breach of trust;
(2) agrees to release or discharge the trustee from liability forbreach of trust after the act or omission constituting the breachoccurs;
(3) elects, under an option to affirm or reject a transaction enteredinto as a breach of trust, to affirm the transaction; or
(4) participates in the act of the trustee which constitutes thebreach of trust.
(b) The consent, acquiescence, agreement to release or discharge,affirmance, or participation by a beneficiary will not relieve thetrustee from liability if:
(1) at the time it was given the beneficiary was under anincapacity;
(2) at the time it was given the beneficiary did not know of hisrights or all of the material facts which the trustee knew or shouldhave known;
(3) it was induced by the trustee's improper conduct;
(4) the trustee had an adverse interest in the transaction and thetransaction was not fair and reasonable; or
(5) the trustee pays or delivers a beneficiary's interest to thatbeneficiary 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 trustproperty;
(2) expressly consented to, participated in or agreed with thetrustee 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 trustestate in excess of that to which he is entitled; or
(5) breached a contract to pay money or deliver property to thetrustee to be held by the trustee as part of the trust estate.
(b) Unless the terms of the trust provide otherwise a beneficiaryof a trust is liable to the extent of his interest in the trust estate forthe 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 maymaintain a civil action under 30-4-3-15 but he is unable, unwilling orneglects to commence the action within a reasonable time not toexceed thirty (30) days after written demand, any beneficiary maycommence the action in his own right for the benefit of all thebeneficiaries.
(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 abreach 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 successortrustee.
(b) If the trustee acquires property and wrongfully holds it outsidethe 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 fordamages for breach of trust.
(c) If the trustee commingles the trust funds or property with hisown funds or property or converts the trust fund or property intoanother form which is wrongfully held outside the trust:
(1) if the fund or property can be traced and identified, thebeneficiary is entitled to restoration of the fund or property to thetrust; or
(2) if the fund or property cannot be traced and identified,
(A) In a case of commingling of funds or property, the beneficiaryis entitled to a lien against the trustee's individual property from thedate and in the amount of the fund or the value of the property at thetime of the commingling.
(B) In a case of conversion of property, the beneficiary is entitledto a lien against the trustee's individual property from the date andaccording to the value of the property at the time of the conversion.
(d) If the trustee is also a beneficiary, the other beneficiaries willbe entitled to a charge against the trustee's beneficial interest tosecure their claims against him for a breach of trust.
(e) If a beneficiary successfully maintains an action undersubsection (a) of this section or is entitled to a judgment undersubsections (b), (c), or (d) of this section, he is entitled to a judgmentfor 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 oftrust, a beneficiary may maintain an action against a co-beneficiarywho consented to the breach for a redress of the breach, if theco-beneficiary:
(1) knows or should have known that the act of the trustee towhich he consented constituted a breach of trust;
(2) agreed with the trustee or the other beneficiaries to be liablefor 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 forany loss for which the other beneficiaries are entitled to redressunder subsection (a) of this section and his beneficial interest in thetrust estate may be charged for the amount of the loss if the courtdeems it proper to do so.
(Formerly: Acts 1971, P.L.416, SEC.4.)
IC 30-4-3-24
Repealed
(Repealed by P.L.238-2005, SEC.63.)
IC 30-4-3-24.4
Modification or termination of trust by court
Sec. 24.4. (a) The court may modify the administrative ordispositive terms of a trust if, because of circumstances notanticipated by the settlor, modification or termination will further thepurposes of the trust. To the extent practicable, the modificationmust be made in accordance with the settlor's probable intention.
(b) The court may modify the administrative terms of a trust orterminate 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 directthe trustee to distribute the trust property in a manner consistent withthe purposes of the trust.
(d) The court may modify the terms of a trust to give the settlorthe 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 forconservation or preservation. (b) This subsection applies to a trust consisting of trust propertyhaving a total value of less than seventy-five thousand dollars($75,000). Unless the terms of the trust provide otherwise, the trusteemay terminate the trust:
(1) if the trustee concludes the value of the trust property isinsufficient to justify the cost of administration; and
(2) after providing notice of the trust termination to qualifiedbeneficiaries.
(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 isinsufficient to justify the cost of administration. If a trust terminatesunder this subsection, the court shall direct the trustee to distributethe trust property in a manner consistent with the purposes of thetrust.
