1. (a) If a trust is terminated or partially terminated and the available trust property is not sufficient to fully satisfy the interests of all beneficiaries, the interests must be abated in the following order:

   1. (1) The interests that would be characterized as residuary devises if the trust were a will.
   2. (2) The interests that would be characterized as general devises if the trust were a will.

   3. (3) The interests that would be characterized as specific devises if the trust were a will.

      The amount abated for each beneficiary within each classification described in subdivisions (1) through (3) must be proportional to the amount of property that each beneficiary would have received if full distribution of the trust property had been made in accordance with the terms of the trust instrument.

2. (b) If:

   1. (1) a trust instrument expresses an order of abatement that differs from the order set forth in subsection (a); or

   2. (2) the order of abatement stated in subsection (a) would impair an express or implied purpose of the trust;

      the interests of the beneficiaries must be abated in the manner determined appropriate to give effect to the settlor's intent.

3. (c) If, under the terms of a trust that was revocable at the time of the settlor's death, the subject of a preferred devise is sold or used to pay debts, expenses, taxes, or other obligations incident to the settlement of the settlor's affairs, abatement must be achieved by adjustment in, or contribution from, other interests in the remaining trust property.
4. (d) Where applicable, the abatement of beneficiary interests in a trust is subject to IC 32-17-13-4 .

As added by P.L.101-2008, SEC.8.