Though the Indiana Court of Appeals had “significant concerns” about the transfer of trust assets in a dispute between stepsiblings, the appellate panel affirmed the trial court’s decision in favor of the stepbrother after finding his stepsister’s claims were barred by the statute of limitations.
In 1988, Nile and Georgia Richmond acquired property and mineral interests in West Virginia. Five years later, the couple prepared trusts in each of their names that created three separate trusts – a primary trust that, upon their deaths, would be distributed to the two other trusts, designated A and B.
The agreements also held that Brenda Gittings, Nile Richmond’s daughter, and William Deal, Georgia Richmond’s son, would become co-trustees if either of the Richmonds ceased to be qualified as trustees. Neither Nile nor Georgia Richmond were permitted to be sole trustee.
Upon Nile Richmond’s death in 1995, Georgia Richmond distributed property from his trust to his Trust A and Trust B without consulting her son or stepdaughter. She then eliminated Gittings as a beneficiary and trustee from her trust without informing Gittings of the change. Georgia Richardson also transferred a one-half interest in the West Virginia properties from her husband’s primary trust to his Trust A.
Georgia Richmond then sent Gittings a copy of her father’s trust and asked her to sign and return documents that would have allowed Georgia Richmond to transfer the West Virginia properties from her husband’s Trust A to her primary trust. Gittings ultimately signed the deeds sent to her, but without knowledge that she was agreeing to transfer the properties to a trust she did not have an interest in.
After Georgia Richmond’s death in 1997, Gittings learned that she and her son had been eliminated as beneficiaries, and Deal told her there was no money left after paying for his mother’s medical and funeral bills. However, Deal then deeded the West Virginia properties in his mother’s estate to himself.
Deal eventually received more than $3 million related to the West Virginia properties. Gittings was informed in 2011 that Deal had deeded those properties to himself, and in June 2012, Deal recorded the deeds Gittings had signed as co-trustee transferring the properties from her father’s Trust A to his mother’s primary trust.
Deal then moved to approve “the execution, delivery and recording of the deeds” of his stepfather’s trust and “the partial distribution of Trust A outright to” his mother as being “properly made pursuant to the trust terms and Indiana law.” He claimed that Gittings was barred from bringing counterclaims against him due to her “consent and participating” and the statute of limitations.
The Spencer Circuit Court ultimately ruled in favor of Deal, finding Gittings had learned in 1997 that she had been eliminated as a beneficiary, so her cause of action accrued then and the claims she tried to raise in 2013 were time barred.
Gittings and her son appealed in Brenda Sue Gittings and March Richmond Gittings v. William H. Deal, 74A01-1611-TR-2551, arguing their causes of action accrued in 2011, when Gittings learn that Deal had deeded the properties to himself. The Indiana Court of Appeals, however, disagreed.
“Although she may not have understood the extent of the damage until 2011, it was not necessary that the full extent of the damage be evidence before the cause of action accrued,” Judge Michael Barnes wrote in a Friday opinion that affirmed the trial court’s decision.
But Barnes went on to write that Georgia Richmond acted improperly when she solely determined the distributions to Trust A and Trust B, as the agreement provided neither she nor her husband could act as the sole trustee. Further, the transfer of property from Nile Richmond’s Trust A to Georgia Richmond’s primary trust was not done with all of the beneficiaries having all materials facts, as Gittings did not know of her elimination, he wrote.
Thus, under the statutes applicable at that time, court authorization was required to complete the transfer. The failure to obtain such authorization made the transfer improper, Barnes said.
Based on those facts, the appellate court had “significant concerns” regarding the conduct of the trustees, Barnes said. However, because the question of the statute of limitations was dispositive, the judges upheld the judgment in favor of Deal.