(d) If a trust terminates under subsection (b), the trustee shalldistribute the trust property in a manner consistent with the purposesof the trust.
As added by P.L.238-2005, SEC.36.
IC 30-4-3-25
Rescission and reformation
Sec. 25. (Recission and Reformation)
Upon petition by an interested party, the court may rescind orreform a trust according to the same general rules applying torecission 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 tocomply with 42 U.S.C. 1396p(d)(4)(A) is terminated, the trusteeshall not distribute trust property to any person entitled to paymentfrom the trust until the office of Medicaid policy and planning hasbeen fully reimbursed for assistance rendered to the person for whomthe trust was created.
(c) The primary purpose of a trust described in subsection (b) isto ensure that the state is repaid Medicaid benefits provided in returnfor 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 beforereimbursing 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 theTrust) (a) Upon petition by the trustee or a beneficiary, the court shalldirect or permit the trustee to deviate from a term of the trust if,owing to circumstances not known to the settlor and not anticipatedby him, compliance would defeat or substantially impair theaccomplishment of the purposes of the trust. In that case, if necessaryto carry out the purposes of the trust, the court may direct or permitthe trustee to do acts which are not authorized or are forbidden by theterms of the trust, or may prohibit the trustee from performing actsrequired by the terms of the trust.
(b) The trustee may deviate from the terms of the trust as providedin subsection (a) of this section, without first obtaining thepermission of the court, if there is an emergency or if he reasonablybelieves that there is an emergency, and before deviating he has noopportunity to apply to the court for permission to deviate.
(c) The trustee is liable for any loss or damage which results if hefails to apply to the court for permission to deviate from the terms ofthe trust, when he knows or should know that, owing tocircumstances not known to the settlor and not anticipated by him,compliance will defeat or substantially impair the accomplishmentof the purposes of the trust.
(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 publicpurpose and the property is to be applied to a particular charitablepurpose, and it is or becomes impossible, impracticable, wasteful, orillegal to carry out the particular purpose, and if the settlormanifested a more general intention to devote the property tocharitable purposes, the trust need not fail, but the court may directthe application of the property to some charitable purpose which fallswithin the general charitable intention of the settlor.
(b) The terms of a charitable trust that would result in thedistribution of the trust property to a noncharitable beneficiaryprevails over the power of the court under subsection (a) to apply thecy pres doctrine to modify or terminate the trust only if, when theprovision takes effect:
(1) the trust property is to revert to the settlor and the settlor isstill alive; or
(2) less than twenty-one (21) years have elapsed since the trustwas created.
(c) A living heir of the settlor or a living beneficiary named in theoriginal 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
(Repealed by P.L.238-2005, SEC.63.)
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 isauthorized 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 thecourt under subsection (d).
(b) Unless the terms of the trust requires a different time, thetrustee may resign:
(1) if the trustee gives at least thirty (30) days notice to:
(A) the qualified beneficiaries;
(B) the settlor, if living; and
(C) all cotrustees; or
(2) with the approval of the court.
In approving a resignation, the court may issue orders and imposeconditions reasonably necessary for the protection of the trustproperty. Any liability of a resigning trustee or of any sureties on thetrustee's bond for acts or omissions of the trustee is not discharged oraffected by the trustee's resignation.
(c) For good cause shown, the court may at any time appoint atemporary 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 removalof a corporate trustee if there has been a change in control of thecorporate trustee after the date of the execution of the trust. Thecourt may remove the corporate trustee if the court determines theremoval is in the best interests of all the beneficiaries of the trust. Forpurposes of this subsection a change in control of the corporatetrustee occurs whenever a person or group of persons acting inconcert acquires the beneficial ownership of an aggregate of at leasttwenty-five percent (25%) of the outstanding shares of voting stockof:
(1) a trustee; or
(2) a corporation controlling a trustee;
after June 30, 1996.
(e) A trustee who has resigned or been removed shallexpeditiously deliver the trust property within the trustee'spossession to the cotrustee, successor trustee, or other person entitledto the trust property. A trustee who has resigned or been removed hasthe duties of trustee and the powers necessary to protect the trustproperty:
(1) unless a cotrustee remains in the office of trustee or thecourt 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 byP.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 thetrust instrument provides otherwise, a corporate trustee that acquiresa 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 tru