Asset Protection Planning Tips Techniques & Tools

Notre Dame Law School
NDLScholarship
Indiana Continuing Legal Education Forum Indiana Continuing Legal Education Forum
2022
1-1-2022
Asset Protection Planning_ Tips, Techniques & Tools

Indiana Continuing Legal Education Forum (ICLEF)
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Indiana Continuing Legal Education Forum (ICLEF), "Asset Protection Planning_ Tips, Techniques & Tools"
(2022). Indiana Continuing Legal Education Forum 2022. 29.
https://scholarship.law.nd.edu/iclef_2022/29
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Asset Protection Planning: Tips, Techniques & Tools
____
April 27, 2022
Index
ICLEF Electronic Publications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. . . . . . . . . . . . . . . .
MANUAL - Asset Protection Planning: Tips, Techniques and Tools - April 27, 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 .................
Agenda. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11..................
Faculty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
.................
Faculty bios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 ..................
Manual table of contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 ..................
Section-1-Jeffrey-S-Dible. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 ..................
Section 1 - Jeffrey S. Dible. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
.....................
Section 1 Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 .....................
(1) An Easier Task: Protecting Beneficiaries and Power-Holders Under Non-Self-Settled Trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 .....................
(2) Ten General Principles to Remember for Self-Settled Planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 .....................
(3) Lessons or Practice Pointers from Reported “Attorney Ethics” Cases and Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 .....................
(4) Red Flag” Indicators Telling the Lawyer to Say “NO THANKS” to a Prospective Client (or at least to proceed cautiously). . . . . . . . . . . . . .47 .....................
(5) General Vulnerability of Protective Asset Transfers under the Indiana UFTA and UVTA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48 .....................
(6) New Specific Risk for Some Asset Transfers under the Indiana Voidable Transactions Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 .....................
(7) Tenancy by the Entireties Real Estate –Already Well-Protected. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 .....................
(8) Use of a “Matrimonial Trust(s)” to Hold Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 .....................
(9) Federal and State Exemptions for Non-Inherited Retirement Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 .....................
(10) State Statutory Exemption for Life Insurance Proceeds or Cash Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 .....................
(11) State Statutory Exemption for Annuities Payable to Non-Purchasers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66 ....................
(12) “Exemption Planning”: Increasing Holdings of Assets Exempt from Creditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 .....................
(A) Reported Court Decisions Involving “Exemption Planning”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
.......................
(B) When is it Safe for a Client to Engage in Exemption Planning?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70.......................
(13) Can LLCs be used effectively and standing alone for asset protection?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
....................
(14) Self-Settled Trusts Don’t Protect the Trust Assets from the Settlor’s Creditors Unless They are DAPTs. . . . . . . . . . . . . . . . . . . . . . . . . . .75 .....................
(A) Ten-Year Look-Back Rule for Trusts under Bankruptcy Code § 548(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
.......................
(B) Protections Added to I.C. 30-4-2.1 in 2010-11: Is there a back-door method for funding an effective self-settled spendthrift trust entirely within Indiana?.79 .......................
(15) Structuring a DAPT or Other Self-Settled Spendthrift Trust as a “GrantorTrust” for Income Tax Purposes. . . . . . . . . . . . . . . . . . . . . . . . .82 .....................
(16) Ensuring that Assets Transferred to a DAPT Won’t be Included in the Settlor’s“Gross Estate” for Federal Estate Tax Purposes. . . . . . . .85 .....................
Appendix 1 - Provisions added to Indiana Code 30-4-2.1 in 2010 and 2011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89 .....................
Appendix 2 - Indiana "matrimonial trust" statute (I.C. § 30-4-3-35). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
.....................
PowerPoint - Asset Protection “Lite”: Techniques Available in Indiana for Hoosiers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 .....................
Topic Scope for this First Hour. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97
.......................
Using a discretionary spendthrift trust to protect the interest of a beneficiary other than the settlor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100 ........................
Specific exemption for “tenancy by the entireties” real estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104 ........................
Using “Matrimonial Trusts” to hold T by E real estate for married settlors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106 ........................
Statutory exemption for non-inherited IRAs and other tax-qualified retirement accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 .........................
Indiana statutory exemption for life insurance proceeds or cash value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111 ........................
Indiana statutory exemption for the proceeds of some annuity contracts or policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 ........................
Can an Indiana LLC be used as a stand-alone vehicle to hold and protect assets from creditors?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 .........................
Engaging in “exemption planning”to increase the holdings of assets that are exempt from creditor claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 .........................
Remedies available to creditors under Indiana’s “Uniform Fraudulent Transfer Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 .........................
Some time-tested practical maxims about self-settled asset protection planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 .........................
Practice Pointers for Lawyers (mostly what NOT to do). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 .........................
Red flag indicators that should tell the lawyer to NOT get involved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128 ........................
Intersection of DAPT design with federal income tax issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .130 ........................
Intersection of DAPT design with federal estate tax planning objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133 ........................
Section-2-Jeffrey-B-Kolb. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .136
...................
Section 2 - Jeffrey B. Kolb. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
......................
Section 2 Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .138 ......................
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
......................
1. BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .140......................
2. REQUIREMENTS TO CREATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .142 ......................
3. PROTECTION FROM CREDITORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 ......................
3 .1. SCOPE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
.........................
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April 27, 2022
Index
3 .2. JURlSDICTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
.........................
3.3. CHOICE OF LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .146 ........................
3 .4. ALTER EGO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
.........................
3.5. TRANSFEROR'S INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .148 ........................
3 .6. TRUSTEE OR DIRECTOR SELECTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .149 ........................
3.7. ESTATE TAX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
.........................
4. CREDITOR EXCEPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
.......................
4.1. UNIFORM FRAUDULENT TRANSFER ACT CONVEYANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .150 ........................
4.2. CHILD SUPPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152
........................
4.3. MARITAL PROPERTY DIVISION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152 ........................
4.4. BANKRUPTCY CLAWBACK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 .........................
4.5. ASSETS ON FINANCIAL STATEMENTS OR APPLICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .153 ........................
4.6. QUALIFIED DISPOSITIONS PROHIBITED BY AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 .........................
5. DAPT CASE LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
......................
5.1. UNFAVORABLE DECISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 .........................
5.2. FAVORABLE DECISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 .........................
5.3. OBSERVATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160
.........................
6. TRUSTEE AND LAWYER LIABILITY TO CREDITORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
.......................
6.1. TRUSTEE LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
.........................
6.2. LAWYER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .163
........................
7. DRAFTING CONCERNS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .165
......................
7.1. STATUTORY REQUIREMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 .........................
7.2. MULTIPLE FIDUCIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .166 ........................
7.3. RULE AGAINST PERPETUITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .167 ........................
7.4. QUIET TRUSTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .167
........................
8. USES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .168
......................
8.1. ESTATE PLANNING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .168 ........................
8.2. FAMILY LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 .........................
8.3. MEDICAID. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169.........................
8.4. BUSINESS ASSET PROTECTION TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .170 ........................
8.5. EXOTIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .170
........................
9. COMPARISON TO OTHER APT'S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 ......................
Exhibit A - Engrossed Senate Bill No. 265. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .172
......................
Exhibit B - INFORMATION AND DOCUMENTS NEEDED FOR ESTATE PLANNING LETTER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .209 ......................
Exhibit C - LEGACY TRUST QUALIFIED AFFIDAVIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .225 ......................
Exhibit D - (TRANSFEROR'S NAME) LEGACY TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .226 ......................
Section-3-Deborah-J-Caruso-Mark-S-Zuckerberg. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
...................
Section 3 - Deborah J. Caruso - Mark S. Zuckerberg. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 ......................
PowerPoint - Fraudulent Conveyances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 ......................
Fraudulent Transfers: § 548. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .253 ......................
§548 Fraudulent Conveyance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254 ......................
Elements for “Actual Fraud”§548(a)(1)(A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255 ......................
Actual Intent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .256
......................
Badges of Fraud. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .257 ......................
Elements for “Less than Reasonably Equivalent Value”§548(a)(1)(B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .258 ......................
ACTUAL FRAUD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 ......................
CONSTRUCTIVE FRAUD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .261 ......................
Self-Settled Trusts in Bankruptcy: § 548(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .263 ......................
Avoidance of Transfer sunder §548(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .264 ......................
§548(e) Elements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .265 ......................
Identifying a“Self-Settled Trust” or “Similar Device”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .266 ......................
Theory 3 Other State or Federal Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .272 ......................
Indiana Uniform Fraudulent Transfer Act: Ind. Code § 32-18-2 et seq.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .273 ......................
32-18-2-15 Transfers voidable as to present creditors; creditor's burden of proof. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .274 ......................
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Indiana Bankruptcy Property Exemptions Updated Dollar Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 ......................
Scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .276
......................
Scenario 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
......................
Scenario 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280
......................
Scenario 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283
......................
Scenario 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
......................
Scenario 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288
......................
Scenario 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
......................
Scenario 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292
......................
Scenario 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
......................
Section-4-Kendra-G-Gjerdingen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .297
...................
Section 4 - Kendra G. Gjerdingen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297 ......................
Section 4 Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .299
......................
Asset Protection in Divorce—What Works and . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 ......................
Protecting Assets Prior to Marriage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .301 ......................
Premarital Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301
.........................
Protecting Assets After Marriage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .304
......................
Postnuptial Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .304
........................
The In Marriage QDRO®. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .306 ........................
Tools Available Before and After Marriage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .307
......................
Trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .307
........................
Domestic Asset Protection Trust (Legacy Trust). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 .........................
Trusts Created by a Third Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311 .........................
Asset Protection Gone Wrong. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312
......................
Uniform Fraudulent Transfers Act (UFTA). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .312
........................
Foreign or Offshore Bank Account and Offshore Asset Protection Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .314 ........................
But Wait, There’s More--Unwinding Complex Estate Planning Devices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315
.......................
Life Settlement of Insurance Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315
.........................
Charitable Contribution Carryovers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316
.........................
Section-5-Robert-W-Fechtman. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .317
...................
Section 5 - Robert W. Fechtman. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 ......................
......................
I. First-Party Special Needs Trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322......................
II. Third-Party Special Needs Trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323 .......................
A. A Testamentary Special Needs Trust for a Surviving Spouse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .324 ........................
B. The “Tandem” Special Needs Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326
.........................
C. Special Needs Trusts Incorporating the Power to Withdraw Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .327 ........................
III. Settlement Preservation Trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .328
......................
IV. Asset Protection Trusts for Minors and Young or At-Risk Adults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .328 ......................
APPENDIX A - TRUST FOR THE SOLE BENEFIT OF *BFN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .330 ......................
APPENDIX B - TRUST FOR THE BENEFIT OF *BFN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344 ......................
APPENDIX C - LAST WILL AND TESTAMENT OF *X. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364 ......................
Appendix D - *X FAMILY TRUST AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .373 ......................
APPENDIX E - *(CLIENT ) SETTLEMENT PRESERVATION TRUST WITH SPECIAL NEEDS TRUST PROVISIONS (SAMPLE LANGUAGE). 391. . . . . . . . . . . . . . . . . . .
Section-6-Jeff-R-Hawkins. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .398
...................
Section 6 - Jeff R. Hawkins. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398
......................
......................
2022 Creditors’ Claim Enforcement Against Decedents’ Property.pdf. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .400 ......................
Part 1. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .403
........................
1.1. Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .403
........................
1.2. Threshold Questions About a Decedent’s Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403 .........................
1.3. Two Major Channels Passing Decedents’ Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .404 ........................
Part 2. Creditors’ Claims in Decedents’ “Probate Estates”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404 .........................
2.1. Probate Terminology Matters – What is a Decedent’s “Estate?”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .404 ........................
2.2. Decedents’ Probate Property Title Passage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405 .........................
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2.2.1. Immediate Title Passage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .405
........................
2.2.2. Title Passage to Distributees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .406
........................
2.2.3. Testate Estate Title Passage Questions Concerning the Probate Estate’s Suspended Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .406 ........................
2.2.4. Wills Must Be Admitted to Probate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406 .........................
2.2.5. Race to the Courthouse to Resolve the Probate Estate’s Suspended Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408 .........................
2.3. Personal Representative’s Power of Possession. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409 .........................
2.3.1. Personal Representative’s Interception of Title Passage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409 .........................
2.3.2. Personal Representative’s Distribution Deed Distractions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .410 ........................
2.3.3. Refocusing on Intestate and Testate Title Passage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411 .........................
2.3.4. Intestate Title Passage – a Family Thing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .411 ........................
2.3.5. Testate Title Passage – Decedent’s Will Admitted to Probate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .411 ........................
2.4. Personal Representative’s Administration of a Decedent’s Probate Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .412 ........................
2.4.1. Personal Representative’s Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412 .........................
2.4.2. Personal Representative’s Fiduciary Duty to Distributees and Creditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .412 ........................
2.4.3. Personal Representative’s Management of a Decedent’s Probate Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413 .........................
2.5. Creditors’ Claims Against a Decedent’s Probate Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414 .........................
2.5.1. Governmental Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414
.........................
2.5.2. Family and Social Services Administration’s Estate Recovery Against a Deceased Medicaid Recipient’s Probate Estate. . . . . . . . . . . . . . . . . 414 .........................
2.5.3. Nongovernmental Claims Against a Decedent’s Probate Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .415 ........................
2.6. Secured Claims Against a Decedent’s Encumbered Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .416 ........................
2.7. Requirements for a Claim Against a Decedent’s Probate Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .416 ........................
2.8. Claim Collection Priorities for a Decedent’s Probate Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417 .........................
2.9. Creditors’ Claims Against a Decedent’s Probate Real Property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .419 ........................
2.9.1. Brief History Lesson on Personalty Versus Realty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419 .........................
2.9.2. Creditors’ Interception of Probate Real Property Title passage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .419 ........................
2.9.3. Overview of Procedural Functions of IC 29-1-7-15.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .419 ........................
2.9.4. The 5-Month & 7-Month Rules Governing a Personal Representative’s Sale of a Decedent’s Real Property Under IC 29-1-7-15.1(b)21F. . . . .420 ........................
2.10. Procedural Strategies for Distributees’ Protection of Probate Assets Against Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .422 ........................
2.10.1. Strategy 1: Skip Probate Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422 .........................
2.10.2. Strategy 2: Petition for Administration More Than 5 Months After Decedent’s Death – No Claims Filed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423 .........................
2.10.3. Strategy 3: Petition for Administration More Than 5 Months After Decedent’s Death – Late Claims Filed. . . . . . . . . . . . . . . . . . . . . . . . . . . . .423 ........................
2.10.4. Strategy 4: Pursue Real Property Under IC 29-1- 7-23(b)-(d) and (Temporarily) Abandon Low-Value Personal Property. . . . . . . . . . . . . . . . .424 ........................
2.10.5. Strategy 5: Seek appointment of a Personal Representative to Scrutinize Claim Merits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .426 ........................
Part 3. Claims Against Nonprobate Transferees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .428 ........................
3.1. Procedural Policy for Claims Against Nonprobate Transferees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .428 ........................
3.2. Nonprobate Transfer Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429
.........................
3.3. Party Definitions and Liability of Nonprobate Transferees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .430 ........................
3.4. Apportionment of Nonprobate Transferees’ Liability to the Probate Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .431 ........................
3.5. Abatement of Beneficiaries’ Trust Interests by Nonprobate Transfer Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431 .........................
3.6. Instrument’s Apportionment Provisions Concerning Nonprobate Transferees’ Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431 .........................
3.7. Forum of Proceedings to Enforce Claims Against Nonprobate Transferees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .432 ........................
3.8. Claims Concerning Deceased Transferors Dying Before July 1, 2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432 .........................
3.9. Medicaid Estate Recovery Claim Deadline Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432 .........................
3.10. Medicaid Estate Recovery Exemptions of Nonprobate Transfers Established Before April 30, 2002, and Assets Determined by FSSA to be Exempt 433or Unavailable Before April 3
3.11. Claims Concerning Assets Transferred Through Nonprobate Transfers Concerning Deceased Transferors Dying After June 30, 2018. . . . . . . . . 434 .........................
3.11.1. Deadline to File and Serve a Claim Against a Deceased Transferor’s Probate Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .434 ........................
3.11.2. Deadline to File and Serve a Written Demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .434 ........................
3.11.3. Written Demand Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435.........................
3.11.4. Requirement of a Claimant’s Diligent Probate Estate Claim Prosecution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436 .........................
3.11.5. Direct Claimant Action If Personal Representative Declines or Fails to Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437 .........................
3.11.6. Statutory Exoneration for a Personal Representative’s Declination or Failure to Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437 .........................
3.11.7. Protection of Secured Creditors’ Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .438 ........................
3.11.8. Deadline for Filing and Serving the Written Demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .438 ........................
3.11.9. Deadline for Commencement of Proceedings Against Nonprobate Transferees Concerning Deceased Transferors Dying That June 30, 2018. 438.......................
3.11.10. Statutory Exoneration of Obligors and Trustees for Transfers to Non probate Transferees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439 .........................
____
April 27, 2022
Index
3.11.11. Obligations, Rights, and Priorities of Successful Personal Representatives and Claimants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .439 ........................
3.12. Counter-Punching as an Asset Protection Strategy Against Nonprobate Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 440 .........................
3.12.1. Avoid Filing a Petition for Administration Within 5 Months After the Deceased Transferor’s Death. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 440 .........................
3.12.2. Seeking Appointment as Personal Representative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 .........................
3.12.3. Personal Representative’s Duty to Scrutinize Claim Merits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .441 ........................
3.12.4. Personal Representative’s Role as the Claim Procedures Enforcer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 .........................
3.12.5. Claim Settlement Negotiations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .442 ........................
3.12.6. Pursue Asset Values in Claim Enforcement Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442 .........................
Part 4. CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .443
........................
Appendix 1 - Estate Claim Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444.........................
Appendix 2 - Personal Representative's Authority to Sell Decedent's Real Property Under IC 29-1- 7-15.1 (b)-(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .445 ........................
Appendix 3 - FSSA & Other Creditors' Claims Against Nonprobate Transferees of Decedents Dying After June 30, 2018. . . . . . . . . . . . . . . . . . . . . . . . . . .446 ........................
Appendix 4 - NON-GOVERNMENTALCLAIMS AGAINST NONPROBATE TRANSFEREES [IC 32-17-13 for Decedents dying after June 30, 2018]. . . . . . 447 .........................
Appendix 5 - GOVERNMENTAL CLAIMS AGAINST NONPROBATE TRANSFEREES [IC 32-17-13 for Decedent's dying after June 30, 2018]. . . . . . . . . .449 ........................
Appendix 6 - WRITTEN DEMAND FOR PROCEEDINGS AGAINST NONPROBATE TRANSFEREES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451 .........................
Appendix 7 Petition to Set Claim for Trial.pdf. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451 .........................
Appendix 7 - PETITION TO SET CLAIM FOR TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453 .........................
S‌TATE OF INDIANA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .453
........................
1. Joby Schmo (the “Decedent”) died intestate on November 31, 2021.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453 .........................
2. The Court appointed Billy Bob Schmo to serve as the Decedent’s Personal Representative and the Clerk issued Letters of Administration to the Personal 453 Representative on Novem
3. The Publisher’s Affidavit of the Schmo County Gazette states that it published the first notice to creditors on December 17, 2021.. . . . . . . . . . . . . . . 453 .........................
4. The Claimant filed his claim against the Decedent’s estate on February 29, 2022 (the “Claim”).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453 .........................
5. More than three months and 15 days have elapsed since the first publication of notice to creditors and the Personal Representative has neither allowed 453 nor disallowed the Claim w
6. The Claimant is filing this petition on April 4, 2022, a date that is less than 30 days after the expiration of the Personal Representative’s deadline to 453 allow or disallow the Claim und
Appendix 8 Complaint Against Nonprobate Transferees.pdf. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .453 ........................
Appendix 8 - VERIFIED COMPLAINT AGAINST NONPROBATE TRANSFEREES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455 .........................
S‌TATE OF INDIANA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .455
........................
1. Boss, the grand champion hog owned by Joby Schmo (the “Deceased Transferor”), entered the Plaintiff’s field and consumed $10,000 worth of corn455 on September 31, 2021.. . . .
2. The Deceased Transferor died intestate on November 31, 2021.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455 .........................
3. The Schmo Circuit Court appointed Billy Bob Schmo to serve as the Decedent’s Personal Representative and the Clerk issued Letters of Administration 455 to the Personal Represen
4. The Publisher’s Affidavit of the Schmo County Gazette states that it published the first notice to creditors on December 17, 2021.. . . . . . . . . . . . . . . 455 .........................
5. Plaintiff filed his claim to recover $10,000 in damages against the Decedent’s estate (the “Claim”) on February 29, 2022.. . . . . . . . . . . . . . . . . . . . . .455 ........................
6. More than three months and 15 days have elapsed since the first publication of notice to creditors and the Personal Representative has neither allowed 455 nor disallowed the Claim w
7. Plaintiff filed a Petition to Set Claim for Trial in the Schmo Circuit Court on April 4, 2022, a date that was less than 30 days after the expiration of the456 Personal Representative’s dea
8. Plaintiff delivered a Written Demand for Proceedings Against Nonprobate Transferees under Ind. Code § 32-17-13-7 to each of the Personal Representative 456 and the Defendants a
9. The Schmo Circuit Court entered a judgment allowing the Claim on November 31, 2022 (the “Claim Allowance Judgment”) and finding that the Deceased 456 Transferor’s probate esta
10. The Personal Representative has failed to commence proceedings against the Defendants, so Plaintiff is entitled to commence proceedings in the456 name of the Estate under Ind.
11. Plaintiff holds an allowed claim by the Claim Allowance Judgment in the amount of $10,000.00, and Plaintiff is entitled to judgment against the Defendants 456 to enforce the Claim A
PowerPoint - CREDITORS’ CLAIM ENFORCEMENT AGAINST DECEDENTS’ PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .458 ........................
PART 1. INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459 .........................
PART 2. CREDITORS’ CLAIMS IN “PROBATE ESTATES”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .462 ........................
PART 3 – CLAIMS AGAINST NONPROBATE TRANSFEREES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .490 ........................
Section-7-Margaret-M-Christensen-Myekeal-Smith. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498
...................
Section 7 - Margaret M. Christensen - Myekeal Smith. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .498 ......................
PowerPoint - Ethical Considerations for Asset Protection Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501 .......................
AGENDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502
......................
Competence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .503 ......................
Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .507
......................
Conflicts Of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511......................
Conflicts of Interest: Self-Interested Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .517 ......................
Conflicts of Interest: Third Party Payor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .523 ......................
Conflicts of Interest: Joint Representation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .529 ......................
Other Conflicts of Interest: Former Client. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .538 ......................
Other Conflicts of Interest: Imputed Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .543 ......................
____
April 27, 2022
Index
Representing Clients With Diminished Capacity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547 ......................
Duties to Third Parties and Tribunals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .578 ......................
Sanctions for Aiding a Client’s Fraudulent Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581 ......................
Truthfulness in Statements to Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .584 ......................
Dealing With Unrepresented Persons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588 ......................
Respect for Rights of Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590 .......................
When “Stuff” Happens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593
......................
Article - Understanding Conflicts of Interest Arising from a Material Limitation on Representation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .599 ......................
ICLEF Electronic Publications
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Indiana Continuing Legal Education Forum (ICLEF)

230 East Ohio Street, Suite 300
Indianapolis, Indiana 46204
Ph: 317-637-9102 // Fax: 317-633-8780 // email: iclef@iclef.org
URL: https://iclef.org
ASSET PROTECTION
PLANNING: TIPS,
TECHNIQUES AND
TOOLS
April 27, 2022
WWW.ICLEF.ORG
Copyright 2022 by Indiana Continuing Legal Education Forum
INDIANA CONTINUING LEGAL EDUCATION FORUM
OFFICERS
TERESA L. TODD
President
LYNNETTE GRAY
Vice President
HON. ANDREW R. BLOCH

Secretary
SARAH L. BLAKE
Treasurer
ALAN M. HUX
Appointed Member
LINDA K. MEIER
Appointed Member
DIRECTORS
James H. Austen Shaunda Lynch
Sarah L. Blake Thomas A. Massey
Hon. Andrew R. Bloch Linda K. Meier
Melanie M. Dunajeski Whittley Pike
Lynnette Gray Richard S. Pitts
Alan M. Hux Jeffrey P. Smith
Dr. Michael J. Jenuwine Teresa L. Todd
ICLEF
SCOTT E. KING
Executive Director
James R. Whitesell Jeffrey A. Lawson
Senior Program Director Program Director
ASSET PROTECTION PLANNING:
TIPS, TECHNIQUES AND TOOLS
Schedule
8:30 A.M. Registration and Coffee
8:55 A.M. Welcome and Introductions

Jennifer J. Hawkins, Program Co-Chair
9:00 A.M. Asset Protection "Lite": Techniques Available in Indiana for Hoosiers
Jeffrey S. Dible
10:00 A.M. Coffee Break
10:10 A.M. Protecting Assets with Legacy Trusts

Jeffrey B. Kolb
11:10 A.M. Coffee Break
11:15 A.M. Asset Protection in Bankruptcy – Creditor and Debtor Perspectives

Deborah J. Caruso and Mark S. Zuckerberg
12:00 P.M. Lunch Break (on your own)
1:00 P.M. Asset Protection in Divorce – What Works and…

Kendra G. Gjerdingen
1:45 P.M. Asset Protection with First- and Third-Party Special Needs Trusts
Robert W. Fechtman
2:45 P.M. Refreshment Break
3:00 P.M. Creditors’ Claim Enforcement Against Decedents’ Property

Jeff R. Hawkins
3:45 P.M. Asset Protection Planning Ethics

Margaret M. Christensen
4:30 P.M. Adjourn
April 27, 2022

WWW.ICLEF.ORG
ASSET PROTECTION PLANNING:
TIPS, TECHNIQUES AND TOOLS
Faculty
Ms. Jennifer J. Hawkins - Co-Chair Mr. Jeff R. Hawkins - Co-Chair
Hawkins Elder Law Hawkins Elder Law
999 North Section Street 999 North Section Street
P.O. Box 382 P.O. Box 382
Sullivan, IN 47882-0382 Sullivan, IN 47882-0382
ph: (812) 268-8777 ph: (812) 268-8777
e-mail: jennifer@hawkinselderlaw.com e-mail: jeff@hawkinselderlaw.com
Ms. Deborah J. Caruso Ms. Kendra G. Gjerdingen

Rubin & Levin, P.C. Mallor Grodner LLP
135 North Pennsylvania Street, Suite 1400 511 South Woodscrest Drive
Indianapolis, IN 46204 Bloomington, IN 47401
ph: (317) 860-2867 ph: (812) 332-5000
e-mail: dcaruso@rubin-levin.net e-mail: kggjerdi@lawmg.com
Ms. Margaret M. Christensen Mr. Jeffrey B. Kolb
Dentons Bingham Greenebaum LLP Kolb Roellgen & Traylor LLP
2700 Market Tower 801 Busseron Street
10 West Market Street P.O. Box 215
Indianapolis, IN 46204 Vincennes, IN 47591
ph: (317) 635-8900 ph: (812) 882-2280
e-mail: margaret.christensen@dentons.com e-mail: kolb@emisonlaw.com
Mr. Jeffrey S. Dible Mr. Mark S. Zuckerberg
Frost Brown Todd LLC Bankruptcy Law Office of Mark S. Zuckerberg, P.C.
201 North Illinois Street, Suite 1900 429 North Pennsylvania Street, Suite 100
P.O. Box 44961 Indianapolis, IN 46204
Indianapolis, IN 46244-0961 ph: (317) 687-0000
ph: (317) 237-3811 e-mail: debtnomo@aol.com
e-mail: jdible@fbtlaw.com
Mr. Robert W. Fechtman
Fechtman Law Office
8555 River Road, Suite 420
Indianapolis, IN 46240
ph: (317) 663-7200
e-mail: rfechtman@indianaelderlaw.com
April 27, 2022
WWW.ICLEF.ORG
Jennifer J. Hawkins, Hawkins Elder Law, Sullivan
Education:
BME, 1988, Jacobs School of Music, Indiana University, Bloomington, Indiana
JD, 1992, Louis D. Brandeis School of Law, University of Louisville, Louisville, Kentucky
Bar Admissions:
Indiana State Bar, 1992
United States District Court, Northern District of Indiana, 1992
United States District Court, Southern District of Indiana, 1992
Memberships:
Indiana State Bar Association:
Probate, Trust, & Real Property Section
Elder Law Section
Sullivan County Bar Association: Treasurer
Terre Haute Bar Association
Specialty Certification:
Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyer (2010-present)
Government Service:
Greene County Deputy Prosecutor, 1993-94, and 1998
Community Service:
Wabash Valley Community Foundation, Sullivan County Affiliate: Past Board Member
Ministry Service:
Westside Church of Christ, Sullivan, Indiana: Alto, Praise & Worship Ministry Team
Jeff R. Hawkins, Hawkins Elder Law, Sullivan
Education:
BS Business, 1988, Kelley School of Business, Indiana University, Bloomington, Indiana
JD, 1992, Louis D. Brandeis School of Law, University of Louisville, Louisville, Kentucky
Bar Admissions:
Indiana and United States District Court Northern & Southern Districts of Indiana,
1992; and Illinois, 2012
Memberships:
American College of Trust and Estate Counsel: (Fellow, 2011-present)
Trust & Estate Specialty Board: (Past Co-Chair, 2010-13)
National Academy of Elder Law Attorneys, Indiana and Illinois Chapters
Illinois State Bar Association: Business Advice and Financial Planning Section; Elder Law
Section; Real Estate Law Section; Trusts and Estates Section; and Alternative Dispute
Resolution Section.
Indiana State Bar Association: Probate, Trust, & Real Property Section, (Past Chair,
2009-10); Elder Law Section; Business Law Section; Agricultural Law Section; GP, Solo
& Small Firm Section; Alternative Dispute Resolution (ADR) Section; Board of
Governors (1996-98, 2006-10, and 2012-16); House of Delegates (Past Chair, 2009-
10); and Past President (2014-15).
Sullivan County Bar Association
Terre Haute Bar Association
Indiana Specialty Certification:

Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyer
Pamphlets & Chart Publications:

Starting & Managing a Law Practice in a Nutshell, 2016
Trust Issues and Guidelines for Indiana County Auditors, Assessors, and Recorders,
2016
Indiana Deed Recordation Process Comparison Chart by County, 2007
Church Affiliation:
Westside Church of Christ, Sullivan, Indiana
Deborah J. Caruso, Rubin & Levin, P.C., Indianapolis
Deborah J. Caruso practices in the area of bankruptcy, debtors and creditors' rights,
state court receiverships and commercial litigation. She has 35 years of experience
representing and advising individuals, businesses, bankruptcy trustees and state court
receivers in Chapter 7, 11 and 13 bankruptcy cases, out of court debt restructuring,
receivership actions and litigation matters. She has served as counsel to individuals and
businesses reorganizing in Chapter 11 cases or liquidating in complex Chapter 7 cases.
She has also counseled bankruptcy trustees and state court receivers in liquidation
cases and represented creditors in all chapters of the bankruptcy code. Ms. Caruso's
experience has ranged from reorganizing small family businesses to representing
trustees and receivers in complex Ponzi schemes. Ms. Caruso is a Chapter 7 panel
trustee and administers individual bankruptcy cases in the Southern District of Indiana,
Indianapolis Division.
Ms. Caruso has been active in the Indiana State Bar Association having served on the
compensation committee, as counsel to the president, and as president of the
Bankruptcy and Creditors' Rights Section. Presently, Ms. Caruso sits on the Indiana
State Bar Association Board of Governors. She is a Distinguished Senior Fellow of the
Indianapolis Bar Association and currently acts as counsel to the board of the
Indianapolis Bar Association. She is a frequent lecturer for ICLEF, the Indiana State Bar
Association, and the Indianapolis Bar Association. Ms. Caruso was selected by her peers
for inclusion in The Best Lawyers of America in 2015 and 2016. She was selected as an
Indiana Super Lawyer each year from 2006 and has been included on the list of Top 25
Female Super Layers and Top 50 Indiana Super Lawyers, most recently in 2018.
PRACTICE AREAS
• Individual and Business Bankruptcy under Chapters 7, 13 and 11

• Debt Restructuring and Out-of-Court Workouts
• Chapter 7 Panel Trustee
• Representation of Bankruptcy Trustees
• State Court Receiverships
• Creditors’ Rights
• Business and Commercial Litigation
• Bankruptcy Litigation
PROFESSIONAL ASSOCIATIONS AND AFFLIATIONS

• United States District Court for the Northern and Southern Districts of
Indiana
• United States Court of Appeals for the Seventh Circuit
• Chapter 7 Panel Trustee for Region 10
• American Bar Association
• Indiana State Bar Association
• Indianapolis Bar Association
• American Bankruptcy Institute
• National Association of Bankruptcy Trustees
EDUCATION
• Indiana University Law School, Indianapolis, Indiana, JD (cum laude) -

1981
• Indiana University, A.B. (cum laude) – 1978
Margaret M. Christensen, Dentons Bingham Greenebaum LLP, Indianapolis
Meg Christensen concentrates her practice on three main areas of law: lawyer ethics,
appeals and business litigation. Since 2017, she has served as co-chair for Dentons
Bingham Greenebaum's Recruiting Committee.
Her focus includes:

- Ethics – Meg has represented lawyers in all stages of the disciplinary process pending
before the Indiana Supreme Court. Additionally, she has represented other
professionals in front of various state licensing boards, and the IRS Office of
Professional Responsibility.
- Appellate – Meg brings a fresh perspective to identifying and analyzing issues on
appeal. Meg’s experience includes representing clients in the appellate phase of
complex business disputes, contract and insurance coverage disputes, and shareholder
liability.
- Business Litigation – Meg assists clients in litigation in both state and federal courts in
claims involving multi-million dollar contract disputes, shareholder liability, enforcement
of employee restrictive covenants, inter-governmental disputes, unfair competition
claims, dissolutions, administrative enforcement and licensing. She is experienced in
media law issues including defamation defense, reputation management, and social
media harms. Meg also represents the media in pursuing access to public records and
enforcing open door laws.
- Meg’s clients are primarily concerned about the impact their legal disputes will have
on their business or personal lives. Recognizing that litigation introduces uncertainty
into her client’s plans, Meg prides herself in clearly communicating with clients about
the practical effect of various strategies. Meg’s goal is to help busy clients focus on
what they do best while she works to present their strongest arguments in pursuit of
the best possible result.
- Between the Indiana State Bar Association (ISBA), the Indiana Continuing Legal
Education Forum (ICLEF) and Association of Professional Responsibility Lawyers (APRL),
Meg presents on ethics at over a dozen continuing legal education seminars each year.
As part of ISBA’s Ethics Committee, she considers and issues advisory opinions,
recommends rule changes and facilitates lawyer education events. Meg is an active
member of the APRL and devotes her time to researching trends in disciplinary
enforcement and lawyer ethics.
- In her free time, Meg enjoys cooking, hosting dinner parties, and attending yoga or
barre class. She’s an avid NPR listener, loves old homes and house rehabs and
attending camp with her two children. She has a vested interest in voting advocacy and
once served as a member of the United Nations Election Protection Delegation,
monitoring the polls in El Salvador’s National Election.
Jeffrey S. Dible, Frost Brown Todd LLC, Indianapolis
Jeff Dible concentrates his practice in estate planning, taxation and general business
law. He prepares wills and trusts, supervises the administration of estates and trusts,
represents various parties in guardianships and contested will or trust litigation, and
provides gift tax and estate planning advice to professionals and business owners in the
larger context of business succession. Jeff regularly lectures to attorneys and other
estate planning professionals on a variety of estate planning and tax topics. He has
frequently testified before committees of the Indiana General Assembly in favor of or
against various bills to amend Indiana’s trust, estate and guardianship laws, including
the 2012-13 repeal of the Indiana inheritance tax. He is a Fellow of the American
College of Trust and Estate Counsel and has been certified as an Indiana Trust and
Estate Lawyer by the Indiana Trust and Estate Specialty Board (TESB).
Jeffrey S. Dible
Frost Brown Todd LLC
201 North Illinois Street, Suite 1900
P.O. Box 44961
Indianapolis, IN 46244-0961
ph: (317) 237-3811
fax: (317) 237-3900
e-mail: jdible@fbtlaw.com
Robert W. Fechtman, Fechtman Law Office, Indianapolis
Bob Fechtman is a life-long resident of Indiana. He graduated from Northwestern

University with a degree in music and a major in economics, and he received his JD
from Rutgers School of Law. He also attended the University of San Diego’s Institute
on International and Comparative Law at Magdalen College, Oxford University. In
6th and 7th grade, Mr. Fechtman went away to school to sing with the American Boychoir
in Princeton, New Jersey.
Mr. Fechtman focuses his practice on the problems of older and disabled persons,
particularly special needs trusts, estate planning and trusts, health law, Medicaid
planning, guardianships and decedents’ estates. He is a frequent writer and speaker on
a variety of estate planning, disability and elder law topics. He has been certified as an
elder law attorney by the National Elder Law Foundation.
He is a member of the National Academy of Elder Law Attorneys, and he is a two-time

