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Justices: Trustee of revocable trust serves self

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The Indiana Supreme Court accepted a revocable trust case to answer the first impression question: While a trust is revocable, whom does the trustee serve? The justices concluded that an Indiana woman, as trustee, served herself.

In Harold O. Fulp, Jr. v. Nancy A. Gilliland, 41S01-1306-TR-426, Harold Fulp Jr. sought specific performance of the purchase agreement he made with his elderly mother to buy the family farm at a discounted price. Ruth Fulp placed the farm in a revocable trust and was the trustee, primary beneficiary and settlor. Her daughter Nancy Gilliland, who became successor trustee after Ruth Fulp resigned as trustee, refused to proceed with the sale. Fulp Jr. had purchased the farm at the same per-acre discount that Gilliland had paid when she previously purchased another portion of the farm.  

The trial court denied specific performance because it found Ruth Fulp breached her fidicuary duty to her children by selling the farm at a low price and Fulp Jr. breached his fiduciary duty as a beneficiary by participating in the sale. The Indiana Court of Appeals affirmed, believing Ruth Fulp had sold the farm as settlor, not trustee.

“Nancy sought transfer, asking us to decide whether the trustee of a revocable trust owes a duty to the settlor alone or also to the remainder beneficiaries,” Justice Loretta Rush wrote. “We granted transfer to address that issue, and we conclude that while a revocable trust is revocable, the trustee only owes a duty to the settlor. Therefore, Ruth was free to sell the farm as trustee, as the purchase agreement reflected, without breaching any fiduciary duty. And since Ruth owed her children no duty as trustee, she had no need to sell the farm as settlor, as the Court of Appeals concluded—nor would the facts in this case support any intent to amend the Trust.”

Ruth Fulp’s fiduciary duty was to herself, as settlor and primary beneficiary. That duty does not extend to her beneficiary children, because that would mean she was serving two masters, the justices held. Such conflicting duties would essentially make the trust irrevocable because complying as trustee with her own wishes to revoke the trust would breach the purported duty to the remainder beneficiaries by placing her own interests above theirs.

Since the trial court misinterpreted the trust and law by determining Ruth Fulp had a duty to her children that she breached and Fulp Jr. aided in that breach, the court abused its discretion in denying specific performance, Rush wrote.

 

 

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  • mo better
    Victim: Dishonest Men Song: "John Wesley Harding" (1967) Method: A gun in every hand, i.e., two guns Motive: Money; straightening out situations; avoiding foolish moves Verdict: No charge held against him could they prove
  • bob zimmmerman
    Huh is that the guy who shot trayvohn? lol
    • Cannot resist
      Well I think Robert Zimmerman sang it best, "You're gonna have to serve somebody, yes indeed You're gonna have to serve somebody, Well, it may be the devil or it may be the Lord But you're gonna have to serve somebody."

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      1. I just wanted to point out that Congressman Jim Sensenbrenner, Senator Feinstein, former Senate majority leader Bill Frist, and former attorney general John Ashcroft are responsible for this rubbish. We need to keep a eye on these corrupt, arrogant, and incompetent fools.

      2. Well I guess our politicians have decided to give these idiot federal prosecutors unlimited power. Now if I guy bounces a fifty-dollar check, the U.S. attorney can intentionally wait for twenty-five years or so and have the check swabbed for DNA and file charges. These power hungry federal prosecutors now have unlimited power to mess with people. we can thank Wisconsin's Jim Sensenbrenner and Diane Feinstein, John Achcroft and Bill Frist for this one. Way to go, idiots.

      3. I wonder if the USSR had electronic voting machines that changed the ballot after it was cast? Oh well, at least we have a free media serving as vicious watchdog and exposing all of the rot in the system! (Insert rimshot)

      4. Jose, you are assuming those in power do not wish to be totalitarian. My experience has convinced me otherwise. Constitutionalists are nearly as rare as hens teeth among the powerbrokers "managing" us for The Glorious State. Oh, and your point is dead on, el correcta mundo. Keep the Founders’ (1791 & 1851) vision alive, my friend, even if most all others, and especially the ruling junta, chase only power and money (i.e. mammon)

      5. Hypocrisy in high places, absolute immunity handed out like Halloween treats (it is the stuff of which tyranny is made) and the belief that government agents are above the constitutions and cannot be held responsible for mere citizen is killing, perhaps has killed, The Republic. And yet those same power drunk statists just reel on down the hallway toward bureaucratic fascism.

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