In Re Stephen L. Chapman
2011 Ind. App. LEXIS 1619
| Ind. Ct. App. | 2011Background
- Howard and Elizabeth Chapman created the Stephen L. Chapman Irrevocable Trust in 1997, with a distribution to Stephen upon his 55th birthday (Nov. 13, 2010).
- Stephen and Carrie Chapman married in 1998; Carrie filed for dissolution in 2009, pending in Allen County court.
- In 2010, Trustees filed to reform the Trust to delay Stephen’s distribution, relying on Trust Clause 7 and Trust modification provisions.
- Carrie intervened in the Trust reform proceedings, arguing the Trust assets were a marital asset and the dissolution affected distribution.
- The trial court granted reform, delaying Stephen’s distribution six months after the final dissolution decree (and any appeal).
- On appeal, the Indiana Court of Appeals reversed in part, holding Trustees failed to prove that the dissolution was an unforeseeable event and thus erred in reforming the Trust.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the trial court have jurisdiction to reform the Trust while dissolution proceedings were ongoing? | Carrie contends dissolution proceedings control jurisdiction. | Trustees argue separate proceedings with different subject matter permit jurisdiction. | Jurisdiction affirmed; no error in exercising jurisdiction. |
| Did the trial court err in reforming the Trust under Clause 7 without proving the dissolution was unforeseeable? | Carrie asserts dissolution was foreseeable; unforeseeability required by statute. | Trustees contended dissolution is per se unforeseeable under Clause 7. | Reversed; unforeseeability required and not established. |
| Whether the modification to delay Stephen’s distribution was proper under the equitable deviation provisions (IC 30-4-3-24.4 and -26). | Carrie argues modification not supported by statute and settlors anticipated dissolution during distribution. | Trustees relied on statutory deviation to protect trust purposes amid unforeseen events. | Partially reversed on unforeseeability; does not affirm the modification under the statute. |
Key Cases Cited
- In re Nobbe, 831 N.E.2d 835 (Ind. Ct. App. 2005) (examines whether growth in trust stock constitutes unforeseen circumstances justifying equitable deviation)
- Hilliard v. Jacobs, 927 N.E.2d 393 (Ind. Ct. App. 2010) (abuse of discretion standard for stay orders)
- Meade v. Marshall Superior Court, 644 N.E.2d 87 (Ind. 1994) (jurisdiction and procedure for concurrent actions)
- Kentner v. Ind. Pub. Emp'rs' Plan, Inc., 852 N.E.2d 565 (Ind. Ct. App. 2006) (analysis of whether actions are substantially the same for jurisdictional purposes)
- Paloutzian v. Taggart, 931 N.E.2d 921 (Ind. Ct. App. 2010) (trust interpretation; standard for determining when modification is a question of law)
- In re Nobbe, 831 N.E.2d 835 (Ind. Ct. App. 2005) (irrevocable trusts and equitable deviation corresponding to unforeseen circumstances)