Past President of the Indiana Chapter of the National Academy of Elder Law
Attorneys. He is a member and a Past President of the Special Needs Alliance, which is
a national, non-profit, invitation-only network of lawyers dedicated to disability and
public benefits law. He is also a member of the Elder Law Section and the Probate,
Real Property and Trusts Section of the Indiana State Bar Association, and a member of
the Indianapolis Bar Association. Mr. Fechtman is a sustaining member of the Indiana
Trial Lawyers Association. He is currently serving on the Boards of Directors of the
National Elder Law Foundation, which is the accrediting organization for elder law
attorneys, and of the Indianapolis Bar Association Estate Planning and Administration
Section Executive Council, and the current President of the Board of The Indianapolis
Children’s Choir.
Kendra G. Gjerdingen, Mallor Grodner LLP, Bloomington and Indianapolis
Kendra G. Gjerdingen chairs the firm’s Appellate Law Group and handles the legal
needs of private and business clients in civil litigation and family law. Her concentration
includes family law and jurisdiction, interstate and international custody disputes,
appeals, and civil litigation.
Kendra is a leading family law and appellate lawyer in Indiana. She also has extensive
experience in jurisdictional disputes. She has represented many clients in Hague
Convention cases, as well as those involving interstate custody disputes, in addition to
assisting fellow practitioners and members of the judiciary in understanding the
complexities involved when parents live in different states or countries.
Kendra utilizes the Family Law Group’s team approach to assure that a client’s needs
are addressed quickly and efficiently. Kendra is a successful litigator with extensive
courtroom experience. She also brings her compassion and knowledge to each case, as
well as her attention to detail and dedication to civility in the practice of law. Kendra is
an advocate of alternative dispute resolution, especially in family law, understanding
the importance of reducing conflict in order to reach desired results.
Kendra is a Registered Family Law Mediator and a Certified Family Law Specialist, by
the Family Law Certification Board. She is a past-chair of the Indiana State Bar
Association Appellate Practice Section, and currently serves as the chair of its
continuing education committee. She is also on the council of the Family and Juvenile
Law Section of the ISBA.
Kendra is married to a law professor at the Indiana University Maurer School of Law,
and they have two children and three granddaughters.
Jeffrey B. Kolb, Kolb Roellgen & Kirchoff LLP, Vincennes
Jeff Kolb graduated from Indiana University-Bloomington in 1973 and from its school of
law in 1976 which is the year he joined the law firm.
Jeff is Board Certified Indiana Trust and Estate Lawyer by the Trust and Estate
Specialty Board and supervises the firm's estate planning and estate administration
practice. Jeff also does considerable work in elder law, oil and gas, coal, estate
litigation, property, and business entities. Jeff practices in Indiana and Illinois.
Jeff has served on the Probate Trust and Real Property Section council since 1979. In
1981, he began a quarterly newsletter for the Section which he still edits today. In
1986-1987, he chaired the Section. In 1991, Jeff wrote the Indiana Power of Attorney
Act. From 1996, to the present, he chaired the Probate Review Committee, which is
responsible for almost all legislation during that period of time related to trusts and
estates. He served on the Indiana State Bar Association Board of Managers and the
Unauthorized Practice of Law Committee. He was president of the Indiana Bar
Foundation from 2000 to 2002 and has been a Foundation fellow and Master fellow
since 1988. He also served on the Board of Directors of the Indiana Continuing Legal
Education Foundations. In 2012, he was instrumental in the repeal of all Indiana Death
Taxes. In 2019, he wrote the Indiana Legacy Trust Act.
From 1988 to the present, he has been a member of the American College of Trust and
Estate Council. From 1990 to the present, he has been a member of the National
Academy of Elder Law Attorneys. He has served in the Volunteer Lawyer Program of
Southwestern Indiana from 1999 to the present. In 1980 to 1982 he was appointed to
the Probate Code Study Commission by Governor Bowen. He became a Board Certified
Indiana Trust and Estate Lawyer in 2006 when he drafted the first test to certify
lawyers in that specialty. In 2019, he wad reappointed to the Probate Code Study
Commission by Governor Holcomb.
Jeff received numerous awards and recognitions for his legal work. In 1980, he
received a Citation of Merit from the Indiana State Bar Association for an article written
for its magazine "Res Gestae." In 1995, he received the ISBA award for the Probate
Newsletter. From 2000 to present, he has been in Who's Who in American Law. From
2001 to the present, he has been in Best Lawyers in America. In 2015, he was selected
by Best Lawyers as Lawyer of the Year in Indiana for estates, trusts and planning. In
2004, he received the Probate Trust and Real Property Section Lifetime Service Award
of which he is the only recipient. From 2005 to present, he has been selected as a
Super Lawyer by the Indianapolis monthly magazine and was in the Top 10 lawyers in
Indiana in 2008 and the Top 50 lawyers in Indiana in 2007, and 2009 to 2013. In
2006, he was selected to the Hall of Fame by the General Practice Section of the
Indiana State Bar Association. From 2009, he received a Presidential Citation for his
work on the Unauthorized Practice of Law from the Indiana State Bar Association. In
2015, Jeff received the Top Lawyer in Indiana Trusts and Estates. In 2019, Jeff
received the Sagamore of the Wabash which is Indiana's highest civil award.
Jeff has served on the YMCA Board of Directors since 1993 and was President from
1999 to 2001. From 1993 to 2010, he was a member of the Vincennes Education
Foundation. He served on the Board of Directors from 1994 to 2010 and was President
from 1998 to 1999. From 1998 to the present, he has served on the Knox County
Community Foundation and on the Board of Directors from 1998 to 2002 and 2008 to
the present. In 2000, he served as president. From 1989 to the present, he served on
the Board of Directors of the Lincoln High School Academic Society. From 1988 to the
present he served on the Wabash Valley Estate Planning Council, being a founding
member and first president. In 1986, he was appointed and later reelected to the
Vincennes Community School Corporation School Board where he served until
1997. He was president in 1989, 1991, and 1996. He served on the Knox County
United Way as president in 1989 and the Vincennes Civitan Club where he was
president in 1980. He also served on Old Town Players, Inc., Old Northwest
Corporation and Fort Knox II Committee, an Ad Hoc Committee of the Indiana Historical
Society. He is a founding member and first president of the Old Northwest Running
Club in 1979.
He is married to Deborah with whom he recently celebrated their 47th anniversary. His
three children; Justin, Joanna, and John, live in St. Paul, Minnesota; Pelham Manor,
New York; and San Francisco, California respectively.
Kolb Roellgen & Kirchoff LLP

801 Busseron Street
P.O. Box 215
Vincennes, IN 47591
ph: (812) 882-2280
fax: (812) 885-2308
e-mail: kolb@emisonlaw.com
Mark S. Zuckerberg, Bankruptcy Law Office of Mark S. Zuckerberg
Mark S. Zuckerberg is one of only twelve Board Certified Consumer

Bankruptcy Specialists in the entire State of Indiana and has filed over twenty-
thousand (20,000) bankruptcy cases in his twenty-two (22) year career. He frequently
lectures both locally and nationally to lawyers and various groups on the topic of
consumer bankruptcy law. Mr. Zuckerberg has spoken at the National level at the
American Bankruptcy Institute, the National Association of Consumer Bankruptcy
Attorneys and the National Conference of Bankruptcy Judges Annual Conferences. He
has been quoted on several occasions in the New York Times, Indianapolis Star, The
Indianapolis News, and several other news publications. Mr. Zuckerberg has been
interviewed by NBC Evening news, Business Week, and People Magazine. Mr.
Zuckerberg currently serves on the board of the American Board of Certification. Mr.
Zuckerberg is a member of the Indianapolis Bar Association and past Chairman of the
Bankruptcy and Creditors Right's Section of the Indiana State Bar Association. He was
the only consumer bankruptcy attorney to debate Senator Grassley on the merits of
bankruptcy reform on National Public Radio's Morning Edition. Mr. Zuckerberg has been
recognized by Who's Who in American Law, the Best Lawyers in America Consumer
Guide, and was the only consumer bankruptcy attorney to be named in the March 2005
Edition of the Indianapolis Monthly Magazine's list of Indiana Super Lawyers. Mr.
Zuckerberg was awarded Master Distinguished Fellow by the Indianapolis Bar
Association. Mr. Zuckerberg received his BA from Indiana University and his JD degree
from Capital University. Mr. Zuckerberg has concentrated his practice exclusively to the
area of Bankruptcy Law for over twenty-two (22) years.
Accomplishments:
• One of two lawyers asked to speak on bankruptcy law at the Judicial
College for Indiana State Court Judges, - an organization devoted to
educating Indiana judges on bankruptcy.
• Member of the Indiana State Bar Association (Past President of the
Commercial Law Section)
• Member of the Indianapolis Bar Association (Commercial Law), which
awarded Mark the Master Distinguished Fellow.
• Recognized in the Indianapolis Business Journal, "40 Under Forty"
recipient, May 1998.
• Recognized by Who's Who in American Law and The Best Lawyers in
America Consumer Guide.
• Was the only consumer bankruptcy attorney in America asked to debate
Senator Grassley on the merits of the pending bankruptcy reform legislation
on National Public Radio's Morning Edition.
Table
of
Contents
Section
One
Indiana Continuing Legal Education Forum
ASSET PROTECTION “LITE”: TECHNIQUES

AVAILABLE IN INDIANA FOR HOOSIERS
by Jeffrey S. Dible
Frost Brown Todd LLC
jdible@fbtlaw.com
Indianapolis, Indiana
April 27, 2022
© 2016, 2017, 2018, 2022 Frost Brown Todd LLC All rights reserved.
DISCLAIMER
Jeff Dible has used his best efforts to include accurate and up-to-date
information in his materials for this program. Statutory provisions or
cases from jurisdictions outside Indiana are cited or included for
illustrative purposes and not as definitive statements about the law in
those other jurisdictions. The author makes no warranties about the legal
conclusions stated or implicit in these materials. These materials are not
intended as legal advice to any specific individuals.
(16) Ensuring that Assets Transferred to a DAPT Won’t be Included in the
Settlor’s “Gross Estate” for Federal Estate Tax Purposes .........................................44
Appendix 1: Provisions added to Indiana Code 30-4-2.1 in 2010 and 2011 ..................48
Appendix 2: Indiana “matrimonial trust” statute (I.C. § 30-4-3-35) ..............................52
ii
ASSET PROTECTION “LITE”: TECHNIQUES
AVAILABLE IN INDIANA FOR HOOSIERS
The Eleventh Commandment: “Thou shalt not get away with it.”
Anonymous
The scope of this paper is the range of asset protection techniques or strategies
other than domestic asset protection trusts (such as the Indiana “legacy trust”) that
Hoosiers can use under current Indiana law. Because this paper is being presented as
just one part of a full-day program, this writer has removed (a) material on legal ethics
(state bar ethics opinions and attorney discipline cases) and (b) text summarizing
reported cases under the Bankruptcy Code.
(1) An Easier Task: Protecting Beneficiaries and Power-Holders Under Non-Self-

Settled Trusts
The primary topic of this paper is the group of techniques other than domestic
asset protection trusts (DAPTs) that Indiana residents can use to lawfully protect their
own assets against current or future creditors. But it’s worth remembering that when
Indiana residents make inter vivos gifts to or for the benefit of other persons (such as
children, grandchildren, or friends) or leave assets after death to or for the benefit of
other persons, the gifted or bequeathed money or property can be protected from the
creditors of those other persons. The optimal method for protecting a gift or inheritance
from the recipient’s creditors is to structure the gift or the at-death bequest or
distribution so that the property passes to an entirely discretionary spendthrift trust for
the benefit of the individual, instead of passing directly and “outright” to the
individual.
The inclusion of a spendthrift provision in the trust, to trigger the protection
under I.C. § 30-4-3-2(a), is important, but by itself, the spendthrift provision does not
supply strong or complete protection for the beneficiary’s interest in the trust. The key
to strong protection against the beneficiary’s creditors is to make all trust distributions
and expenditures subject to the “sole discretion” of a trustee who is not the beneficiary
and who is independent of the beneficiary.1 If this is done, then I.C. § 30-4-2.1-14 (see
Appendix 1 on page 48 below) will protect the beneficiary’s interest in the trust from
his or her non-governmental creditors: The logical basis is that if the beneficiary cannot
compel the trustee to make any particular distribution, a creditor of the beneficiary
cannot compel the trustee to make a distribution that could be collected to partially
repay the beneficiary’s debt.
1
Making the timing, amounts and purposes of distributions entirely subject to the
trustee’s discretion is sometimes not consistent with the practical objectives of the
donors or settlors, especially when the trust beneficiaries are children or grandchildren.
1
In Clay v. Hamilton, 116 Ind.App. 214, 63 N.E.2d 207 (1945), the trust was a
testamentary trust whose terms (a) prohibited the beneficiary from assigning or
conveying his interest and (b) required the trustee to pay to the beneficiary all net
income generated by the trust assets (farm real estate) that was not spent on upkeep of
the farm. Citing and relying on sections from the Restatement of Trusts, the Indiana
Court of Appeals held that because the trust’s terms required all of the remaining net
income to be distributed periodically to the beneficiary, his former spouse could reach
and divert the income distributions from the trust, in order to satisfy an alimony
judgment she had against the beneficiary.
From the fact pattern in Clay v. Hamilton, it is not much of a “stretch” to
imagine a case in which a state court orders the trustee of a discretionary spendthrift
trust to continue a pattern of regular distributions, but to a creditor of the beneficiary,
where the trustee had previously exercised discretion to make a stream of regular
distributions to the beneficiary. This illustrates the principle that the assets in a non-
self-settled spendthrift trust will be better protected from the beneficiary’s creditors if
the trust combines a strong spendthrift restriction with a structure under which all
distributions (even of net income) are under the trustee’s discretionary control, and no
distributions are mandatory.
In an unpublished 2012 case where a testamentary spendthrift trust restricted the
use of the trust’s corpus to pay the higher education expenses of the testator’s children
and required terminating distributions only at each child’s 30th birthday, the Court of
Appeals distinguished the facts from Clay v. Hamilton and held that the corpus of the
trust could not be reached to pay child support arrears owed by one of the child
beneficiaries for his own child, at a time when the beneficiary had not become eligible to
receive any mandatory distributions from the trust. In re Jacob Levi Loucks
Testamentary Trust, 2012 WL 601153 (unpublished Ind. Ct. App. 2012).
Because of the expansive definition of “property and rights to property” under
Internal Revenue Code section 6332(a), the structure of an entirely discretionary
spendthrift trust will not prevent the U.S. government from reaching the trust assets in
order to collect delinquent federal taxes owed by a beneficiary of that trust. See U. S. v.
Grimm, 865 F.Supp. 1303 (N.D. Ind. 1994). But other creditors are barred from reaching
or seizing the trust assets of a non-self-settled discretionary spendthrift trust, so long as
the assets are in the trustee’s hands and not yet distributed to the beneficiary.
In the context of an Indiana dissolution of marriage proceeding, if the ex-spouse
who is the beneficiary of a discretionary trust does not have a present possessory
interest in the trust (because distributions from the trust are discretionary and not
predictable), that spouse’s interest in the trust will not be marital property. See In re
Marriage of Hirsch, 385 N.E.2d 193, 196 (Ind. Ct. App. 1979).
What if the terms of a trust give a beneficiary or another individual a limited
power of appointment that the beneficiary could exercise to withdraw and keep some
2
portion of the trust’s income or principal each year, or at specified intervals? If the
holder of the appointment or withdrawal power is not inclined to exercise the power,
can a judgment creditor of the power holder compel the exercise of the withdrawal
power or reach the trust assets that could be withdrawn? To this writer’s knowledge,
the primary reported Indiana court decision on this issue is still Irwin Union Bank &
Trust Co. v. Long, 160 Ind.App. 509, 312 N.E.2d 908 (1974). In Long, the judgment
creditor was the ex-spouse of the trust beneficiary, who held (but did not exercise) an
annually-lapsing, non-cumulative power to withdraw up to 4 percent of the trust
principal each year. The Court of Appeals held that the judgment creditor could not
reach the 4-percent “appointable” portion of the trust assets. Avoiding the abrogation of
the holding in Long was one reason that the ISBA’s Probate Review Committee did not
support the enactment (without modifications) of the Revised Uniform Power of
Appointment Act in Indiana.
In a 1981 case which did not involve any creditor claims, the Court of Appeals
cited Long but held that a trust beneficiary who had satisfied two conditions (surviving
her mother and reaching her 35th birthday) did not have a power of appointment but
instead had a vested interest in the subject trust, which allowed her to demand and
withdraw all the trust assets at any time, thus terminating the trust. Lincoln National
Bank & Trust Co. v. Figel, 427 N.E.2d 5, 9 (Ind. Ct. App. 1981).
Imagine a fact situation in which a beneficiary of an entirely discretionary
spendthrift trust has personal behavior problems or is financially irresponsible and
incurs substantial uninsured medical expenses or other living expenses, which the
trustee refuses to pay. On the law, including I.C. § 30-4-2.1-14(b), a creditor of that
beneficiary should not be able to reach the trust assets or to compel a distribution to
satisfy the beneficiary’s death. But many lawyers for trustees could have a nagging
suspicion that in a tough case, a trial court would find some basis on which to order the
trustee to use trust assets to pay the beneficiary’s debts.
To this writer’s knowledge, the best example of such a case is Sisters of Mercy
Health Corp. v. First Bank of Whiting, 624 N.E.2d 520 (Ind. Ct. App. 1994). In this case,
the beneficiary of a spendthrift trust was the settlor’s surviving spouse. The Court of
Appeals’ opinion does not say whether income distributions were discretionary, but the
bank trustee stopped income distributions for a while. The spouse beneficiary incurred
substantial unpaid medical and hospital bills and eventually filed a personal
bankruptcy proceeding. The hospital obtained a money judgment against the spouse
beneficiary for the unpaid medical bills owed by her and sought unsuccessfully to
collect the judgment through a garnishment order on the bank trustee of the trust,
despite the bankruptcy proceeding. Then the hospital filed a direct action against the
bank trustee under Ind. Code §30-4-3-10. The Court of Appeals reversed summary
judgment in favor of the bank trustee, and (using reasoning analogous to the doctrine of
necessaries) held that the bank trustee could be found (in a later trial) to have acted in
bad faith or abused its discretion in refusing to use trust assets to pay the unpaid
3
medical bills of the spouse beneficiary.2 A dissenting opinion pointed out that the state
trial court did not have jurisdiction over the case because of the spouse’s pending
bankruptcy, and because of section 541(c)(2) of the Bankruptcy Code, which would
recognize the enforceability of the spendthrift protections in the trust document.
The Delaware “spendthrift trust” statute provides stronger protection for a
beneficiary’s interest in a non-self-settled spendthrift trust than is available to Indiana
trusts under I.C. § 30-4-3-2(a) and 30-4-2.1-14(b). In the long and complex “Mennen
trust” litigation in Delaware, a $99 million judgment was entered against individual
trustee Jeff Mennen (a “bad actor” if ever there was one) for breaches of fiduciary duty
in mismanaging the assets of a trust for his brother John. But when Jeff’s siblings (as the
other beneficiaries of John’s trust) sought to collect the judgment from the assets of a
separate non-self-settled spendthrift trust under which Jeff was the beneficiary, the
Delaware Chancery Court upheld the second of two Master’s reports and concluded
that the siblings could not reach Jeff’s interest in his own trust or that trust’s assets.
Mennen v. Wilmington Trust Co., 2015 WL 1914599 and 2015 WL 1897828 (Master’s
two reports submitted to the Delaware Chancery Court on April 24, 2015); 2015 WL
4935373 (Chancery Court’s final order adopting Master’s final report), affirmed by the
Delaware Supreme Court, 2017 WL 2666118 (unpublished), June 21, 2017.
(2) Ten General Principles to Remember for Self-Settled Planning

(a) Most of the time, by the time a client thinks seriously of contacting a lawyer to
discuss asset protection planning, it's already too late to engage in most types of
planning without triggering fraudulent transfer claims, because creditor claims
or adverse litigation either already exist or are threatened against the client.
(b) Be aware of the Indiana statutory exemptions for tenancy-by-the-entireties
property (exempt from the individual creditors of each spouse), for the
“proceeds and avails” of some life insurance, for some annuities, and for IRAs
and other retirement accounts that were created by the owner or participant (and
not inherited).
(c) A client concerned about potential claims by existing or future creditors should
not turn exempt assets into non-exempt assets (an extremely common mistake).
2
In Indiana and before the Sisters of Mercy case, the “doctrine of necessaries” had
only been applied to compel one member of a married couple to pay for the support
needs of the other spouse who lacks sufficient resources. Bartrom v. Adjustment
Bureau, Inc., 618 N.E.2d 1 (Ind. 1993); Matter of Guardianship of Hall, 694 N.E.2d 1168
(Ind. Ct. App. 1998). In Sisters of Mercy, the Court of Appeals may have felt ready to
extend the doctrine of necessaries to the spendthrift trust because it was created by one
spouse (the settlor) for the benefit of the other spouse.
4
(d) Depending on the timing and the circumstances of the transfers or purchases, the
client's actions in increasing his or her holdings or the value of exempt assets
("exemption planning") may be perfectly fine, or may be successfully attacked
later as fraudulent.
(e) If a client holds assets whose form or nature make them exempt from creditor
claims and if the client does not change how those assets are titled, mistakes by
the client in transferring or dealing with other assets normally won't put the
exempt, undisturbed assets in jeopardy.
(f) Hoosiers can form and fund domestic asset protection trusts (DAPTs) under I.C.
30-4-8 and the laws of about 18 other States.
(g) The ability of future creditors to reach DAPT assets has not been extensively
tested in the state courts (and not at all in Indiana. Further, if a DAPT is funded
with a fraudulent transfer, current creditors of the settlor can reach the trust
assets.
(h) If you are a lawyer, be aware of the cautions and prohibitions in Rules 1.2(d), 3.3,
4.4, and 8.4(c) of the Indiana Rules of Professional Conduct, and of the potentially
serious penalties under federal law for a lawyer who actively participates in
bankruptcy fraud or illegal tax evasion.
(i) If your client is even moderately likely to act on (or to ignore) advice from you
about asset protection planning and fraudulent transfer concepts, obtain a
signed, sworn affidavit from your client, confirming (1) his or her solvency,
(2) the accuracy of the client's disclosures to you about assets and liabilities, and
(3) the absence of any pending or threatened litigation against your client.
(j) If a voluntary or involuntary bankruptcy petition is filed by or against your
client, all bets are off. The sooner that a bankruptcy filing occurs after your client
uses some attempted asset protection planning technique, the worse the
consequences will be.
(3) Lessons or Practice Pointers from Reported “Attorney Ethics” Cases and
Opinions
• If a client has current unpaid creditors, or is insolvent in the cash-flow sense or in
the balance-sheet sense, or faces a threatened or pending lawsuit, do not
recommend or assist in any transfer of that client’s assets that would cause those
assets to be unavailable to such creditors, if the assets are not already exempt
from creditor process and not already outside the scope of “asset” or “property”
under the state fraudulent transfer statute.
• Unless you have significant experience in representing debtors in bankruptcy
proceedings (including defending against bankruptcy trustees’ objections to
discharge or challenges to claimed exemptions of assets), do not agree to give
5
asset protection advice to an individual who concedes that he or she is likely to
be a debtor in a bankruptcy case within the next two years.
• If a potential client with creditor problems ultimately does not hire you (because
your preliminary or provisional “advice” is that there is nothing that you can do
for or recommend to the client with respect to “asset protection planning”),
strongly consider writing a letter or sending an e-mail to this individual,
confirming that you have not been engaged and that you did not agree to give
advice or representation to that individual.
• Do not participate as a party (as a straw man, a temporary or intermediate
transferee, or otherwise) in a transfer of assets by a client who is insolvent in a
cash-flow sense or in a balance-sheet sense.
• Do not allow an insolvent or financially troubled client to use the law firm trust
account to hold client funds for preferential payments to some of the client’s
creditors but not to others.
• Do not create a special, separate bank account for use by an insolvent client in
segregating or depositing particular funds, where those funds will be used by the
client to pay less than all of the client’s creditors.
• Resist the temptation (and the client’s entreaties) to act as a de facto receiver of
an insolvent client’s assets if the client wants an informal procedure for applying
available assets to pay known current creditors. Recommend the use of an
independent person as receiver and insist that the receiver hire independent
counsel.
(4) Red Flag” Indicators Telling the Lawyer to Say “NO THANKS” to a
Prospective Client (or at least to proceed cautiously)
1. The potential client wants to transfer substantially all of his or her assets into some
sort of asset protection vehicle, in order to build a financial “firewall” around
those assets.
2. The potential client expresses great urgency in completing some asset transfers
within a definite and short time frame.
3. The potential client is referred to you by a lawyer with a significant debtor
bankruptcy practice, or the client says that he or she has recently met with a
bankruptcy attorney.
4. The potential client drops repeated references to the States of Nevada or South
Dakota and to one or more of the following: “real trusts,” “Keystone trusts,”
“pure trusts,” or “Constitutional trusts.” (It may be impossible to re-educate such
a client or to disabuse him or her of certain groundless notions.)
6
5. The potential client says that he or she wants the type of trust that allows all
income to be excluded from federal income taxation [not!].
6. The potential client says that he or she recently attended a special meeting of the
governing board of a business on which the potential client sits as a manager,
officer or director. (This may be an indication that the board has discussed a
potential claim or lawsuit against officers or directors.)
5. The potential client is evasive about what his or her current assets are liabilities
are or refuses to provide information for a solvency affidavit.
6. The potential client wants (or thinks that he or she wants) to transfer assets out of
the “joint” names of the potential client and his or her spouse and into the
spouse’s name alone.
7. The potential client wants to re-title assets in the name of a spouse, parent or
child without that other person’s knowledge or participation, or without
completing the delivery of the transfer documents.
(5) General Vulnerability of Protective Asset Transfers under the Indiana UFTA
and UVTA
Indiana’s voidable transfer statute (I.C. 32-18-2), both before and after the 2017
amendments, is best understood as creating an additional remedy to creditors (to avoid
a transfer and to follow transferred assets into the hands of transferees when the
requirements are satisfied). Indiana enacted a version of the Uniform Fraudulent
Transfer Act (UFTA) as Ind. Code § 32-2-7-1 in 1994, and the Indiana UFTA was moved
to I.C. 32-18-2 as part of the 2002 recodification of title 32.
In 2017, Indiana amended I.C. 32-18-2 to enact many of the provisions of the
Uniform Voidable Transactions Act or UVTA (Senate Enrolled Act 316, effective on and
after July 1, 2017).3
Compared to our previous UFTA statute, the main changes made in the Indiana
UVTA were the following:
 Replacing “fraudulent” with “voidable” (as explained below).
 Confirming that when a creditor seeks relief under the UVTA regarding a
voidable transfer, the creditor has the burden of proving each element of the
claim by a preponderance of the evidence.4
3
In this section of this paper and unless otherwise indicated, all citations to the Indiana
UVTA use the numbering in I.C. 32-18-2 as amended, effective July 1, 2017, by S.E.A.
316 of 2017.
4
The “preponderance of the evidence” standard is arguably not a change in Indiana
7
 Deleting the special definition of “insolvent” that had applied to partnerships
under old I.C. § 32-18-2-12(e) and making the general definition of “insolvent” in
I.C. § 32-18-2-12(c) and (d) apply to partnerships as well as to other debtors.
 Revising I.C. § 32-18-2-18 to clarify that if a transfer by the debtor is voidable, a
creditor may recover a judgment against the first transferee who received the
transferred asset from the debtor and against subsequent transferees who did not
give reasonably equivalent value, but that the creditor cannot recover a judgment
against a person who received the transferred asset in good faith and who gave
reasonably equivalent value to the debtor (All subsequent transferees who receive
the transferred asset from such a bona fide purchaser are also free from potential
liability to the creditor).
 Adding an important new choice of law section, I.C. § 32-18-2-19.3 (based on
section 10 of the national UVTA), which states that a claim for relief under the
UVTA is “governed by the law of the jurisdiction in which the debtor is located
when the transfer is made or the obligation is incurred,” and three simple rules
for determining where a debtor is “located” (For example, an individual is
“located” at his or her principal residence, and a business entity with just one
place of business is located at that place of business).
See the further discussion of the choice of law rule on pages 12 through 15 below.
As used in our older (pre-2017) UFTA, the word “fraudulent” was a somewhat
misleading term of art. Although a creditor could obtain relief under the statute by
proving that a debtor transferred an asset with “with actual intent to hinder, delay, or
defraud any creditor of the debtor” (see the previous I.C. § 32-18-2-14(1) and new I.C.
§ 32-18-2-14(a)), a transfer of assets could be “fraudulent” under our older statute even
if no actual intent to deceive or to conceal is present. The “fraudulent” nature of a
particular asset transfer —and therefore its susceptibility to being avoided or unwound
by a particular creditor —was inferred from various facts and circumstances that were
said to constitute “badges of fraud.”
In Husky Intern. Electronics, Inc. v. Ritz, 136 S.Ct. 1581 (2016), the U. S.
Supreme Court interpreted the phrase “false pretenses, a false representation, or actual
fraud” in 11 U.S.C. § 523(a)(2)(A), which is used to prevent a bankruptcy discharge in a
chapter 7, 11, 12 or 13 case from applying to a debt owed by an individual debtor, to the
extent that the extension of credit was obtained by “false pretenses, a false
representation, or actual fraud.” In this case, the individual debtor Ritz was a director
and 30-percent shareholder of Chrysalis, which owed a $164,000 debt to a supplier
(Husky). Over a 2-year period, Ritz transferred funds from Chrysalis to other entities
law. See Laird v. Davidson, 124 Ind. 412, 25 N.E. 7 (1890). But under the UFTA, some
other states had required creditors to prove their claims by clear and convincing
evidence.
8
that Ritz controlled, leaving Chrysalis unable to pay its debt to Husky. Husky sued Ritz
personally under a Texas fraudulent transfer statute, Ritz filed a chapter 7 personal
bankruptcy case, and Husky sought to hold Ritz personally liable in an adversary
proceeding within the bankruptcy case.
In Ritz, the Supreme Court interpreted “actual fraud” as used in section 523(a)
and held that “actual fraud . . . encompasses forms of fraud, like fraudulent conveyance
schemes, that can be effected without a false representation.” 136 S.Ct at 1586.
The Uniform Voidable Transactions Act replaced “fraudulent transfer” with
“voidable transaction” not because of a change in substance, but to avoid potential
confusion that could occur in analysis if the terms “fraud” and “fraudulent” continued
to be used. Thus, in amended I.C. § 32-18-2-14(a), which applies to current or future
creditors, the wording remains the same as in Indiana’s pre-2017 UFTA, except for the
insertion of “voidable” to replace “fraudulent” in the second line below:
Sec. 14. (a) A transfer made or obligation incurred by a debtor is
fraudulent voidable as to a creditor, whether the creditor’s claim arose
before or after the transfer was made or the obligation was incurred, if the
debtor made the transfer or incurred the obligation:
(1) with actual intent to hinder, delay, or defraud any creditor of
the debtor; or
(2) without receiving a reasonably equivalent value in exchange
for the transfer or obligation, and the debtor:
(A) was engaged or was about to engage in a business or a
transaction for which the remaining assets of the debtor
were unreasonably small in relation to the business or
transaction; or
(B) intended to incur, or believed or reasonably should have
believed that the debtor would incur, debts beyond the
debtor’s ability to pay as they became due.
Similarly, in amended I.C. § 32-18-2-15(a), which applies to creditor claims that arise
before a challenged transfer, “fraudulent” was replaced with “voidable”:
Sec. 15. (a) A transfer made or obligation incurred by a debtor is
fraudulent voidable as to a creditor whose claim arose before the transfer
was made or the obligation was incurred if:
(1) the debtor made the transfer or incurred the obligation
without receiving a reasonably equivalent value in exchange for
the transfer or obligation; and
(2) the debtor:
9
(A) was insolvent at that time; or
(B) became insolvent as of the result of the transfer or
obligation.
The word “defraud” still appears in the national UVTA and in I.C. § 32-18-2-14(a), but
only as one word in the phrase “hinder, delay, or defraud.” Actual intent to “hinder” or
“delay” any creditor is sufficient to make an asset transfer voidable.
Under the 1994 Indiana Uniform Fraudulent Transfer Act, the Indiana courts
continued to use approximately eight “badges of fraud” or indicia as factors in order to
infer that a debtor had made an asset transfer with intent to “hinder, delay or defraud”
a creditor, even though these indicia were not stated in the 1994 UFTA. See Otte v. Otte,
655 N.E.2d 76, 81 (Ind.Ct.App. 1995).
In the Uniform Voidable Transactions Act, as substantially adopted by Indiana in
the 2017 amendments to I.C. 32-18-2, the list of “badges of fraud” or indicia are now
back in Indiana statutory form, except they are listed as factors to be considered by the
court in determining whether a debtor made a transfer or incurred an obligation with
“actual intent” to “hinder, delay, or defraud any creditor:5
(b) In determining actual intent under subsection (a)(1), consideration
may be given, among other factors, to whether:
(1) the debtor retained possession or control of the property
transferred after the transfer;
(2) the transfer or obligation was disclosed or concealed;
(3) before the transfer was made or obligation was incurred, the
debtor had been sued or threatened with suit;
(4) the transfer was of substantially all the debtor’s assets;
(5) the debtor absconded;
(6) the debtor removed or concealed assets;
(7) the value of the consideration received by the debtor was
reasonably equivalent to the value of the asset transferred or the
amount of the obligation incurred;
(8) the debtor was insolvent or became insolvent shortly after the
transfer was made or the obligation was incurred; and
5 This list is the same as nine of the 11 factors in section 4(b) of the national UVTA.
Indiana did not adopt the national Act’s definition of “insider” or the two factors in
section 4(b) that refer to transfers to insiders of the debtor.
10
(9) the transfer occurred shortly before or shortly after a
substantial debt was incurred.
In analyzing the effect of the different types of “voidable transfer” potentially
covered by Indiana’s UFTA, it is crucial to first determine whether there are an “asset”
(as defined) and a “claim” (as defined) to which the statute can apply, and whether the
transferor was insolvent (in either of the senses defined in I.C. § 32-18-2-12(c) or (d))
before a transfer or became insolvent as a result of a transfer. The various types of
“voidable transfers” and the applicable limitations periods under Indiana’s amended
(2017) statute are summarized in the following table:
Period for
Type of Transfer Section of What Debtor or Transferor Creditor to File
“Voidable” by Indiana UVTA Must Do to Avoid Action for
Creditor Liability Violation
“Actual intent to 32-18-2-14(a)(1)  Don’t create evidence Later of 4 years

hinder, delay, or of actual intent after transfer
defraud any  Don’t make transfers made or
creditor of the under circumstances obligation
debtor”) against listed in subsection incurred OR 1
present creditors (b)(1) thru (b)(9) year after
discovery
(32-18-2-19(1))
Transfers made or 32-18-2-14(a)(2)  Plan and carry out Within 4 years
obligations future transactions so after the
incurred by a that transferor receives transfer was
debtor that are reasonably equivalent made or the
voidable by a value in exchange, and obligation was
current or  After transferring an incurred
future creditor, asset or incurring an (32-18-2-19(2))
regardless of obligation, remain
debtor’s actual solvent in a balance-
intent sheet sense (debts
don’t exceed total
assets at a fair
valuation) and in a
cash-flow sense (fully
able to pay debts as
they become due)
11
Period for
Type of Transfer Section of What Debtor or Transferor Creditor to File
“Voidable” by Indiana UVTA Must Do to Avoid Action for
Creditor Liability Violation
Transfers made or 32-18-2-15(a)  Plan and carry out

obligations future transactions so
incurred by a that transferor receives
debtor that are reasonably equivalent
voidable by a value in exchange
current creditor,  Remain solvent in a
regardless of balance-sheet and
actual intent cash-flow sense
The Indiana UVTA has not changed, in substance, the definitions of “asset,”
“claim,” “creditor,” “debt,” “debtor,” “insolvent,” “property,” or “transfer,” and the
remedies available to creditors under I.C. § 32-18-2-17 (which include “avoidance” of an
asset transfer and potentially also attachments and injunctive relief) have not changed.
Finally, the two-year and four-year limitations period for creditor claims have not
changed.
To this writer’s knowledge, the most recent reported court decision under the
Indiana UVTA is Shri Rukmani Balaji Mandir Trust v. Michigan City, 170 N.E.3d 247
(Ind. Ct. App. 2021). Although that case involved real estate transfers to a trust and
other transferees in 2015 and earlier years, the trial court and the Court of Appeals
applied the current wording of I.C. § 32-18-2-14, which added back (as subsection 14(b))
the list of the badges of fraud that Indiana courts have long considered in determining
the factual issue of whether a debtor or transferor made a transfer with actual intent to
hinder, delay or defraud a creditor.
(6) New Specific Risk for Some Asset Transfers under the Indiana Voidable
Transactions Act
The official Reporter for the national UVTA was Prof. Kenneth C. Kettering, who
previously taught at Brooklyn Law School and Case Western and who most recently
taught at Columbia Law School. Prof. Kettering was not and is not a fan or a proponent
of domestic asset protection trusts (also known as self-settled spendthrift trusts). As the
official Reporter for the UVTA, Prof. Kettering took the lead in adapting and revising
the official Comments to the old UFTA, to adapt them to apply to the Uniform Voidable
Transactions Act.
In 2014, Richard W. (Dick) Nenno, ACTEC’s observer to the UVTA Drafting
Committee, expressed concerns that some of the revised Comments inaccurately
described existing state law on the following issue:
12
If a resident of State X (which does not have a domestic asset protection
trust statute) engages a trustee in State Y (which does have a DAPT statute)
and creates and funds an asset protection trust in State Y, would the asset
transfer that funds the trust in State Y be a voidable transfer per se,
voidable automatically by any creditor of the settlor, or would a creditor
of the settlor have to show actual intent to “hinder, delay or defraud” (as
under I.C. § 32-18-2-14(a)(1)) or some combination of insolvency and/or
inability to pay debts as they become due?
Dick Nenno and some other expert commentators became convinced that the
official Comments were inaccurate, and that existing state law does not make such an
asset transfer (from a non-DAPT state into a DAPT state voidable per se. See Richard W.
Nenno and Daniel S. Rubin, Are Transfers to Self-Settled Spendthrift Trusts by Settlors in
Non-APT States Voidable Transfers Per Se? STEVE LEIMBERG’S ASSET PROTECTION
NEWSLETTER # 327, August 15, 2016; George D. Karibjanian, The new Uniform Voidable
Transactions Act: Good for the Creditors’ Bar, but Bad for the Estate Planning Bar? ALASKA
BAR ASSOCIATION ESTATE PLANNING & PROBATE SECTION WEBINAR, September 13, 2016.
Ultimately, the Drafting Committee and the ULC finalized the official
Comments, including the disputed passages, despite the complaints by Dick Nenno and
others and the absence of a review by the ULC’s Joint Editorial Board for Uniform Trust
& Estate Acts.
The problematic parts of the official Comments in the final UVTA include these
passages (italic and bold emphasis added):
From the comment to section 4 [transfers voidable as to present and future
creditors]:
For example, some states have enacted legislation authorizing the
establishment and funding of self-settled spendthrift trusts, subject to
specified conditions. In such a state, such legislation will supersede the
historical interpretation referred to in the preceding paragraph, either
expressly or by necessary implication, with respect to allowed transfers to
such a statutorily-validated trust. See, e.g., Del. Code. Ann. tit. 12, §
3572(a), (b) (2014). See also Comment 8.
Because the laws of different jurisdictions differ in their tolerance of
particular creditor-thwarting devices, choice of law considerations may be
important in interpreting § 4(a)(1) as in force in a given jurisdiction. For
example, as noted in Comment 2, the language of § 4(a)(1) historically has been
interpreted to render voidable a transfer to a self-settled spendthrift trust.
Suppose that jurisdiction X, in which this Act is in force, also has in force a
statute permitting an individual to establish a self-settled spendthrift trust and
transfer assets thereto, subject to stated conditions. If an individual Debtor whose
principal residence is in X establishes such a trust and transfers assets thereto,
13
then under § 10 of this Act the voidable transfer law of X applies to that transfer.
That transfer cannot be considered voidable in itself under § 4(a)(1) as in force in
X, for the legislature of X, having authorized the establishment of such trusts,
must have expected them to be used. (Other facts might still render the transfer
voidable under X’s enactment of § 4(a)(1).) By contrast, if Debtor’s principal
residence is in jurisdiction Y, which also has enacted this Act but has no
legislation validating such trusts, and if Debtor establishes such a trust
under the law of X and transfers assets to it, then the result would be
different. Under § 10 of this Act, the voidable transfer law of Y would
apply to the transfer. If Y follows the historical interpretation referred to
in Comment 2, the transfer would be voidable under § 4(a)(1) as in force in
Y.
From the comment to section 10 [choice of law rules]:
. . . Debtors are likely to have greater incentive and ability to employ
“asset tourism” for the purpose of seeking to evade the substantive
rules of this Act than for the purpose of seeking to manipulate the
perfection and priority rules of secured transactions law. Interpretation
and application of this Act should so recognize.
5. Section 10(b) determines the governing law only for a claim for
relief in the nature of a claim for relief under this Act. Furthermore, this
Act, like the earlier Uniform Fraudulent Conveyance Act, has never
purported to be an exclusive law on the subject of voidable transfers and
obligations. See Comment 2 to § 15. Accordingly, the choice of law rule set
forth in this § 10 is by no means applicable to all assertions that a transfer
was made or an obligation incurred in contravention of law.
After Senate Bill 316 —to enact most of the UVTA — was introduced in the 2017
Session of the General Assembly, the ISBA’s Probate, Trust & Real Property Section
negotiated with the bill’s sponsor and with the Indiana Bankers Association, for the
purpose of preventing the controversial official Comments to the national UVTA from
being used and relied upon by Indiana courts in interpreting and applying Indiana’s
UVTA, including the new choice of law provision in I.C. § 32-18-2-19.3.
The compromise language that was ultimately agreed upon — and passed — as
Section 21 of Senate Enrolled Act 316 is I.C. § 32-18-2-23, which reads as follows:
Sec. 23. This chapter:
(1) adopts, in part provisions of the Uniform Voidable
Transactions act as released by the National Conference of
Commissioners on Uniform State Laws; and
(2) may be cited as the Indiana Uniform Voidable Transactions
Act.
14
However, in interpreting solely this chapter, comments released by a
committee of the National Conference of Commissioners on Uniform State
Laws shall not be considered as authority.
The above section 23 will not prevent any Indiana court from invoking the choice of law
rule in section 19.3 and from determining that Indiana law will govern whether an
Indiana resident’s creation and funding of an asset protection trust in another state
(which has enacted a DAPT statute) is a voidable transfer under Indiana UVTA.
However, section 23 should prevent an Indiana court from citing or relying on the
official Comments as support for the idea that a Hoosier’s creation and funding of an
asset protection trust in another state would be a voidable transfer per se.
(7) Tenancy by the Entireties Real Estate –Already Well-Protected

