15 N.E.3d 67
Ind. Ct. App.2014Background
- Alexander and Selma Kazlauski executed a revocable family trust in 2004 naming their three children (Sally Kent, Linda Turner, Stanley Kazlauski) as remainder beneficiaries and providing for equal shares of net proceeds after death of the survivor.
- The Trust permits the surviving grantor to amend the trust by a signed writing and contains a clause allowing "specific gifts" made in a separate writing "referring to or attached to this trust agreement."
- Alexander died in 2005; in 2008 Selma signed a separate form titled "Specific Gifts Upon Death" (the Specific Gifts Form) stating the Trust "incorporates this specific gifts form by reference" and listing specific real-property gifts (including two homes on an undivided ~20‑acre parcel) to beneficiaries.
- Selma died in 2010; Linda (successor trustee) sought to treat the Form as modifying the Trust distributions. Sally and Stanley petitioned to interpret the Trust and moved for summary judgment, arguing the Form is an invalid attempt to incorporate by reference specific real property.
- The trial court granted summary judgment for Sally and Stanley; the court of appeals affirmed, holding (1) the Form must be treated as an incorporation by reference (because its language so states), and (2) Indiana law prohibits incorporation by reference of specific gifts of real property, so the Form is ineffective to change the Trust’s disposition of the parcel (which remains subject to the Equal Shares Provision).
Issues
| Issue | Plaintiff's Argument (Linda) | Defendant's Argument (Sally & Stanley) | Held |
|---|---|---|---|
| Whether the Specific Gifts Form is a valid amendment to the Trust | The Form satisfies the Trust Code amendment requirements (signed writing) and thus validly amends the Trust | The settlor intended the Form as an incorporation by reference; language of the Form controls and it should be treated as incorporated, not an amendment | Court: The Form must be construed as an incorporation by reference (per its plain language), so it is not an amendment |
| Whether the Specific Gifts Form validly incorporates specific real property gifts by reference | The Trust Code does not bar incorporation by reference of real property; the Form should be effective to pass the homes/parcel as listed | Indiana Code §30‑4‑2.1‑11 permits incorporation by reference only for tangible personal property; it does not authorize real property transfers by such a writing | Court: Incorporation by reference under the statute is limited to tangible personal property; specific gifts of real property cannot be made by such a writing, so the Form is invalid to convey real property |
Key Cases Cited
- Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528 (Ind. 2006) (standard of review for summary judgment)
- Hauck v. Second Nat. Bank of Richmond, 286 N.E.2d 852 (Ind. Ct. App. 1972) (construe trust to make it operative where possible)
- Crawfordsville Trust Co. v. Elston Bank & Trust Co., 25 N.E.2d 626 (Ind. 1940) (principles of trust construction)
- Stowers v. Norwest Bank Ind., N.A., 624 N.E.2d 485 (Ind. Ct. App. 1993) (court cannot vary terms of instrument)
- Goodwine v. Goodwine, 819 N.E.2d 824 (Ind. Ct. App. 2004) (give effect to clear, unambiguous trust language)
- State v. Dugan, 793 N.E.2d 1034 (Ind. 2003) (statutory construction principles)
- State v. Oddi-Smith, 878 N.E.2d 1245 (Ind. 2008) (use plain statutory language to determine legislative intent)
- In re Wardship of Turrin, 436 N.E.2d 130 (Ind. Ct. App. 1982) (where statute enumerates items, others are excluded by implication)