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 vivos
trust; existence of trust beneficiaries; creation of trust by exercise
of power of appointment
Sec. 1. (a) A trust in either real or personal property is enforceable
only if there is written evidence of its terms bearing the signature of
the settlor or the settlor's authorized agent.
(b) Except as required in the applicable probate law for the
execution 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, the
identity of the beneficiary, the nature of the beneficiary's interest and
the purpose of the trust may be ascertained with reasonable certainty.
(c) It is not necessary to the validity of a trust that the trust be
funded with or have a corpus that includes property other than the
present or future, vested or contingent right of the trustee to receive
proceeds 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 presently
ascertained or ascertained in the future, subject to any applicable rule
against perpetuities.
(f) A power of a trustee to select a beneficiary from an indefinite
class is valid. If the power is not exercised within a reasonable time,
the power fails and the property subject to the power passes to the
persons who would have taken the property had the power not been
conferred.
(g) A trust may be created by exercise of a power of appointment
in favor of a trustee.
(Formerly: Acts 1971, P.L.416, SEC.3.) As amended by
P.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 is
not created by a will is validly created if the trust's creation complies
with the law of the jurisdiction in which the trust instrument was
executed or the law of the jurisdiction in which, at the time of
creation:
(1) the settlor was domiciled, had a place of abode, or was a
national;
(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 a
person named as trustee.
(b) The appearance of the named person's signature on the writing
which is the evidence of the trust or on a separate written acceptance
will be conclusive that the named person accepted the trust.
(c) Except as provided in subsection (e), if the named person
exercises powers or performs duties under the trust, the named
person will be presumed to have accepted the trust.
(d) The named person may reject the trust in writing and, if the
named person does so, will incur no liability. If, after being informed
that the named person has been named as trustee, the named person
neither expressly accepts the trust nor exercises powers or performs
duties under the trust within a reasonable time, the named person will
be presumed to have rejected the trust.
(e) If there is an immediate risk of damage to the trust estate, the
named person may act to preserve the trust estate and will not be
presumed to have accepted the trust, provided the named person
delivers a written rejection to the settlor at or within a reasonable
time after the named person acts, or, if the settlor is dead, to the
beneficiary or the court having jurisdiction over the administration
of the trust estate.
(Formerly: Acts 1971, P.L.416, SEC.3.) As amended by
P.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 a
trustee or trustees named as beneficiary or hereafter to be named
beneficiary under an inter vivos trust shall be paid directly to the
trustee or trustees and held and disposed of by the trustee or trustees
as provided in the trust agreement or declaration of trust in writing
made and in existence on the date of death of the insured, whether or
not such trust or declaration of trust is amendable or revocable or
both, or whether it may have been amended, and notwithstanding the
reservation of any or all rights of ownership under the insurance
policy or annuity contract; subject, however, to a valid assignment of
any part of the proceeds. It is not necessary to the validity of such
trust agreement or declaration of trust that it be funded or have a
corpus other than the right, which need not be irrevocable, of the
trustee or trustees named therein to receive such proceeds as
beneficiary. A policy of life insurance or annuity contract may
designate as beneficiary a trustee or trustees named or to be named
by will if the designation is made in accordance with the provisions
of the policy or contract whether or not the will is in existence at the
time 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 limited
to 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 trust
property.
(b) The extent of the beneficiary's estate shall be determined from
the terms of the trust. The Rule in Shelley's Case and the Doctrine of
Worthier Title shall not be applied to determine the meaning or
application of the terms.
(c) Except as provided in 30-4-2-14, if, under the terms of the
trust, the trustee is required at some time to distribute real property
from the trust estate to a beneficiary, that beneficiary's equitable
interest is real property. In all other cases the beneficiary's interest is
personal 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 entire
equitable interest in property to the same person as both the sole
trustee and the sole beneficiary, no trust will be deemed to have been
created and the transferee shall treat the property as the transferee's
own.
(b) Except as provided in subsection (c), if the title to the trust
property 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 the
trustee, whether the interest is contingent or vested;
the entire beneficial interest shall not be construed to be united in
one (1) person.
(c) The title to the trust property and the entire beneficial interest
shall not become united in a beneficiary whose interest is protected
under a trust with protective provisions, and in that case the court
shall appoint a new trustee to administer the trust for the
beneficiary's benefit.
(Formerly: Acts 1971, P.L.416, SEC.3.) As amended by
P.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 duty
related to the administration of the trust, the title to the trust property
will be treated as having vested directly in the beneficiary on the date
of 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 that
is required to create the trust is determined by the applicable probate
law.
(b) The capacity of a settlor that is required to create, amend,
revoke, or add property to a revocable trust is the same as the
capacity of a testator that is required to make a will.
(c) To create or add property to an irrevocable trust, the settlor or
transferor must be of sound mind and have a reasonable
understanding of the nature and effect of the act and the terms of the
trust.
(d) To direct the actions of the trustee of a trust, the settlor or
other person must:
(1) have the capacity to hold and deal with property for the
settlor'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 by
P.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 to
take, hold, and deal with property for his own benefit and must be at
least 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 power
to act as a trustee.
(c) Subject to IC 1971, 30-4-2-8, the fact that the person named to
be trustee is also a beneficiary will not disqualify him from acting as
trustee 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 a
criminal or tortious act or an act which is contrary to public policy.
(b) A trust with terms which violate subsection (a) of this section
is invalid unless the prohibited term is separable. If the prohibited
term is separable, only it is invalid and the remainder of the trust is
valid.
(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 terms
of 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 the
beneficiary or other person or may sell it after a period of time
stipulated 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 the
trust property upon direction by the beneficiary or other person or to
sell it after a stipulated period of time in the absence of a direction
as provided in 30-4-2-13, the beneficiary may treat his interest as
personal property and may assign it to any person notwithstanding
the provisions of 30-4-2-7(c).
(b) The trustee will be bound by an assignment made under
subsection (a) of this section only after he receives written notice of
it.
(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 spouse
under a written agreement with each other that requires the
creation of the trust; or
(B) a court order.
(b) If, after creating a revocable trust, the settlor is divorced or the
marriage of the settlor to the settlor's spouse is annulled, the settlor's
former spouse shall for the purposes of the trust be treated as if the
spouse 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 of
election 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 the
settlor's estate against the settlor's will under IC 29-1-3.
(b) The trustee shall dispose of the assets received from the
settlor's estate and the portion of the trust remaining after the
spouse's election as if the settlor's spouse had died before the settlor
died.
As added by P.L.200-1991, SEC.4.
IC 30-4-2-17
Valid purposes of charitable trust; selection of purpose or
beneficiary if not specified by trust
Sec. 17. (a) A charitable trust may be created for the following
purposes:
(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 particular
charitable purpose or beneficiary, the court may select at least one
(1) charitable purpose or beneficiary. The selection must be
consistent with the settlor's intention to the extent the intention can
be ascertained.
(c) The settlor of a charitable trust, among other persons, may
maintain 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 an
animal 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 on
the death of the animal.
(2) If the trust is created to provide for the care of more than
one (1) animal alive during the settlor's lifetime, the trust
terminates on the death of the last surviving animal.
(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) A person having an interest in the welfare of an animal for
whose 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 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.
(f) 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.26.
IC 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.