Citations Affected: IC 6-4.1; IC 29-1; IC 30-4; IC 30-5; IC 32-4;
IC 34-30.
Synopsis: Numerous changes to probate, trust, and tax laws. Changes
notice of appraisal requirements. Makes various changes concerning
the responsibilities of an attorney in fact. Allows a putative father, for
the purpose of inheritance, to execute a paternity affidavit to establish
the paternity of a child born out of wedlock. Provides that a person
incurs civil liability if, not more than three business days after receiving
the power of attorney, the person refuses to accept the authority of an
attorney in fact granted under a power of attorney. Provides that a
person does not incur civil liability if the person provides the attorney
in fact with a written statement not more than ten days after the refusal
explaining why: (1) the power of attorney is legally invalid; or (2) the
attorney in fact is exercising a power not provided in the power of
attorney. Provides that a nonprobate transfer does not include the
transfer of a life insurance policy or annuity or payment of death
proceeds thereof. Provides that the liability of a nonprobate transferee:
(1) may not exceed the value of the nonprobate transfers received or
controlled by the nonprobate transferee; and (2) does not include the
net contributions of the nonprobate transferee. Repeals a superseded
provision concerning the liability of a person who receives payment
from a multiple party account for claims against the estate.
Effective: July 1, 2002.
January 7, 2002, read first time and referred to Committee on Judiciary.
January 31, 2002, amended, reported favorably _ Do Pass.
February 4, 2002, read second time, amended, ordered engrossed.
A BILL FOR AN ACT to amend the Indiana Code concerning trusts
and fiduciaries.
SECTION 1. IC 6-4.1-5-3 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 3. Before he makes
making the appraisal required under section 2(3) of this chapter, the
county inheritance tax appraiser shall give notice of the date, time, and
place of the appraisal, by mail, to (1) each person known to have an
interest in the property interests to be appraised, including the
department of state revenue; and (2) any person designated by the
probate court and each interested person who filed a request for
notice and provided a mailing address to the county assessor. The
county inheritance tax appraiser shall appraise the property interests at
the time and place stated in the notice.
SECTION 2. IC 6-4.1-5-9 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 9. (a) When the county
inheritance tax appraiser files an appraisal report with the probate
court, the court shall give twenty (20) days notice by mail of the date,
time, and place of a hearing on the report to each interested person
who filed a request for notice and provided a mailing address
under section 3 of this chapter. The court shall give the notice by
mail to all persons known to be interested in the resident decedent's
estate, including the department of state revenue.
(b) If the address of a person interested in a resident decedent's
estate is unknown, the probate court shall give notice of the time and
place of the appraisal report hearing by publication. The court shall
publish the notice not less than three (3) successive weeks before the
hearing in a newspaper published in the county.
SECTION 3. IC 6-4.1-5-11 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 11. The court shall
immediately mail a copy of its determination of the fair market value
of the property interests transferred by a resident decedent and the
inheritance tax due as a result of the decedent's person's death to all
persons interested in the decedent's estate, including each interested
person who filed a request for notice and provided a mailing
address under section 3 of this chapter, the department of state
revenue, and the county treasurer.
SECTION 4. IC 29-1-2-7, AS AMENDED BY P.L.9-1999,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2002]: Sec. 7. (a) For the purpose of inheritance (on the
maternal side) to, through, and from a child born out of wedlock, the
child shall be treated as if the child's mother were married to the child's
father at the time of the child's birth, so that the child and the child's
issue shall inherit from the child's mother and from the child's maternal
kindred, both descendants and collaterals, in all degrees, and they may
inherit from the child. The child shall also be treated as if the child's
mother were married to the child's father at the time of the child's birth,
for the purpose of determining homestead rights and the making of
family allowances.
(b) For the purpose of inheritance (on the paternal side) to, through,
and from a child born out of wedlock, the child shall be treated as if the
child's father were married to the child's mother at the time of the
child's birth, if one (1) of the following requirements is met:
(1) The paternity of a child who was at least twenty (20) years of
age when the father died has been established by law in a cause
of action that is filed during the father's lifetime.
(2) The paternity of a child who was less than twenty (20) years
of age when the father died has been established by law in a cause
of action that is filed:
(A) during the father's lifetime; or
(B) within five (5) months after the father's death.
(3) The paternity of a child born after the father died has been
established by law in a cause of action that is filed within eleven
(11) months after the father's death.
(4) The putative father marries the mother of the child and
acknowledges the child to be his own.
(5) The putative father executes a paternity affidavit as set
forth in IC 16-37-2-2.1.
(c) The testimony of the mother may be received in evidence to
establish such paternity and acknowledgment, but no judgment shall be
made upon the evidence of the mother alone. The evidence of the
mother must be supported by corroborative evidence or circumstances.
(d) If paternity is established as described in this section, the child
shall be treated as if the child's father were married to the child's
mother at the time of the child's birth, so that the child and the child's
issue shall inherit from the child's father and from the child's paternal
kindred, both descendants and collateral, in all degrees, and they may
inherit from the child. The child shall also be treated as if the child's
father were married to the child's mother at the time of the child's birth,
for the purpose of determining homestead rights and the making of
family allowances.