Real property that is held or titled in tenancy by the entireties (“husband and
wife or “T by E”) form is exempt from the claims of individual creditors of either spouse,
either outside or inside of a bankruptcy case filed by either or both spouses. See Ind.
Code § 34-55-10-2(c)(5), as amended by P.L. 179-2005 [HEA 1262] in reaction to In re
Cross, 255 B.R. 25 (N.D. Ind. 2000).
Unlike some other U. S. jurisdictions, Indiana law does not recognize tenancy by
the entireties as a valid form of ownership for any kinds of assets other than real
property.
The only individual creditor of a married person who can reach the equity in that
married person’s “half” of T by E real estate is the United States Government, when that
spouse owes an unpaid federal tax debt. In U. S. v. Craft, 122 S.Ct. 1414, 535 U.S. 274
(2002), both spouses transferred T by E real estate to one spouse, the wife, who did not
owe the federal tax debt. There was already a recorded federal tax lien notice in place,
for the husband’s federal tax liabilities. The consideration for the real estate transfer
was one dollar. The husband, who owed the federal tax debt, later used non-exempt
assets to pay down the mortgage on the real estate, and the District Court in Michigan
found that that action by the husband was a fraudulent transfer. The U. S. Supreme
Court held that despite the inability of either spouse, alone, to transfer his or her one-
half interest in T by E real estate and the venerable legal fiction that a married couple
holding T by E real estate are “one person,” Mr. Craft’s one-half of the equity in the real
estate was “property or rights to property” as broadly defined under 26 U.S.C. § 6321,
and therefore the IRS could obtain a foreclosure sale of the real estate and seize the
husband’s half of the net sales proceeds.
When both spouses are joint obligors who owe money to a creditor, that “joint
creditor” can reach the T by E real property to satisfy the debt, but if both spouses file a
15
bankruptcy case as joint debtors, they can claim a pair of $22,750 exemptions for T by E
real estate that is their personal residence. I.C. § 34-10-55-2(c)(1).6
Under Indiana’s versions of the Uniform Fraudulent Transfer Act (I.C. § 32-18-2-
2(b)(3)) and — on or after July 1, 2017 —the Uniform Voidable Transactions Act (I.C.
§ 32-18-2-2(1)(C)), the “assets” of a debtor do not include “An interest in property held
in tenancy by the entireties to the extent the interest is not subject to process by a
creditor holding a claim against only one (1) tenant.”
Among other things, this exemption for T by E real estate from individual
creditors of either spouse means that if a married individual (Spouse A) owes a debt to
a creditor and if that individual’s spouse (Spouse B) is not a co-obligor on that debt,
Spouse A could transfer his or her undivided one-half interest in tenancy-by-entireties
real estate to Spouse B (or more precisely, the couple could transfer the real estate to
Spouse B alone), and the individual creditors of Spouse A would not have any basis to
avoid that transfer under the Indiana UFTA or UVTA. From this, it does not follow that it
would be a good idea for Spouse A’s interest in the T by E real estate to be transferred to
Spouse B. On the contrary, if the objective is to protect the equity in that T by E real
estate from each spouse’s individual creditors, the real estate should be left titled
exactly as it is. See, e.g., United States v. Gerard, 2018 WL 1811606 (S.D. Ind., April 17,
2018) [Transfer of entireties real estate to husband did not protect wife’s half from
federal tax debt].
Conversely, a married individual should not transfer individually-titled real
property to himself or herself and to his or her spouse as tenants by the entireties, in
order to transform non-exempt real property into exempt real property, unless the
transfer is completed at a time when there is no threatened or pending creditor claim
and when there is no plan or intention to file a bankruptcy petition. Section 727(a)(2)(A)
of the Bankruptcy Code (11 U.S.C. § 727(a)(2)(A)) authorizes a bankruptcy court to deny
a chapter 7 discharge to an individual debtor who causes or permits any of his or her
property to be “transferred, removed, destroyed, mutilated, or concealed” within one
year before filing the bankruptcy petition and “with intent to hinder, delay or defraud”
a creditor or a chapter 7 bankruptcy trustee. The bankruptcy trustee could also avoid
such a transfer under section 548(a)(1) if the transfer occurred within 2 years before the
filing of the bankruptcy petition.
In a case arising out of a 1984 chapter 7 bankruptcy case filed by a married man
named Donald Graves (his spouse did not file her own petition or join with him), the
6
The dollar amount in I.C. § 34-55-10-2(c)(1) says “$15,000,” but I.C. § 34-55-10-2.5
requires the Indiana Department of Financial Institutions to periodically adjust the
specific dollar exemption amounts for inflation. The latest inflation adjustments became
effective on March 1, 2022 and increased the $15,000 exemption to $22,750 per debtor for
real property held and used as a principal residence. See 750 IAC 1-1-1.
16
bankruptcy court allowed the trustee to avoid, under 11 U.S.C. § 544(b), some transfers
of real property by Mr. Graves to himself and his spouse as tenants by the entireties,
determining that the bankruptcy estate included that real property. The bankruptcy
court also denied a bankruptcy discharge to Mr. Graves under 11 U.S.C. § 727(a)(3) and
(a)(4), even though the real estate transfers and other asset transfers were ostensibly
completed more than a year before the filing of the chapter 7 petition (see 11 U.S.C.
§ 727(a)(2)(A). When Mr. Graves appealed from the bankruptcy court orders, the
District Court in Fort Wayne upheld the denial of a bankruptcy discharge, upheld the
avoidance of the real property transfers, and imposed a fine and attorney fee award
against Mr. Graves’s lawyers on the grounds that the appeal was frivolous. Matter of
Graves, 70 B.R. 535 (N. D. Ind. 1987).
In Indiana, and with one limited exception explained in Part (8) immediately
below, a “tenancy by the entireties” can exist only in real property that is co-owned by
two legally married individuals. If tangible or intangible personal property is titled in
the names of a married couple as joint tenants with the right of survivorship, an
individual creditor of either spouse can reach the “equity” in that spouse’s undivided
fractional interest in that joint tenancy property, because the joint tenancy is severable
by either spouse acting alone.
(8) Use of a “Matrimonial Trust(s)” to Hold Real Property

The “matrimonial trust” statute, Ind. Code § 30-4-3-35, was enacted effective July
1, 2010, to permit married individuals to hold record ownership of “tenancy-by-the-
entireties” real property in a single co-grantor trust (“joint trust”) or in a pair of trusts,
without losing the common-law protection from each spouse’s individual creditors that
is afforded by keeping real property titled directly in the names of the members of the
couple as husband and wife or as tenants by the entireties.7
Before 2011 (and especially before “portability” of the estate tax lifetime
exclusion between spouses became a “permanent” option in 2013), there were
frequently some sensible estate tax reasons to encourage, or to at least allow, married
individuals to sever T by E real property into two separate fractional tenant-in-common
interests, or to transfer the T by E real property into the name of just one spouse, in
order to equalize the two spouses’ potential gross estates for estate tax purposes. By
allowing a married couple to transfer real property to a trust(s) while still prohibiting
unilateral transfers and protecting the real property from individual creditors, the
availability of “matrimonial trusts” and “matrimonial property” would reduce the
disadvantages of transferring real property out of T by E form.
In 2010, 2011, and 2012, various lawyers (including some who concentrate on
matrimonial law and debtor-creditor law) raised various conceptual and practical issues
7
Recall that the “four unities” of T by E real property (not held in a trust(s)) are unity of
estate, unity of possession, unity of control, and unity of conveyance or encumbrance.
17
about the statute as originally worded and enacted. In particular, some lawyers were
concerned (and displeased) about the possibility that I.C. § 30-4-3-35 could allow the
creation of a sort of super-entireties property held by trusts, where the protection of the
trust-owned real estate against the spouses’ creditors would go beyond the protection
that would have been available if the real estate had been left titled directly in the
names of the husband and the wife. The result of the ensuing discussion and drafting
was two sets of amendments, in 2011 and 2013.
Although this writer was heavily involved in crafting the 2011 and 2013
amendments, he has recommended the possible use of matrimonial trusts to only about a
dozen couples so far, and only two of his married couples (as clients) have actually
transferred real property to one or more matrimonial trusts in order to turn it into
“matrimonial property.” Some title insurance company underwriters apparently have
contended that the conveyance of T by E real property to a matrimonial trust or trusts
creates personal property for which the couple’s existing title insurance coverage will not
remain in effect.
Appendix 2 contains the text of the Indiana “matrimonial trust“ statute, I.C. § 30-
4-3-35. The most controversial part of the statute is still subsection (o), which describes
the protection that “matrimonial property” will continue to have against the individual
creditors of either spouse after one of the spouses has died and if real estate held in trust
continues to be “matrimonial property.”
It almost goes without saying that if both members of a married couple are co-
obligors or jointly and severally liable on a debt, the creditor who is owed that debt can
gain access to the couple’s equity in T by E real property in order to collect that debt.
Therefore, transferring T by E real property to one or two “matrimonial trusts” will not
provide that real property with any protection against creditors to whom both spouses
owe money as co-obligors.
The statute allows a married couple to re-title existing T by E property so that it
is owned of record by a pair of trusts or a “joint trust,” and so that non-severability and
some creditor protection is preserved for the real estate, as “matrimonial property.”
Nothing in the statute suggests that transferring existing T by E real estate to one or two
matrimonial trusts will provide that real estate with any additional protection, while
both spouses are alive, against individual creditors to whom either spouse (alone) owes
money.
But the statute also allows a married couple (or one spouse) to take real property
that is not originally T by E property and to transfer it to a trust or trusts so that it
becomes “matrimonial property.” It is conceivable that one or two married individuals
could transfer non-T-by-E real estate to a matrimonial trust(s) under the statute, under
circumstances that would give existing creditors a basis to attack the re-titling as a
fraudulent transfer under Ind. Code § 32-18-2-2(b)(3), or that would give a bankruptcy
trustee a basis to avoid the transfer under 11 U.S.C. § 544(b).
18
What is still uncertain, under I.C. § 30-4-3-35(o), is whether “matrimonial
property” that continues to be held in a “matrimonial trust” will continue to be
protected from the claims of the surviving spouse’s individual creditors (pre-existing
creditors or new creditors) after one spouse or settlor has died and when the real
property in the trust now has just one current beneficial owner. To this writer’s
knowledge, there have been no reported Indiana court decisions on this issue or under
the matrimonial trust statute in general.
No matter which debts — H’s individual debts or W’s individual debts — are
regarded by the married couple as the most problematic or as the greatest threat, an
acceptable “no-brainer” strategy is to simply leave existing T by E real property titled
directly in both spouses’ names (This is the “If it ain’t broke, don’t fix it” strategy). A
married couple that already has or plans to create revocable trust(s) could use and
structure their trust(s) to receive and hold newly purchased real property.
If a married couple wants to acquire new real estate and protect the equity in that
real estate from their individual creditors, the simplest course of action is for the couple
to directly purchase the real estate as “husband and wife” or as tenants by the entireties
and to directly hold the real estate in T by E form. However, if the couple has some
practical estate-planning reason to want to limit what the surviving spouse can do with
the real estate after one of them dies, they could arrange to have one co-grantor (joint)
“matrimonial trust” or a pair of “matrimonial trusts” purchase and own the new real
estate. The trust instrument or instruments could restrict the surviving spouse’s rights
and interest in the real estate in a manner consistent with I.C. § 30-4-3-35(p).
This writer does not believe that a lawyer would be committing legal malpractice
if he or she failed to strenuously recommend the use of matrimonial trusts for
protection against creditor claims.
(9) Federal and State Exemptions for Non-Inherited Retirement Accounts

When an individual employee participates in a pension or retirement plan
(including but not limited to a 401(k) plan) to which ERISA rules apply, that
individual’s interest in the plan is protected from his or her creditors by the anti-
assignment, anti-alienation rules of ERISA, which are found in 26 U.S.C. §401(a)(13) and
29 U.S.C. § 1056(d)(1).8
8
One notable exception: The IRS can collect federal tax liabilities by reaching and
levying upon IRAs and most other retirement accounts, because the Internal Revenue
Code provides no exemption from levy for IRAs and retirement account or pension
assets (except for Railroad Retirement benefits and military pensions specifically listed
in 26 U.S.C. § 6334(a)(6)). See also Equitable Life Assur. Society of U.S. v. Mischo, 363
F.Supp.2d 1239 (E.D. Cal. 2005).
19
In Indiana, an individual’s interest in a traditional IRA, Roth IRA, or other tax-
advantaged retirement plan or account is protected from his or her individual creditors
by a debtor exemption in I.C. § 34-55-10-2, the statute that also provides the exemptions
that will apply to Hoosier debtors in chapter 7 bankruptcy cases. The specific exemption
for traditional IRAs and retirement accounts reads as follows in I.C. § 34-55-10-2:
(c) The following property of a debtor domiciled in Indiana is
exempt:
....
(6) An interest, whether vested or not, that the debtor has in a
retirement plan or fund to the extent of:
(A) contributions, or portions of contributions, that were
made to the retirement plan or fund by or on behalf of
the debtor or the debtor's spouse:
(i) which were not subject to federal income
taxation to the debtor at the time of the
contribution; or
(ii) which are made to an individual retirement
account in the manner prescribed by Section
408A of the Internal Revenue Code of 1986;
(B) earnings on contributions made under clause (A) that
are not subject to federal income taxation at the time
of the levy; and
(C) roll-overs of contributions made under clause (A) that
are not subject to federal income taxation at the time
of the levy.
Subdivision (c)(6)(A)(i) refers to traditional IRAs, 401(k) plans, and other retirement
accounts and exempts assets in such accounts or plans, but only to the extent that
contributions to the IRA or retirement account or plan were not taxable income to the
debtor “at the time of contribution.” The value of a traditional IRA that is attributable to
ordinary tax-deductible contributions (and earnings on those contributions) will be
exempt from non-governmental creditor claims.
Contributions to Roth IRA accounts are made with after-tax dollars and are
never tax-deductible, but subdivision (c)(6)(A)(ii) provides a separate explicit
exemption for Roth IRA assets, by referring to “section 408A” of the Internal Revenue
Code, which provides for Roth IRAs.
I.C. § 34-55-10-2(c)(6) does not place an explicit dollar cap or ceiling on the
amount of assets in a traditional IRA, Roth IRA, or other retirement account that an
individual debtor can protect from his or her creditors. The previous version of the
exemption for IRAs and retirement accounts was worded differently and was found in
20
old I.C. § 34-2-28-1(a)(6). In 1993, the Indiana Supreme Court answered a question
certified by the U. S. District Court for the Northern District and held, 3 to 2, that the
lack of a specific dollar limit or cap in old § 34-2-28-1(a)(6) meant that the exemption for
retirement accounts violated Article I, Section 22 of the Indiana Constitution, by not
including limitations tied in some way to the reasonable needs of a debtor and his or
her family with respect to the “necessary comforts of life.” Matter of Zumbrun, 626
N.E.2d 452 (Ind. 1993).
In one of the Foster cases discussed below, the Bankruptcy Court for the
Southern District of Indiana noted that the exemption statute for IRAs and retirement
plans was rewritten in 1993, while Zumbrun was pending, to limit the exemption to the
portion of an IRA or retirement plan or account that is attributable to tax-deductible or
permitted contributions. The Bankruptcy Court held that what is now I.C. § 34-55-10-
2(c)(6) provided for a reasonable cap on the exemption, and denied an objection by a
bank creditor to the debtors’ claimed exemptions for their IRAs. In re Foster, 168 B.R.
183, 186-87 (S. D. Ind. 1994). In a subsequent appeal from this ruling by the bank
creditor, the District Court in Evansville certified several questions to the Indiana
Supreme Court, and one question was whether the retooled language for the IRA and
retirement account debtor exemption provided for a reasonable cap. By 1996, Chief
Justice Shepard’s thinking had evolved, and the Supreme Court held that the current
language (now in I.C. § 34-55-10-2(c)(6)) complies with Article I, Section 22 of the
Indiana Constitution because “it makes explicit reference to an amount certain and
readily ascertainable in the Internal Revenue Code.” Citizens Nat. Bank of Evansville
v. Foster, 668 N.E.2d 1236, 1240 (Ind. 1996).
And this is where Indiana law still stands, so long as the owner of a traditional
IRA or Roth IRA or the participant in a retirement plan does not become the debtor in a
voluntary or involuntary bankruptcy case: The entire value in the plan or account that
is attributable to tax-deductible or non-taxable contributions (or to permitted
contributions under Code sections 219 and 408A, in the case of a Roth IRA), and to
“inside” earnings on those contributions, will be exempt from the claims of ordinary
non-governmental creditors.
However, if an IRA owner or retirement plan participant becomes the debtor in a
bankruptcy case, section 522(n) placed an overall limit of $1 million on the total amount
of traditional IRA, Roth IRA, or retirement account assets that an individual debtor may
exempt in a bankruptcy case:
(n) For assets in individual retirement accounts described in section
408 or 408A of the Internal Revenue Code of 1986, other than a simplified
employee pension under section 408(k) of such Code or a simple
retirement account under section 408(p) of such Code, the aggregate value
of such assets exempted under this section, without regard to amounts
attributable to rollover contributions under section 402(c), 402(e)(6),
403(a)(4), 403(a)(5), and 403(b)(8) of the Internal Revenue Code of 1986,
21
and earnings thereon, shall not exceed $1,000,000 in a case filed by a
debtor who is an individual, except that such amount may be increased if
the interests of justice so require.9
Every three years, the U. S. Judicial Conference is required to adjust the $1 million
amount in subsection (n) (and other federal exemption amounts under 11 U.S.C. §522)
for inflation. As of April 1, 2022, the adjusted dollar cap under section 522(n) is
$1.362,800.
It is crucial to distinguish between (a) an IRA or retirement account that is owned
by the debtor and funded with the debtor’s own contributions or deductions from
wages or salary and (b) an IRA or retirement account that is “inherited” by a beneficiary
from the original owner or plan participant who has died. See In re Klipsch, 435 B.R.
586 (S.D. Ind. 2010), in which the Bankruptcy Court rejected a debtor’s attempt to claim
an exemption under the Indiana exemption statute for an inherited IRA account.
In Clark v. Rameker, 134 S.Ct. 2242 (2014), the U. S. Supreme Court unanimously
held that an IRA inherited by the daughter of the original IRA owner did not constitute
“retirement funds” for bankruptcy exemption purposes under 11 U.S.C. § 522(b)(3)(C).
The Supreme Court left the figurative door open to potentially allow a “spousal IRA”
inherited by a surviving spouse to be treated as “exempt retirement funds,” because of
the ability of a surviving spouse beneficiary to delay the withdrawal of required
minimum distributions. In an Arizona10 bankruptcy case, In re Pacheco, 537 B.R. 935 (D.
Ariz. 8-25-2015), the bankruptcy court “took the hint” and concluded that the surviving
spouse beneficiary under a 401(k) plan could claim an exemption in her bankruptcy
proceeding for her late husband’s plan account assets under the Arizona state
exemption and under 11 U.S.C. § 522(b)(3)(C), because Clark v. Rameker only decided
the status of retirement accounts inherited by non-spouse beneficiaries.
To this writer’s knowledge, the most recent published Indiana case on this issue
is Dumka v. Erickson, 70 N.E.3d 828 (Ind. Ct. App. 2017), in which the trial court took
judicial notice of the statutory exemption for IRAs and concluded that the exemption
was available for a $51,000 IRA inherited by the surviving spouse who, with her late
husband, was jointly and severally liable on the unpaid $984,000 balance of a money
9
11 U.S.C. § 522(n), added by section 224 of the Bankruptcy Abuse & Consumer
Protection Act of 2005 (BACPA, Pub. L. 109-8), effective for bankruptcy cases filed on or
after October 17, 2005. See also BACPA section 323, amending Bankruptcy Code
§ 541(b)(7)(A) to exclude from a debtor’s estate amounts withheld by an employer from
the debtor’s compensation and earmarked for retirement account contributions.
10 Like Indiana, Arizona is an “opt-out” state that requires debtors in bankruptcy cases
to use the state-law debtor exemptions rather than the federal exemptions, and in
Pacheco, Arizona provided a specific state exemption for retirement accounts and
plans.
22
judgment against them, even though the surviving spouse did not affirmatively claim
the exemption in the supplemental proceeding. The Court of Appeals upheld the
exemption.
(10) State Statutory Exemption for Life Insurance Proceeds or Cash Value
Ind. Code § 27-1-12-14(e) provides an exemption for life insurance policies and
protects the “proceeds and avails” of those life insurance policies from all claims by
creditors of the insured or of the insured’s spouse, but only to the extent that the
“spouse, children or any relative dependent upon such person [the insured] or any
creditor” is a designated beneficiary on the policy or is a bona fide assignee of
ownership of the policy.
The “proceeds and avails” of a life insurance policy are separately defined in
subsection 27-1-12-14(a) as “death benefits, cash surrender and loan values, premiums
waived,” and dividends not received in cash.
If an individual is the insured on a life policy on his or her life, if the individual’s
spouse or children are beneficiaries on that policy, and if that individual wants to
protect the cash value of the policy or the death benefit from his or her creditors or from
his or her spouse’s creditors, the best course of action is for the individual to leave the
beneficiary designation alone. No matter how worried the individual insured is about
current or future creditor claims, it would be a mistake to withdraw the cash value and
put the cash in an ordinary account or transfer it to someone else.
In Citizens Nat. Bank of Evansville v. Foster, 668 N.E.2d 1236 (Ind. 1996), the
Indiana Supreme Court answered a second certified question from the District Court in
Evansville: Whether the exemption from creditors for life insurance, under what is now
I.C. § 27-1-12-14(e), violates Article 1, Section 22 of the Indiana Constitution because it
does not impose a cap or limit on the value of life insurance death benefit or cash value
that can be exempted. The Supreme Court held that the absence of a cap or limit, tied in
some way to the amount needed to afford the “necessities of life,” made the exemption
in I.C. § 27-1-12-14 potentially unconstitutional, depending on the amount of “proceeds
and avails” that an insured debtor seeks to claim as exempt:
. . . [S]ubstantial sums closeted in anticipation of bankruptcy do not fit
with the “necessary comforts of life” purpose of the Indiana Constitution
and a claimant must demonstrate that they do so in order to claim the
exemption.
. . . . The exemption for life insurance is constitutionally suspect and
may be claimed only upon proof that the exemption is required to afford
the “necessities of life.”
Foster, 668 N.E.2d at 1242.
23
The facts in Foster were unflattering to the husband-and-wife debtors: Two
weeks before filing their bankruptcy petition, Mr. and Mrs. Foster paid a single
premium of $100,000 for a life insurance policy with a face amount of $115,000 and a
stipulated cash surrender value of slightly less than $92,000. In re Foster, 168 B.R. 183,
185 (S.D. Ind. 1994).
Since the Foster decision in 1996, this writer has seen three Indiana Bankruptcy
Court decisions and one Indiana Supreme Court opinion in which the life insurance
exemption in I.C. § 27-1-12-14(e) has been interpreted or applied:
 The 38-year-old widow of the insured and her 4 ½-year-old son were the named
beneficiaries on a life insurance policy with a $200,000 death benefit. The widow
filed her bankruptcy case some two years after her insured husband’s death and
sought to exempt the entire $200,000 amount from her chapter 7 bankruptcy
estate. The Bankruptcy Court took the “invitation” from the Indiana Supreme
Court in Foster and engaged in a facts-and-circumstances analysis (including
evidence from a CPA of projected living expenses for the widow and son) of
what portion of the life insurance death benefit was properly exempt as required
to afford the widow debtor with “the necessities of life.” The Bankruptcy Court
concluded that the entire $200,000 amount was exempt under I.C. § 27-1-12-14. In
re Bannourah, 201 B.R. 954 (S.D. Ind. 1996).
 In I.C. § 27-1-12-14(e), in the clause “the spouse, children, or any relative
dependent upon such [insured] person,” the words “dependent upon such
person” modified only the phase “any relative” and not “children,” so that to the
extent that one or more non-dependent children are named beneficiaries on the
life insurance policy, the “proceeds and avails” of the policy are exempt. In re
Wandrey, 334 B.R. 427 (N.D. Ind. 2005).
 A debtor filed a bankruptcy petition and claimed an exemption for an existing
life insurance policy having a cash value of about $14,000, on which the debtor
was the insured and his adult son was the designated beneficiary. The
bankruptcy trustee objected to the claimed exemption, and the Bankruptcy Court
for the Northern District certified a question to the Indiana Supreme Court about
whether “dependent upon such person” modified “child.” Writing for a
unanimous court, Chief Justice Rush adopted the same statutory construction
used in Wandrey, held that the son and beneficiary did not need to be a
“dependent” in order for the exemption under I.C. § 27-1-12-14(e) to apply. In re
Howell, 27 N.E.3d 723 (Ind. 2015).
 Less than 2 months before the debtor filed her chapter 7 bankruptcy case, her
insured husband died, and the debtor collected a total of $8,694.69 from two
policies on her late husband’s life. She deposited $8,600.69 of that money into a
bank account two days before she filed her bankruptcy petition. The Bankruptcy
Court in Hammond determined that the money was still exempt under I.C. § 27-
24
1-12-14(e), even though it was no longer held within the life insurance policy or
held by the insurer at the time the bankruptcy petition was filed. “[A] ‘benefit’ is
only a ‘benefit’ if it helps someone. A life insurance policy distribution in the
hands of the insurance company doesn't help anyone, except perhaps the
insurance company's bottom line with respect to investment income if the benefit
payment is delayed and is paid from invested funds.” In re Davis, 527 B.R. 319,
325 (N.D. Ind. 2015).
It is still necessary to analyze each case or situation on the basis of its facts and
circumstances, in order to determine whether the amount of life insurance “proceeds or
avails” (death benefit or cash surrender value) that an insured or a beneficiary wants to
claim as exempt will be within the vague, non-objective, constitutional limits imposed
by the Supreme Court in its Foster decision in 1996. It will continue to be risky for an
individual to purchase new or additional life insurance having cash value, in anticipation
of litigation by a current creditor or a claim by a future creditor.
(11) State Statutory Exemption for Annuities Payable to Non-Purchasers

Ind. Code § 27-2-5-1(b) provides that if an annuity contract is issued by a domestic
life insurance company,11 and when the proceeds of or payments under an annuity are
payable to a person (i.e., to an annuitant or beneficiary) who is not the person who
provided the consideration (e.g., paid the premium(s)) for the annuity contract, the
proceeds of or payments under the annuity are exempt from the claims of the creditors
of the annuitant or beneficiary who did not pay for the annuity. The entire statute
applies to both life insurance policies and annuities issued by “domestic life insurance”
companies and was enacted in 1995 as part of the same bill which enacted Ind. Code
§ 27-1-12-14:
IC 27-2-5-1
Spendthrift laws; exemption from judicial process
Sec. 1. (a) As used in this section, “premium” includes any deposit or
contribution.
(b) No person entitled to receive benefits under a life insurance or life
annuity contract, or under a written agreement supplemental thereto,
issued by domestic life insurance company, shall be permitted to
commute, anticipate, encumber, alienate, or assign such benefits, if the
11
This writer could not find a statutory definition of “domestic life insurance
company” in title 27, but the term is used throughout I.C. 27-1-12. “Domestic
company” is defined in Ind. Code § 27-1-2-3(e) as “an insurance company organized
under the insurance laws of this state.” Therefore, it appears that the exemption of
annuity payments or proceeds from the claims of the creditors of the annuitant or
beneficiary is available only if the annuity is issued by an Indiana company.
25
right to do so is expressly prohibited or withheld by a provision contained
in such contract or supplemental agreement. And if such contract, policy,
or supplemental agreement so provides, such benefits, except when
payable to the person who provided the consideration for such contract,
shall not be subject to such persons' debts, contracts, or engagements, nor
to any judicial process to levy upon or attach the same for payment
thereof.
(c) A premium paid for an individual life insurance policy that names
as a beneficiary, or is legally assigned to, a spouse, child, or relative who is
dependent upon the policy owner is not exempt from the claims of the
creditors of the policy owner if the premium is paid:
(1) not more than one (1) year before the date of the filing of a
voluntary or involuntary petition by; or
(2) to defraud the creditors of;
the policy owner.
(d) The insurer issuing the policy is discharged from all liability by
payment of the proceeds and avails of the policy (as defined in IC 27-1-12-
14(b)) in accordance with the terms of the policy unless, before payment,
the insurer has received at the insurer's home office, written notice by or
on behalf of a creditor of the policy owner that specifies the amount
claimed against the policy owner.
There are no reported decisions under this statute. Please note that subsection (c) is
worded to apply only to life insurance policies, and states that if a policy owner pays a
premium with intent to defraud a creditor or within one year before the filing of a
[bankruptcy] petition, the amount of the premium payment itself is not exempt from
the claims of the policy owner’s creditors.
(12) “Exemption Planning”: Increasing Holdings of Assets Exempt from Creditors

Individuals generally have the right to take advantage of laws and legal
procedures to transform, convert or to liquidate assets that are not exempt from the
reach of their future creditors and to reinvest the proceeds into assets that are exempt
from creditors. For example:
 If a married couple owns an expensive residence titled in both spouses’ names as
tenants by the entireties, and if the real estate is encumbered by mortgage debt,
the spouses could pay down or pay off that mortgage debt, and thereby increase
equity that will be exempt from the individual creditors of either spouse.
 If an individual is not currently making the maximum allowable contribution
(through reduction of salary or otherwise) to a traditional IRA, Roth IRA, or
401(k) account, that individual could increase his or her contributions to the
26
maximum or create a new IRA, in order to maximize the amount that he or she
can deposit annually into retirement accounts that are exempt from creditors.
 An individual could use available cash to purchase new or additional life
insurance on his or her own life and could name a spouse or children or other
dependent relatives as the beneficiaries on the insurance policy, in order to turn
non-exempt cash into exempt value of the life insurance.
Although an individual would be “free” to do any of these things, such restructuring or
transformation of the individual’s assets could be actionable as a “voidable transfer”
under the Indiana UVTA, or could be avoidable by a bankruptcy trustee, if the
individual took steps to increase his or her “creditor-exempt” assets within the
limitations periods under the Indiana UVTA (see pages 11 and 12 above) or within two
years before becoming the debtor in a bankruptcy proceeding. In U. S. v. Craft, the
federal tax case mentioned on page 15 above, the husband, who owed the federal tax
debt, used non-exempt assets to pay down the mortgage on the real estate, and the
District Court in Michigan found that that action by the husband was a fraudulent
transfer.
If an individual becomes a debtor in a voluntary or involuntary bankruptcy
proceeding and if he or she fails to make full and accurate disclosure of his or her assets,
or if he or she concealed assets or engaged in “exemption planning” before filing, that
individual debtor may be denied a bankruptcy discharge under 11 U.S.C. § 727(a)(2), or
he or she may have an otherwise exempt asset declared to be non-exempt and a part of
the bankruptcy estate under 11 U.S.C. § 522(g).
(A) Reported Court Decisions Involving “Exemption Planning”

