Harold O. Fulp, Jr. v. Nancy A. Gilliland, Individually and as Successor Trustee of the Ruth E. Fulp Revocable Trust Dated June 29, 2005
972 N.E.2d 955
Ind. Ct. App.2012Background
- Ruth E. Fulp created a revocable trust (the Trust) on June 29, 2005, designating herself as settlor, trustee, and sole lifetime beneficiary, with her three children as remainder beneficiaries and the family farm as the Trust corpus.
- Ruth retained power to alter, amend, or revoke the Trust; upon her death, the Trust would become irrevocable with remainder to the children.
- In August 2010, Ruth discussed selling the farm to Harold O. Fulp, Jr., her son, who sought financing for the purchase at a price modeled after a prior sale to a family member; the parties eventually agreed to a sale price via a Purchase Offer Agreement.
- On September 7, 2010, Ruth signed the Purchase Offer Agreement selling the farm to Harold for a total price of $450,252, and Ruth informed Gilliland, the then-attorney-in-fact for the Trust.
- Ruth resigned as trustee on September 21, 2010; Gilliland became successor trustee and, on October 12, 2010, Roger’s letter stated Ruth could not manage her affairs and there would be no closing; Gilliland repudiated the Purchase Offer Agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can Ruth, as settlor, execute a sale of Trust property without invalidating the Trust? | Harold: Ruth’s reserved power to alter/revoke includes selling Trust corpus; sale valid. | Gilliland: Ruth’s role as trustee required acting in beneficiaries’ interests; sale below FMV breached fiduciary duties; unclean hands bar relief. | Yes; Ruth could validly sell, and Harold is entitled to specific performance. |
| Did Gilliland’s repudiation as successor trustee tortiously interfere with the Purchase Offer Agreement? | Harold: Gilliland repudiated to maximize inheritance, lacking justification. | Gilliland: repudiation was justified to protect the Trust corpus and comply with fiduciary duties. | No; Gilliland did not tortiously interfere. |
Key Cases Cited
- Kesling v. Kesling, 967 N.E.2d 66 (Ind. Ct. App. 2012) (settlor status in revocable inter vivos trust retained despite trustee role)
- Marshall & Ilsley Trust Co. v. Woodward, 848 N.E.2d 1175 (Ind. Ct. App. 2006) (analyzes whether a named remote beneficiary is entitled to an accounting)
- Moon v. Lesikar, 230 S.W.3d 800 (Tex. Ct. App. 2007) (settlor-trustee dynamic and fiduciary duties in revocable trusts)
- Breeze v. Breeze, 428 N.E.2d 286 (Ind. Ct. App. 1981) (trusts—when settlor and trustee effects ownership interests)
- Dietz v. Finlay Jewelry Corp., 754 N.E.2d 958 (Ind. Ct. App. 2001) (factors for tortious interference and reasonableness/justification analysis)
- Paloutzian v. Taggart, 931 N.E.2d 921 (Ind. Ct. App. 2010) (trust interpretation aims to ascertain settlor’s intent)
- Smyth v. Cleveland Trust Co., 179 N.E.2d 60 (Ohio 1961) (trusts—historic basis for revocable trusts and settlor rights)