COA reinstates challenge to trust amendment

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(IL file photo)

A woman’s complaint against an amendment to a family trust was timely and should be reinstated, the Court of Appeals of Indiana ruled Monday.

Appellant-plaintiff Nancy Coulson-Smith is one of several beneficiaries to the Zoe E. Coulson Agreement of Trust, which was established in 1993.

The trust agreement was amended several times, with a final amendment in November 2016 making Zoe and John Coulson co-trustees of the trust. Zoe died in May 2018, leaving John as the sole trustee.

In May 2021, John and Coulson-Smith entered into a tolling agreement, which recited that Nancy had certain claims relating to the trust, “including whether [Zoe] had the capacity to execute the [2016 Amendment].”

Coulson-Smith filed a complaint in July 2021 contesting the validity of the 2016 amendment. Her complaint alleged that in November 2016, Zoe “did not possess the soundness of mind required in order to validly amend” the trust, “and as such, the 2016 Amendment is invalid.”

Coulson-Smith asked the Sullivan Circuit Court to declare the 2016 amendment invalid and to declare its terms a nullity in favor of the trust’s February 2009 amendment governing the disposition of the trust property.

The other trust beneficiaries filed a motion to dismiss Coulson-Smith’s complaint, citing Indiana Code § 30-4-6-14, which requires a person to commence a proceeding to contest the validity of a revocable trust within three years of the settlor’s death. The other beneficiaries also contended the tolling agreement was invalid because they weren’t parties to it and did not sign it.

The trial court dismissed Coulson-Smith’s complaint with prejudice as to all defendants.

Coulson-Smith appealed and the COA reversed, finding the tolling agreement was valid.

Writing for the court, Judge Margret Robb noted that while the tolling agreement provided Coulson-Smith additional time to contest the validity of the trust, it did not address any substantive issue surrounding the trust.

“It did not settle a controversy about the validity of the trust; nor did it impact the construction or effect of the trust; the identity, rights, or interests of a beneficiary; or change the terms of the trust,” Robb wrote. “The adjudication of Nancy’s complaint — by the trial court or by a later agreement about the substance of the complaint — may affect any or all of those things, but when the Tolling Agreement was signed, Nancy had of course not yet filed her complaint.”

The appellate court ruled the tolling agreement validly extended the time for Coulson-Smith to file a complaint.

“As no party has contended Nancy did not file her complaint within the time allowed by the Tolling Agreement, Nancy is entitled to judgment as a matter of law that her complaint is not untimely,” Robb wrote.

Judges Paul Mathias and Peter Foley concurred.

The case of Nancy Coulson-Smith v. John C. Coulson, as Successor Trustee of the Zoe E. Coulson Trust,, 22A-PL-980, was thus remanded with instructions to vacate the dismissal order and reinstate Coulson-Smith’s cause of action.

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