“[T]he conversion of non-exempt to exempt property for the purpose of placing
the property out of the reach of creditors, without more, will not deprive the debtor of
the exemption to which he would otherwise be entitled.” Marine Midland Bus. Loans,
Inc. v. Carey, 938 F.2d 1073, 1076 (10th Cir. 1991). However, some exemption planning
may result in a denial of a bankruptcy discharge or in a denial of exempt status for an
asset, if the debtor is shown to have done the exemption planning with the intent to
“hinder, delay or defraud” a creditor or creditors, after an inquiry into the following
facts and circumstances, among others:
• The amount(s) of the transfer(s) from non-exempt to exempt property
• The proximity (in time) between the transfer and the filing of the bankruptcy
petition
• Whether the transfer or conversion from non-exempt to exempt property
involved new funds or property previously subject to security interests
• Whether insiders of the debtor were benefited by the transfer or conversion to
exempt property
27
• What creditor claims or potential claims were known to or should have been
known by the debtor at the time of the transfer or conversion
• Whether the debtor misled any creditors before or in the course of the transfer or
conversion to exempt assets
Here are two typical cases involving attempted “exemption planning” by individuals
who filed bankruptcy proceedings soon thereafter:
In re Boudrot, 287 B.R. 582 (W.D. Okla. 2002). A civil money judgment for
$71,000 in attorney fees and costs was entered against the husband and wife debtors in
litigation that they had commenced. Shortly after the judgment was entered, the debtors
liquidated their savings accounts and used the resulting money ($54,000) to pay down
the mortgage on their principal residence, which was an exempt homestead under
Oklahoma law. The judgment creditor obtained a wage garnishment against one of the
married debtors. They filed a joint bankruptcy petition and disclosed the liquidation of
their savings accounts and the pay-down of their mortgage in their bankruptcy
schedules. In denying a discharge to the debtors under 11 U.S.C. § 727(a)(2), the
bankruptcy court found that the debtors had decreased their non-exempt assets and
increased the value of their exempt homestead within a year before filing their chapter 7
petition and with an intent to hinder or delay or defraud any creditor, such as the
creditor holding the $71,000 judgment.
In re Davidson, 164 B.R. 782 (S.D. Fla. 1994), affirmed in part and reversed in part,
178 B.R. 544 (S.D. Fla. 1995). A lender obtained a $214,000 money judgment against Mr.
and Mrs. Davidson on several loans, on which Mr. Davidson was the primary borrower
and Mrs. Davidson was the guarantor. Two days before the judgment was entered, Mrs.
Davidson withdrew about $145,000 from a joint bank account and purchased a $100,000
single-premium annuity, which would have been an “exempt” asset under applicable
Florida law. About 8 months later, Mr. and Mrs. Davidson filed a joint chapter 7
bankruptcy petition and claimed the annuity as an exempt asset. The bank holding the
money judgment and the bankruptcy trustee objected to the discharge of Mr. and Mrs.
Davidson and to the claimed exemption for the annuity. The bankruptcy court denied a
bankruptcy discharge to Mrs. Davidson but allowed a discharge for Mr. Davidson. On
cross-appeal, the District Court upheld the denial of Mrs. Davidson’s discharge but
remanded the case back to the bankruptcy court, which was instructed to determine
whether Mr. Davidson should be denied a discharge after determining (1) whether an
attorney fee invoice paid by Mr. Davidson showed that he requested legal research on
an exemption for annuities and (2) whose funds were used to purchase the annuity. The
District Court noted that under Florida’s fraudulent transfer statute, the bank lender
and judgment creditor could have brought an action against the Davidsons to avoid or
unwind the annuity purchase.
28
(B) When is it Safe for a Client to Engage in Exemption Planning?
In this writer’s experience, it is “safe,” or safer, for a client to engage in exemption
planning, and for a lawyer to recommend or assist in such planning, only if all of the
following conditions are satisfied:
 The client is not insolvent and will be able to continue to pay all debts currently
as payments become due, even after making the asset transfers or
“transformations” that will be involved in increasing the client’s holdings of
“exempt” assets.
 No litigation by a creditor is currently pending or threatened against the client.
 The client can produce copies of filed tax returns and payment records showing
that he or she has paid in full all income taxes as reported for the last 6 or 7 years.
 The client is not a guarantor on any debt owed by a business entity that is
insolvent or that is unable to pay the business’s debts as they fall due.
 The client is willing to truthfully sign a “solvency affidavit” of the type that
would be required if the client were to create and fund a domestic asset
protection trust (DAPT) under an appropriate statute in another jurisdiction.
 The client will not be filing a bankruptcy petition within the next 24 months after
completing the exemption planning, and the client is willing to affirm in writing
that he or she does not anticipate being the debtor in an involuntary bankruptcy
or receivership proceeding within the next 24 months.
(13) Can LLCs be used effectively and standing alone for asset protection?
Among a substantial minority (at least) of Indiana residents who are potential
estate planning clients, there appears to be some “conventional wisdom” that by
creating and funding a limited liability company — even an LLC that has just one
member and does not operate a business — the individual member can protect from
future creditors the assets that are contributed to the LLC.
Based on this writer’s experience and research, this conventional wisdom about
LLCs is not reliably accurate. LLCs are frequently used as one component of
sophisticated “offshore” asset protection planning, but as a stand-alone entity, a single-
member LLC probably is not going to protect the assets in the LLC against the collection
efforts of a well-motivated, determined creditor who holds a money judgment against
the LLC’s member.
The use of an LLC as the only entity in an asset protection arrangement depends
on the idea that a judgment creditor of the LLC’s member will not be able to engage in
“reverse veil-piercing” and reach the assets inside the LLC to satisfy the judgment
against the LLC member. When a judgment creditor can succeed in reverse veil-
piercing, this occurs on a theory that the LLC is merely the alter ego of the member.
29
This writer has found no reported Indiana court decisions in which reverse veil-
piercing has been discussed and explicitly allowed or disallowed with respect to an
LLC in which a member of the LLC was a judgment debtor. Reverse veil piercing on an
“alter ego” theory was discussed with respect to a closely-held corporation in Lambert v.
Farmers Bank, Frankfort, Ind., 519 N.E.2d 745 (Ind. Ct. App. 1988).
In other states, reported court decisions about reverse veil-piercing have
depended on the law of the jurisdiction in which the LLC was formed. For example, in
PNC Bank v. Udell, a U. S. District Court in Illinois looked to Delaware law and
concluded that the judgment creditor of an Illinois-resident LLC member could not use
reverse veil-piercing to reach the assets inside a Delaware LLC. 2017 WL 3478814 (slip
opinion, N.D. Ill. 2017).
If an Indiana resident had a demonstrable business purpose for contributing
additional assets to an existing Indiana LLC, or if he or she formed a new Indiana LLC
to operate a business (or to carry on other activities besides the passive holding of
investment assets), the LLC could provide some protection for the LLC’s assets against
future creditors of the member who formed or contributed assets to the LLC. And the
protection against creditors could be stronger if the LLC has one or more additional
members or is engaged in business operations.
In Indiana, when a creditor wins a money judgment against an individual who is
a member of an Indiana LLC, the judgment creditor can seek a charging order against
the member’s interest in the LLC. If a charging order is entered, the judgment creditor
can collect from distributions as and when they are made out of the LLC and to the
member who is the judgment debtor. The charging order by itself cannot compel the
members or managers to make distributions out of the LLC, if there is no operating
agreement or if the operating agreement does not require mandatory distributions to
the members at specified times.
The charging order provision in Indiana’s LLC statute, the “Business Flexibility
Act,” is I.C. § 23-18-6-7, and has read as follows since the Act was passed in 1993:
I.C. § 23-18-6-7
Judgment creditors of members; rights
Sec. 7. (a) On application to a court with jurisdiction by a judgment
creditor of a member, the court may charge the interest of the member in
the limited liability company with the payment of the unsatisfied amount
of the judgment with interest.
(b) To the extent the court charges under subsection (a), the judgment
creditor has only the rights of an assignee of the member's interest in the
limited liability company.
30
(c) This article does not deprive a member of the benefit of any
exemption laws applicable to the member's interest in the limited liability
company.
Note that this section is silent about whether a charging order is the exclusive remedy
available to the judgment creditor of an LLC member. What if the judgment debtor is
the LLC’s sole member (or sole member and sole manager), and if the operating
agreement does not require distributions except upon the affirmative vote of a majority
of the members (or a majority of the managers)?12 Can the judgment creditor of a
member use a more effective collection method, such as asking a court to order the sale
of the member’s interest in the LLC (sometimes called “foreclosure” in this context)?
In a 2005 case, the Court of Appeals interpreted Ind. Code § 23-18-1-10 and 23-18-
6-7 and held that a charging order was essentially the sole remedy available to a
judgment creditor of an LLC member. Brant v. Krilich, 835 N.E.2d 582, 592 (Ind. Ct.
App. 2005). The holding in Brant was followed in a divorce case, Crider v. Crider, 15
N.E.3d 1042 (Ind. Ct. App. 2014), in which the Court of Appeals held that one ex-spouse
could get a charging order against the other ex-spouse’s member interest in an LLC, but
that the divorce court exceeded its authority in ordering the transfer of the member
interest itself to the ex-spouse who was not a member.
In 2012 and 2013, the Indiana Business Law Survey Commission (BLSC), with
input from an ISBA task force, proposed several technical amendments to the Indiana
LLC statute. Many of the amendments were drafted and proposed as alternatives to
problematic provisions of the Revised Uniform LLC Act (RULLCA), which Indiana did
not enact. The BLSC’s bill was eventually enacted as House Enrolled Act 1394 (P.L. 40-
2013), with an effective date of July 1, 2013.
One provision in the BLSC’s bill, which had to be dropped during the 2013
Session to prevent the entire bill from being killed, was a set of amendments to I.C. § 23-
18-6-7, to borrow language from the Delaware LLC statute and to confirm that a
charging order against the member’s interest is the sole remedy available to the
judgment creditor of an LLC member. The amendments would have added two
subsections to I.C. § 23-18-6-7:
(d) No creditor of a member or creditor of a member’s assignee has
the right to obtain possession of, or otherwise exercise legal or equitable
remedies with respect to, the property of the limited liability company.
12
If an Indiana LLC has no operating agreement or if the operating agreement is silent
on the timing and authorization of distributions, I.C. § 23-18-4-3 requires a simple
majority vote of the members (or, if the LLC is manager-managed, a simple majority
vote of the managers) to authorize distributions.
31
(e) This section provides the exclusive remedy by which a judgment
creditor of a member may satisfy a judgment from a judgment debtor’s
member interest in a limited liability company. A judgment creditor shall
have no right to foreclose upon the charging order or the judgment
debtor’s member interest.
At the first House Judiciary Subcommittee hearings during the 2013 Session,
representatives of the ISBA Creditors Rights Section and of the Indiana banking
industry expressed either significant concern about or opposition to any change in
Indiana law regarding charging orders, unless other protections for lenders were
added. The above proposed amendments to I.C. § 23-18-6-7 were withdrawn to prevent
the entire bill from being jeopardized. So, it remains uncertain whether a judgment
creditor could be prevented from obtaining a foreclosure or sale order with respect to a
member interest held in an Indiana LLC by a judgment debtor. In this writer’s opinion,
this makes an Indiana LLC — especially a single-member LLC —a potentially
ineffective tool for asset protection in Indiana, unless the LLC is used in combination
with other techniques, such as a domestic asset protection trust.
Because I.C. § 23-18-6-7 is silent about whether a charging order is the exclusive
remedy, an Indiana resident who uses a single-member Indiana LLC as a “vehicle” for
personal asset protection can only rely on Brant v. Krilich as the basis for arguing that a
court cannot order the sale or other transfer of the LLC member’s interest, if a charging
order against distributions does not allow the judgment creditor to collect any money.
Other states have wrestled with the issue of allowing or prohibiting the court-
ordered sale of an LLC member interest, or otherwise to reach the LLC’s assets, if a
charging order against a LLC member and judgment debtor is unlikely to produce
actual collections (from distributions to the LLC member, as they are paid). In Florida in
2008, the 11th Circuit Court of Appeals certified a question to the Florida Supreme
Court. The Court of Appeals wanted to know whether, under a specific section of
Florida’s LLC statute, “court may order a judgment-debtor to surrender all ‘right, title,
and interest’ in the debtor’s single-member limited liability company to satisfy an
outstanding judgment.” Fed. Trade Comm’n v. Olmstead, 528 F.3d 1310, 1314 (11th
Cir.2008). The specific Florida statute, which was F.S.A. § 608.433(4) at the time, had
wording nearly identical to subsections (a) through (c) of I.C. § 23-18-6-7, as quoted
above, and did not say that a charging order is the exclusive remedy.
The Florida Supreme Court rephrased the certified question to refer to Florida
law in general (including the levy and execution statutes), and not just to the specific
section of the Florida LLC statute, and answered YES to the rephrased question, over
the objections of two dissenting justices. The Supreme Court’s holding therefore was
that a Florida court could allow a judgment creditor to reach the assets inside a single-
member LLC to satisfy a judgment against the LLC member. Olmstead v FTC, 44 So.3d
76 (Fla. 2010).
32
In the wake of the Florida Supreme Court’s decision in Olmstead, members of
the Florida Bar were concerned that the decision could jeopardize the legitimate use of
both single-member and multiple-member LLCs. The Florida legislature amended
section 608.433(4) of the Florida LLC Act to add what was called the “Olmstead” patch,
to make a charging order the exclusive remedy against a judgment debtor’s interest in a
multiple-member LLC, and to add a standard for the availability of foreclosure of a
judgment debtor’s interest in a single-member LLC. As a result of a 2013 recodification,
the amended section is now F.S.A. § 605.0503, whose pertinent provisions read as
follows [bold emphasis added]:
(3) Except as provided in subsections (4) and (5), a charging order is
the sole and exclusive remedy by which a judgment creditor of a member
or member’s transferee may satisfy a judgment from the judgment
debtor’s interest in a limited liability company or rights to distributions
from the limited liability company.
(4) In the case of a limited liability company that has only one
member, if a judgment creditor of a member or member’s transferee
establishes to the satisfaction of a court of competent jurisdiction that
distributions under a charging order will not satisfy the judgment
within a reasonable time, a charging order is not the sole and exclusive
remedy by which the judgment creditor may satisfy the judgment against
a judgment debtor who is the sole member of a limited liability company
or the transferee of the sole member, and upon such showing, the court
may order the sale of that interest in the limited liability company
pursuant to a foreclosure sale. A judgment creditor may make a showing
to the court that distributions under a charging order will not satisfy the
judgment within a reasonable time at any time after the entry of the
judgment and may do so at the same time that the judgment creditor
applies for the entry of a charging order.
(5) If a limited liability company has only one member and the court
orders a foreclosure sale of a judgment debtor’s interest in the limited
liability company or of a charging order lien against the sole member of
the limited liability company pursuant to subsection (4):
(a) The purchaser at the court-ordered foreclosure sale obtains the
member’s entire limited liability company interest, not merely the
rights of a transferee;
(b) The purchaser at the sale becomes the member of the limited
liability company; and
(c) The person whose limited liability company interest is sold
pursuant to the foreclosure sale or is the subject of the foreclosed
33
charging order ceases to be a member of the limited liability
company.
(6) In the case of a limited liability company that has more than one
member, the remedy of foreclosure on a judgment debtor’s interest in the
limited liability company or against rights to distribution from the limited
liability company is not available to a judgment creditor attempting to
satisfy the judgment and may not be ordered by a court.
(7) This section does not limit any of the following:
(a) The rights of a creditor who has been granted a consensual
security interest in a limited liability company interest to pursue
the remedies available to the secured creditor under other law
applicable to secured creditors.
(b) The principles of law and equity which affect fraudulent
transfers.
(c) The availability of the equitable principles of alter ego, equitable
lien, or constructive trust or other equitable principles not
inconsistent with this section.
(d) The continuing jurisdiction of the court to enforce its charging
order in a manner consistent with this section.
In this writer’s opinion, an Indiana LLC can be an effective stand-alone tool for asset
protection only so long as Indiana courts continue to follow the holding in Brant v
Krilich and treat a charging order as the exclusive remedy of a creditor who holds a
judgment against the LLC member. An Indiana resident who wants to use an LLC for
asset protection would be better off using a Delaware LLC, because the Delaware LLC
statute explicitly makes a charging order the exclusive remedy, whether the judgment
debtor is the only member of the LLC or is one of two or more members of the LLC. See
6 Del. C. § 18-703(d).
(14) Self-Settled Trusts Don’t Protect the Trust Assets from the Settlor’s Creditors
Unless They are DAPTs
Under current Indiana law, a settlor can create and fund a trust for the benefit of
another person as the beneficiary, include “spendthrift” provisions in the trust document,
and (if the trust is properly structured) prevent creditors of the beneficiary from
reaching seizing or diverting the trust assets or income before distributions are actually
made to the beneficiary. See Ind. Code § 30-4-3-2(a). When the debtor in a bankruptcy
case is a beneficiary of a trust (but not a settlor of that trust) and when the trust contains
a spendthrift clause or restriction, that restriction is enforceable in the debtor-
beneficiary’s bankruptcy case. See 11 U.S.C. § 541(c)(2).
34
However, under a long-standing common law principle, an individual cannot
create and fund a trust with himself or herself as a beneficiary, include spendthrift
protections in the trust document, and protect the trust assets from the settlor-
beneficiary’s own creditors. Creditors of the settlor-beneficiary can reach the assets of a
self-settled spendthrift trust without proving any intent to hinder, delay or defraud
creditors. Ind. Code §30-4-3-2(b) reads as follows:
(b) Except as otherwise provided in subsection (c), if the settlor is
also a beneficiary of the trust, a provision restraining the voluntary or
involuntary transfer of his beneficial interest will not prevent his creditors
from satisfying claims from his interest in the trust estate.
Subsection (c) carves out an exception for interests in tax-qualified retirement plans that
are structured as trusts. See also Restatement (Third) of Trusts § 25, comment e (2003);
Restatement (Second) of Trusts § 156(1) (1959).
In Kesling v. Kesling, 967 N.E.2d 66 (Ind. Ct. App. 2012), a shareholder of a
closely-held corporation transferred his stock to a revocable grantor trust under which
he was the sole trustee and sole beneficiary during his lifetime. The Court of Appeals
held that in light of his continued status as the owner of the shares for federal income
tax purposes and the continued exposure of the trust assets to his creditors (among
other factors), the shareholder-settlor was still a “shareholder” of the corporation for
purposes of a shareholders’ agreement, which restricted transferability of all shares,
provided a first-refusal option triggered by gratuitous or non-gratuitous attempted
transfers, and provided for redemption and cross-purchase options after the death of a
shareholder. 967 N.E.2d at 79-84.
In the United States, the “innovation” of including a spendthrift provision in a
self-settled trust, in attempt to protect the trust assets from creditors of the settlor-
beneficiary, apparently originated in Pennsylvania, where a William Bartram created
and funded such a trust in 1849. In 1862, after Bartram’s death, his creditors sued the
remainder beneficiary of the trust to collect Bartram’s debts from the trust assets. After
discussing various English cases under the Statute of 13 Elizabeth (the basis for all U.S.
fraudulent transfer statutes), the Pennsylvania Supreme Court held that Bartram’s
original transfer to the trustees was void as a fraud upon his creditors and that the
spendthrift provision was ineffective. Mackason’s Appeal, 42 Pa. 330, 1862 WL 5101
(1862).
In Ind. Code § 30-4-3-2(b), quoted verbatim above on this page, the key phrases
that cause all of the trouble are “if the settlor is also a beneficiary of the trust” and “his
creditors” and “his interest in the trust.” The primary exception to the rule in I.C. § 30-4-
3-2(b) is the Indiana Legacy Trust statute, I.C. 30-4-8. An Indiana legacy trust (and in
many circumstances a DAPT created under some other State’s law) will protect the trust
assets from the settlor-beneficiary’s future creditors, but no other kind of self-settled
35
spendthrift trust will protect the trust assets from the settlor’s creditors if the settlor is
also a beneficiary of the trust.
Who is the “settlor” of a trust? Under Indiana’s Trust Code, “’Settlor’ means a
person who establishes a trust including the testator of a will under which a trust is
created.” Ind. Code § 30-4-1-2(21). It is clear that so long as the trust’s terms are stated in
a writing signed by the settlor and so long at least one beneficiary is identified by name
or defined, a valid trust in Indiana can be created “dry” and funded later: “It is not
necessary to the validity of a trust that the trust be funded with or have a corpus that
includes property other than the present or future, vested or contingent right of the
trustee to receive proceeds or property . . . .” Ind. Code § 30-4-2-1(c). Indiana law does
not define the settlor of a trust as anyone who contributes property to a trust; the settlor
is the person who creates and states the trust’s terms. This concept creates a possible
loophole, which is discussed on pages 39 and 40 below.
In the majority of states which, unlike Indiana, do not permit self-settled
spendthrift trusts (DAPTs) to protect the trust assets against the settlor-beneficiary’s
creditors, the settlor’s retention of any beneficial interest in the trust’s income or
principal is sufficient to trigger the rule, and to prevent the spendthrift provision from
protecting the trust’s assets against the settlor’s creditors.
In a federal tax collection proceeding that predates Indiana’s enactment of its
DAPT (legacy trust) statute, the U. S. District Court in South Bend relied on the Indiana
UFTA and the “general equity powers” provision in the Indiana Trust Code (I.C. § 30-4-
3-30) and found that the funding of a “family trust” by William and Beverly Smith was
a fraudulent transfer, ineffective to protect the trust assets against the federal
government’s efforts to foreclose on the trust assets, to collect income tax assessments
for the 1982-1988 tax years. U. S. v. Smith, 950 F.Supp. 1394 (N.D. Ind. 1996).
The Smiths had funded the trusts in 1977 by conveying parcels of real estate to
the trustees (Mrs. Smith and an unrelated individual) for only nominal consideration.
The only beneficiaries of the trust were Mr. and Mrs. Smith and their children, who held
all the “units of beneficial interest” in the trust. The trust appeared to be structured like
many sham trusts used by “tax protestors” in an attempt to avoid paying income taxes,
and the trust instrument referred to the Smiths’ “Constitutional rights.” Although the
Smiths did not owe any unpaid federal taxes when they created and funded the trusts,
and although the funding of the trusts did not make the Smiths insolvent, they stopped
filing federal income tax returns for several years starting in 1982. Mr. Smith claimed
that the trust’s reportable gross income was not his and was not attributable to him or
his spouse; he reported as income only the “consulting fees” that he collected from the
trust. Such a position was bound to fail under the line of cases involving other sham
“tax avoidance” trusts, including U. S. v. Denlinger, 982 F.2d 233 (7th Cir. 1992). The
District Court concluded that the Smiths had created and funded the trust with the
intent to hinder, delay or defraud the federal government.
36
(A) Ten-Year Look-Back Rule for Trusts under Bankruptcy Code § 548(e)
Section 548 of the Bankruptcy Code (11 U.S.C. § 548) gives the bankruptcy
trustee broad powers to “avoid” various kinds of asset transfers made by a debtor
before the bankruptcy petition was filed. Effective for bankruptcy proceedings
commenced on or after October 17, 2005, BACPA (P.L. 109-8, section 1402) added a new
subsection to the Bankruptcy Code, §548(e) [underscoring and italics added]:
Sec. 548. Fraudulent transfers and obligations
(e)(1) In addition to any transfer that the trustee may otherwise
avoid, the trustee may avoid any transfer of an interest of the debtor in
property that was made on or within 10 years before the date of the filing
of the petition, if –
(A) such transfer was made to a self-settled trust or similar device;
(B) such transfer was by the debtor;
(C) the debtor is a beneficiary of such trust or similar device; and
(D) the debtor made such transfer with actual intent to hinder,
delay, or defraud any entity to which the debtor was or
became, on or after the date that such transfer was made,
indebted.
(2) For the purposes of this subsection, a transfer includes a
transfer made in anticipation of any money judgment, settlement, civil
penalty, equitable order, or criminal fine incurred by, or which the debtor
believed would be incurred by —
(A) any violation of the securities laws (as defined in section
3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(47))), any State securities laws, or any regulation or
order issued under Federal securities laws or State securities
laws; or
(B) fraud, deceit, or manipulation in a fiduciary capacity or in
connection with the purchase or sale of any security
registered under section 12 or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78l and 78o(d)) or under
section 6 of the Securities Act of 1933 (15 U.S.C. 77f).
Please note that if an individual is merely a beneficiary of a trust, was never a settlor of
the trust, and did not transfer assets to it, the 10-year look-back rule will not apply that
individual’s interest in the trust (But his or her interest in the trust might still be
included as property of the bankruptcy estate).
Note also that the four elements (A) through (D) in subsection (e)(1) are worded
in the conjunctive, joined by “and.” In this writer’s opinion, this means that a
37
bankruptcy trustee cannot invalidate or avoid a gratuitous asset transfer made to a trust
within the 10-year period unless the trustee can prove that the transfer to the trust was
made “with actual intent to hinder, delay or defraud” any current or future creditor of
the settlor. In many cases, especially for trusts created and funded for innocuous estate
planning reasons by solvent settlors, actual intent will be difficult or impossible for a
bankruptcy trustee to prove.
However, even before new subsection 548(e) became effective in 2005,
bankruptcy courts have not have much difficulty in finding that a debtor’s creation and
funding of a revocable living trust within 1 or 2 years before the filing of his or her
bankruptcy petition was an asset transfer that the bankruptcy trustee could avoid under
section 548.13 See, e.g., In re Wallaert, 149 B.R. 665 (W.D. Wash. 1992) [partial summary
judgment for the bankruptcy trustee where joint debtors conveyed their residence to a
“Loving Trust” within one year pre-petition]. The addition of a ten-year look-back
period in subsection 548(e)(1) increases the stakes and makes it more difficult for the
settlor of a trust to use a self-settled trust to protect assets, especially if the settlor had
difficulty paying debts at the time such a trust was created and funded.
(B) Protections Added to I.C. 30-4-2.1 in 2010-11: Is there a back-door method

for funding an effective self-settled spendthrift trust entirely within
Indiana?
Effective July 1, 2010, the Indiana General Assembly added four new sections to
the end of Chapter 2.1 of the Indiana Trust Code, to provide some explicit rules for
interpreting trust provisions involving “discretionary” interests and to help courts,
trustees, beneficiaries, and creditors determine whether a settlor or beneficiary has
“dominion or control” over a trust’s assets or whether a trust’s settlor may be
considered the alter ego of the trustee. These four sections (I.C. §§ 30-4-2.1-14 and 30-4-
2.1-15 through -17, see Appendix 1) were enacted without fanfare and were based on
some sections in the trust statutes of South Dakota (a state with a robust, Wild-West-
style asset protection trust statute and an excellent track record of attracting out-of-state
trust business). In 2011, the General Assembly added new section 30-4-2.1-14.5, to
provide examples of trust language that could be used to create a “discretionary
interest,” dovetailing with section 14.
As of April 2022, this writer has found no reported Indiana court decisions
applying or interpreting any of these sections (14 through 17) with respect to any real-
life trust or settlor.
13
In bankruptcy cases commenced before October 17, 2005, section 548(a)(1) gave the
bankruptcy trustee the power, analogous to a creditor’s rights under state fraudulent
transfer statutes, to avoid various asset transfers made within one year pre-petition.
Section 1402 of BACPA increased that look-back period to two years pre-petition for
bankruptcy cases filed on or after October 17, 2005.
38
When the General Assembly added sections 14 through 17 to I.C. 30-4-2.1, our
legislators did not change I.C. § 30-4-3-2(b), which prevents the settlor of a trust who is
also a beneficiary from using the spendthrift provision in the trust instrument to protect
the trust assets or his or her beneficial interest from his or her creditors.
In light of this “dissonance” between new sections 14 through 17 and the
unchanged I.C. § 30-4-3-2(b), can an Indiana resident (1) create and fund a non-DAPT
trust that gives the trustee unfettered discretion over distributions, (2) name himself as
the sole initial beneficiary of the trust, (3) appoint himself as the trustee, and (4) rely on
I.C. §30-4-2.1-14 to shield all of the trust assets from his creditors, on the grounds that he
cannot be compelled to make any distributions to himself?
This writer’s answer is NO, because if an Indiana probate court or appellate
court analyzed the issues carefully, the court would treat these wonderful provisions in
I.C. 30-4-2.1 and I.C. § 30-4-3-2(b) as being in pari materia. This writer’s answer would
still be NO even if the settlor appointed an independent trustee. The court most likely
would construe all of the provisions together and would conclude that if the settlor of a
trust is a beneficiary of the trust, neither a spendthrift restriction nor a provision
conferring a “sole and absolute” discretionary distribution power on an independent
trustee can prevent a motivated creditor from obtaining a court order that would, at the
least, divert or attach discretionary distributions as they are paid out to or for the
benefit of the settlor-beneficiary.
There is a slightly-different “back-door” method for creating and funding a
spendthrift trust in Indiana for the purpose of protecting assets transferred to the trust
by someone who is not the settlor. This method would exploit the narrowness of the
definition of “settlor” in I.C. § 30-4-1-2(21):
(21) “Settlor” means a person who establishes a trust including the testator
of a will under which a trust is created.
This method — if it would “work” — would involve the following steps:
(a) An individual Hoosier, Mr. B, wants to protect his assets from current or future
creditors.
(b) Mr. B prevails upon a relative or friend or even a stranger (Ms. S) to act as the
settlor to establish (create and state the terms of) a “dry” trust (initially
containing no assets or funded with only $1.00 or $10.00 of Ms. S’s money. Ms. S
is the “settlor” of the trust because she “establishes” the trust.
(c) The trust instrument, which is created and signed by Ms. S and also signed by
some independent person or entity T as the trustee, authorizes the trustee to
accept gifts of assets from any source, and identifies Mr. B as a current
beneficiary eligible to receive or benefit from distributions made by the
independent trustee T in T’s sole and unreviewable discretion.
39
(d) Two weeks or two months after Ms. S signs the trust instrument, Mr. B makes a
gift of $500,000 to the trust.
(e) I.C. § 30-4-3-2(b) does not apply to the trust and to Mr. B — or so the argument
would go — because the triggering condition under the statute (“if the settlor is
also a beneficiary of the trust, a provision restraining the voluntary or involuntary
transfer of his beneficial interest will not prevent his creditors from satisfying
claims from his interest in the trust estate”) is not satisfied.
(f) If a current or future creditor claims that the spendthrift provision in the trust
instrument does not protect the trust assets from Mr. B’s creditors, Mr. B’s
counter-arguments are that he is only the beneficiary and not a settlor of the trust
and that his creditors cannot force the independent trustee to make any
distribution, because the trust is a discretionary trust under which he has merely
an expectancy interest with no ability or right to force any distributions for his
benefit (see I.C. § 30-4-2.1-14 in Appendix 1).
Will this work? Will the assets that Mr. B transfers to trustee T be protected from
Mr. B’s creditors? In this writer’s opinion, the answer is “Probably No,” for three
reasons:
 Even if Mr. B is not the “settlor” of the trust and is merely a person who
transferred assets to the trust, those asset transfers will be vulnerable to being
attacked and avoided by any creditor of Mr. B who files an action under the
Indiana UVTA within the applicable limitations period, which could be as long
as four years after the asset transfer occurs or after the creation of an obligation
by Mr. B or by the trustee who acts under the statute.
 Even if Mr. B is not the “settlor” of the trust, his asset transfers to the trust can be
avoided by a bankruptcy trustee under 11 U.S.C. § 548(a)(1) if Mr. B becomes the
debtor in a bankruptcy case within two years after the asset transfers.
 Any present or future creditor of Mr. B may be able to convince an Indiana state
or federal court to apply a “substance over form” argument and to treat Mr. B as
a real settlor or as the real settlor of the trust, as part of a pre-arranged plan to
shelter assets from creditors, and with Ms. S, the nominal settlor, as a “sham” or
“stand-in” settlor who would never have created the trust except at the behest of
Mr. B.
This writer is aware of some anecdotal Indiana cases in which a creditor or bankruptcy
trustee has argued that a debtor, who is a beneficiary of a trust, is also a “settlor” of a
trust with respect to at least some of the trust assets contributed by him or her (or left in
the trust because a withdrawal power held by the beneficiary was not exercised) and
therefore that the trust is, to that extent, a “self-settled trust” whose spendthrift
provision will not protect those trust assets from the creditors of that beneficiary (who
40
is also claimed to be a “settlor”). Although such an argument by a creditor might seem
bogus, it may be good enough to force a settlement with the creditor.
In order to allow a settlor-beneficiary to transfer assets to a trust and to plausibly
and dependably protect his or her beneficial interest in the trust from current or future
creditors, Indiana would have to enact a domestic asset protection trust (DAPT) statute,
or that settlor beneficiary would have to form the trust under the Indiana legacy trust
statute (I.C. 30-4-8) or the laws of one of the other jurisdictions that allow DAPTs.
(15) Structuring a DAPT or Other Self-Settled Spendthrift Trust as a “Grantor

Trust” for Income Tax Purposes
The settlor who creates a DAPT can structure the asset protection trust so that it
is either a grantor trust or a non-grantor trust for income tax purposes.
Especially for an individual with a large net worth and who has a realistic
exposure to the federal estate tax at the time of his or her future death, a real tax benefit
can be obtained by making a completed gift to an irrevocable grantor trust: The
completed gift removes the gifted asset (and future growth in value and future income)
from the settlor-donor’s “estate” for estate tax purposes, and by using other personal
funds to pay the income taxes on the trust’s income (which is reported directly on the
settlor’s Form 1040 returns), the settlor-donor is making the equivalent of additional
tax-free gifts to the trust beneficiaries whenever he or she uses personal funds to pay
the income taxes on the trust’s income.
Further, the trust instrument for the trust can give the trustee (ideally an
independent trustee) the discretion but not the obligation to reimburse the settlor-donor
for income taxes on trust income that the settlor-donor pays with personal funds. See
Rev. Rul. 2004-64, 2004-27 I.R.B. 7, 2004 WL 1484393. The existence or exercise of such a
discretionary reimbursement power will not cause the trust assets to be included in the
settlor-donor’s gross estate for estate tax purposes.
Finally, when an irrevocable trust is a grantor trust for income tax purposes, the
settlor who is the grantor and owner of the trust for income tax purposes can engage in
various financial transactions with the trust (such as loans or purchases or sales of
assets) without triggering any income, gain or loss, because for income tax purposes,
the grantor trust is the alter ego of the settlor/grantor. Please note that if a DAPT is
structured as a grantor trust, the protection of the DAPT’s assets from creditors of the
settlor/grantor could be jeopardized or destroyed if the settlor engages in asset
purchases or sales with the trust or if the settlor borrows money from the trust.
If the settlor will be a discretionary beneficiary of the DAPT (eligible to receive or
benefit from discretionary distributions of income and/or principal), then little or no
specific drafting effort will be required to make the DAPT a grantor trust and to make
the settlor-beneficiary the “owner” of the DAPT and all its income for income tax
41
purposes. This is because of two familiar rules in Subchapter J, Subpart E (the “grantor
trust” subpart) of the Internal Revenue Code:
 Code § 677(a), the pertinent part of which states “The grantor [settlor] shall be
treated as the owner of any portion of a trust, whether or not he is treated as such
owner under section 674, whose income without the approval or consent of any
adverse party is, or in the discretion of the grantor or a nonadverse party, or both,
may be . . . distributed to the grantor or the grantor’s spouse [or] . . . held or
accumulated for future distribution to the grantor or grantor’s spouse.”
 Code § 674(a), which states that the grantor [settlor] of a trust “shall be treated as
the owner of a portion of a trust in respect of which the beneficial enjoyment of
the corpus or the income therefrom is subject to a power of disposition,
exercisable by the grantor or a nonadverse party, or both, without the approval or
consent of an adverse party.”
[Italics added] The rule in Code § 677(a) is easier to understand and can apply to any
trust under which trust income may be distributed to the settlor or the settlor’s spouse.
A trust that has its settlor or the settlor’s spouse as a permissible recipient of income
distributions will almost inevitably be a “grantor trust” for income tax purposes, unless
specific steps are taken to structure the trust as a non-grantor trust.
The rule stated in Code § 674(a) is a broader general rule that can apply to trusts
under which the settlor and the settlor’s spouse are beneficiaries and to trusts under
which the settlor and the settlor’s spouse are not eligible to receive or benefit from
income distributions at all.14 The general rule in § 674(a) is subject to nine (9) exceptions
which are stated in migraine-inducing detail in subsections (b), (c) and (d) of section
674.
When the settlor of a DAPT or other trust does not want the trust to be a grantor
trust for income tax purposes (with the trust’s income taxed directly to the settlor), the
draftsperson’s practical task is to choose one or more of the stated exceptions and to
add appropriate language to the administrative structure of the trust. Here are two
approaches that can be taken to make a DAPT a non-grantor trust:
 Relying on subsection 674(c), make the sole trustee (or a clear majority of
multiple trustees) independent and not related, subordinate or subservient to the
settlor; give that independent trustee(s) the power to sprinkle-spray distributions
of income and/or principal to or among multiple beneficiaries in a class; and
14Keep in mind that it is possible for a settlor to create and fund a DAPT with a non-
spouse family member as a beneficiary, in order to protect the trust assets and the
beneficial interest of the family member from that family member’s future creditors.
Therefore, Code § 674 can be relevant when such a trust is designed and drafted.
42
prohibit anyone from adding beneficiaries to the class, except to provide for
children born or adopted after the creation of the trust.
 Relying on subsection 674(d), give a trustee (who is not the settlor or the settlor’s
spouse) the discretionary power to accumulate, distribute or apportion to one or
more beneficiaries; limit the trustee’s discretion by a “reasonably definite
external standard which is set forth in the trust instrument; and prohibit anyone
from adding beneficiaries to the class, except to provide for children born or
adopted after the creation of the trust.
If the settlor of a DAPT or other trust (or the settlor’s spouse) is a beneficiary
eligible to receive or benefit from income distributions, and if the settlor does not want
the trust to be a grantor trust, the settlor will not be able to simply use and rely on one of
the exceptions in Code § 674, even if the trustee of the trust will be independent (such as
a bank or trust company). This is because Code § 677(a) states that the rule in section
677(a) applies even if the settlor (grantor) would not be treated as the owner of the trust
under section 674.
Therefore, if the settlor of a trust or the settlor’s spouse will be a permissible
beneficiary of the trust, the only effective way to comply with Code § 677(a) and to
make that trust a non-grantor trust is to require the “approval or consent of an adverse
party” for any decision by the trustee to distribute income to the settlor or the settlor’s
spouse or for any trustee decision to accumulate income for future distribution to the
settlor or spouse.
“Adverse party” and “nonadverse party” have specific definitions under Code
§ 672(a) and (b). An “adverse party” is a person who has “a substantial beneficial
interest in the trust,” where that interest “would be adversely affected by the exercise of
[a] power” that the person possesses with respect to the trust. An independent trustee
(such as a bank or trust company) which is not also a trust beneficiary cannot be an
“adverse party” because the element of a “substantial beneficial interest” is missing.
When a DAPT or other irrevocable trust will have the settlor or the settlor’s
spouse as a discretionary beneficiary, one popular way to structure the trust to be a
non-grantor trust is (1) to give the power to approve or make discretionary distributions
to a “distribution committee” which does not include the settlor or the settlor’s spouse
and (2) to design the distribution committee so that a majority of the committee
members are also permissible beneficiaries who could be eligible to receive or benefit
from discretionary income distributions. The idea is that if a distribution committee
member votes in favor of making a discretionary distribution of trust income to the
settlor or the settlor’s spouse, the committee member’s exercise of that power would
adversely affect the committee member’s own beneficial interest in the trust. Therefore,
that committee member is an “adverse party.”
Frequently, when a married settlor with a high-net-worth decides to create and
fund an irrevocable SLAT (Spousal Limited Access Trust) to receive a large taxable gift
43
and to save future estate taxes, that settlor may also decide to structure the SLAT as a
DAPT, in order to protect the SLAT’s assets from future creditors of the settlor and the
spouse, as a secondary objective. When the married settlor doesn’t mind making the
SLAT a grantor trust, it will be sufficient if the SLAT has a single independent trustee,
such as a bank or trust company or an independent individual, where that trustee won’t
be an “adverse party.”
In contrast, if the married settlor has a high net worth and wants to create a non-
grantor trust with the settlor’s spouse as a significant beneficiary entitled or eligible to
receive trust income, that trust will need to have one or more adverse parties who are
both permissible income beneficiaries and trustee(s) or distribution committee
members, as described above. A trust with a spouse beneficiary which is structured as
a non-grantor trust is sometimes called a SLANT (Spousal Limited Access Non-grantor
Trust) for marketing purposes.
As explained in the last section of this paper below and under current (2022)
federal tax law, the assets of a properly-structured irrevocable trust will not be included
in the gross estate of the settlor for estate tax purposes if the trust was funded with a
completed gift or gifts.
(16) Ensuring that Assets Transferred to a DAPT Won’t be Included in the Settlor’s
“Gross Estate” for Federal Estate Tax Purposes
A typical domestic asset protection trust (DAPT) will often have the settlor of he
trust as one beneficiary (or even as the main beneficiary) who is eligible to receive or
benefit from discretionary distributions of trust income or principal or both. When the
settlor of a DAPT chooses to structure his or her asset transfers to the trust as
“completed gifts” under Code § 2511, the settlor does this to permanently remove those
assets from the settlor’s “gross estate” for estate tax purposes.
One obstacle to achieving this objective is Code § 2036(a), which is one of the
primary “estate inclusion” rules, and which reads as follows:
(a) General rule.--The value of the gross estate shall include the value
of all property to the extent of any interest therein of which the decedent has at
any time made a transfer (except in case of a bona fide sale for an adequate
and full consideration in money or money's worth), by trust or otherwise,
under which he has retained for his life or for any period not ascertainable
without reference to his death or for any period which does not in fact end
before his death--
(1) the possession or enjoyment of, or the right to the income from, the
property, or
(2) the right, either alone or in conjunction with any person, to designate
the persons who shall possess or enjoy the property or the income
therefrom.
44
[Italics added] The above wording naturally triggers this question: If the settlor of an
irrevocable trust makes a large, completed taxable gift(s) to an irrevocable trust and if
that settlor is not and cannot serve as the trustee, and if the settlor is a discretionary
beneficiary eligible to receive or benefit from distributions approved and made by an
independent trustee, does Code § 2036(a) cause the trust assets to be included in the
settlor’s gross estate?
For several decades, the IRS’s and the federal courts’ answer to this question
depended on (a) whether distributions could be made from the trust to discharge a legal
obligation of the settlor who was also a discretionary beneficiary of the trust and
(b) whether creditors of the settlor could reach the trust assets.
Reg. § 20.2036-1(b)(2) reads as follows:
(2) The “use, possession, right to the income, or other enjoyment of the
transferred property” is considered as having been retained by or
reserved to the decedent to the extent that the use, possession, right to the
income, or other enjoyment is to be applied toward the discharge of a
legal obligation of the decedent, or otherwise for his pecuniary benefit.
The term “legal obligation” includes a legal obligation to support a
dependent during the decedent's lifetime.
Before the late 1980s, when U. S. jurisdictions started enacting DAPT statutes which
allowed properly-structured self-settled spendthrift trust protect assets from the
settlors’ creditors, the above-quoted regulation was a major obstacle to keeping the
assets of any self-settled spendthrift trust out of the federal gross estate of a settlor who
was also a discretionary beneficiary. If the settlor’s creditors could reach the trust assets
to satisfy a debt of the settlor, then the trust’s income and/or principal could be applied
toward the discharge of a legal obligation of the settlor, and to the extent of the
gratuitous asset transfers made by the settlor to the trust, the trust assets would be
included in the settlor’s gross estate under Code § 2036(a).
Many of the earlier cases and ruling considered both the section 2036(a) “estate
inclusion” issue and the issue of whether the settlor had parted with dominion and
control of the gifted assets and had made a completed gift, despite the status of the
settlor as a discretionary beneficiary of the trust. See Rev. Rul. 77-378, 1977-2 C.B. 347,
1977 WL 43460; Paolozzi v. Commissioner, 23 T.C. 182 (1954). In Rev. Rul. 77-378, the
trustee had absolute and uncontrolled discretion to determine what distributions, if
any, would be made to the settlor (grantor). the IRS determined that under applicable
state law, the settlor (grantor) could not compel the trustee to make any distributions to
him, and the settlor’s creditors could not reach any of the trust’s assets.
In Paxton v. Commissioner, 86 T.C. 785 (1986), the settlor and his spouse
transferred substantially all of their assets to pair of irrevocable discretionary trusts,
under which the trustee had the discretionary power to make distributions of income
and principal to them. The Tax Court held that the assets of one trust were included in
45
the gross estate of the settlor who died, because (1) he made the original transfers to his
trust “subject to an understanding, express or implied, that he would receive the trust
income or corpus or both when requested” and (2) “he retained an interest in the trust
income and corpus his creditors could reach.” 86 T.C. at 808. Note that just the second
reason (ability of the settlor’s creditors to reach the trust assets) would have been
enough to cause inclusion of the trust assets in the federal gross estate of the deceased
settlor.
Private Letter Ruling 200944002 (October 30, 2009), 2009 WL 3497233, addressed
the Code § 2036(a) gross estate inclusion issue in the context of an Alaska DAPT. The
trustee of the Alaska trust had the sole and absolute discretion to determine the
amounts and timing of income and principal distributions, equal or unequal, to or for
the benefit of the settlor (grantor) and the settlor’s spouse and descendants. Under
Alaska’s DAPT statute, creditors of the settlor could not reach the trust assets. In PLR
2009440002, the IRS cited and discussed Rev. Rul. 2004-64, and determined that “the
trustee’s discretionary authority to distribute income and/or principal to the Grantor
dos not, by itself, cause the Trust corpus to be includible in the Grantor’s gross estate
under § 2036.” The IRS noted that this conclusion could change if there was an
understanding or pre-existing arrangement between the settlor/grantor and the trustee
about how and when the trustee would exercise the discretionary distribution power.
In a 2011 case, a bankruptcy trustee was allowed to use subsection 548(e) of the
Bankruptcy Code (the so-called “10-year clawback” rule) to recover assets that a settlor
transferred to an Alaska DAPT in 2005, some four years before the settlor filed his
bankruptcy petition. In re Mortensen, 2011 WL 5025249, 10 Alaska Bankr. Rep. 146 (D.
Alaska 2011). The court found that the 2005 asset transfers themselves were sufficient
evidence of the debtor/settlor’s intent to hinder creditors.
According to Steven Akers of Bessemer Trust Company, when agents in the IRS’s
National Office read the Mortensen case, they said that with the benefit of hindsight,
they probably would not have issued PLR 200944002.
If the settlor of a DAPT is merely a discretionary beneficiary of the trust and if
the trustee is clearly an independent trustee with “sole” discretion, but if there is
evidence15 of a sub rosa understanding between the trustee and the settlor-beneficiary
that the latter can receive distributions pretty much at any time and in any amounts
upon an oral request, then two bad outcomes are at least somewhat likely:
 The DAPT assets will be included in the settlor-beneficiary’s gross estate for
estate tax purposes after his or her death, under Code § 2036(a).
15
Worst-case, the “evidence” of an understanding or arrangement between the settlor-
beneficiary and the trustee might be nothing more than a pattern of distributions that
are consistently made at the times and in the amounts requested by the settlor-
beneficiary.
46
 The DAPT assets could be reachable by the settlor-beneficiary’s creditors, despite
the other provisions of the trust instrument and its compliance with the
requirements of the DAPT statute.
The best recent illustration of the second bullet point is the case of S.E.C. v. Wyly, 56
F.Supp.3d 394 (S.D.N.Y. 2014). This was a civil enforcement action by the SEC arising
out of the failure of two significant investors to disclose holdings that they effectively
controlled in publicly traded shares or options in some reporting companies subject to
sections 13(d) and 16(a) of the 1934 Exchange Act. The shares and options were owned
of record in a group of offshore trusts and subsidiary entities that were being
administered by professional asset managers based on the Isle of Man. However, the
settlors of these offshore trusts, Sam and Charles Wyly, placed their loyal agents in the
position of “trust protectors” for the trusts, and the evidence at trial showed that the
professional asset managers never did anything with the trust assets except in reaction
to recommendations from the trust protectors, and conversely, the professional asset
managers never refused or failed to follow a recommendation from the protectors.
The federal judge in the case relied on various inventive legal theories, including
a strained argument based on “grantor trust” income tax rules, in order to reach the
conclusion that Sam and Charles Wyly were in substance “the grantors” of the offshore
trusts and were in control of the trusts (through the trust protectors), and therefore they
had an obligation to report transactions involving the listed securities. The federal
court found that Sam and Charles had fraudulently failed to report the securities
transactions in which the trusts engaged, and Sam and Charles were ordered to
disgorge about $186 million in profits from those unreported trades.
One way to summarize the result in S.E.C. v. Wyly: Asset protection trusts work
well . . . until they don’t.
47
Appendix 1 Sections added to I.C. 30-4-2.1 in 2010 and 2011
Indiana Trust Code provisions enacted as part of P.L. 6-2010 (SEA

