132 N.E.3d 34
Ind. Ct. App.2019Background
- Settlor Ollie Waid, Jr. created a revocable living trust in 2010 and amended it several times; successor trustee is Steven E. Post.
- Article VII contains specific $10,000 bequests to named individuals and charities; a residuary clause directs the Trustee to “hold, distribute and pay the remaining principal and undistributed income in perpetuity” in the Trustee’s sole discretion, “subject . . . to limitations imposed by law.”
- After Waid’s 2018 death, the Trustee located most specific beneficiaries and reported approximately $4.6 million remaining as the trust residue. The Trustee sought court guidance, asserting the residuary was intended for charities and was discretionary.
- Cheryl Barron Doll moved to intervene, arguing the residuary clause fails to identify any beneficiary with reasonable certainty and therefore the clause is invalid.
- The trial court found the residuary ambiguous, admitted extrinsic evidence of charitable intent, treated the trust as charitable, and denied Doll’s motion to intervene.
- The Court of Appeals reversed: it held the residuary clause fails as a matter of law because it does not identify an ascertainable beneficiary (not even an indefinite class), so the residue results back to the settlor’s estate and must be distributed by intestacy.
Issues
| Issue | Plaintiff's Argument (Doll) | Defendant's Argument (Trustee) | Held |
|---|---|---|---|
| Validity of residuary clause: does it identify a beneficiary with reasonable certainty? | Residuary fails statutory certainty requirement; no beneficiary or ascertainable class identified. | Clause gives Trustee sole discretion to distribute to charities; trust should be enforced as charitable/split-interest. | Reversed trial court: residuary clause fails as a matter of law for lack of an ascertainable beneficiary. |
| Whether trust is a charitable trust permitting Trustee to distribute residue to charity | N/A (Doll argues noncharitable residual failure) | Trustee/trial court: extrinsic evidence shows settlor intended charitable purpose; apply charitable trust principles. | Trust is not a pure charitable trust (it is split-interest/beneficent public purpose); charitable-trust rules do not validate the residuary clause. |
| Application of cy pres to save residue for charitable purpose | N/A | Trustee: cy pres could reform/redirect residue for charitable purposes. | Cy pres does not apply: residuary clause contains no particular charitable purpose nor a general charitable intention to invoke cy pres. |
| Consequence of invalid residuary clause | Residue should result back to settlor’s estate and pass by intestacy to heirs (Doll sought intervention to protect that interest). | Trustee implied residue could be distributed to charities or to Trustee. | Resulting trust arises for settlor’s estate; remand to distribute residue under intestate succession. |
Key Cases Cited
- Fulp v. Gilliland, 998 N.E.2d 204 (Ind. 2013) (primary rule: give effect to settlor’s intent; interpret trust as whole)
- Gittings v. Deal, 109 N.E.3d 963 (Ind. 2018) (de novo review of trust interpretation)
- Melloh v. Gladis, 309 N.E.2d 433 (Ind. 1974) (resulting trust arises when an express trust fails in whole or part or is fully performed without exhausting estate)
- Colbo v. Buyer, 134 N.E.2d 45 (Ind. 1956) (if no provision on termination, trustee holds property on resulting trust for settlor or settlor’s successors)
- Pavy v. Peoples Bank & Trust Co., 195 N.E.2d 862 (Ind. Ct. App. 1964) (failed express trust produces resulting trust in favor of settlor or estate)