SECTION 5. IC 29-1-7-3 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2002]: Sec. 3. (a) After the death of a testator
decedent, the person having custody of his the decedent's will:
(1) may; or
(2) shall, upon written demand by the personal representative
or upon court order;
deliver it the will to the court which has jurisdiction of the
administration of his the decedent's estate.
(b) A verified written application may be filed by or on behalf of
any interested person or any personal representative named, in any
court having jurisdiction of the administration of the decedent's estate
for an order of that court against any person who is alleged to have the
custody of the will of the said person so dying, to produce said will
before said court at the time fixed by said court in order that said will
may be probated. Upon the filing of said application, the court shall
cause notice to issue of the filing thereof to the person alleged in said
petition to have the custody of said will. If, upon the hearing of said
application, the court shall find the allegations thereof to be true, the
court shall enter an order directing the person so named in said
application to deliver said will within the time fixed in said order, to
such person as the court shall designate, so that the same may be
offered for probate.
(c) If the person against whom said order is issued shall, after said
order shall have been served upon him, fail without just cause to so
produce said will at the time so fixed therefor, he shall be guilty of
contempt of court and may by said court be committed to the jail of the
county in which said court is located, there to remain until he produces
said will, or until said order to produce shall have been vacated, and
said person so found guilty of contempt shall also be liable to any
person interested in the probate of said will for all damages he may
sustain by the failure of said person to comply with said order.
SECTION 6. IC 30-4-3-29 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 29. (a) A trustee may
be removed as follows:
(1) By the court.
(2) By the person, if any, who by the terms of the trust is
authorized to remove the trustee.
(3) Unless the terms of the trust instrument provide otherwise, by
a beneficiary of the trust whose petition is granted by the court
under subsection (e).
(b) Upon petition by the trustee the court may, in its discretion,
permit the trustee to resign if the trustee's resignation will not be
detrimental to the trust.
(c) Unless a successor trustee is named in or selected according to
a method prescribed in the terms of the trust, the court may appoint a
trustee to replace a removed, resigned, or deceased trustee and, on
petition by a party to the trust, may appoint a co-trustee if to do so
would facilitate more effective administration of the trust. The court
shall inquire into the qualifications of a proposed successor trustee and
give due consideration to the intentions of the settlor of the trust before
appointing a successor trustee.
(d) For good cause shown, the court may at any time appoint a
temporary trustee for such period of time, and to perform such duties,
as the court may direct.
(e) This subsection applies only to a trust executed after June 30,
1996. A beneficiary of a trust may petition the court for the removal of
a corporate trustee if there has been a change in control of the corporate
trustee after the date of the execution of the trust. The court may
remove the corporate trustee if the court determines the removal is in
the best interests of all the beneficiaries of the trust. For purposes of
this subsection a change in control of the corporate trustee occurs
whenever a person or group of persons acting in concert acquire
acquires the beneficial ownership of an aggregate of at least
twenty-five percent (25%) of the outstanding shares of voting stock of:
(1) a trustee; or
death, an accounting under this subsection must be requested not
later than nine (9) months after the date of the principal's death.
(d) Not more than one (1) accounting is required under this section
in each twelve (12) month period unless the court, in its discretion,
orders additional accountings.
(e) If an attorney in fact fails to deliver an accounting as required
under subsection (c), the person requesting the accounting may initiate
an action in mandamus to compel the attorney in fact to render the
accounting. The court may award the attorney's fees and court costs
incurred under this subsection to the person requesting the accounting
if the court finds that the attorney in fact failed to render an accounting
as required under this section without just cause.
SECTION 9. IC 30-5-6-4.5 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2002]: Sec. 4.5. (a) An attorney in fact has the authority to
employ persons, including:
(1) attorneys;
(2) accountants;
(3) investment advisers; and
(4) agents;
to assist the attorney in fact in the performance of the attorney in
fact's fiduciary duties. Any reasonable costs incurred with regard
to services rendered for the benefit of the principal shall be paid
from the principal's asset holdings.
(b) Except as provided in subsection (c), if an accounting is
requested as set forth in section 4 of this chapter, costs incurred by
the attorney in fact:
(1) to defend the actions of the attorney in fact on behalf of the
principal with regard to the preparation of the accounting;
and
(2) to defend any other actions of the attorney in fact on
behalf of the principal;
shall be paid from the principal's asset holdings.
(c) If a court determines that an attorney in fact:
(1) breached the attorney in fact's fiduciary duty or obligation
to the principal; or
(2) was engaged in self-dealing activities with the principal's
asset holdings;
the court may determine that the attorney in fact is responsible for
the payment of the costs incurred under subsection (b).