65) and by P.L. 36-2011
IC 30-4-2.1-14 16
Rules of interpretation concerning discretionary interests
Sec. 14. (a) The following rules apply only to discretionary interests:
(1) A discretionary interest is a mere expectancy that is neither a property
interest nor an enforceable right.
(2) A creditor may not:
(A) require a trustee to exercise the trustee's discretion to make a
distribution; or
(B) cause a court to foreclose a discretionary interest.
(3) A court may review a trustee's distribution discretion only if the trustee
acts dishonestly or with an improper motive.
(b) Words such as sole, absolute, uncontrolled, or unfettered discretion
dispense with the trustee acting reasonably.
(c) Absent express language to the contrary, if the distribution language in a
discretionary interest permits unequal distributions between beneficiaries or
distributions to the exclusion of other beneficiaries, a trustee may, in the trustee's
discretion, distribute all of the accumulated, accrued, or undistributed income and
principal to one (1) beneficiary to the exclusion of the other beneficiaries.
(d) Regardless of whether a beneficiary has any outstanding creditors, a
trustee of a discretionary interest may directly pay any expense on behalf of the
beneficiary and may exhaust the income and principal of the trust for the benefit of the
16
South Dakota’s statute (SDCL § 55-1-43) contains this paragraph, analogous to
Indiana’s subsection 14(b) stated above: “A reasonableness standard may not be applied
to the exercise of discretion by the trustee with regard to a discretionary interest. Other
than for the three circumstances listed in this subdivision, a court has no jurisdiction to
review the trustee's discretion or to force a distribution.” There are no reported South
Dakota court decisions under SDCL § 55-1-43. However, a related South Dakota
statute, SDCL § 55-1-41, prohibits a creditor of a spendthrift trust beneficiary from
reaching even mandatory distributions that are payable to that beneficiary. In a 2019
case, the divorced beneficiary of a California spendthrift trust moved the situs and
governing law to South Dakota and won a declaratory judgment that South Dakota
courts were not required to give full faith and credit to a California child support order
which had been enforced previously against distributions from the trust. Matter of
Cleopatra Cameron Gift Trust Dated May 26, 1998, 931 N.W.2d 244 (S.D. S. Ct. 2019).
Appendix 1 — 48
Appendix 1 Sections added to IC 30-4-2-1 in 2010 and 2011
beneficiary. A trustee is not liable to a creditor for paying the expenses of a beneficiary
who holds a discretionary interest.
As added by P.L.6-2010, SEC.14.
IC 30-4-2.1-14.5
Evidence of discretionary interests
Sec. 14.5. (a) As used in this section and section 14 of this chapter,
“discretionary interest” refers to any interest over which the trustee has any discretion
to make or withhold a distribution.
(b) A discretionary interest may be evidenced by permissive language such as
“may make distributions” or may be evidenced by mandatory distribution language
that is negated by the discretionary language of the trust such as “the trustee shall make
distributions in the trustee's sole and absolute discretion”.
(c) An interest that includes distribution language that appears mandatory
but is subsequently qualified by discretionary distribution language is considered a
discretionary interest.
(d) Trust provisions that create discretionary interests include the following
examples:
(1) “The trustee may, in the trustee's sole and absolute discretion, make
distributions for health, education, maintenance, and support.”.
(2) “The trustee shall, in the trustee's sole and absolute discretion, make
distributions for health, education, maintenance, and support.”.
(3) “The trustee may make distributions for health, education, maintenance,
and support.”.
(4) “The trustee shall make distributions for health, education, maintenance,
and support. The trustee may exclude any beneficiary or make unequal
distributions among the beneficiaries.”.
(5) “The trustee may make distributions for health, education, maintenance,
support, comfort, and general welfare.”.
As added by P.L.36-2011, SEC.8, effective April 20, 2011.
IC 30-4-2.1-15
Rules of interpretation concerning a beneficiary's influence over a trust
Sec. 15. If a party challenges a settlor or a beneficiary's influence over a trust,
none of the following factors, alone or in combination, may be considered dominion
and control over a trust:
(1) A beneficiary serving as a trustee or co-trustee.
Appendix 1 — 49
(2) The settlor or beneficiary holds an unrestricted power to remove or

replace a trustee.
(3) The settlor or a beneficiary:
(A) is a trust administrator, a general partner of a partnership, a
manager of a limited liability company, or an officer of a
corporation; or
(B) has any other managerial function in any other entity;
that is owned in whole or in part by the trust.
(4) A person related by blood or adoption to a settlor or beneficiary is
appointed as trustee.
(5) An agent, accountant, attorney, financial adviser, or friend of the settlor or
a beneficiary is appointed as trustee.
(6) A business associate of the settlor or a beneficiary is appointed as trustee.
(7) A beneficiary holds any power of appointment over part or all of the trust
property.
(8) The settlor holds a power to substitute property of equivalent value.
(9) The trustee may loan trust property to the settlor for less than a full and
adequate rate of interest or without adequate security.
(10) The trust contains broad purposes or highly discretionary distribution
language.
(11) The trust has only one (1) beneficiary eligible for current distributions.
IC 30-4-2.1-16
Rules of interpretation concerning a trustee's independence from the settlor
Sec. 16. Absent clear and convincing evidence otherwise, a settlor of an
irrevocable trust may not be considered the alter ego of a trustee. The following factors,
alone or in combination, are not sufficient evidence to conclude that the settlor controls
a trustee or is the alter ego of the trustee:
(1) Any combination of the factors listed in section 15 of this chapter.
(2) Isolated occurrences of the settlor signing checks, making disbursements,
or executing other documents related to the trust as a trustee when the
settlor is, in fact, not a trustee.
(3) Requesting a trustee to make distributions on behalf of a beneficiary.
(4) Requesting a trustee to hold, purchase, or sell any trust property.
Appendix 1 — 50
IC 30-4-2.1-17
Limits on creditors of beneficiaries who may replace or remove a trustee or who are
also trustees or co-trustees
Sec. 17. (a) A creditor may not reach, exercise, or otherwise acquire an
interest of a beneficiary or any other person who holds an unconditional or conditional
removal or replacement power over a trustee. A power described in this subsection is
personal to a beneficiary or other person and may not be exercised by the person's
creditors. A court may not direct a person to exercise the power.
(b) A creditor may not:
(1) reach an interest of a beneficiary who is also a trustee or co-trustee; or
(2) otherwise compel a distribution to a beneficiary who is also a trustee or
co-trustee.
(c) A court may not foreclose against an interest held by a beneficiary
described in subsection (b).
Appendix 1 — 51
Appendix 2 Indiana’s “matrimonial trust” statute
NOTE: Subsection (a) of the matrimonial trusts statute, as a statement of legislative

intent or policy, was added in 2011 and “tweaked” slightly in 2013. The last changes made to
I.C. § 30-4-3-35 were made by Section 10 of P.L. 99-2013 (House Enrolled Act 1056 of 2013).
Those changes are shown in strikethrough and bold fonts in the following complete text of the
statute:
IC 30-4-3-35
Matrimonial trusts; election; effect of the death of a spouse or the dissolution of the
marriage; revocation
Sec. 35. (a) This section is intended to ensure that if real property is transferred
to one (1) or more revocable trusts created by a husband and wife for estate planning
purposes, the husband and wife will enjoy the maintain real estate ownership
protections that equivalent to those they would otherwise enjoy have if they owned
that real property in an estate by the entireties including an estate by the entireties
created under IC 32-17-3-1.
(b) As used in this section, "joint matrimonial trust" means a single inter vivos trust
established under this section by settlors who are related as husband and wife.
(c) As used in this section, "matrimonial property" means real property that:
(1) is subject to a written election to treat the property as matrimonial
property under this section; and
(2) is owned by a matrimonial trust.
(d) As used in this section, "matrimonial trust" means a trust established under this
section to own matrimonial property.
(e) As used in this section, "separate matrimonial trust" means a separate trust that
is also a matrimonial trust.
(f) As used in this section, "separate trust" means a trust established by one (1)
individual.
(g) A matrimonial trust may be established:
(1) jointly by a husband and wife; or
(2) in two (2) or more separate trusts.
(h) A husband and wife may elect to treat real property as matrimonial property
with a written statement of the election:
(1) in an instrument or instruments conveying the real property to a
matrimonial trust or trusts; or
(2) in a separate writing that must be recorded in the county where the real
property is situated and indexed in the records of the county recorder's office to
the instrument or instruments that convey the real property to a matrimonial
trust or trusts.
Appendix 2 — 52
(i) A guardian of a husband and wife may make an election under this section:
(1) without the approval of the court if the guardian has unlimited powers
under IC 29-3-8-4; and
(2) with the approval of the court in all other cases.
(j) An attorney in fact of a husband or wife may join in the making of an election
under this section under the powers conferred upon the attorney in fact by IC 30-5-5-2 if
the power of attorney is recorded in the county where the real property is situated and
indexed in the records of the county recorder's office to the instrument or instruments
that convey the real property to a matrimonial trust or trusts.
(k) The terms of a separate matrimonial trust or a joint matrimonial trust may (but
are not required to) restrict the sale or transfer of the matrimonial property for:
(1) the lifetime of the settlor who dies first;
(2) the lifetime of the surviving settlor; or
(3) another defined time period.
(l) An interest in matrimonial property is not severable during the marriage of the
husband and wife unless:
(1) both the husband and wife join in the severance in writing; or
(2) a third party owns and forecloses a mortgage or other lien against the
interests of both the husband and wife in the matrimonial property.
(m) Notwithstanding any other provision of this section, the legal rights of a
lienholder that exist at the time of an election to treat the real property subject to the lien
as matrimonial property may not be subject to a severance described in subsection (l)
without the lienholder's written consent.
(n) To the extent that a matrimonial trust continues to be a matrimonial trust
after the death of a settlor (as provided in subsections (o) (p) and (q) (r)):
(1) real property held or owned in a separate trust and for which an earlier
election was made under this section, continues to be matrimonial property;
and
(2) an unsecured creditor or judgment lien creditor who has a claim only
against the deceased settlor but not against the surviving settlor cannot
enforce that claim against the deceased settlor’s interest or the surviving
settlor’s interest in the matrimonial property.
(o) After the death of a settlor of a matrimonial trust (whether separate or joint),
the issue of whether the surviving settlor’s interest in the matrimonial property will
be exposed to the claims of the surviving spouse’s existing creditors or new creditors
must be determined according to:
Appendix 2 — 53
(1) the nature and extent of the surviving settlor’s interest in the
matrimonial property under the terms of the deceased settlor’s separate trust
or the joint trust;
(2) all other relevant facts and circumstances; and
(3) pertinent principles of nontrust law outside this article.
(o) (p) Matrimonial property held in a separate matrimonial trust or in a joint
matrimonial trust continues to be matrimonial property after the death of one (1) settlor:
(1) if the settlors reserved a life estate in the matrimonial property for each
settlor when they conveyed the matrimonial property to the matrimonial
trust(s); or
(2) if the deceased settlor's separate trust provides to the surviving settlor:
(A) a life estate;
(B) an interest that qualifies for a deduction from the gross estate of the
decedent under Section 2056 of the Internal Revenue Code regardless of
whether an election is made to qualify the interest for the deduction; or
(C) in some respect the current right to occupy or receive rent,
royalties, or other kinds of income with respect to the matrimonial
property.
(p) (q) A separate matrimonial trust established by a deceased settlor ceases to be
a matrimonial trust upon the termination of payments to the surviving settlor as a result
of the surviving settlor’s death or as a result of the surviving settlor’s valid disclaimer of
all interests in the matrimonial property held in the deceased settlor’s trust.
(q) (r) A separate matrimonial trust established by a settlor who remains alive
continues to be a matrimonial trust during that settlor’s remaining lifetime, so long as
he or she retains the right to use, occupy or enjoy the matrimonial property held in the
settlor’s separate trust.
(r) (s) A matrimonial trust ceases to be a matrimonial trust upon the dissolution
of the marriage of the settlors.
(s) (t) A husband and wife may revoke a matrimonial trust by together
executing a writing expressing the revocation.
As added by P.L. 6-2010, SEC. 18. Amended by P.L. 36-2011, SEC. 9; P.L. 99-2013, SEC. 10.
EN20171.Public-20171 4865-5874-7673v1
4/3/2022
Appendix 2 — 54
Asset Protection “Lite”: Techniques

Available in Indiana for Hoosiers
Jeffrey S. Dible
April 27, 2022
jdible@fbtlaw.com
1
Topic Scope for this First Hour
• Techniques that do NOT involve creating

“self-settled” spendthrift (domestic asset
protection) trusts
• Using asset-specific exemptions from
ordinary creditors’ claims under Indiana or
federal statutes
o T by E real estate & matrimonial trusts
o Tax-qualified retirement accounts
o Proceeds of life insurance policies & annuities
• An overview of how the Indiana Uniform
Voidable Transactions / Fraudulent Transfer
Act (I.C. 32-18-2) works
2
(continued)
• Can Indiana LLCs be used as stand-alone vehicles to

hold assets and protect them from claims of creditors
of an LLC member (“reverse veil piercing”)
• “Exemption planning” (increasing an individual’s
holdings of asset types that have statutory
exemptions
• General “maxims” of asset protection planning and
tips for lawyers
• Federal estate tax planning issues that arise from the
use of self-settled discretionary spendthrift trust
3
(continued)
This first segment will NOT cover:

• Details of bankruptcy cases and other cases
summarized in the written materials and involving
challenges to domestic asset protection trusts or
“exemption planning”
• Attorney discipline cases and ethics opinions involving
attorneys who were involved in asset protection
planning
• Details of the design, drafting, funding, and
administration of domestic asset protection trusts
(DAPTs) such as the Indiana “legacy trust”
4
Using a discretionary spendthrift trust
to protect the interest of a beneficiary
other than the settlor
• Generally easy to do under Ind. Code §30-4-3-2(b)
• If the beneficiary is later a debtor in a bankruptcy, 11
U.S.C. §541(c)(2) makes the spendthrift restriction
enforceable against bankruptcy trustee and creditors
• If the trustee’s discretion to make distributions is
described with words like “sole” or “absolute,” the
trustee has no obligation to act “reasonably” in
exercising discretion (I.C. §30-4-2.1-14(b))
• But an exercise or non-exercise of discretion that is
malicious or made in bad faith may be actionable and
reviewable by a court for abuse of discretion
(Goodwine v. Goodwine, 819 N.E.2d 824, 828 (Ind.
Ct. App. 2004))
5
• Protection of trust assets that a beneficiary or power-
holder could withdraw under an unexercised power of
appointment (Irwin Union Bank & Trust Co. v.
Long, 312 N.E.2d 908 (1974))
• This discretionary spendthrift trust technique does
NOT protect assets that are transferred by the settlor
from creditors of the settlor unless the trust is a
domestic asset protection trust
• Won’t protect the beneficiary’s interest in the trust
against U. S. Treasury for federal tax obligations (U.S.
v. Grimm, 865 F.Supp. 1303 (N.D. Ind. 1994))
6
• If the non-settlor trust beneficiary has serious creditor
problems and numerous debts, can the trustee simply
refuse to make ANY discretionary distributions to or
for that beneficiary?
o A court might apply the “doctrine of necessaries”
and might order that distributions be made to
satisfy the beneficiary’s minimum needs for food,
shelter, or medical care (Sisters of Mercy Health
Corp. v. First Bank of Whiting, 624 N.E.2d 520
(Ind. Ct. App. 1994))
o The trustee can exercise discretion by making
expense payments directly to third-party vendors
7
• If an individual wants to use a discretionary spendthrift
trust that is NOT a DAPT to protect significant assets
that he or she will later transfer to the trust . . .
• Can that individual exploit the narrow definition of
“settlor” in I.C. §30-4-1-2(21) and have some “ringer”
act as the settlor to create the trust with a nominal
gift?
o Jeff Dible’s answer is that this probably won’t work
o It won’t work if the individual is a debtor in a
bankruptcy case within 10 years after the trust is
created (11 U.S.C. §548(e)(1))
o See pages 39-41 in Jeff Dible’s paper
8
Specific exemption for “tenancy by the
entireties” real estate
• Indiana does not recognize “tenancy by the entireties”
or T by E as a form of ownership for property that is
not real property
• Under I.C. §34-55-10-2(c)(5), T by E ownership
protects each spouse’s interest in the real estate from
his or her individual creditors
• Does not protect the equity in the real estate against
creditors who are owed money by both spouses as
joint obligors
• If one spouse owes an individual federal tax debt, T
by E ownership won’t protect that spouse’s undivided
interest in the real estate against collection by the IRS
(U.S. v. Craft, 122 S.Ct. 1414 (2002))
9
Specific exemption for “tenancy by the
entireties” real estate
• Jeff Dible has seen no reported Indiana court
decisions on whether the surviving spouse can
continue to protect the real estate from the creditors of
the surviving spouse after the other spouse has died
• A married individual who wants to protect asset value
from present or future creditors should not transfer
individually-titled real property to the individual and his
or her spouse as husband and wife (won’t work)
• Conversely, if one spouse has or perceives creditor
problems, the couple should not transfer T by E estate
from the couple and to the other spouse alone
• See the discussion and cited cases on pages 16 and
17 of Jeff Dible’s paper
10
Using “Matrimonial Trusts” to hold
T by E real estate for married settlors
• The statute (I.C. §30-4-3-35) as last amended in
2013 is in Appendix 2 of Jeff Dible’s paper
• Married settlors can use recorded deeds and/or
recorded statements of election to confirm their
intention and decision to hold real property in trust as
“matrimonial trusts”
• The statute can be used ‒
o To transfer existing T by E real estate to one “joint”
matrimonial trust or to 2 separate matrimonial
trusts
o To have one or two matrimonial trusts acquire
ownership of real estate that was not T by E real
property
11
Using “Matrimonial Trusts” to hold
T by E real estate for married settlors
• I.C. §30-4-3-35(p), real estate that is held in one or
two “matrimonial trusts” can continue to be
“matrimonial property” if the surviving settlor has at
least a life estate or some other right to occupy or
receive income from the real estate or another interest
(e.g., QTIP trust) that qualifies for the estate tax
marital deduction
• Subsection (o) of §30-4-3-35 “fudges” or “hedges” on
the issue of whether the surviving settlor can protect
the matrimonial property (real estate in the trust(s))
from her or his existing creditors or new creditors
• No reported Indiana decisions on this issue
• Matrimonial trusts are also useful for “blended family”
planning
12
Statutory exemption for non-inherited IRAs
and other tax-qualified retirement accounts
• Exemptions apply to the interest of the original owner
or contributor to a pension, 401(k) or other retirement
plan, or traditional or Roth IRA
• Statutory sources for the exemption
o Federal: 26 U.S.C. §401(a)(13) and 29 U.S.C.
§1056(d)(1) [for plans subject to ERISA]
o Indiana: I.C. §34-55-10-2(c)(6) [refers specifically
to “retirement plan or fund” and to traditional IRAs
and the Code section 408A for Roth IRAs]
• For defined benefit or defined contribution plans,
401(k) accounts, and SEPs and SIMPLE accounts, no
dollar ceiling on the amount that the owner or
contributor can protect from ordinary creditors
13
(continued)
• Under the Indiana state exemption statute (§34-55-

10-2(c)(6)), no explicit dollar ceiling on the amount
that the owner of a traditional or Roth IRA can protect
from ordinary creditors
o See discussion of the Zumbrun and Foster cases
on pages 20-21 of the paper
• However, if the retirement account owner ends up as
the debtor in a bankruptcy case, 11 U.S.C. §522(n)
places an inflation-indexed cap on the total amount of
IRA assets that will be exempt
o As of April 1, 2022, the ceiling amount for IRAs is
$1,362,800
14
(continued)
• The exemption from creditors’ judgments for owned
retirement accounts do not apply to IRAs or other
retirement accounts that are inherited by beneficiaries
o The creditors of non-spouse beneficiaries
generally can reach the assets in an inherited
retirement account
o Cases discussed on pages 22-23: Clark v.
Rameker, 134 S.Ct. 2242 (2014); In re Klipsch,
435 B.R. 586 (S.D. Ind. 2010)
o A surviving spouse beneficiary who inherits an IRA
may be able to shield the IRA’s assets from the
spouse beneficiary’s creditors (Pacheco and
Dumka v. Erickson)
15
Indiana statutory exemption for life insurance
proceeds or cash value
• I.C.§27-1-12-14(a) defines the “proceeds and avails”
of a life insurance policy as “death benefits, cash
surrender value, premiums waived,” and dividend not
received in cash
• Under subsection (e) of I.C.§27-1-12-14, “proceeds
and avails” under a life insurance policy are exempt
from the claims of creditors of the insured or the
insured’s spouse to the extent that any of the
following persons is a beneficiary designated on the
policy:
o Spouse or child (child need not be a dependent;
see Wandrey and Howell cases on page 24)
o Relative who is dependent on the insured
16
Indiana statutory exemption for life insurance
proceeds or cash value
• The total dollar amount of life insurance proceeds or
other “proceeds and avails” that an eligible beneficiary
can protect from creditors is not unlimited in amount
o “Necessities of life” concept under Art. 1, Section
22 of the Indiana Constitution (see Foster case
discussed on page 23)
o Courts have decided the reasonable portion of life
insurance proceeds to protect from beneficiaries’
creditors (see cases discussed on page 24)
• Under I.C.§27-2-5-1(c), if the owner of a life
insurance policy pays a premium on the policy within
1 year before the filing of a bankruptcy petition, the
proceeds won’t be exempt from creditors of the policy
owner
17
Indiana statutory exemption for the proceeds
of some annuity contracts or policies
• The exemption statute for annuities (I.C.§27-2-5-
1(b)) creates a spendthrift restriction on the ability of
the beneficiary or annuitant to assign his or her
interest in the contract AND also allows the policy or
contract to say that the proceeds are exempt from
claims by creditors (makes the exemption
enforceable)
• However, subsection 1(b) is explicitly worded so that
the exemption from creditors applies only to life
insurance or life annuity contract “issued by a
domestic life insurance company”
• The exemption also does not apply to the creditors of
a person “who provided the consideration for such
contract” (paid the premium(s))
18
Can an Indiana LLC be used as a
stand-alone vehicle to hold and
protect assets from creditors?
• The idea is that the LLC will passively hold assets and
will not engage in any activity that would cause the
LLC to incur a debt or liability in the LLC’s name
• A creditor of the LLC’s member could attempt to use
“reverse veil-piercing” to reach the LLC’s assets in
order to satisfy a money judgment won against the
LLC’s member, on a theory that the LLC is merely the
alter ego of the member
• Sparse case law on “reverse veil-piercing” is cited on
page 30 of Jeff Dible’s paper
• A creditor holding a money judgment against the LLC
member could also try to execute upon the LLC
member interest itself to collect the judgment
19
Can an Indiana LLC be used as a
stand-alone vehicle to hold and
protect assets from creditors?
• Under the Indiana LLC statute (I.C. §23-18-6-7), a
judgment creditor of a member can seek a “charging
order” to obtain payments on the judgment as and
when the LLC makes distributions to the member who
owes the judgment
• Indiana’s statute does NOT say that a charging order
is the sole remedy of a judgment creditor
• A 2005 case held that a charging order is the sole
remedy
• BUT in 2012-13, the Indiana creditors’ rights bar
blocked an amendment that would have clarified the
statute and confirmed a charging order as sole
remedy
• Consider using another state’s LLC statute
20
Engaging in “exemption planning”
to increase the holdings of assets
that are exempt from creditor claims
• This practice is generally legal

• Examples:
o Paying down mortgage debt on real estate held in
T by E ownership, to increase the equity that is
exempt from individual creditors of either spouse
o Increasing the allowable contribution to a
traditional IRA, 401(k) plan, or other retirement
account
o Purchasing new or additional life insurance on the
individual’s own life or purchasing a new annuity
contract, where the individual’s spouse, children or
dependent relatives are beneficiaries
21
Engaging in “exemption planning”
to increase the holdings of assets
that are exempt from creditor claims
• Transferring real property that is individually owned
into T by E ownership probably will not work
o That transfer could be attacked by a creditor under
the Uniform Voidable Transactions Act in an action
brought within 4 years after the transfer
o See the Graves case discussed on pages 16-17
• If an individual engages in exemption planning by re-
titling assets and later becomes a debtor in a
bankruptcy case:
o The court could deny a discharge under§727(a) if
asset transfer occurred within 1 year pre-petition
o Under§548(a)(1), the trustee could avoid a
transfer made within 2 years pre-petition
22
Remedies available to creditors under
Indiana’s “Uniform Fraudulent Transfer Act
• Indiana’s statute is I.C. 32-18-2, and that chapter is
labeled the “Uniform Fraudulent Transfer Act”
• However, Indiana enacted most of the provisions of
the Uniform Voidable Transactions Act (UVTA)
effective July 1, 2017
• I.C.§32-18-2-23(2) states that ch. 2 may be cited as
the “Indiana Uniform Voidable Transactions Act”
• Some official comments to the national UVTA stated
(inaccurately) that asset transfers to a domestic asset
protection trust (DAPT) under another state’s law
would be “voidable per se” under the UVTA
• I.C.§32-18-2-23 states that the official comments
may not be cited as authority in interpreting Indiana’s
version of the Act
23
• The “fraudulent” in “fraudulent transfer” was a
misnomer because a creditor didn’t (and doesn’t)
have to prove all the elements of common law fraud
or an actual false representation or intent to deceive
• Under the Indiana Uniform Voidable Transactions Act
(UVTA), a creditor who wants to attack an asset
transfer still has two ways to prevail (proof by a
preponderance of the evidence):
o Show actual intent by the debtor (transferor) “to
hinder, delay or defraud any creditor of the debtor”
o Show facts or circumstances (“badges of fraud”)
from which intent to hinder or delay creditors may
be inferred
• The “badges of fraud” from case law are now codified
in I.C.§32-18-2-14(b)
24
• A creditor must timely file a civil action to challenge or
invalidate an asset transfer that is “voidable” and to
reach the transferred assets
• Limitations periods are in§32-18-2-19 (see table on
pages 11 and 12 of the paper) and vary depending on
whether the claimant is a present creditor (claim arose
before the asset transfer) or a future creditor
• If the creditor is a present creditor of the debtor-
transferor and wants to prove actual intent to hinder,
delay or defraud, file the action within the later of ‒
o 1 year “after the transfer or obligation was or could
reasonably have been discovered by the claimant”
o 4 years after the transfer was made or the
obligation was incurred
25
• If the creditor is a present creditor of the debtor-
transferor or if the creditor’s claim arose after the
asset transfer (“future creditor”), file the action within 4
years after the transfer was made or the obligation
was incurred
• If the claimant is a present creditor does not want to
try to prove actual intent to hinder, delay or defraud
any creditor, I.C.§32-18-2-15(a) requires the claimant
to prove ‒
o The debtor made the asset transfer without
receiving reasonably equivalent value in
exchange, and
o The debtor was insolvent at the time of the asset
transfer or became insolvent as a result of the
transfer or the obligation incurred
26
• If the claimant is a present creditor or a future creditor
(claim arose after the asset transfer) and does not
want to try to prove actual intent to hinder, delay or
defraud any creditor, I.C.§32-18-2-14(a)(2) requires
the claimant to prove ‒
o The debtor made the asset transfer without
receiving reasonably equivalent value in
exchange, and
o The debtor either
❖ was about to engage in a business or a
transaction for which the debtor’s remaining
assets were unreasonably small, or
❖ should have believed that the debtor would
incur debts beyond his or her ability to pay
27
Some time-tested practical maxims
about self-settled asset protection planning
a) Most of the time, by the time that your client thinks
seriously about contacting you (a lawyer) about
doing asset protection planning, it is already too
late because creditor claims or adverse litigation
already exist or are threatened and “on the horizon”
b) Your client should not transform exempt assets into
non-exempt assets
c) Actions by your client to increase holdings of exempt
assets (“exemption planning”) may work very well or
may be timely attacked later by some creditor as
“voidable transactions”
d) The ability of future creditors (creditors whose claims
arose post-transfer) to reach DAPT assets has not
been tested in the Indiana courts
28
e) If your client ends up in a voluntary or involuntary
bankruptcy case (especially within 2 years after
making an asset transfer or within 10 years after
creating a self-settled asset protection trust), all bets
are off
f) Remember that if a well-designed DAPT is funded
with an asset transfer that is timely attacked as a Ch.
“voidable transaction,” at least some current creditors
of the client/settlor can reach the DAPT’s assets
g) Before helping your client do asset protection
planning, perform due diligence about your client’s
net worth, assets, and current liabilities (develop and
use a good checklist and consider doing a criminal
case background check)
29
e) Before helping your client do asset protection
planning (even if you won’t be helping to draft and
create a DAPT), have your client sign a “qualified
affidavit” (solvency affidavit) that complies with
I.C.§30-4-8-5
f) Be aware of the cautions and prohibitions that apply
to lawyers under Rules 1.2(d), 3.3, 4.4, and 8.4(c) of
the Rules of Professional Conduct
30
Practice Pointers for Lawyers
(mostly what NOT to do)
1. If your client is already insolvent in a balance-sheet

