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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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      2. The practitioners and judges who hail E-filing as the Saviour of the West need to contain their respective excitements. E-filing is federal court requires the practitioner to cram his motion practice into pigeonholes created by IT people. Compound motions or those seeking alternative relief are effectively barred, unless the practitioner wants to receive a tart note from some functionary admonishing about the "problem". E-filing is just another method by which courts and judges transfer their burden to practitioners, who are the really the only powerless components of the system. Of COURSE it is easier for the court to require all of its imput to conform to certain formats, but this imposition does NOT improve the quality of the practice of law and does NOT improve the ability of the practitioner to advocate for his client or to fashion pleadings that exactly conform to his client's best interests. And we should be very wary of the disingenuous pablum about the costs. The courts will find a way to stick it to the practitioner. Lake County is a VERY good example of this rapaciousness. Any one who does not believe this is invited to review the various special fees that system imposes upon practitioners- as practitioners- and upon each case ON TOP of the court costs normal in every case manually filed. Jurisprudence according to Aldous Huxley.

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