SECTION 10. IC 30-5-9-9, AS AMENDED BY P.L.252-2001,
SECTION 36, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2002]: Sec. 9. (a) Except as provided in subsection (b), a
person refusing who, not more than three (3) business days after
receiving a power of attorney, refuses to accept the authority of an
attorney in fact to exercise a power granted under a power of attorney
is liable to the principal and to the principal's heirs, assigns, and the
personal representative of the estate of the principal in the same
manner as the person would be liable had the person refused to accept
the authority of the principal to act on the principal's own behalf. In any
action brought in court to either force the acceptance of the authority
of the attorney in fact or pursue damages as a result of the person's
refusal to accept the authority of an attorney in fact, the person found
liable for refusing to accept the authority of an attorney in fact shall pay
the following:
(1) Three (3) times the amount of the actual damages.
(2) The attorney's fees of the person bringing the action to court.
(3) Prejudgment interest on the actual damages from the date the
person refused to accept the authority of the attorney in fact.
(b) A person refusing to accept the authority of an attorney in fact
to exercise a power granted under a power of attorney is not liable
under subsection (a) if:
(1) the person has actual notice of the revocation of the power of
attorney before the exercise of the power;
(2) the duration of the power of attorney specified in the power of
attorney has expired;
(3) the person has actual knowledge of the death of the principal;
(4) the person reasonably believes that the power of attorney is
not valid under Indiana law and provides the attorney in fact with
a written statement not more than ten (10) business days after
the refusal, describing the reason that the power of attorney is not
valid under Indiana law; or
(5) the person reasonably believes that the power of attorney does
not grant the attorney in fact with authority to perform the
transaction requested and provides the attorney in fact with a
written statement not more than ten (10) business days after
the refusal, describing the reason the person believes the power
of attorney is deficient under Indiana law.
(c) This section does not negate the liability a person would have to
the principal or the attorney in fact under another form of power of
attorney, under the common law, or otherwise.
SECTION 11. IC 32-4-1.1 IS ADDED TO THE INDIANA CODE
AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2002]:
amended, modified, or revoked by the decedent during the
decedent's lifetime. If there is more than one (1) such trust, in
proportion to the relative value of the trusts.
(3) Except as provided in IC 27-1-12-14, other nonprobate
transferees in proportion to the values received.
Sec. 4. Unless otherwise provided by the trust instrument,
interest of beneficiaries in all trusts incurring liabilities under this
chapter shall abate as necessary to satisfy the liability as if all of
the trust instruments were a single will and the interests were
devises under it.
Sec. 5. (a) A provision made in an instrument may direct the
apportionment of the liability among the nonprobate transferees
taking under that or any other governing instrument.
(b) If a provision in an instrument conflicts with a provision in
another instrument, the later provision prevails.
Sec. 6. Upon due notice to a nonprobate transferee, the liability
imposed by this chapter is enforceable in proceedings in Indiana in
the county where:
(1) the transfer occurred;
(2) the transferee is located; or
(3) the probate action is pending.
Sec. 7. (a) A proceeding under this chapter may not be
commenced unless the personal representative of the decedent's
estate has received a written demand for the proceeding from the
surviving spouse or a surviving child, to the extent that statutory
allowances are affected, or a creditor.
(b) If the personal representative declines or fails to commence
a proceeding after demand, a person making demand may
commence the proceeding in the name of the decedent's estate at
the expense of the person making the demand and not of the estate.
(c) A personal representative who declines in good faith to
commence a requested proceeding incurs no personal liability for
declining.
Sec. 8. A proceeding under this chapter must be commenced not
later than nine (9) months after the decedent's death, but a
proceeding on behalf of a creditor whose claim was allowed after
proceedings challenging disallowance of the claim may be
commenced within sixty (60) days after final allowance of the
claim.
Sec. 9. Unless written notice asserting that a decedent's probate
estate is insufficient to pay allowed claims and statutory allowances
has been received from the decedent's personal representative, the
following rules apply:
(1) Payment or delivery of assets by a financial institution,
registrar, or another obligor to a nonprobate transferee under
the terms of the governing instrument controlling the transfer
releases the obligor from all claims for amounts paid or assets
delivered.
(2) A trustee receiving or controlling a nonprobate transfer is
released from liability under this section on any assets
distributed to the trust's beneficiaries. Each beneficiary, to
the extent of the distribution received, becomes liable for the
amount of the trustee's liability attributable to that asset
imposed by sections 2 and 3 of this chapter.
SECTION 12. IC 32-4-1.5-7.1 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2002]: Sec. 7.1. The liability of a surviving
party, P.O.D. payee, or beneficiary for creditor claims and
statutory allowances is determined under IC 32-4-1.1.
SECTION 13. IC 32-4-1.6-11.1 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2002]: Sec. 11.1. The liability of a beneficiary
for creditor claims and statutory allowances is determined under
IC 32-4-1.1.
SECTION 14. IC 34-30-2-136.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2002] Sec. 136.5. IC 32-4-1.1-7 (Concerning
personal liability of a personal representative).
SECTION 15. IC 32-4-1.5-7 IS REPEALED [EFFECTIVE JULY
1, 2002].