sense or cash-flow sense OR if your client has
current unpaid creditors, do not assist with or
recommend any transfer of assets that are not
already exempt from creditors or that are not
excluded from the scope of “property” under the
UVTA
2. Don’t give asset protection planning advice to a client
who is likely to be a debtor in a bankruptcy case
within the next 2 years, unless you have significant
bankruptcy litigation experience
3. If you don’t agree to be hired, send a confirming “I
am not your lawyer” letter to the almost-client
31
Practice Pointers for Lawyers
(mostly what NOT to do)
4. Don’t agree to act as a de facto receiver of an
insolvent client’s assets (have the client engage an
independent receiver, who should hire separate
counsel)
5. Don’t participate as a straw man or intermediate
transferee in any asset transfer by a client who is
insolvent
6. Don’t allow your insolvent or financially-troubled
client to use your law firm trust account to hold client
funds and to make preferential payments to some
but not all creditors
7. Don’t help your insolvent or financially troubled client
create a special, separate bank account that will be
used to segregate client funds and to pay some
creditors but not others
32
Red flag indicators that should tell
the lawyer to NOT get involved
A. The potential client want to transfer substantially all
of his or her assets to some sort of asset protection
vehicle
B. The potential client expresses great urgency in
wanting to complete some specific asset transfers
within a definite and short time frame
C. The potential client says that he or she has recently
met with a bankruptcy attorney or is referred to you
by a lawyer with a significant debtor bankruptcy
practice
D. The potential client talks frequently and
enthusiastically about Nevada, South Dakota, or
“real trusts,” “pure trusts,” “Keystone trusts,”
“sovereign citizen trusts,” or “Constitutional trusts”
33
Red flag indicators that should tell
the lawyer to NOT get involved
E. The potential client wants to create a trust that
“allows” all income to be excluded from federal tax
F. The potential client sits on the governing board of an
operating business and has recently attended a
special meeting (to discuss actual or threatened
litigation?)
G. The potential client is evasive about his or her assets
and liabilities and won’t cooperate with your due
diligence or sign a solvency affidavit
H. The potential client wants to transfer T by E or joint
tenancy assets solely to the name of a spouse
I. The potential client wants to re-title assets in the
names of family members or friends without
telling them or delivering transfer documents
34
Intersection of DAPT design
with federal income tax issues
• A domestic asset protection trust (DAPT) can (but
need not) be structured as a grantor trust for income
tax purposes
• If the DAPT is a grantor trust and if the settlor is a
beneficiary eligible to receive or benefit from income
tax distributions, all of the DAPT’s income will be
reportable by and taxable to the settlor
• The DAPT instrument can authorize an independent
fiduciary to exercise discretion to reimburse the settlor
for part or all of the income taxes
• Typically, when the settlor or the settlor’s spouse is a
discretionary income beneficiary of a DAPT, “grantor
trust” status will be “automatic” or inevitable under
Code sections 677(a) or 674(a)
35
• If the settlor of a DAPT is also a discretionary income
beneficiary and does not want the DAPT to be a
grantor trust (all income taxed to the settlor), more
detailed drafting effort is required
o Rely on Code§674(c), make the trustee(s)
independent, and give the trustee(s) discretion to
sprinkle-spray distributions among a class of
beneficiaries that cannot be expanded; OR
o Rely on Code§674(d), give an independent
trustee discretionary distribution power limited by a
“reasonably definite external standard” stated in
the DAPT instrument, and prohibit the adding of
beneficiaries except after-born or after-adopted
children
36
• In the estate and gift tax planning arena, it has
become popular to structure SLATs (Spousal Limited
Access Trusts) or SLANTs (Spousal Limited Access
Non-grantor Trusts) as domestic asset protection
trusts
• If the DAPT will have the settlor’s spouse as a
significant beneficiary and if the clients want it to be a
non-grantor trust (SLANT), here is one method:
o Design the DAPT so that the power to decide and
make all discretionary distributions is held by a
“distribution committee” which doesn’t include the
settlor or the settlor’s spouse
o Require that a majority of “distribution committee”
members be beneficiaries who are eligible to
receive distributions (“adverse parties”)
37
Intersection of DAPT design with
federal estate tax planning objectives
• This issue is covered on pages 44-47 of the paper
• If a funds the DAPT with a completed gift(s) AND if
the settlor is a discretionary lifetime beneficiary of the
DAPT, will the remaining DAPT assets be excluded
from the settlor’s “federal gross estate” (for estate tax
purposes) upon his or her death?
• The answer should be YES under Reg.§20.2036-
1(b)(2) IF ‒
o The DAPT instrument prohibits the trustee or
distribution committee from making discretionary
distributions that discharge a legal obligation of the
settlor, AND
o Creditors of the settlor cannot reach the DAPT
assets
38
Intersection of DAPT design with
federal estate tax planning objectives
• There IS a risk that the DAPT assets will be included
in the settlor’s federal gross estate for estate tax
purposes if the settlor made the original transfers to
the DAPT “subject to an understanding, express or
implied, that he would receive the trust income or
corpus or both when requested” (Paxton v.
Commissioner, 86 T.C. 785, 808 (1986)
• The risk of this adverse determination by the IRS is
higher if there is a pattern of discretionary distributions
to the settlor whenever he or she wants and in
whatever amounts that the settlor wants
• Therefore, to protect DAPT assets from creditors and
to exclude them from the settlor’s gross estate, the
settlor should fund the DAPT with surplus assets from
which distributions aren’t crucially needed
39
Thank you for your kind attention.
Jeffrey S. Dible
FROST BROWN TODD LLC
201 N. Illinois St, Suite 1900
P. O. Box 44961
Indianapolis, IN 46244-0961
O: (317) 237-3811
jdible@fbtlaw.com
40
Section
Two
INDIANA LEGACY TRUST
Jeffrey B. Kolb
Kolb Roellgen & Traylor LLP
Vincennes, Indiana
2022
INTRODUCTION
Effective July 1, 2019, Indiana has a new tool in the estate planning toolbox, THE
INDIANA LEGACY TRUST. 1 It changes Indiana law to allow self-settled spendthrift trusts that
protect Qualified Dispositions from most Claims of Creditors. 2 With this change, Indiana joins
seventeen (17) other states with Domestic Asset Protection Trusts (DAPT's). This article
discusses:
1. Background;
2. Requirements to Create;
3. Protection from Creditors;
4. Creditors Exceptions;
5. DAPT Case Law;
6. Trustee and Lawyer Liability to Creditors;
7. Drafting Concems;
8. Uses; and
9. Comparison to Other APT'S.
1. BACKGROUND
Asset Protection is not a new concept in Indiana. A long list of statutory exceptions to
execution on judgments and liens has been in existence for a long time. 3 These exceptions
CU1Tently provide asset protection to wages, life insurance, pensions, tenancy by the entiteties real
property, homesteads, workers compensation proceeds and other statutory compensation funds. In
addition to these formal statutory protections, there is always the informal protection provided by
a transfer of the asset to a third party.
1
SEA 265, Section 9 contains new LC. 30-4-8 (See Exhibit A) Words with initial caps are defined
in the act
2
LC. 30-4-3-2
3
Carr, "Insolvency Protection: Judgments, Exemptions, Bankruptcy and Fraudulent Transfers,"
ICLEF Asset Protection, November 2, 2011.
Also not a new concept in Indiana is protection for creditors from fraudulent transfers.
Indiana's version of the Uniform Fraudulent Transfers Act4 was recently updated to include
provisions from the Uniform Voidable Transfers Act though Indiana specifically kept the title
"Uniform Fraudulent Transfer Act" and rejected the official comments to the Uniform Voidable
Transfers Act. 5
Trnsts and fraudulent transfers date back to ancient Rome where the "fidei commissum"
was often attached to a Roman will to cany out the restrictions on the gift. 6 The Romans created
the concept of fraudulent transfers to prevent transfers to these trusts to avoid creditors. 7 The
English expanded the concept oftrnsts to create "inter vivos" or trusts for the living. 8 The English
also took from the Romans a very simplistic fraudulent conveyance law. 9
Spendthrift trusts were unlmown until the United States common law began applying these
concepts. 10 In the early l800's, Thomas Jefferson created an early spendthrift trust to protect his
daughter's inheritance from the creditors of her financially troubledhusband. 11 By the late 1800's,
third-party spendthrift trusts were commonly used to protect trust assets from the beneficiary's
creditors. 12 However, up until 1987, it was well accepted that self-settled spendthrift trusts were
still subject to claims of the settlor's creditors. 13
4 I.c. 32-18-2
5
LC. 32-18-2-23
6
Adldsson, "A Short Histmy of Asset Protection Trnst Law" (Google it).
7
Id.
8
Id.
9
Statute of 13 Elizabeth, Chapter 5
10
Adkisson, "A Short History of Asset Protection Trnst Law" (Google it).
11 Id.
12 Id.
13 Id.
2
In 1987, Bany Engel, a Colorado lawyer, persuaded the Cook Islands to amend its
International Trnst Law to specifically allow self-settled spendthrift trusts. 14 The Cook Islands
were quickly followed by the Cayman Islands, Belize, Nevis, the Channel Islands, the Isle of Man
and numerous other jurisdictions competing for U.S. dollars and investments. 15 A tsunami of
trillions of dollars began to flow to those jurisdictions in Foreign Asset Protection Trnsts
(FAPT's). 16
This outflow of money did not go unnoticed. In 1997, Alaska, followed by Delaware ninety
(90) days later, passed their respective DAPT's. 17 Michigan and Ohio are the most recent DAPT
states with Indiana now the eighteenth (18th) DAPT state and Connecticut nineteenth (l 9t11).
Until the recent changes, Indiana's Trnst Code made self-settled spendthrift trnsts subject
to claims of the settlor's creditors. 18 In 2010, Indiana adopted from South Dakota provisions that
are called "Discretionary Support Statutes" and "Alter Ego" Statutes. 19 These statutes are designed
to protect spendthrift discretionaiy trnsts from attacks by creditors and will be ve1y important to
the Indiana Legacy Trnst self-settled provisions.
2. REQUIREMENTS TO CREATE
There are many specific requirements to create an Indiana Legacy Trnst.
1. The trust must be in writing signed by the Transferor. 20

2. The trnst must designate that it is a Legacy Trnst established under LC. 30A-8. 21
14 Id.
is Id.
16 Id.
17 Id.
18
LC. 30-4-3-2
19
LC. 30-4-2.1-14 to 17
20
LC. 30-4-8-3(1)
21
I.C. 30-4-8-3(1)
3
3. The trnst must include the following terms:
3 .1. The appointment and acceptance of a Qualified Trustee which is either an

individual, not the Transferor, who is an Indiana resident or any other
Person subject to the supervision of the state department of financial
institutions; or the federal Office of the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System or any other successor
to these agencies;
3.2. Indiana law governs the validity, construction and administration of the
trust;
3.3. The Legacy Trust is il1'evocable; and
3.4. The interest of the Transferor or beneficiaiy in the trust property or the
income from the trust property may not voluntarily or involuntarily be
transfell'ed, assigned, pledged, or mortgaged before the Qualified Trustee
actually distributes the property or income to the beneficiary. 22
4. The Transferor must execute and deliver to the Qualified Trustee a Qualified
Affidavit which provides under penalties of perjmy that:
4.1. The Transferor has full right, title, and authority to transfer the property to
the Legacy Trust,
4.2. The Transferor of the property to the Legacy Trust will not render the
Transferor insolvent,
4.3. The Transferor does not intend to defraud a Creditor by transferring the
property to the Legacy Trust,
4.4. There are no pending or threatened court actions against the Transferor
other than the court actions identified by the Transferor and attached to the
Qualified Affidavit,
4.5. The Transferor is not involved in any administrative proceedings other than
the administrative proceedings identified by the Transferor and attached to
the Qualified Affidavit,
4.6. The Transferor does not contemplate filing for relief under the federal
bankruptcy code, and
4.7. The property transferred to the Legacy Trust is not derived from unlawful
activities. 23
5. If Transferor is a trustee of another existing trust, a Qualified Affidavit must be

signed by the Transferor who funded that trust. 24
6. If the Transferor is a mall'ied individual when the Qualified Affidavit is signed, a

copy of the Qualified Affidavit must be given to Transferor's spouse. 25
22
LC. 30-4-8-4
23
LC. 30-4-8-5
24
LC. 30-4-8-5(c)
25
LC. 30-4-8-8(d)
4
7. If Qualified Disposition is made within thirty (30) days before the date of marriage,
notice of the Qualified Disposition must be given to the intended spouse three (3)
days before the Disposition. 26
Assets listed on a financial statement of Transferor to get a loan are not protected by the
Legacy Trust27 and notice to Lender must be given if those assets are transferred to the Legacy
Trnst28 even though the assets are not protected. This notice should not be required to create a
Legacy Trnst but cautious planners should provide the notice if required.
Once a Legacy Trust is created, later transfers can be made to the Legacy Trnst. The
statutes only require a Qualified Affidavit be prepared to establish a Legacy Trnst. 29 However, it
would be prudent to prepare a Qualified Affidavit under Item 6 with each Qualified Disposition to
the Legacy Trust.
3. PROTECTION FROM CREDITORS
The reason for creating an Indiana Legacy Trnst is to protect the assets of the Trust from
claims of Creditors, even Creditors of the Transferor who created the Trust. This is true even
though the Transferor may receive distributions from either the principal or income of the trust in
the discretion of the Trustee or Distribution Director.
3 .1. SCOPE. The scope of this protection is intended to be very broad except for
Creditors described in the Legacy Trust Act. 30 It is w01ih setting out the statutory language that
creates this broad pmtection:
Section 7: Except as provided in Section 8 of this chapter, "no cause

of action of any ldnd, including the cause of action to enforce a
judgment may be brought for:
26
I.C. 30-4-8-8(a)(3)
27
LC. 30-4-8-l(b)(l)
28
LC. 30-4-8-16(b)
29
LC. 30-4-8-3(3)
30
LC. 30-4-8-7(a)
5
(1) An attachment or other provisional remedy against property
that is the subject of a Qualified Disposition to a Legacy Trnst; or
(2) The avoidance of a Qualified Disposition to a Legacy Trnst.
The protections provided to the Qualified Disposition by the sub-
section applied notwithstanding any law to the contrary set fo1ih
outside this chapter":
It is difficult to imagine protection any broader than that set fo1ih in this language. 31 In addition,
the spendthrift provision in a Legacy Trust is considered a restriction on the Transferor or the
Transferor's beneficial interest in the Trust that is enforceable under applicable non-banlauptcy
law within the meaning of Section 54l(c)(2) of the Federal Banlauptcy Code (11 U.S.C. 54l(c)(2))
or any successor provisions of the federal banlauptcy code. 32
To insure this protection, the chapter goes on to address specific instances that arise in the
enforcement of a Legacy Trust.
3 .2. nJRlSDICTION. The jurisdictional issue often arises where a non-resident created
a DA.PT in a state other than the state of residency. Many DA.PT states adopted provisions
requiring exclusive jurisdiction over all matters related to the DA.PT to be with the state where the
DA.PT was created. Alaska was one of those exclusive jurisdiction DA.PT states. However, the
Alaska Supreme Court found the exclusive jurisdiction provision violated the United States
Constitution. 33
In its recent enactment of an asset protection trnst statute, Ohio adopted a provision which
was not exclusive jurisdiction, but rather gave to the Ohio courts expanded jurisdiction to deal
with these issues. 34 Indiana adopted this Ohio language to address the jurisdictional issue giving
31
I.C. 30-4-8-7(a)
32
LC. 30-4-8-10
33
Toni !Trust by Trustee Donald Tangwall v Barbara Wacker, et al., 413 P3d 1199 (Ala. 2018)
3
4 Ohio Rev. Code 5816
6
Indiana courts jurisdiction to the maximum extent permitted under the United States and Indiana
constitution even if an action has been brought in the court of another state. 35
3.3. CHOICE OF LAW. The Indiana Legacy Trust provisions require that Indiana law
be the governing law of the Trust and that Indiana law be applied in determining any issues arising
under the Legacy Trust. 36 To that end, if a court declines to apply Indiana law in determining the
effect of the spendthrift provision in a Legacy Trust in an action brought against the Legacy Trust,
the Trustee of the Legacy Trust shall immediately resign and shall only have the power to convey
the trust prope1ty to a successor trustee. 37 This is a common provision found in seven of the states
with DAPTS. 38
Choice of law often arises where the Transferor to the DAPT is not a resident in the state
in which the DAPT is created. This dovetails with the issue of full faith and credit required under
the U.S. Constitution for the laws and rulings of other states. The provision in the Legacy Trust
and other states calling for resignation of the Trustee is an effort to thwart the court in other states
applying their laws to these DAPTS. To date, there are no cases discussing the effectiveness of
these trustee resignation provisions. There is a consensus that the provision should make it difficult
to enforce other state laws against DAPTS.
3 .4. ALTER EGO. The alter ego argument is that the interests in the trust given to the
Transferor are such that the Transferor is nothing but the alter ego of the Legacy Trust. The Indiana
Legacy Trust prohibits the Transferor, except as provided under the Legacy Trust provisions, from
any rights or authority with respect to the principal or income of the Legacy Trust. The Legacy
35
LC. 30-4-8-?(d)
36
LC. 30-4-8-4(2) and LC. 30-4-8-7(b)
37 LC. 30-4-8-7(b)
38
Merrie, Worthington, MacArthur and Sullivan, "Best Situs for DAPT's in 2019" Trust
and Estates, January 2019, p. 60.
7
Trust provisions go on to state that "any agreement or understanding purporting to grant or permit
the retention of any greater rights or authority is void." The Legacy Trust provisions allows the
Transferor to serve as an Investment Advisor, but prohibits the Transferor from serving as a Trust
Director except with respect to the retention of a veto right permitted by the Legacy Trust
provisions. 39
In 2010, Indiana adopted South Dakota language protecting discretionary trusts from
claims of Creditors40 I.C. 30-4-2.1-16 specifically addresses the alter ego arguments:
Absent clear and convincing evidence otherwise, a settlor of an

irrevocable trust may not be considered the alter ego of a trustee.
The following factors, alone or in combination, are not sufficient
evidence to conclude that the settlor controls a trustee or is the alter
ego of the trustee:
(1) Any combination of the factors listed in section 15 [IC 30-4-

2 .1-15] of this chapter.
(2) Isolated occurrences of the settlor signing checks, making
disbursements, or executing other documents related to the
trust as trustee when the settlor is, in fact, not a trustee.
(3) Requesting a trustee to make distributions on behalf of a
beneficiary.
(4) Requesting a trustee to hold, purchase, or sell any trust
property.
The factors referred to in LC. 30-4-2.1-15 are:
If a party challenges a settlor or a beneficiary's influence over a

trust, none of the following factors, alone or in combination, may be
considered dominion and control over a trust:
(1) A beneficiary serving as a trustee or co-trustee.

(2) The settlor or beneficiary holds an umestricted power to
remove or replace a trustee.
(3) The settlor or a beneficiaiy:
(A) is a trust administrator, a general paiiner of a partnership, a
manager of a limited liability company, or an officer of a
corporation; or
39
I.C. 30-4-8-11
40
I.C. 30-4-21-14 to 17
8
(B) has any other managerial function in any other entity; that is
owned in whole or in part by the trust.
(4) A person related by blood or adoption to a settlor or
beneficiary is appointed as trustee.
(5) An agent, accountant, attorney, financial adviser, or friend
of the settlor or a beneficiary is appointed as trustee.
(6) A business associate of the settlor or a beneficiary is
appointed as trustee.
(7) A beneficiary holds any power of appointment over part or
all of the trust property.
(8) The settlor holds a power to substitute property of equivalent
value.
(9) The trustee may loan trust property to the settlor for less than
a full and adequate rate of interest or without adequate
security.
(10) The trust contains broad purposes or highly discretionary
distribution language.
(11) The tJ.ust has only one (1) beneficiary eligible for current
distributions.
3.5. TRANSFEROR'S INTEREST. The Legacy Trust and its property is protected
from claims or creditors even though the Transferor serves as a Trust Advisor for investment
purposes or retains the power described in the Legacy Trust provisions. 41 Those interests in the
Legacy Trust that are allowed to a Transferor are set out specifically in the provisions and include
one or more of the following:
(1) A transferor's power to veto a distribution from the trust.

(2) A power of appointment (other than the power to appoint to the transferor, the
transferor's creditors, the transferor's estate, or the creditors of the transferor's
estate) that may be exercised by will or other written instrument of the tJ.·ansferor
that is effective only upon the tJ.·ansferor's death.
(3) The transferor's potential or actual receipt of income or principal, including a right
to income retained in the trust.
(4) The transferor's potential or actual receipt of income or principal from a charitable
remainder unitrust or charitable remainder annuity trust (as those terms are defined
in Section 664 of the Internal Revenue Code).
(5) The transferor's potential or actual receipt of income or principal from a grantor
retained annuity trust or grantor retained unitrust that is allowed under Section 2702
of the Internal Revenue Code.
(6) The transferor's potential or actual receipt or use of principal when that potential
or actual receipt or use results from a qualified trustee's acting:
41 I.C. 30-4-8-7(c)
9
(A) in the qualified trustee's discretion;
(B) under a standard that governs the distribution of principal and does not
confer upon the transferor a power to consume, invade, or appropriate
property for the benefit of the transferor unless the power of the transferor
is limited by an ascertainable standard relating to health, education, support,
or maintenance within the meaning of Section 204l(b)(l)(A) or 2514(c)(l)
of the Internal Revenue Code; or
(C) at the direction of a trust director described in section 14 of this chapter who
acts:
(i) in the trust director's discretion; or

(ii) under a standard that governs the distribution of principal and does not
confer upon the transferor a power to consume, invade, or appropriate
property for the benefit of the transferor unless the power of the transferor
is limited by an ascertainable standard relating to health, education, support,
or maintenance within the meaning of Section 204l(b)(l)(A) or 2514(c)(l)
of the Internal Revenue Code.
(7) The transferor's right to remove a trust or trust director and to appoint a new trustee
or trust director as long as that right does not include the appointment of a person
who is a related or subordinate party to the transferor within the meaning of Section
672(c) of the Internal Revenue Code.
(8) The Transferor's potential or actual use of real property held under a qualified
personal residence trust (as defined in Section 2702(c) of the Internal Revenue
Code). 42
If Transferor retains the veto power over distributions, Transferor will not have made a completed
gift to remove the assets from Transferor's estate.
3 .6. TRUSTEE OR DIRECTOR SELECTION. Special attention must be paid to the
selection of the Trustee and Distribution Director. The Distribution Director is given full
discretion to make distributions of principal or income to named beneficiaries which include the
Transferor. As stated above, this cannot be the Transferor or any party related either by blood or
42
I.C. 30-4-8-13(a)
10
marriage. Also, to avoid inclusion in the value of the federal grnss estate of the Transferor, the
Trustee must be independent as defined under the Internal Revenue Code. 43
3.7. ESTATE TAX. It is possible to create a Legacy Trust yet have the assets of the
Legacy Trust still included in the grnss estate of the Transferor. The reason for doing this would
be the possibility of a stepped up basis, under the exemptions currently in effect from the Federal
Estate Tax. If the Transferor retains the right to veto distributions or a special power of
appointment, these are retained interests which would cause the assets in the Legacy Trust to be
taxed in the Transferor's gross estate. To make a completed gift and remove the assets from the
Transferor's grnss estate, the veto right and special power of appointment should not be used.
4. CREDITOR EXCEPTIONS
As originally written, the broadly worded protection from Claims of Creditors in the
Legacy Trust provisions had only the exceptions that were spelled out in Section 8. 44 However,
during the legislative process, exceptions to the protection from Claims were placed in other
provisions under the Legacy Trust.
4.1. UNIFORM FRAUDULENT TRANSFER ACT CONVEYANCES. The first
exception to the Legacy Trust protection would be transfers that violate Indiana's version of the
Uniform Fraudulent Transfers Act. 45 In 2017, Indiana adopted provisions from the Uniform
Voidable Transfers Act but retained the name Unifonn Fraudulent Transfers Act (UFTA). Indiana
specifically gives no authority to the comments under the Uniform Voidable Transfers Act because
the comments incon·ectly summarize the law regarding transfers to spendthrift trusts. 46
43
IRC 672(c)
44
I.C. 30-4-8-8
45
I.C. 30-4-8-8{a)(1)
46 I.C. 32-18-2-23
11
The Legacy Trnst provisions draw a distinction between claims under UFTA by the State
of Indiana and all other claims. Claims made by the State of Indiana that the Transferor violated
UFTA are still subject to proof by a preponderance of the evidence. 47 The statute of limitations
for claims by the State of Indiana that the Transferor violated UFTA is the later of four (4) years
after the transfer was made or one (1) year after the tmnsfer was recorded or made of public record
or if not recorded or made of public record, was discovered or could have reasonably been
discovered by the creditor. For claims arising after the transfer, the statute of limitations is four
(4) years from the date of the transfer. 48
For UFTA claims other than by the State of Indiana, the Legacy Trnst provisions shorten
the statute of limitations. For UFTA claims that arose before the Qualified Disposition to the
Legacy Trnst, the statute of limitations is the later of two (2) years after the transfer was made or
six (6) months after the transfer was recorded or made of public record or if not recorded or made
of public record, was discovered or could have reasonably been discovered by the creditor. For
claims that arose after the Qualified Transfer, the statute of limitations is two (2) years from the
date of the transfer. 49 In addition, the burden of proof for the Creditor is increased to clear and
convincing evidence. 50 This burden of proof and shortened statute of limitations is comparable to
most of the DAPT states. 51
There is a special rnle used in measuring the statute of limitations that deals with more than
one Qualified Disposition made to the same Legacy Trnst. The time period begins relative to the
date the Qualified Disposition is made with regard to the assets that are transfened at that time.
47
I.C. 30-4-8-8(e}
48
49 I.C. 30-4-8-8(b}
so I.C. 30-4-8-8(a}(1}
51
Merrie, p. 60
12
However, any distribution to a beneficiary is considered to have been made from the last Qualified
Disposition. 52
4.2. CHILD SUPPORT. Also an exception to the protections provided by the Legacy
Trust is an action to enforce child support obligations of the Transferor under a judgment or court
order. 53 This exception for child support is a public policy decision and can be found in almost all
of the DAPT statutes except for Nevada and Alaska. 54
4.3. MARITAL PROPERTY DIVISION. A court judgment or order for division of
property in a dissolution of the Transferor's manfage, or a legal separation between the Transferor
and the Transferor's spouse is also an exception to the protection under the Legacy Trust if the
Qualified Disposition was made after the date of the Transferor's marriage that is subject to the
dissolution or legal separation, or if the Qualified Disposition was made within thirty (30) days
before the date of the Transferor's maniage unless the Transferor provided written notice of the
Qualified Disposition to the intended spouse at least three (3) days before maldng the Qualified
Disposition. 55
4.4. BANKRUPTCY CLAWBACK. In 2005, the banlG'uptcy code was amended to
allow the banla·uptcy trustee to avoid a transfer of assets to a self-settled spendthrift trust such as
the Legacy Trust that is made within ten (10) years prior to the date of filing of the bankruptcy
petition if:
(1) the transfer was made to a self settled trust or similar device;
(2) the transfer was made by the debtor (the debtor is term for the person filing
the banlauptcy);
(3) the debtor is a beneficiary of the trust; and
52
1.C. 30-4-8-8(d)
53
I.C. 30-4-8-8(a)(2)
54
Merrie, p. 60
55
I.C. 30-4-8-8(a)(3)
13
(4) the debtor made the transfer "with actual intent to hinder, delay, or defraud
any entity to which the debtor was or became, on or after the date of such
transfer, was made indebted." 56
This exception to the Legacy Trust is not mentioned in the Legacy Trust provisions,
however it is an important exception to the protection provided by the Legacy Trust. In fact, it
applies to all asset protection trusts whether domestic or foreign. It is a good reason to advise a
Transferor to avoid bankruptcy.
4.5. ASSETS ON FINANCIAL STATEMENTS OR APPLICATIONS. During the
passage of the Legacy Trust provisions, significant negotiations were carried on with various
parties of interest including organizations representing the bankers. As a result of the negotiations,
provisions were added to remove from Legacy Trust protection assets that are listed on an
application or financial statement completed by the Transferor which is submitted to the Lender
in connection with a request to obtain or maintain credit from the Lender. 57 As written, the Legacy
Trust chapter does not apply to those assets. 58 This is hue whether or not the application or
financial statement is completed by the Transferor or on behalf of the Legacy Trust. Also, the
Legacy Trust provisions do not apply to any change in the character, form or ownership of the
assets that are set out in the applications or financial statements. 59
If any assets transfe11·ed to the Legacy Trust are listed on an application or financial
statement completed by Transferor and which is submitted to a Lender in connection with a request
to obtain or maintain credit from the Lender, the Transferor must send written notice of the transfer
within 15 days after that transfer, which notice is sent by certified mail, return receipt requested,
to the registered agent for the Lender or, if no agent, to the last lmown address of the Lender, or
56
11 U.S.C. 548(e)
57 I.C. 30-4-8-l(b)(l)
5a Id.
59 Id.
14
the last address specified by Lender for mailing payments or general inquiries. The notice must
include:
1. Name of Transferor,
2. Description of asset,
3. Name of Trustee, and
4. Date transfer is made. 60
Upon receipt of the notice, the Lender may request that the Transferor or the Trustee
provide the Lender with a certification of the Trust unde1· LC. 30-4-4-4 which includes the names
and addresses of the qualified beneficiaries of the trust and copies of the pages from the trust
instrument that identify the cun-ent trustee and describe the Trustee's administrative powers and
duties. 61
Originally, it was not clear from the Legacy Trust provisions dealing with assets listed on
applications or financial statements whether this only exempts the specific Lender to whom the
report was given or if it exempts all Creditors. In the 2020 legislation, language was added to
make it clear, the exemption only applied to the Lender who received the financial statement and
only to the extent the loan is unpaid. 62
4.6. QUALIFIED DISPOSITIONS PROHIBITED BY AGREEMENT. Also added
during the legislative process was a provision that states:
"Nothing in this chapter shall be construed to authorize any disposition that is

prohibited by the terms of any agreements, notes, guarantees, mortgages,
indentures, instruments, unde1iakings or other documents. Any provisions that
prohibit such transfer or disposition shall be binding and shall make this chapter
inapplicable."
60
LC. 30-4-8-16(b)
61 Id.
62
1.C. 30-4-8-1(b) a amended by SEA SO, 2020.
15
This negotiated provision with the bankers foreshadows the likelihood that the future loan
agreements will prohibit Dispositions to Legacy Trusts. In fact, many existing documents prohibit
Dispositions and should be reviewed. This is an item for increased due diligence by the Trustee
and the lawyer. 63 A 2020 legislative change makes it clear this provision only applies if the debt
is unpaid. 64
5. DAPT CASE LAW.
DAPT legislation has been in existence for over twenty (20) years. Most DAPT legislation
creates an exception for fraudulent transfers under the uniform acts, though sometimes with
sh01iened statute of limitations and heightened bmdens of proof. There is a substantial body of
case law dealing with fraudulent transfers. Those cases are very relevant with regard to those
exceptions to the protection provided by DAPT legislation.
This Section concentrates on case law that specifically deals with DAPTS. This will
exclude cases dealing with foreign asset protection trusts and fraudulent transfer cases that did not
involve a DAPT.
5.1. UNFAVORABLE DECISIONS. In Re Mortensen, 65 an Alaskan resident
transferred his assets to an Alaska Asset Protection Trust that he created in 2005. At the time,
Mortensen was coming off some ve1y lean years and admitted that he was saddled with debt with
increasing competition in his shrinldng business market and that he had not recovered from the
financial camage of a divorce. Also at the time of creation, he had accumulated credit card debt
of a substantial amount. In 2009, M01iensen filed for banlauptcy and did not list the assets in the
Alaskan Tmst. The banlcruptcy tmstee contended that Mortensen failed to create a valid Alaskan
63
LC. 30-4-8-16(c)
64 I.C. 30-4-8-16(c) as amended by SEA 50, 2020.
65
2011 W.L. 5025249, 10 Alaska Banlcruptcy Rep. 146 (D. Alaska 2011).
16
Asset Protection Trust and that under Bankruptcy Code §548(e) and its 10 year claw back period,
the transfer was fraudulent. The banlrn1ptcy court agreed with the trnstee finding the evidence of
the transfers in 2005 at a time when Mortensen was having financial problems was a clear
indication of his intent to hinder his creditors. As a result, the Alaskan Asset Protect Trust property
was transferred to the banlauptcy trustee.
In Kilker v Stillman, 66 Stillman created a Nevada Asset Protection Trust in 2004. Stillman
was a California resident and a soil engineer. In 2000, he perfo1med services for the Kilkers. The
Kilkers sued about four (4) years after the Nevada Trust was created and the suit was settled for
Ninety Two Thousand Five Hundred Dollars ($92,500.00). When Stillman failed to pay the
settlement, the Killcers sought recovery from the Nevada Asset Protection Trust. At trial, Stillman
testified that he transferred virtually all of his assets to the Nevada Trust, keeping only about Five
Hundred Dollars ($500.00) in cash. He also testified that his intent was to protect his assets from
creditors. Finally, he testified that he transfen·ed the property because soil engineers are frequently
sued. The trial court found the Kilkers were reasonably foreseeable as future judgment creditors
and allowed recove1y from the Nevada Trust. On appeal, Stillman and the Trustee argued that the
conveyance was not fraudulent because the Killcers were not creditors at the time the tlust was
created. The California Comi of Appeals affi1med the trial comi's decision based upon Stillman's
testimony as to the transfer of virtually all of his assets and his desire to protect those assets from
creditors. The timing of the Kilkers claim, which arose before the trust was created and was filed
after the trust, raised issues about whether they were present or future creditors. However, the
Comi of Appeals seemed to be swayed by the fact the Stillman was the "managing director" of the
trust, maldng deposits and withdrawals and lending and borrowing money and investing as he saw
66
2012 W.L. 5902348 (Cal. App. 4th Dist. Unpublished 2012)
17
fit. Also, while Stillman's brother was the sole named beneficiary, Stillman still used trust nmds
to pay his personal expenses.
In Waldron v Huber, 67 a Washington resident created an Alaskan Protection Trust to which
he transferred the controlling stock in his business in Washington. At the time of the transfer, he
had been named as a defendant in four (4) significant collection lawsuits. Because of the transfer,
the creditors, the beneficiaries and almost all of the tangible assets were located in Washington,
the banlauptcy court chose to apply Washington law rather than Alaska law. Under Washington's
version of the UFTA and in Banlauptcy Code 548(e), the transfers were found to have been done
with an intent to hinder, delay or defraud the creditors and were pulled into the banlauptcy.
In Re Erskine 68 a Tennessee DAPT was created. Like most states, Tennessee requires a
qualified affidavit be prepared to create the trust and that a qualified trustee be selected. Ersldne
did neither of these things. In addition, Erskine retained powers to control and direct payments,
add and remove trust property and amend or revoke this trust which were contrary to the
requirements of the Tennessee statute. The banlauptcy court surmised that Ersldne had not created
a valid Tem1essee asset protection trust.
In Dahl v Dah/69 a Nevada asset protection trust was set up by a Utah resident to try and
shield his assets from a Utah divorce proceeding. The Utah Supreme Court refused to use
Nevada's choice of law clause and held that the trust assets were marital assets subject to the
division in Utah. In this case, the husband retained such broad powers that the trust was found to
be revocable by him even though the trust documents said it was in-evocable.
67
493 B.R. 798 (Bankr. W.D. Wash. 2013)
68
550 B.R. 362 (Bankr. W.D. Tenn. 2016)
69
2015 WL 5098249
18
In Toni 1 Trust v Wacker, 70 the rnling of the Alaskan Supreme Court that the Alaskan asset
protection tmst provision requiring exclusive jurisdiction in Alaska was unconstitutional has been
discussed. The facts of that case arose in Montana where judgments were taken against Donald
Tangwall and his mother-in-law, Toni Bertran. Toni created the asset protection tmst as a result
of the large judgment naming herself as beneficiary. The Montana state court, using Montana law,
set aside the transfer as fraudulent. In an attempt to avoid the Montana judgments, Toni filed the
suit referenced above claiming that the judgments were not valid because Alaskan law gave Alaska
exclusive jurisdiction. With the Alaskan Supreme Court finding the provision unconstitutional,
Toni was subject to the judgments and the assets of the Alaskan protection trust were subject to
the creditors.
5.2. FAVORABLE DECISIONS. In Trustco Bank v Susan N. Matthews, 71 Susan
Matthews created three Delaware asset protection trusts with herself and descendants as
beneficiaries. Three of the beneficiaries constituted the distribution committee with authority to
direct the trustee to make distributions on the basis of one committee member acting with Susan's
consent. In 2007, Susan conveyed valuable stock to the three trusts and sold some other assets at
a bargain price. Real estate loans on which Susan was liable were modified in 2008 and 2009 and
went into default in 2011. The borrower and Susan agreed to an entry of deficiency judgment in
2013. The lender sued Susan and the trustee of the three Delaware asset protection trusts alleging
that the transfers were fraudulent. Susan and the trustee defended alleging the claims were barred
by the statute of limitations or by laches. The Delaware Chance1y Court is a court of equity so it
could only decide that the claim was barred under the doctrine of laches. However, in arriving at
this decision, it used the four year and one year periods in the Delaware statute instead of the six
70
2018 WL 1125033 (Ala 2018)
71 2015 WL 295373
19
year and two year New York statute of limitations. There still remains the unresolved issue of
whether Susan retained an impermissibly broad beneficial interest such that they were not qualified
dispositions but that could not be resolved in the motion for summary judgment.
In Klabacka v Nelson 72 the issue was division of marital property and a Nevada asset
protection trnst. The Nelsons were married in 1993 and entered into separate property agreements
transmuting their community property into separate property. They each created a separate
property trust and funded the trnst with the respective separate property. Two years after Nevada
enacted its asset protection trnst in 2001, they each create irrevocable spendthrift trusts and funded
the trnst with their separate property. Eight years after the trusts were formed, they filed for
divorce. The trial court ordered that the tlusts be added to their divorce proceedings as necessary
parties. The wife argued that the husband's trust was a sham or his alter ego and requested the
district court invalidate the ti·ust on the grounds that the trnsts were intended only to provide
protection for creditors and were not necessary in the event of a divorce; the assets are community
property due to comingling; and the administration did not follow the formalities set out in the
trust agreement. The trial court agreed with the wife and ordered the husband's trusts to transfer
millions of dollars to the wife's tmst to level off the trnsts so that each would possess 8.7 million
in total trnst assets. The trial court then ordered the husband's trnst to pay approximately $900,000
to satisfy alimony and child support.
The Nevada Supreme Court vacated the ti·ial court, finding that the trnsts were valid asset
protection trusts under Nevada law. To determine the validity, the Supreme Comi found that one
must first look at the words of the trnst and not rely on parole evidence. The Supreme Court next
found that the failure to observe formalities of the trust did not cause it to be disregarded. The
72
394 P.3d 940 (2017)
20
proper remedy for failure to observe formalities is a civil suit against the trustee. In addition, the
Supreme Court found that the equalization of the trnsts was not allowed as it was essentially
ordering the trnstee to distribute property that can only be distributed in the trustee's discretion.
Also, the Supreme Court found that equitable remedies can only be created by the legislature and
not the court. Finally, the Court reversed the order of child support which is not recognized under
the Nevada asset protection trust as an exception creditor. It noted the eff01is of Nevada to attract
trust business to the state under the asset protection trust. Because the husband's children and
spouse weren't known creditors at the time he established the asset protection trust, he could not
be ordered to pay these obligations.
5.3. OBSERVATIONS. To date, the cases emphasize the need to follow the
formalities set out in the statute to create a valid enforceable asset protection trust. This is true for
both the Transferor and the Creditors. Another lesson learned, is to stay out of bankruptcy. While
banlcruptcy can be voluntary or involuntary, in almost all cases, it is voluntary. Once in
banlauptcy, the bankruptcy trustee has the ten (10) year clawback provision which has been used
effectively in almost all of the unfavorable cases set out above.
However, if you are not in banlCT'uptcy, the Matthews case suggest that the statute of
limitations are enforceable and will need to be met by the creditors. Finally, as will be discussed
in the next section, screening and due diligence should be used to weed out Transferors who are
cunently being pursued by Creditors.
6. TRUSTEE AND LAWYER LIABILITY TO CREDITORS
As originally introduced into the legislature, the Legacy Trust provisions provided
immunity from liability for Trustees and lawyers preparing, funding and managing Legacy Trusts.
These are not unusual provisions and can be found in other states with DAPT legislation. The
21
Legacy Tmst opponents pointed to these provisions as proof that there was something evil about
Legacy Tmsts requiring such immunity. Accordingly, the immunity provisions were removed
from the enacted Legacy Tmst provisions.
For both Tmstees and lawyers, liability comes from two areas: Creditors and beneficiaries.
For lawyers, there is the additional liability placed on them by the Rules of Professional Conduct.
This Section focuses on Liability to Creditors
6.1. TRUSTEE LIABILITY. Under the conunon law a tmst was not an entity that could
be sued. Instead, the trustee was sued personally. If necessary, the trustee then requested
indemnity or contribution from the trust. 73 Most states, through the adoption of the Uniform Trust
Code, Trust Codes or the Uniform Probate Code, modified this common law rule to require that
the claim be brought against the trust except in ve1y limited circumstances where the trustee acting
outside the duties of the trustee caused the injury. 74
The Indiana Trust Code states that the tmstee is not personally liable on a contract or other
non-negotiable obligation with a third person in the administration of the trust. 75 It goes on to
provide personal liability only if the injury suffered by the third party is a result of the tmstee's
personal act or omission as tmstee. 76
With the passage of the Legacy Trust provisions, Indiana provides a framework in which
assets can be protected from Creditors of a Transferor under certain circumstances. 77 As a result,
there can be no liability on the Tmstee for merely serving in the role of Tmstee as anticipated by
the Indiana Legacy Tmst provisions.
73
Bailey, "Asset Protection Trusts Protect the Assets But What About the Trustees?" Probate and Property,
January/February 2007, p. 58
74 Id.
75
I.C. 30-4-3-lO(a)
76 Id.
77
I.C. 30-4-8
22
This leaves open the question of transfers that may later be found fraudulent under the
UFTA. Typically, the alleged liability of the Trustee to Creditors because of a fraudulent transfer
would be aiding and abetting or conspiracy. In a worst case scenario, the trustee could be charged
for any intentional acts taken to defraud the creditor.
With that background in mind, the first step will come in the selection of the Trustee. Given
the requirements involved in establishing a Legacy Trust and the significance of the amount of
assets being sheltered for protection, a Trustee should be selected that can not only hold and invest
the assets but also administer the complex administration provisions. This strongly suggests a
professional trustee which would also satisfy concerns related to subordinate pa1iies being either
trustees or in charge of distributions.
However, by far the best steps to be taken by the Trustee would be to establish a due
diligence procedure which would prevent the creation of a Legacy Trust with fraudulent transfers.
Attached as Exhibit B is a suggested addendum to a typical client intake sheet to try and cover all
aspects of this due diligence procedure. Among the many procedures that should be followed will
be obtaining the underlying documents to show the solvency of the Transferor at the time of the
qualified disposition as well as copies of any and all applications or financial statements for loans
and other bank documents which may have prohibited transfers to the Legacy Trust. In addition
to the Qualified Affidavit, the trustee should obtain an affidavit with regard to creditors and
potential creditors lmown to the Transferor at the time of the qualified disposition. The trustee
should be satisfied as to the issue of whether or not transfers to the trust are fraudulent.
Related to the Trustee liability is the issue of Director's liability. Indiana, effective July 1,
2019, adopted the Uniform Directed Trust Act. 78 This Act allows multiple parties to serve in a
78 I.C. 30-4-9
23
fiduciary capacity such as Distribution Director or Investment Director. While the Distribution
Director should be independent the same as a Qualified Trustee, the Investment Director could
have the Transferor as an advisor.
Under the Uniform Directed Trust Act, all of these individuals have fiduciary liabilities
similar to the Trustee to the extent that they have the power of direction. To the extent they have
the power of direction, the Trustee is relieved of that liability. 79
6.2. LA WYER LIABILITY. Lawyers owe the same duties to Creditors as set out above
for the Trustees. In addition, lawyers are bound by the Rules of Professional Conduct.
Asset protection does not always involve fraudulent conduct. An often quoted United
States Supreme Court case stated:
"we suspect there is absolutely nothing new about debtors t1ying to avoid paying
their debts, or seeking to favor some creditors over others - or even about their
seeking to achieve these ends through sophisticated ... strategies." 80
As a general proposition, lawyers who assist clients with transfers of property in good faith and
without actual or deemed knowledge that the transfers are fraudulent should not be liable to
creditors or violate any ethical obligations. 81 Again, the most common forms of liability to
Creditors clients are conspiracy or aiding and abetting the :fraudulent transfer. One commentator
reduced this to three separate categories: (1) the fraudulent transfer constitutes a independent tort;
(2) the fraudulent transfers merged with an independent t01t (usually fraud); and (3) the court
adopts a broad interpretation of the UFTA "Catch-All" provision. 82 The first categ01y is self-
evident in that a lawyer who does an independent t01t would be liable under almost all
79
I.C. 30-4-9
80
Grupo Mexicano de Desarrollo v Alliance Bond Fund, Inc., 527 U.S. 308 (1999).
81
Culp and Perrin, "The Case for Caution," Probate and Property, January/February 2010, p. 41.
82 Id.
24
circumstances. 83 However, in Reynolds v Schrock84 Com1ecticut found that the attorney is not
liable for aiding and abetting a breach of fiduciary duty unless the attomey acted outside the scope
of the lawyer-client relationship.
The second category requires merger of the transfer with an independent tort. Fortunately,
there is substantial case law refusing to hold attorneys liable under the aiding and abetting theory
if they are not the transferee of the property. In Arena Development Group LLC v Nagle
Communications Inc. 85 the District Court from Minnesota acknowledged confusion between fraud
and fraudulent transfers and cited cases including one from Indiana in which the court held that
there is no accessory liability for fraudulent transfers under the Uniform Fraudulent Transfer Act. 86
The third categmy relies on the UFTA provision which allows "any other relief the
circumstances may require." 87 Fortunately, most courts cite Freeman v First Union National
Bank8 8 which concluded that there is no language in the UFTA that suggest the creation of a
distinct cause of action for aiding and abetting claims against non-transferees.
The applicable Rules of Professional Conduct are RPC l.2(d), 4.4(a) and 8.4. RPC l.2(d)
prohibits the lawyer from counseling a client or assist a client that a lawyer knows is criminal or
fraudulent. RPC 4.4(a) also prohibits a lawyer from means that have no substantial purpose other
than to emba1nss on to lay a burden on a third person. RPC 8.4 makes it a professional misconduct
for the lawyer to engage in conduct involving dishonesty, fraud, deceit or misrepresentation.
83 11
Slenn, Has the Warning Bell Sounded for Asset Protection Planners?" Probate and Property, March/April 2010,
p. 48.
84
142 P.3d 1062 {OR 2006)
85
2007 WL 2506431 {D. Minn. 2007)
86
Baker O'Neal Holdings, Inc. v Ernst and Young LLP, 2004 WL 771230 {S.D. Ind. 2004)
87 I.C. 32-18-2-17
88
865 So.2d 1272 (Fla 2004)
25
Comments to RPC 1.2 require that the attorneys conduct be fraudulent or criminal. Fraudulent is
defined as having a purpose to deceive.
As was the case with the trustee, the liability stems from a determination that a transfer to
the Legacy Trust was fraudulent. The best way to avoid liability is for the lawyer to do adequate
due diligence before creating and funding the Legacy Trust. Procedures should be established to
obtain the necessary documents and information to back up the qualified
affidavit and make sure that the protection is there for the transfer from Claims of Creditors.
Exhibit B is an example of such a procedure.
7. DRAFTING CONCERNS
In drafting an Indiana Legacy Trust, the goal is to protect the Transferor's assets
from Claims of Creditors yet provide Transferor maximum flexibility and benefits. These
conflicting goals require a careful review of all powers and rights contained in the Trust.
7.1. STATUTORY REQUIREMENTS. First, and foremost, the Legacy Trust
requirements must be met. These are set out in Section 2. Among those requirements is a
Qualified Affidavit affirmed under penalties by the Transferor and delivered to the
Qualified Trustee. 89 See Exhibit C attached. To confirm delivery, a receipt signed by
the Qualified Trustee is added to the statutory form.
In the Legacy Trust (See Exhibit D), language should spell out the requirements
for a Qualified Trustee so that Transferor is clearly advised what is needed. 90 Indiana law
must be required by the Trust though the power to change can be included for the Trustee
89
I.C. 30-4-8-S(a)
90
IC 30-4-8-2(12)
26
or a Protector. 91 The Legacy Trust must be irrevocable92 and must include a spendthrift
provision as set out in the statute. 93
7.2. MULTIPLE FIDUCIARIES. In complex trusts, including Legacy Trusts,
it is common to have multiple fiduciaries to carry out the different duties with different
powers. This gives flexibility to irrevocable trusts designed to exist for long periods of
time. In many DAPT tlusts, it is not unusual to see an Administrative Trustee, and
Investment Trustee and a Distribution Trustee. These DAPT tlusts go to great lengths to
detail the power and duties of each trustee and to absolve a tlustee from acts of other
trustees.
Effective July 1, 2019, Indiana adopted a solution to this problem: The Uniform
Directed Trust Act (UDTA) 94 The UDTA establishes a framework for a Trustee to be
directed by Trust Directors in specified areas. 95 In the Legacy Trust example, there must
always be a Qualified Trustee as required by statute. 96 However, there can also be a
Distribution Director and an Investment Director who direct the Trustee on distributions
and investments. Under the UDTA, the Trustee is not liable for the actions of the Directors
unless a Director directs an action that requires a Trustee to engage in willful misconduct. 97
Moreover, the Director is held to the same fiduciary standard as a Trustee to the extent of
the direction unless the trust provides otherwise. 98 This UDTA innovation allows
91
I.C. 30-4-8-4(2)
92
1.C. 30-4-8-4(3)
93
1.C. 30-4-8-4(4)
94
SEA 265, Section 10 adding I.C. 30-4-9
95 Id.
96
I.C. 30-4-8-4(1)
97
1.C. 30-4-9-9(b)
98
I.C. 30-4-9-8(a)(1)
27
maximum flexibility in drafting. All powers and duties are given to the Qualified Trust
subject to these powers of direction.
Other Directors may include a Trust Pmtector who is given the power to change
the Trust or Trustee when requested as needed. In Exhibit D, this is called the "Protector
Director." Under the UDTA, advisors are also directors if given a power of direction. 99
A Transferor should never be a Trustee or Director. 100 However, the Transferor can be an
investment advisor to the Trustee or Investment Director. 101
7.3. RULE AGAINST PERPETUITIES. As introduced in the legislature, the
Legacy Trust was not subject to either the common law rule against perpetuities or
Indiana's version of the Uniform Statutmy Rule Against Perpetuities (RAP). 102 Borrowing
from Ohio, the Trust was named the Legacy Trust because it had both Asset Protection
provisions and Dynasty provisions.
During the legislative process opposition arose to the Dynasty provisions and they
were removed. For drafting purposes, a savings clause should be used to prevent violation
of the RAP. The savings clause should require vesting within the maximum time allowed
under the RAP both as it exists now and in the future in case the law is changed.
7.4. QUIET TRUSTS. Effective July 1, 2019, an amendment to the Trust Code
is made providing clarification on the issue of "Quiet Trusts." 103 Quiet Trusts allow a
Trustee to withhold information from a beneficiary. They were allowed under the Indiana
Trust Code but there was no protection for the beneficiaiy. 104 With the new changes, the
99
I.C. 30-4-9-2(9)
100
I.C. 30-4-8-11 and 12
101
I.C. 30-4-8-12
102
1.c. 32-17-8
103
SEA 265, Sections 1 and 3 amending I.C. 30-4-1-2 and 6
104
See form I.C. 30-4-3-6
28
Trnstee should be given the power to appoint a "Designated Representative" to act on
behalf of the beneficiary. 105
8. USES
The Indiana Legacy Trust obviously impacts the area of asset protection and
debtor/creditor law. But it is one of those rare changes which cuts across all area of the
law. Its uses are limited only by the imagination of creative planners. In this section, we
will explore some uses of the Legacy Trnst.
8.1. ESTATE PLANNING. As discussed earlier, a Qualified Disposition to a
Legacy Trust does not necessarily have to be a completed gift. If the Transferor retains the
right to veto distributions or a special power of appointment, the transfer will not be a
completed gift. Among the reasons for not making a completed gift would be the stepped-
up basis that could be available on the Transferor's death if the assets are still in the
Transferor's estate.
Conversely, the completed gift to the Asset Protection Trust would remove the
assets from the Transferor's estate. This reduces the value of the gross estate for federal
estate tax purposes. This is true despite the fact that the Transferor may be the discretionary
distributions from the principal or income. Proposals to reduce federal estate tax
exemptions may suggest completed gifts to use up cunent exemptions.
The next estate planning area would be the generation sldpping aspects of a legacy
trust. Designed properly, it should continue on for future generations. Because Indiana
did not adopt the exception from the rule against perpetuities either common law or
statutory, the generation sldpping feature will last only as long as the longest vesting period
105
I.C. 30-4-1-2(7)
29
under the rule against perpetuities. In the case of the uniform statutory rule against
perpetuities this could be as long as ninety (90) years. 106
Where there are concerns about creditors of beneficiaries or about the beneficiaries'
marital status, the legacy trust could be the perfect recipient of distributions from IRA's,
TOD transfers, beneficiary designations, wills and trusts.
8.2. FAMILY LAW. As indicated in the Legacy Tmst Act, qualified
dispositions to the legacy trust will not be subject to division on dissolution or separation
of marriage if the transfers were made before the marriage and in the case of a pending
marriage and the transfer is made within thirty (30) days of the marriage, the three (3) day
notice is given to the intended spouse before the transfer. This provides another planning
tool either in the alternative or combined with premarital agreements. There is of course
an exception for child support whether or not the child suppmi arose before the transfer to
the trust.
8.3. MEDICAID. Medicaid has a specific rule counting the assets of any self-
settled trust by an applicant for Medicaid eligibility. The legacy trust is often a self-settled
trust. As a result, it would not remove assets from the eligibility requirement of the
applicant unless it had a payback provision in it for the reimbursement to the estate of
expenses advanced on behalf of the Transferor. To avoid this result, third pati Legacy
Trust could be considered.
However, for future generations, the totally discretionary distributions should mean
that the assets of the legacy trust are not part of the countable resources of the beneficiary.
106
1.C. 32-17-8-3
30
8.4. BUSINESS ASSET PROTECTION TRUST. A close reading of the legacy
trust provision shows that it can be created by any "person," which includes a wide variety
of business entities and trusts. This raises the possibility of a business entity creating an
asset pmtection trust under the Indiana Legacy Trust provisions.
A full discussion of a business asset protection trust is beyond the scope of this
paper but has caused some literature to be published. 107
8.5. EXOTIC. Already, asset protection trusts similar to the Indiana Legacy
Trust have prompted planners to consider derivative uses of the trust. One strategy
discussed is referred to as the "hybrid asset protection trust." This type of trust is set up by
a third party to which the Transferor makes contributions. A trust protector has the power
to direct the addition of more beneficiaries and can add the Transferor as a beneficiary at a
later date beyond any statute of limitations.
Another derivative use combines the asset protection trust with LLCs. This is most
often used where the Transfemr is a non-resident of the state in which the DAPT is created.
For example, a resident of Illinois with Illinois real property may put it into an LLC thereby
maldng it personal property. The ownership of the LLC is then transferred to the Indiana
DAPT. This provides double layers of protection as any judgment against the LLC is a
charging order.
Expanding on the same theme, some commentators suggested what is called the
double LLC strategy. 108 Under this strategy, there are two business LLCs. LLC one is
owned 99% by the Asset Protection Trust and 1% by the individual. The second LLC is
107
Horwitz and Damicone, (/Asset Protection Trust for Businesses," Trust and Estates, December 2013, p. 16
108
Oshins "A Domestic Asset Protection Trust Combing it with the double LLC strategy," Probate and Property,
January/February, 2013.
31
owned 99% by the individual and 1% by the trust. This allows the individual to retain
incomes from the LLC despite pursuit from creditors by simply switching from one LLC
to the other.
9. COMPARISON TO OTHERAPT'S.
The differences between Asset Protection Trust both domestic and foreign are
significant. However, there are those who try to rate the various asset protection trusts to
help in the selection of an appropriate state venue.
It is doubtful that Indiana's legacy trust will attract much interest from residents of
other states because Indiana still imposes an income tax on trust income. Among states
which actively pursue trust prope1iy, there typically is no income tax on the trust income.
However, if you look at some of the ratings for domestic asset protection trusts,
Indiana should fare well. 109 Indiana already has in place what are called "discretionaty
support statutes" adopted from South Dakota. It also has in place from South Dakota "alter
ego" statutes protecting discretionary distribution trusts from attacks from creditors.
Finally, Indiana for the most part, compares favorably with other domestic asset protection
trusts with its clear and convincing burden of proof and shortened UFTA
statute of limitations.
What will probably relegate Indiana to a second tier of domestic asset protection
trust would be some of the exceptions carved out by the banks during the course of
legislation. Those exceptions include assets listed on applications or fmancial statements
requesting loans and assets that may have been transfen-ed that are contrary to provisions
in other loan related documents.
109
Merrick, Wortington, MacArthur & Sullivan, "Best States for DAPTs in 2019" Trust and Estates, January 2019, p.
60.
32
11111111111111111111111111111111111111111111111111
.,,
!
April 2, 2019
ENGROSSED
SENATE BILL No. 265
'j'
'
DIGEST OF SB 265 (Updated April 1, 2019 12:20 pm - DI 133)
Citations Affected: IC 30-4.

Synopsis: Various t:J.ust matters. Defines 11designated representative 11,
1
)udicial proceeding", and 11nonjudioialmatter11 fol'putposes of the trust
code. Authorizes the establisfunent of legacy trusts. Prescribes the
procedures for establishin~ a legacy trust and requil:ements for claims
under a legacy trust. ProV1des that a court shall exercise jurisdiction
over a legacy trust or a 9.ualified disposition and adjudicate a case 01·
controversy relardlng tlie legacy trust, if the case or cont:J.·oversy is
within the sub ect matter of the comt. Adopts the uniform dh'ected
trust act, whic allows for the terms of a trust to grant a person other
tllan a trustee power over some aspect of the trust's administration.
Provides that current law regatding the duties and liabilities of a trustee
ofa trustundetthe control ofa third person applies to directions given
to a trustee before July 1, 2019, by a person who has power under the
terms of the trust to dit'eot the trustee. Allows for the use of qulet trusts.
Provides that an interested _person may enter into a binding nonjudicial
settlement agreement with respect to bust mattel's, Provines for
nonjudicial account settlements.
Effective: July 1, 2019.
Head, Young M
(HOUSE SPONSORS - STEUERWALD, DVORAK)
:ranuary 7,.20191.read flrat time and referred 1o Committee on Judiciary.

February,, 201!1 amended, reported favorably-Do Pass,
February 21, 2019, read seooncl time, amendeil, ordered engrossed,
February 22, 2019, engrossed,
February 25, 2019, reao third time, passed, Yeas 42, nays 7,
HOUSE ACTION
March 4~ 2019, read first time and referred to Committee on Judiciary,
April 1, ;1.019, reported-Do Pass,
ES 265-LS 6487/DI 128
•
EXHIBIT
,Apl'il 2, 2019
Ffrst Regular Session, of the 12ls~ Ge~eral Assembly (2019)
.PlUNT.ING CODE, All\Olldtnonts: Whenever an existing atnlufe, (or a seQllort of th6 Indiana
Constitullon) Is being nmondod, tho text of tho existing provision wlll appear in tWs style 'type,
add1Uons wlll appear In thls styfo type1 and deletions wfll appelll' In thllt i!ty.lo type;,
1
I
Add!t!ons: Whenever II now statutory provision Is belng enaoted (or II new ooJ1JJtitutlonal,
provision 11doptod), the text of the new provision will appear !rt tllls ~tylo type, Also, the
word NEW will appear In that style type in the Introductory olauso ofeaoh SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution,
Conillot reoonolUatlon: Toxtln 11 statute In this style t)lpfl ortl*lffy/e i,,pe rooonolles con.tllcts
between statutes .~naoted by the 2018 l.legulnr and Special Session of the General Assembly.
ENGROSSED
SENATE BILL No. 265
ABJLLFORAN ACT to amend the Indiana Code concerning trusts

and fiduciru:ies.
Be it enacted by the General Assembly ofthe State ofIndiana:

.,
l SECTION 1. re 30.-4"1"2, AS AMENDED BY :P.L.163-2018,

2 SECTION 13, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JOLY 1, 2019]: Sec. 2, As used in this article:
4 (1) "Adult" means any petson eighteen (18) years of age or older.
5 (2) "Affiliate" means a parent, descendant, spouse, spouse of a
6 descendant, brother, sister, spouse of a brother or sister,
7 employee, dfreotor, offioe1·, partner,jointventure1·, a col'poration
8 subject to common conttol with the trustee, a shareholder, or
9 corporation who controls the trustee or a corporation controlled.
10 by the trustee other than as a fiducim.y, an attorney, or an agent.
11 (3) 11Beneficiary'' has the meaning set fotth in IC 30-2-14-2.
12 (4) "Breach of trust" means a violation by the trustee of any duty
13 which is owed to the settler or beneficiary.
14 (5) "Charitable trust" means a h'Ust in which all the beneficiaries
15 are the general public or organizations, including trusts,
16 corporations, and associations, and that is organized and operated
17 wholly for religious, charitable, scientific, public safety testing,
ES 265-LS 6487/DI 128
•
2
1 literary, or educational pm·poses. The te1m does not include

2 chin1table remainder tmsts, chadtable lead trusts, pooled income
3 funds, or My other form of split-interest charitable trust that has
4 at least one (1) noncharitable beneficiary.
5 (6) 11 Court11 means a court having jurisdiction over trust matters.
6 (7) ''Designated representative 11 means a person who:
7 (A) is authorized, under the terms of a trust, to represent
8 the intel·ests of a beneficiary;
9 (B) delivers to the trustee a written acceptance of
10 appointment as the designated l'epresentative; and
11 (C) is appointed or assigned to act and communicate on
12 behalf of that beneficiary in one (1) ol' more of the
13 following ways:
14 (i) The person is e:x:preBsly appointed by the settlor, in the
15 trust instrument or under a power reserved by the
16 settlor, to act as a designated repl'esentative fol' one (1)
17 or more beneficiaries of a trust.
18 (ii) The person is appointed as a designated
19 representative by the trustee or by another authorized
20 person under procedures provided in the trust
21 instrument or under this subdivision.
22 (iii) The perspn is authorized or directed under the tl'ust
23 instrument to represent or bind one (1) or more
24 beneficiaries in connection with a judicial proceeding or
25 nonjudicial matter.
26 (iv) The person is appointed by a beneficiary to act as a
27 designated representative of that beneficiary.
28 Notwithstanding ariy corltrary provision in the trust
29 instrument or in a·ny other writing that appoints a designated
30 representative, a designated l'epresentative is a fiduciary and
31 has a duty to act in good faith in representing the best
32 interestll of the beneficiary being represented, and to refrain
33 from willful misconduct, · ·
34 ffl (8) 11Inoome 111 except as othe1wise stated in a trust agreement,
35 has the meaning setfo1i:h in IC 30-2-.14-4.
36 tB:} (9) "Income benefioiru:y" bas the meaning set forth in
37 IC 30-2wl4-5. .
11
38 (9J (10) Inventory value" means the cost ofproperty to the settlor
39 or the iJ:ustee at the time of acquisition or the market value of the
40 property at the time it is delivered to the trustee, or the value of
41 the property as finally determined for purposes of an estate or
42 inheritance ta:x.
ES 265-LS 6487/DI 128
•
l'
1 (11) "Judicial proceeding" means a proceeding involving a

2 trust before a court having subject matter jurisdiction the of
3 trust, whether or not the administi'ation of the trust is
4 governed by lndiana law.
5 f1B) (12) 11Minor 11 means any person utider the age of eighteen
6 (18) yeru·s,,
7 EHi (13) "No oontest provision" :ref.ers to a provision of a trust
8 instrument that, if given effect, would :reduce or eliminate the
9 interest of a beneficiary of the trust who, directly or indireotly,
10 initiates or otherwise pursues:
11 (A) an action to contest the validity of:
12 (i) the trust; or
13 (ii) the terms of the trust;
14 (B) an action to set aside or vary any term of the trust; or
15 (C) any other act to :frustrate 01· defeat the settler's intent as
16 expressed in the terms of the hust.
17 (14) "Nonjudicial matter" includes bu tis not limited to any of
18 the following matters or actions relating to a trust or its
19 administration:
20 (A) A trustee's provision of accounting statements or
21 notices to beneficiaries under IC 30..2-14, IC 30..2..15, or
22 this article. ·
23 (B) The solicitation, execution, and delivery of waivers of
24 notice, consent, or objections :from beneficiaries under
25 IC 30~2. .14, re 30. .2-15, or this article,
26 (C) The solicifation, execution, and delivery of a consent,
27 acquiescence, ratification, release, or discharge by a
28 beneficiary under re 30-4-3-19.
29 ~ (15) "Person" has the meaning setforfh in IC 30-2-14-9.
30 f.1:37 (16) "Personal tepresentative" means an executor or
31 administrator of a decedent's or absentee's estate, guardian of the
32 person or estate, guardian ad !item or other court appointed
33 representative, next :friend, parent or custodian of a :minor,
34 attorney in fact, or oustodian of an inoapacitated person (as
35 denned in IC 29-3wl . .7.5).
36 ft4J (17) 11Principa111 has the meaning set forth in IC 30-2-14-10.
37 {+5J (18) "Qualified beneficiai'Y" means:
38 (A) a beneficiary who, on the data the beneficiary's
39 qua1ification is determined:
40 (i) is a disfrlbutee or permissible distributee of trust income
41 or principal;
42 (ii) would be a distdbutee orpe1:missible distl'ibutee oftiust
ES 265-LS 6487/Dl 128
•
4
1 income or principal if the interest of the distributee
2 descdbed in item (i) terminated on that date;
3 (iii) would be a distdbutee or permissible distributee of trust
4 income or principal if the tmst terminated on that date;
5 (iv) is a charitable organization expl'essly designated to
6 receive distdbutions under the terms of a chru.1table trust;
7 (v) is a person appointed to enforce a tiust for the care of an
8 anlmal under re 30-4~2~18; or
9 (vi) is a person appointed to enfol'ce a trust for a
10 noncharitable pm·pose undel' IC 30-4~2~ 19; or
11 (B) the attorney general, if the hust is a chadtable trust having
12 its principal place of administration in Indiana.
13 f1-6J (19) 11Remainderman11 means a beneficiary entitled to
14 principal, including income which has been accumulated and
15 added to the principal.
16 $RJ (20) 11 Settlo.r11 means a person who establishes a trust
17 including the testator of a will under which a trust is created,
18 f18J (21) 11 Tenns of a trust11 , 11 terms of the trust", or 11 tenns of a
19 charitable trust" means the manifestation of the intent ofa settlor
20 or decedent with respect to the trust, expressed in a manner that
21 admits ofits proofin a judicial proceeding, whether by written or
22 spoken words 01' by conduct, .
23 0-9J (22) 11Trust estate11 means the trust property and the income
24 derived from its use.
25 t*l1 (23) 11Trust for a benevolent public plU',POse11 means a
26 charltable tmst (as defined in subdivision (5)), a split-interest
27 trust (as defined in Seotlon 4947 of the Inteinal Revenue Code),
28 a perpetual care fund or an endowment care fund established
29 under IC 23w14-48-2, a prepaid funeral plan or funeral trust
30 established under IC 30-2-9, a funeral trust established under
31 re 30-2-10, a trust 01· an escrow account creat-ed :fl:om payments
32 of funeral, burial services, or merchandi~e in advance of need
33 described in IC 30-2'-13, and any other form of split-intetest
34 chai1table trust that has both charitable and noncharitable
35 beneficiades, including but not li:tnl.ted to charitable temainder
36 tmsts, ohru:itable lead tmsts, and charitable pooled income funds.
37 ~ (24) 11 T111st insh'U111ent" means an instrument, agi:eement, or
38 othe1' written document executed by the settlor that contains the
39 terms of the trust, including any amendments to the terms of the
40 1:1:ust. ·
41 ("22J (25) 11Tl'Ustpropel'ty11 means propertyeithe1'plaoed in t:tust or
42 purchased 01· otherwise acquired by the trustee for the trust
ES 265.'..-Ls 6487/Dl 128
•
5
1 i'egardless ofwhethe1· the tmstprope1iy is titled in the name of the
2 trustee 01· the name of the trust.
3 ~ (26) 11'1):ustee 11 has the meaning set forth in IC 30-2w14w13,
4 SECTION2. IC 30"4-3~2IS AMENDED TO READ AS FOLLOWS
·; 5 [EFFECTIVE JULY 1, 2019]: Seo, 2: (a) The settlormayprovide in the
6 terms of the ttust that the interest of a beneficiary may not be either
7 voluntal'ily or involuntarily transferred before payment or delivery of
8 the interest to the beneficiary by the trustee.
9 (b) Except as otherwise provided Jn subsection (o), if the settlor is
10 also a beneficiary of the 1rust, a provision restrnining the voluntary or
11 involuntary transfer of hi8 the settlor's beneficial interest will not
12 p1·even;t hi8 the settlor's creditors from sa\isfying claims :from hi8 the
13 settlor's JntE,rest Jn the trust estate.
14 (c) Subsection Wapplies to a: trttst that meets both:ofthefollOWffl:g
15 reqtth:onms, regardless ofwhether or ttot the A protecti've provision
16 similal' to that authorized by subsection (a) prevents a c1•editor of
17 the settlor from satisfying a claim from the settlo1·'s interest in the
18 trust estate when the settler is also a beneficiary of the trust if the
19 trust is one (1) of the following:
20 (1) A trust that meets both of the following requirements:
21 ffl (A) The ttust is a qualified trust under 26 U.S.C, 401(a).
22 (2) (:B) The li:tnitations on each benefioiai:y's control over the
23 beneficiary's interest in the trust complies with 29 U.S.C.
24 l056(d).
25 (2) A legacy trust established under IC 30M4-8.
26 (d) A trust containing terms autho11zed under subsection (a) :tnay be
27 referred to whe1·eve1• appropriate as a trust with protective provisions.
28 SECTION 3. IC 304-3-6, AS AMENDED BY P.L.5M2015,
29 SECTION63,ISAMENDEDTOREADASFOILOWS[EFFECTIVE
30 JULY 1, 2019]: Sec. 6. (a) The tmsteehas a duty to administer a trust
31 according to the terms of the trust.
32 (b) Unless the terms of the trust or the provisions of section 1.3 of
33 this ohaptel' provide otherwise, thfl trustee also has a duty to do the
34 followlng:
35 (1) Administer the 1rustin amanner consistent with IC 30-4-3.5.
36 (2) Take possession of and maJntain control over the trust
37 property.
38 (3) Preserve the 1rust pmperty.
39 (4) Make the trust property productive for both the income and
40 remainder beneficiru:y. As used in this subdivision, 11productive11
41 Jnoludes the production of income or investment for potential
42 appreciation.
ES 265-LS 6487/DI 128
•
6
1 (5) Keep the trust property separate from the trustee's individual
2 property and separate from or oleru1y identifiable from property
3 subject to another trust.
4 (6) Maintain clear and accurate accounts with respect to the trust
5 estate.
6 (7) Except as provided in subsection (c), keep the following
7 beneficiaries reasonably infor1ned about the administration ofthe
8 trust and of the material facts necessary fo1• the beneficiaries to
9 protect theh' interests:
10 (A) A current income beneficiru:y.
11 (B) A beneficiary who will become an inoome beneficiary
12 upon the expiration of the term of the current income
13 beneficiary, if the trust has become irrevocable by:
14 (i) the terms of the trust instrument; 01·
15 (ii) the death of the settlor.
16 A t1'Ustee satisfies the requh'ements of this subdivision by
17 providing a beneficiary described in clause (A) or ,(B), upon the
18 bene-ficiarys written request, access to the trust's accounting and
19 financial records concerning the administration of trust property
20 and the administration of the trust,
21 (8) Upon:
22 (A) the trust becoming h'revocable:
23 (i) by the terms of the trust instrument; or
24 (ii) by the death' of the settlor; and
25 (B) the written request of an income beneficia1y or
26 remainder.man; ·
27 promptly provide a copy of the complete trust instrument to the
28 in.come beneficiary orremaindennan, This subdivision does not
29 prohibit the terms of the trust from requiring the trustee to
30 separately provide each beneficiary only the portions of the
31 trustinstl'umentthat describe or pertain to that beneficiary's
32 interest in the trust and the administrative provision of the
33 trust instrument that pertain to ·au beneficiaries of the trust,
34 (9) Take whatever action is reasonable to realize on claims
35 constituting part of the trust property.
36 (10) Defend actions involving the trust estate.
37 (11) Supervise any person to whom authority has been delegated,
38 (12) Determine the trust benefioia1fos by acting on information:
39 (A) the trustee, by 1·easonable inquity, ooni#del's 1·eliable: and
40 (B) with respect to heirship, relationship, survivorship, or any
41 other issue relative to determining a trust beneficiary.
42 (c) The terms of a trust may expand> restrict, elimillate, or
ES 265-LS 6487/DI128
'f
l
'f
i
TI 7
:
1 othe:rw:ise vary the right of a beneficiary to be informed of the
2 beneficiary's interest in a trust fol' a period of time, including a
3 period of time related to:
4 (1) the age of the beneficiary;
5 (2) the lifetime of a settlor or the spouse of a settlor;
6 (3) a term of years or a period of time ending on a specific
7 date; or
8 (4) a specific event that is certain to occur.
9 (d) During any period of time that the tl'Ust instrument restricts
10 or eliminates the right of a beneficiary to be informed of the
11 beneficiary's interest in a frust, a designated repl'esentative for the
12 beneficiary:
13 (1) shall represent that beueficfary and bind that beneficiary's
14 interests for purposes of any judiciary proceeding or
15 nonjudicial matter involving the trust unless the court finds,
16 after a hearing upon notice, that a conflict of interest exists
17 between the beneficiary and the designated representative;
18 and
19 (2) has the authol'ity to initiate or,defend and participate in
20 any proceeding relating to the trust under this article or
21 under IC 30~2 on behalf of the beneficiary.
22 An alleged conflict of interest between a beneficiary and the
23 beneficiary's designated 1·epresentative may be asserted to the
24 court by the beneflcial'Y whose right to be informed of the
25 beneficiary's interest in a trust is restl'icted or eliminated in the
26 trust instrument or by any othel' person authorized to represent
27 and bind that beneficiary's interest under IC 30-4-6~10.5.
28 (e) If:
29 (1) a beneficiary is an adult and has not been adjudicated to
30 be an incapacitated person;
31 (2) the trust instrument restricts or eliminates the right of the
32 beneficiary to be informed of the beneficiary's interest in a
33 trust; and
34 (3) the beneficiary discovers information about the
35 beneficiary's interest in the trust ft•om sources other than the
36 trustee;
37 subsections (c) and (e) do not prohibit the beneficiary from
38 demanding and receiving information about the trust and its
39 administration under subsection (b)(7\ including a copy of all
40 televant pol'tions of the trust instrument, or an accounting Ol'
41 statement regarding the trust under IC 30-4~5~12(c). The
42 beneficiary may also initiate and participate in any proceeding
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1 against or with the trustee under this chapter.

2 SECTION 4. !030-4-3-9 IS AMENDED TO READ AS FOLLOWS
3 [EFFECTIVE JULY 1, 2019]: Sec. 9. (Duty of'frusteeunde1· Control
4 of Third Person)
5 (a) This section applies to directions given to a tl'Ustee befo1•e
6 July 1, 2019, by a person who has power under the terms of the
7 trust to direct the trustee.
8 (a} (b) If the terms of the trust give a person a powe1· to direct the
9 trustee in the administration of the trust and those terms expressly
10 d:irect the trustee to rely, or relieve the trustee from liability ifhe does
11 rely, on that person's directions, the trustee may do so and will incur no
12 liability for any loss to the trust estakl,
13 {b:} (c) 1fthe terms of the trust give a person a power to direct the
14 trustee in the administration of the trust, except as provided in
15 subsection W(b): ofth±s seetkltt:-
16 (1) ff the person holds the powel' as a fiduolary, the trustee has a
17 duty to refuse to comply with any dfrection which he knows or should
18 know would constitute a breach of a duty owed by that person as a
19 fiduciary,
20 (2) If the person holds the power solely for his own benefit, the
21 trustee may refuse to comply only if the attempted exercise of the
22 power violates the terms of the trust with tespeot to that powel',
23 SECTION 5. IC 30-4-3-24.5; AS' ADDED BY P.L.238-2005,
24 SECTION 36, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
25 JULY 1, 2019]: Sec, 24.5, ·(a) This section does not apply to an
26 easement for conservation or preservation.
27 (b) This subsection applies to a tmst consisting of trust property
28 having a total value of less than seventy-five thousand dollars
29 ($75,00°0). Unless the terms of the trust pl'ovide otherwise, the trustee
30 may terminate the trust: ·
31 (1) if the trustee concludes the value of the trust property is
3Z insufficient to justify the cost 9f administl'atfon; and
33. (2) after pr9viding notice of the trust termination to qualified
34 bene:fioiaties. · ·
35 (c) The trustee may pr'opose the termination of a trust by
36 written notice. to qualified bi;inefioial'ies if the trustee, upon l'eview
37 of surrounding circumstances, concludes that continuation of the
38 trust on its e:xistlng terms would be contrary to the ~conomic best
39 interest of the tmst estate and that early termination would be in
40 the best int~l'ests of the beneficiaries consistent with the settlor's
41 intent. This trust termination sllall occur upon •·eceipt of written
42 consent of all qualified beneficiaries. ·
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1 ~ (d) The oom1: may:
li 2 (1) modify or terminate a trust; or
: 3 (2) remove the trustee and appoint a different trustee;
4 ifthe couit determines that the value .ofthe trust property is :insufficient
5 to justify the cost of administration. If a trust te1'minates under this
T 6 subsection, the court shall direct the trustee to distribute the trust
7 property in a manne1· consistent with the purposes of the trust,
8 @} (e) If a trust terminates under subsection (b), the trustee shall
9 distribute the trust property :in a manner consistent with the PU1'.P0Ses
10 of the trust.
11 SECTION 6, IC 30-4"5~14.5 IS ADDED TO T.HEJNDIANACODE
12 AS ANEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
13 1, 2019]: Sec, 14,5. (a) A trustee may obtain a nonjudicial
14 settlement of its accounts in accordance with subsection (b) when:
15 (1) a trust terminates pursuant to the terms of the trust;
16 (2) a small trust terminates pursuant to IC 30"4--3"24.5;
17 (3) a trustee resigns or is removed; or
18 (4) a trustee seeks discharge of an interim accounting period
19 when the trust is continuing.
20 (b) A trustee who elects to proceed under this section shall
21 p1·ovide the following to the quali.fled beneficiaries of the trust and
22 a successor trustee, if applicable, within a reasonable time after
23 termination of the trust pursuant to its terms, the resignation or
24 removal of the trustee, 01• the end of the period for which the
25 tmstee is seeldng discharge:
26 (1) A statement showing the fair market value of the new
27 assets to be distributed from a terminating trust or a
28 successor trustee.
29 (2) A trust accounting for the pl'ior three (3) yeal's showing all
30 receipts and disbursements and inventory value of the net
31 assets,
32 (3) All estimate for any items reasonably anticipated to be
33 received or disbursed,
34 (4) The amount of any fees, including trustee fees, remaining
35 to be paid,
.. 36 (5) Notice that the trust is terminating, or that the trustee has
37 resigned or been removed, the time period for which the
38 trustee seeks discharge of its accounts, and a statement
39 providing that claims against a trustee undel' IC 30,4w6~12
40 and IC 30-4"6w141 if applicable, shall be barred if no
41 objections are l'eceived within the time pedod described in
42 subsection (c), '
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10
1 (6) The name and malling address of the trustee.
2 (1) The name and telephone number of a pel'son who may be
3 contacted for additional information.
4 The trustee may also provide the statement 1.mdnotice described in
5 this subsection to any otbe1· person who the t.mstee reasonably
6 believes may haV'e an interest in the trust.
7 (c) If, after l'eceiving the notice and trust information described
8 in subsection (b), a qualified beneficiary objects to a disclosed act
9 or omission, the qualified beneficiary shall provide written notice
10 of the objection to the trustee not later than sixty (60) days after
11 the notice was sent by the trustee. If no written objection is
12 provided in the sixty (60) day time period, the information
13 provided under subsection (b) shall be considel'ed approV'ed by the
14 1·ecipient. The trustee shall, in the case of a trust terminating
15 pursuant to the terms of the trust or the trustee's resignation or
16 removal, within a reasouable period of time following the
17 expiration of the sixty (60) day time period, distribute the assets as
18 provided in the trust or to the successor trustee. If a qualified
19 beneficiary gives the trustee a written objection witWn the
20 applicable sixty (60) day time period, the frustee or the qualified
21 beneficiary may:
22 (1) submit the written objection to the court for resolution
0
23 and charge the expense of commencing a pl'oeeeding to the

24 trus't; or
25 (2)' resolve the oojection 'by a nonjudicial settlement
26 agreement under section 25 ofthls chapter, or otherwise.
27 Any agreement entered into pursuant to ·subdivision (2) may
28 include a re.lease, an indemnity clause, Ol" both, OD the part of the
29 beneficiary against the tr.ustee relating to the trust. If the parties
30 agree to a nonjudicial settlement agreement under section 25 of
31 this chapter, any l'elated expenses shall be chal'ged to the trust.
32 Upon a 1•esolution ofan objection under this subsection, within a
33 reasonable period of time, the trustee shall distl'ibute the
34 remaining tl'Ust assets as provided in the trust or to the successol'
35 trustee.
36 (d) The trustee may rely upon the wl'itten statement of a person
37 receiving notice that the person does not object.
38 (e) When a trustee distributes assets of a termlnating trust or to
39 a successm· trustee after complying with the provisions of this
40 article· and having l'ecelved · no objectibns, each person who
41 received notice and either consented or failed to obj ectpul'suant to
42 this section is barred from:
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1 (1) bringing a claim against the trustee or chall~nging the ,
2 validity of the trust to the same extent and with the same
3 preclusive effect as if the cour.t had entered a final order
4 app1·oving the trustee's final account; or
T
5 (2) bringing a claim against the trustee for the period of such
! 6 interim accounts to the same extent and with the sam~
7 pl•eclusive effect as if the court had entered a final order
8 approving the trustee's interim accounts.
9 (f) A trustee may not request that a beneficiary indemnify the
10 trustee against loss in exchange for the trustee forgoing a request
11 to the court to approve lts accounts at the time that the trust
12 terminates, Ol' at the time the trustee resigns or is remove~ except
13 as agreed upon by the piU'ties pursuant to subsection (c).
14 (g) The court that exercises probate jurisdiction shall have
15 exclusive jurisdiction over matters under this section.
16 (h) IC 30-4-'6-10.5 shall apply to this section,
17 (i) Nothing in this aection shall pl'eclude a trustee from
18 proceeding unde1• 1C 30-4~3~18(b) to have the tl'Ustee's accounts'
19 reviewed and settled by the court.
20 SECTION 7. IC 30-4-Sw25 IS ADDED TO THE INDIANA CODE
21 ASANEWSECTION'TORBAD AS FOLLOWS [EFFECTIVE JULY
22 1, 2019]: Sec. 25, (a) As used in this section, "interested person"
23 means a person whose consent would be required to achieve a
24 binding settlement were the settlement to be approved by the court.
25 (b) E:x:cept as provided in subsection (c), an intel'ested person
26 may enter into a binding nonjudicial settlement agreement with
27 respect to any mattel' involving a trust, This procedure is not
28 intended to foreclose Ol' limit any other pl'ocedure for settlement
29 available under other applic!lble law.
30 (c) A nonjudicial settlement agreement is valid only to the extent
31 it does not violate a material purpose of the trust and includes
32 terms and conditiolls that could be properly approved by the court
33 under this article or other applicable law. A nonjudicial settlement
34 may not be used to pl'oduce a result not authorized by othel'
35 provisions of this article, including but not limited to terminating
36 or modifying a trust in an impermissible manner.
37 (d) Subject to subsection (c), matters that may be resolved by a
38 nonjudicial settlement agreement include the following:
39 (1) The interpretation or construction of the terms of a b·ust.
40 (2) The approval of a trustee 1s report or accounting or waiver
41 of the preparation of a trustee's report 01• accounting.
42 (3) Direction to a trustee to refrain fl'om perfol'ming a
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1 particula1• act Ol' th~ gl'ant to a trustee of any necessary ol'
2 desirable power.
3 (4) The resignation Ol' appointment of a trustee and the
4 determination of a tl'Ustee's compensation,
5 (5) Transfer of a trust's principal place of administration.
6 (6) Liability or release of a trustee fo:i.• an action l'elating to a
7 tl'ust.
8 (7) The criteria for distdbution to a beneficiary whel'e a
9 trustee is given discretion'.
10 (8) The resolution of a dispute · arising out of the
11 administration or distribution of a trust,
12 (9) An investment action.
13 (10) The appointment of and powers granted to a directing
14 party of a trust p1·otector.
15 (11) Direction to a directing party or to a trust protector to
16 perform Ol' refrain from performing a particular act or the
17 grant of a powel' to a directing party or trust protector,
18 (e) Before or after the parties enter into a nonjudicial settlement
19 agreement, an interested person may request the court to approve
20 a nonjudicial settlement agreement to determine whether the
21 rep1·esentation under IC 30-4-6-10.5 was adequate and to
22 determine whether the agl'eement contains terms and conditions
23 the court would approve,'
24 SECTION 8, XC 30-4--6-10.5, AS ADDED BY P.L,238-2005,
25 SECTION 45,ISAMENDED TO READ AS FOLLOWS [EFFECTIVE
26 JULY 1, 2019]: Sec.· 10,5, (a) Except as provided in the tenns of a
27 trust, and to the extent there is not a conflict of .interest between the
28 representative and the person represented or among those being
29 represented:
30 (1) a guardian may represent and b.ind the protected person who
31 is subject to the guardianship;
32 (2) an attorney in. fact who has authority to act with respect to the
33 particular question or dispute may represent and bind the
34 principal;
35 (3) a trustee may represent and bind the beneficiaries of the trust;
36 (4) a personal representative ofa decedent's estate may represent
37 and bind persons .intetested in the estate; and·
38 (5) a designated repl·esentntive appointed for a beneficiary
39 under a provision in a trust instrument may represent and
40 bind the beneficiary of the ttust; and
41 E5} (6) a parent may represent and bind the parent's minor,
42 unborn, ornot yet adopted childifa guardian for the child has not
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1 been appointed;
2 with regard to a particular question 01· dispute,
I 3
4
(b) The bolder of'a general power of appointment> including a
general testamentary power of appointment, may represent and bind
5 pel'sons whose interests aw subject to th~ powe1• of appointment1
6 including:
7 (1) pe1tnissible appointees; and
8 (2) takers in default.
9 (c) Unless otherwise represented:
10 (1) aminol';
11 (2) an incapacitated person;
12 (3) an unborn or a not yet adopted child; or
13 (4) a person whpse identity 01· location is unknown and not
14 reasonably ascertainable;
15 may be represented by and bound by anothe1· person who has a
16 substantially identical interestwithrespect to the particular question 01·
17 dispute but only to the extent there is not a conflict of interest between
18 the representative and the person represented,
19 (d) If the court detennines that an interest is .not represented under
20 this section or that the othe1wise available representation might be
21 inadequate, the court :may appoint a guardian ad !item. to receive notice,
22 give consent, and otherwise represe11t, bind, and act on behalf of:
23 (1) a mino.r;
24 (2) an incapacitated person;
25 (3) an unborn child; or
26 (4) a person whose identity or location is unlmown,
27 If not precluded by conflict of interest, a guardian ad !item may be
28 appointed to represent several persons or inte1'ests. A guardian ad !item
29 may act on behalf of the person represented with respect to any matter
30 adsing under this title, regatdless of whethe1· a judicial proceeding
31 concerning the trust is pending. In making decisions, a guardian ad
32 litem.mayconsider general benefits accruing to the living members of
33 the family of the persons represented.
34 (e) Notice to a pe1•son who may represent and bind another person
35 under this sectl.on has the s!;l..tne effect as if notice were given ditectly
36 to the other pel'son.
37 (f) The consent of a person who may represent and bind another
38 person under this section is binding on the person represented unless
39 the person rep1·esented objects to the 1'epresentation before the consent
40 would have become effective,
41 SECTION 9. IC 30-4-8 IS ADDED TO Tiffi INDIANA CODE AS
42 A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
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1 1, 2019]:
2 Chapter 8. Legacy Trusts
3 Sec, 1, (a) Subject to the limitations set forth in subsection (b),
4 this chapter applies to:
5 (1) qualified dispositions fo legacy tl·us,ts; and
6 (2) dispositions by transferol'S who are trustees;
7 that al·e made after June 30, 2019,
8 (b) This chapter does not apply to:
9 (1) any assets that are listed on an application m· financial
10 statement completed by the transferor and which is submitted
11 to a lender in connection with a request to obtain or maintain
12 credit from the lender; Ol'
13 (2) any assets ofn legacy trnst that are listed on an applic.ation
14 or financial statement completed on behalf of the legacy trust
15 and which is submitted to a lender in connection with a
16 l'equest to obtain Ol' maintain credit from the lender on behalf
17 of the legacy trust.
18 In the event that assets described in subsection (b)(1) are later
19 transferred to a legacy trust and a default occurs undel' the loan or
20 extension of credit, eithel' before ol' after the transfel' 01• disposition
21 under the legacy trust, the lender shall be entitled to proceed
22 against any assets listed on the applications or financial statements
23 which were submitted in connection with the loan, or any
24 modifications, amendments, or renewals of the loan. Nothing in this
25 chapter shall p1·ohibitsuch action, A change in the character, form,
26 or ownership of the assets described in subsection (b)(1) shall in no
27 way make subsection (b)(1) inapplicable,
28 Sec. 2. Unless the context requires otherwise, the following
29 definitions apply throughout this chaptel':
30 (1) 11 C1ahn11 means a right to payment, regardless ofwhether
31 the right is reduced to judgment, liquidated, unliquidated,
32 fixed, contingent, matured, immature, disputed, undisputed,
33 lega~ equitable, secured, or unsecured, ·
34 (2) "Creditor" means a person who has a claim against the
35 transferor.
36 (3) "Debt" means liability on a claim.
37 (4) "Disposition" means a tl'ansfer, conveyance, or assignment
38 of property, including a change in the legal ownership of
39 propedy that occurs when a trustee is substituted for another
40 trustee or when at least one (1) frustee is added. The term also
41 includes the exercise of a power that causes a transfer of
42 property to a trustee. However, the term does not include the
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1 release onelinquishment ohn intel'estin property that, until
2 the release or l'elinquishmenti was the subject of a qualified
3 disposition.
4 (5) "Investment decision" means the retention, purcl1ase, sale,
5 exchange, tender, or other transaction affecting the ownership
6 of or l'ights in an investment. ·
7 (6) "Legacy trust" means an irrevocable tl'Ust established
8 under section 3 of this chapter.
9 (7) "Lender" means a company 01• entity that extends credit,·
10 including but not limited to a financial institution (as defined
11 by IC 28~1...1~3(1)), a company or entity that extends credit
12 under IC 24~4.4 or IC 24w4,5, or the successors and assigns of
13 the company or entity.
14 (8) 11 Person II means an indi'Vidual at least eighteen (18) years
1'5 of age, a corporation, a trust, a limited liability company, a
16 limited liability pal'tnersbip, a partnership, a governmental
17 entity, the state, or a political subdivision of the state,
18 (9) "Property" means real property, personal property, 01· an
19 interest in real 01r personal property.
20 (10) "Qualified affidavit" means a1 sworn affidavit e1ecuted
21 under section 5 of this chapter,
22 (11) "Qualified disposition" means a disposition by a
23 transferor to a legacy trust.
24 (12) "Qualified trustee" means a person qualified to serve as
25 the trustee of a legacy trust under section 6 of this chapter,
26 (13) "Transferor" means a person who as:
27 (A) an owner of property;
28 (B) a holder of a powel' of appointment that authorizes the
29 holder to appoint in favor of the holder, the h0Ide1•1s
30 creditol.'s, the holder's estate, or the creditors of the
31 holder's estate; or
32 (C) a trustee;
33 directly 01.· indirectly makes a disposition or causes a
34 disposition to be made.
35 (14) "Trust director" means a person given authority by the
36 terms of a legacy trust to direct, consent to, or disapprove
37 actual or proposed investment' decisions, distdbution.
38 decisions, m· othe1• decisions related to pl'operty in a legacy
39 tl'ust.
40 Sec, 3, A legacy trust is established by:
41 (1) designating in writing in the trust that the trust is a legacy
42 trust established under this chapter;
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1 (2) including the terms required by section 4 of this chaptel'in
2 the legacy trust~ and
3 (3) delivering a qualified affidavit containing the statements
4 l'equil'ed by section 5 of this chapter to the qualified trustee,
5 Sec. 4, A legacy trust must do the following! ,
6 (1) :Provide for the appointment of at least one (1) qualified
7 trustee for the property that is the subject of a qualified
8 disposition.
9 (2) Expressly incorporate Indiana law to govern the validity,
10 construction, and administration of the tl'ust,
11 (3) Be frrevocable.
12 (4) :Provide that the interests of the transferor or beneficiary
13 in the trust property or the income from the trust property
14 may not voluntarily or involuntarily be transferred, assigned,
15 pledged, or mo1•tgaged before the qualified trustee actually
16 distributes the property or income to the beneficiary.
17 Sec, 5, (a) A qualified affidavit must be signed under the
18 penalties ofperjul'y, and state the following:
19 (1) That the transferor has full right, title, and authority to
20 transfer the property to the legacy trust,
21 (2) That the transfel' of the property to the legacy trust will
22 not rendel' the transferor insolvent, ·
23 (3) That the transferor does not intend to defraud a creditor
24 by transferring the property to the legacy trust.
25 (4) That there are no pending Ol' threatened court actions
26 against th'e transferor other than the court actions identified
27 by the transferor and attached to the qualified affidavit,
28 (5) That the transferor is not involved in any administrative
29 proceedings other than the administrative proceedings
30 identlfied by the transferor and attached to the qualified
31 affidavit,
32 (6) That the transferor does not contemplate filing for relief
33 under the federal banlu·uptcy code.
34 (7) That the property transferred to the legacy trust is not
35 derived from unlawful activities.
36 (b) Except as provided in subsectim1 (c), a qualified affidavit
37 must be signed by the transferor.
38 (c) In the case of a disposition by a transferor who is a trustee,
39 the quaµfied affidavit must be signed by the transferor who made
40 the original disposition to the trustee. A qualified affidavit signed
41 under thls subsection must state the facts as of the time of the
42 original disposition.
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1 (d) If a transferor is a married individual at the time a qualified
2 affidavit is signed, the transferor shall provide a copy of the
3 qualified affidavit to the transferor's spouse.
4 Sec, 6, (a) A person may serve as a qualified trustee of a legacy
5 trust if the person is not the transferor and satisfies either of the
6 following requirements:
7 (1) In the case of an individual, the individual is a resident of
8 Indiana.
9 (2) In all other cases, the person is-:
10 (A) authorized by Indiana law to ' act as a trustee; and
11 (B) subject to the supervision of:
12 (i) the department of financial institutions; or
13 (il) the fedel'al Office of the Comptroller of the
14 Currency, the Fedel'al Deposit Insurance Corporation,·
15 the Boa1·d of Govemors of the Federal Reserve System,
16 or any successo1· to these agencies.
17 (b) A quallii.ed trustee shall do the following:
18 (1) Maintain or arrange for providing custody of the property
19 subject to the qualified disposition in Indiana •
20 . (2) Maintain complete and accm·ate recol'ds for the legacy
21 trust on an exclusive or nonexclusive basis.
22 (3) Prepare or arrange for the preparation of all required tax
23 returns fol' the legacy trust.
24 (4) Materially participate in the administration of the legacy
25 trust.
· 26 Sec. 7. (a) Except as pl'ovided in section 8 of this chapter, no
27 cause of action of any ldnd, including a cause of action to enforce
28 a judgment, may be brought fon
29 (1) an attachment or other provisional remedy against
30 property that is the subject of a qualified disposition to a
31 legacy trust; or
32 (2) the avoidance of a qualified disposition to a legacy trust.
33 The protections provided to a qualified disposition by this
34 subsection apply notwithstanding any law to the contrary set forth
35 outside this chapter,
36 (b) If a court decUnes to apply Indiana law in determining the
37 effect of a spendthl'ift pro'Vision in a legacy trust in an action
38 brought against a legacy tl'Ust, the ttustee of the legacy trust shall
39 immediately resign and, without further Ol'der of any court, cease
40 to be the tl'Ustee ofthe legacy trust. When a trustee resigns under
41 this section, the tmstee has the power only to convey the trust
42 property to a successor trustee appointed under this section, A.
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1 successor trustee shall succeed the resigning trustee in accol'dance
2 with the terms of the legacy trust. If the trust does not provide for
3 a successol' trustee and the trust would otherwise be without a
4 trustee, any beneficiary of the trust may petition an Indiana court
5 to appoint a successor trustee, The Indiana court receiving the
6 petition shall appoint a successor trustee to serve in accordance
7 with the terms and comlltions that the com·t detel'mines are
8 consistent with the purposes of the trust and this chapter.
9 (c) A legacy trust an4 its property al'e protected under this
10 section regardless of whether or not the transfero).·:
11 (1) serves as a trust adviser under section 12 of this chapter;
12 or
13 (2) retains a power desclibed in section 13 of this chaptel'.
14 (d) To the maximum extent permitted by the United States
15 Constitution and the Indiana Constitution, a court of this state
16 shall e:x:e1·cise jurisdiction over a legacy trust or a qualified
17 disposition and shall adjudicate a case or, controversy bl'ought
18 before the court l'egarding, arising out of, or related to a legacy
19 trust ol' a qualified disposition if that case ol' controversy is
20 otherwise within the subject matter judsdiction of the court.
21 Subject to the United States Constitution and the Indiana
22 Constitution, a court of this state shall not dismiss or otherwise
23 decline to adjudicate a case 01• controversy described in this
24 subsection on the grounds that a court of another jurisdiction has
25 acquired 01• may acquire proper jurisdiction over, or may pl'ovide
26 proper venue for, the case Ol' conh•ovetsy or the parties to the case
27 ol' controversy. Nothing in this subsection shall be construed to do
28 eithel' of the following: ·
29 · (1) Prohibit a transfer Ol' other reassignment of a case or
30 controversy from one court of this state to anothe1· court of
31 this state. ·
32 (2) Expllnd or limit the subject matter jurisdiction of a court
33 of this state.
34 Sec. 8, (a) Except as provided in subsection (e), a claim against
35 property that is the subject of a qualified disposition to a legacy
36 trust is barred by section 7 of this chapter unless the claim is one
37 (1) of the following:
3~ (1) E:xcept as providetUn subsection (b), an action brought in
39 Indiana under the Uniform Fraudulent Transfer Act
40 (IC 32...18~2) in which the requirements for recovery under the
41 act are met by cleal' and convincing ev:i.dence. ·
42 (2) An action to enforce the child support obligations of the
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1 transferor under a judgment or court order.
2 (3) A court judgment or orde1• for the division of property in
3 a dissolution ofthe fransferor's marriage or a legal sepal'ation
4 between the transfel'or and the transfero1·1s spouse, if the
1' 5 transfel'o1· 1s disfribution to the legacy trust was madet
I 6 (A) after the date of the transferor's manfage that is
' 7 subject to tbe dissolution or legal separation; or
8 (B) within thirty (30) days before the date of the
9 transferor's marriage that is subject to the dissolution or
10 legal separation unless the tl'ansferor provided written
11 notice of the qualliled disposition to the other party to the
12 mardage at least three (3) days before malting the
13 qualified disposition.
14 (b) A claim brought under an action described in subsection
15 (a)(1) is extinguished unless~
16 (1) the Cl'editor's claim arose befo1·e the qualliled disposition
17 to a legacy trust was made and the action is brought not latel'
18 than the late1· of:
19 (A) two (2) years after the fransfer was made; 01·
20 (B) si:x: (6) months after the transfer:
21 (i) was recorded 01• made a public 1•ecol'd; or
22 (ii) if not recorded 01• made a public record, was
23 discovered or could have reasonably been discovered by
24 the creditor; or
25 (2) notwithstanding IC 32w18w2-19, the creditor's claim arose
26 concunent with 01• after the qualified disposition and the
27 action is brought not more than two (2) years after the date of
28 the qualified disposition,
29 (c) A qualified disposition made by a transferol' who is a trustee
30 is considered for pm•poses of this chapter to have been made on the
31 date that the properly that is subject to the qualified disposition
32 was originally transferred in trust to the frustee or any predecessor
33 trustee and the conditions set forth in section 4(3) of this chapter
34 are satisfied.
35 (d) If more than one (1) qualliled disposition is made by means
36 of the same legacy trust:
37 (1) the maldng of a subsequent qualified disposition is
38 disregarded when determining whether a credito1· 1s claim
39 with respect to a prior qualified disposition is extinguished
40 under subsection (b); and
41 (2) any distribution to a beneficiary is considered to h1tve been
42 made from the latest qualified disposition,
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1 (e) If the state of Indiana is a creditor of a transferor, then
2 notwithstanding subsection (a)(1) and subsection (b), the state of
3 Indiana may bring an action against a qualified trustee to assel·t a
4 claim against or to recover property that is the subject of a
5 qualified disposition by proceeding unde).· the Indiana Uniform
6 Fraudulent Tl'ansfel' Act, subject to the standal'd of evidence in
7 IC 32-18w2-14 and IC 32-18w2...15, and the limitation periods in
8 IC 32-18-2-19.
9 Sec, 9, (a) If a creditor's claim is allowed under section 8 of this
10 chapter, the tl'ansferor's qualified disJ?osition to a legacy trnst is
11 subject to the claim only to the extent netessary to satisfy the
12 transferor's debt to the creditor mald.ng the allowed claim.
13 (b) In the event the trustee participates in litigation bl'ought by
14 a lender to enfo1•ce its rights under section 1(b)(1) of this chapter,
15 the trustee may recover the fees and costs incurred in such
16 litigation from the trust only after the lender has been paid in full,
17 (c) If a creditor's claim is allowed under section 8 of this chapter
18 and the ci'editor has not sought to enforce its rights undel' section
19 1(b)(1) of this chapter, the claim is limited as follows:
20 (1) If the court is satisfied that a qualified trustee has not
21 acted in bad faith in accepting or administel'ing the property
22 that is the subject of the qualified disposition:
23 (A) the qualified trustee has a first and paramount lien
24 against the pl'operty that is the subject of the qualified
25 disp'osition in an amount equal to the entire cost, including
26 attorney's fees, p1•opel'ly incurred by the qualified trustee
27 in the defense of the action or proceedings filed by the
28 creditor;
29 (B) the creditor's claim shall be allowed subject to the
30 proper fees, costs, p1·ee:rlsting l'ights, claims, and interests
31 of the qualified trustee and of any predecessor qualified
32 trustee that has not acted in bad faith; and
33 (C) it is pl'esumed that the qualified trustee did p.ot act in
34 bad faith. merely by accepting the property that is the
35 subject of the qualified disposition.
36 (2) If the court is satisfied that a beneficiary of'a legacy trust
37 has not acted :in liad faith, and the distribution was made to
38 the beneficiary before the creditor made the trustee aware of
39 its·claim or commenced an action to enforce'its claim, the
40 creditor's claim is subject to the right or'the beneficiary to
41 retain any distribution made upon the exercise of a trnst
42 power 01• the discretion vested in the qualified ti'ustee that was
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1 properly exercised befo1•e the trustee was made aware of the
2 claim or an action was commenced to enforce the claim.
3 Sec.10. A spendthrift p1·ovision described in section 4(4) of this
4 chaptel' is considered a l'estl'iction on the transfer of the
5 transferor's beneficial interest in the trust that is enforceable
6 under applicable nonbankruptcy Iawwithin the meaning of Section
7 541(c)(2) of the federal Banlauptcy Code (11 U.S.C. 541(c)(2)) or
8 any successor provision of the federal Banlu·uptcy Code.
9 Sec. 11, Except as permitted by the terms of a legacy trust and
10 by sections 12 and 13 of this chapter, the transferor may not have
11 any rights or authol'ity with respect to the principal or income of
12 the legacy trust. An agreement or understanding purporting to
13 grant or permit the retention of any greater rights or authority is
14 void,
15 Sec.12. A transfel'Ol'Who makes a qualified disposition may also
16 serve as an investment adviser to the trust. However, the
17 ttansferor may not serve as a trust director to a legacy trust except
18 with respect to the retention of a veto l'ight permitted by section
19 13(a)(1) of this chapter.
20 Sec, 13. (a) A legacy trust is not considered revocable because of
21 the Jnclusion of one (1) or more of the following:
22 (1) A transfero1•1s power to veto a distribution fl'om the trust.
23 (2) A power of appointment (other than the power to appoint
24 to the transferor, the transferor's creditors, the transferor's
25 estate, or the c1•editors of the transferor's estate) that may be
26 exercised by will or other written instrument ofthe transferor
27 that is effective only upon the transferol'1s death.
28 (3) The transferor's potential or actual receipt of income or
29 principal, including a right to income retained in the trust.
30 (4) The transferor's potential or actual receipt of income or
31 principal from a charitable remainder unitrust or charitable
32 remainder annuity trust (as those te1·ms are defined in Section
33 664 of the Internal Revenue Code).
34 (5) The transfe1·01·1s potential or actual receipt of income or
35 principal from a gl'antor retained annuity trust or granto1·
36 retained unifrust that is allowed under Section 2702 of the
37 Internal Revenue Code.
38 (6) The transferor's potential or actual receipt 01· use of
39 principal when that potential or actual receipt 01· use results
40 from a qualified trustee's acting:
41 (A) in the qualified trustee's discretion;
42 (B) unde1• a ,standard that governs the diskibution of
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1 principal and does not confer upon the transferor a power
2 to consume, invade, or appropriate property for the benefit
3 of the transferor unless the powe1• of the transfel·or is
4 limited by an ascertainable standal'd relatJ,ng to health,
5 education, support, or maintenance within the meaning of
6 Section2041(b)(1)(A) or2514(c)(1)oftbelnternalRevenue
7 Code; or
8 (C) at the direction of a trust director described in section
9 14 of this chapter who acts:
10 (i) in the trust director's discretion; or
11 (il) under a standard that governs the distribution of
12 principal and does not confer upon the transferor a
13 power to consume, invade, or appropriate property for
14 the benefit of the transfe1•01· unless the power of the
15 transferor is Umited by an ascertainable standard
16 relating to health, education, suppol't, or maintenance
17 within the meaning of Section 2041(b)(1)(A) or
18 2514(c)(1) of the Internal Revenue Code,
19 (7) The transferor's right to remove a trustee or trust director
20 and to appoint a new trustee 01· tl'ust directol' as long as that
21 right does not include the appointment of a person who is a
22 related or subol'dinate party to the transferor within the
23 meaning of Section 672(c) of the Internal Revenue Code.
24 (8) 'J;'he transferor's potential or actual use of real property
25 held under a qualified personal residence trust (as defined in
26 Section 2702(c) of the Internal Revenue Code).
27 (b) For the putpose of subsection (a)(6)(A), a qualified trustee
28 is presumed to have discretion with respect to the distribution of
29 principal unless that discretion is denied to the qualified trustee by
30 the terms of the legacy trust,
31 Sec. 14, (a) A transferor may appoint one (1) or more fl·ust
32 directors who may have authol'ity under the terms of the trust:
33 (1) to remove and appoint qualified trustees or trust
34 directors; and
35 or
(2) to direct, consent to; disapprove distributions from the
36 trust.
37 (b) Trust dil'ectors are not required to satisfy the 1•equitements
38 imposed upon trustees by section 6 of this chapter.
39 Sec, 15: If: ·
40 (1) a qualified tl'ustee of a legacy trust ceases to meet the
41 requirements of section 6 of this chapter; and
42 (2) there remains no trustee of the legacy trnst that meets the
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1 requirements of section 6 oftbis chapter;
2 the qualified frustee described in subdivision (1) is considel'ed to
3 have resigned when the qualified trustee ceased to meet the
4 requirements of section 6 of tlrls cbapte1•, and a successor trustee
\• 5 provided for in the legacy trust shall become a qualified trustee. If
' 6 the legacy trust does not provide for a successor qualified trustee,
7 a court shall appoint a successor q~alified trustee upon the
8 application of any interested party,
9 Sec.16. (a) Nothing in this chapter shall be construed to prohibit
10 a lender from enfo1·cing its rights in property identtfied in section
11 1(b) of this chapter and, to the extent necessary, naming the legacy
12 trust or trustee of the trust as a defendant to the action or
13 proceeding,
14 (b) If an asset described in subsection 1(b)(1) of this chapter is
15 transferred to a legacy trust 01• trustee of a legacy trust; the
16 transferor of that asset must send wl'itten notice of the transfer to
17 the p e:rtinent lender within fifteen (15) days after tbatt1•ansfer. The
18 transferor must send the notice by certified mail, return receipt
19 requested, to the registered agent for the lender, If there is no
20 registered agent for the lender, the transferor must send notice to
21 one (1) of the following:
22 (1) The last lmown address of the lender.
23 (2) The last address specified by the lender for mailing
24 payments on the obligations.
25 (3) The address specified by the lender for general inquhies.
26 by customers,
27 The notice must include the name of the transferDl', a description
28 of the asset transferred, the name of the trustee, and the date that
29 the transfer was completed, Upon request, the transferor or trustee
30 shall provide the lender with a cel·tUication of the tmst under
31 IC 30-4M4-4, the names and addresses of the qualified beneficiaries
32 of the trust, and copies of the pages from the trust instrument that
33 identify the current trustee and describe the trustee's
34 administrative powers and duties.
35 (c) Nothing in this chapter shall be construed to authorize any
36 disposition that is prohibited by the terms of any agreements,
37 notes, guaranties, mortgages, indentures~ instruments,
38 undel'taldngs, or other document&. Any provisions that prohibit
39 such tl·ansfer or disposition shall be binding and shall make this
40 chapter inapplicable,
41 (d) In the event ofa conflict between this section and any other
42 provision of this chapter, tbis section shall control,
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1 SECTI0N10.XC304-9lSADDEDTOTHElNDIANACODEAS
2 A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
3 1, 2019]:
4 Chapter 9, Uniform. Dh'ected Trust Act
5 Sec, 1, This chapter may be cited as the Unifo1•m Dh'ected Tl'ust
6 Act.
7 Sec. 2. As used in this chaptel.', the following definitions apply:
8 (1) "Breach of trust" includes a violation by a trust directol'
9 or trustee of a duty imposed on that director or trustee by the
10 terms of the trust, this chapter, Ol' the law of this state other
11 than this chapter,
12 (2) 11 Directed trust" means a trust for which the terms of the
13 trust grant a power of direction.
14 (3) "Directed trustee" means a trustee that is subject to a
15 trust dil'ector's power of direction.
16 (4) "Person" means an individual, estate, business or
17 nonprofit entity, public co1·poration, govel'nment 01•
18 government subdivision, agency, or instrumentality or other
19 legal entity.
20 (5) "Power of direction" means a power over a trust granted
21 to a person by the terms of the trust to the extent the powel' is
22 exercisable while the person is not serving as a trustee. The
23 term includes a power over the investment, management, ol'
24 distribution of trust pl'Operty or other matters of trust
25 administration, The term excludes the powers described in
26 section 5(b) of this chapter,
27 (6) "Settlor" means a person, including a testator, that
28 creates, or contributes property to, a trust. If more than one
29 (1) person creates or contributes property to a trust, each
30 person is a settlor of the portion of the trust prope~1y
31 attributable to that person's contribution e:xceptto the extent
32 another person has the power to revoke 01· with'draw that
33 portion. · .
34 ' (7) "State" means a state ·of the United States, the District of
35 Columbia, Puerto Rico, the United States Virgin Islands, or
36 any other territoI'Y of possession subject to the jul'isdiction of
37 the United States.
38 (8) 11 Terms of a trust" means:
39 (A) except as otherwise provided in clause (B), the
40 manifestation of the settlor's intent regarding a trust's
41 provisions as:
42 (i) expressed in the trust instrument; or
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1 (ii) established by other evidence that would be
2 admissible in a judicial pi·oceeding; or
3 (B) the tru~t's provisions as established, determined, or
4 amended by:
7
5 (i) a trustee or trust director in accordance with
6 applicable law; or
7 (ii) court order.
8 (9) "Trust director 11 means a person that is granted a power.
9 of direction by tp.e terms of a trust to the extent the power is
10 exercisable while the person is not serving as a trustee. The
11 person is a trust director whether or not the terms of the trust
12 refer to the person as a trust director and whether or not the
13 person is a beneficiary or settlor of the trust.
14 (10) "Trustee" includes an original, additional, and successor
15 trustee, and a cotrustee.
16 (11) 11Willfulmisconduct" means intentional m·ongdoing, and
17 not mere negligence, gl'oss negUgep.ce, or recklessness.
18 (12) "Wrongdoing" means malicious conduct or conduct
19 designed to defraud or to seek an unconscionable advantage,
20 Sec. 3. (a) This chapter applies to a trust, whenever cre11ted, that
21 has its principal place of administration in Indiana, subject to the
22 following:
23 (1) ff the trust was created before July 1, 2019, this chapter
24 applies only to a decision or action occurring after June 30,
25 2019.
26 (2) If the princip1d place of administration of the trust is
27 changed to Indiana after June 30, 2019, this chapter applies
28 only to a decision or action occurring on or after the date of
29 the change.
30 (b) Without precluding other means to establish a sufficient
31 connection with the designated jurisdiction in a dil'ected trust, the
32 terms of the trust that designate the principal place of
33 administration of the trust are valid and controlling if:
34 (1) a trustee's pl'incipal place of business is located in or a
35 trustee is a resident of the designated jurisdiction;
36 (2) a trust director's principal place of business is located in
37 or a trust director is a resident of the designated jurisdiction;
38 O)."
39 (3) all or part of the administration occurs in the designated

40 jul'isdiction.
41 Sec. 4. The common law and principles of equity supplement
42 this chapter, except to the extent modified by this chap tel' or law of
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1 Indiana other than this chapter.
2 Sec. 5. (a) As used in this section, "power of appointment"
3 means a power that enables a person acting in a nonfiduciary
4 capacity to designate a recipient of an ownership interest in or
5 another power of appointment ove1• trust property.
6 (b) This chapter does not apply to a:
7 (1) power of appointment;
8 (2) power to appoint Ol' remove a trustee or n·ust director;
9 (3) power of a settlor over. a trust to the extent the settlor has
10 a power to revoke the trust;
11 (4) power of a beneficiary over a trust to the extent the
12 exercise or none:ii:el'cise of the power affects the beneficiary
13 interest of:
14 (A) the beneficiary; or
15 (B) another beneficiary represented by the beneficiary
H5 with respect to the e:xercise or nonexercise of the power; or
17 (5) power over a trust if:
18 (A) the terms of the trust provide tbii.t the power is held in
19 a nonfiducia1-y capacity; and
20 (B) the power must be held in a non.fiduciary capacity to
21 achieve the settlol·'s tax objectives under the Internal
22 Revenue Code.
23 (c) Unless the terms of a trust pl·o'Vide otherwise, a power
24 granted to a person to designate a recipient of an ownership
25 interest in or power of appointment over trust property that is
26 exercisable while the pel'son is not serving as a trustee is a power
27 . of appointment and not a power of direction.
28 Sec. 6. (a) Subject to section 7 of this chapter, the terms of the
29 tl'ust may grant a power of dil'ection to a trust director.
30 (b) Unless the terms oh trust provide otherwise:
31 (1) a trust director may exercise any further power
32 appropriate to the e:x:ercise or nonexercise of l:l power of
33 direction granted to the director·under subsection (a); and
34 (2) tl'Ust directors with joint powers must act by majority
35 decision.
36 Sec. 7, A 'trust director is subject to the same rules as a trustee
37 in a lil~e position and under similar ch'cumstances in the exercise
38 or nonexercise of a power of direction or further power under
39 section 6(b)(1) of this chapter regarding:
40 (1) a payba'ck provision in the terms of a trust necessary to
41 comply with the 1•eimb'Ul'sement requkements under 42
42 U.S.C, 1396p(d)(4)(A); or
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{
1 (2) a charitable interest in the frust, including notice
2 l'egarding the interest to the ,attorney general undel'
3 IC 30-4-6-6.
4 Sec, 8. (a) Subject to subsection (b), with respect to a power of
5 direction Ol' further power under section 6(b)(1) of this chapter:
'(
6 (1) a trust director has the same fiduciary duty and liability in
l 7 the exercise or nonexercise of the power:
8 (A) if the power is held individually~ as a sole trustee in a
i'
i 9 like position and under simifa.1• circumstances; or
!
10 (B) if the power is held jointly with. a ti,rntee or another
11 trust director, as a cotrustee in a like position and under
12 similar circumstances; and
13 (2) the terms of the trust may vary the director's duty or
14 liability to the same extent the terms of the trust could vary
15 the duty or liab\lity of a trustee in a like position and under
16 similar circumstances,
17 (b) Unless the terms of a trust provide otherwise, if a trust
18 directo1• is license~ ce1·tified, or otherwise autholized 01· permitted
19 by law other than this chapter to provide health care in the
20 ordinary course of the director's business or practice of a
21 profession, to the extent the director acts in that capacity, the
22 director has no duty or liability under this chapter.
23 (c) The terms ofa tmstmayimpose a duty orliab.ilityon a trust
24 dkector in addition to the duties and liabilities under this section.
25 Sec. 9. (a) Subject to subsection (b), a directed trustee shall take
26 reasonable action to comply with a trust director's exercise Ol'
27 nonexercise of a power of direction or further power under section
28 6(b)(1) of this chapter, and the tl·ustee is not liable for the action,
29 (b) A illrected trustee must not comply with a trust director's
30 exercise or nonexercise of a power of direction or further power
31 under section 6(b)(1) of this chapter to the extent that by
32 complying the trustee would engage in willful misconduct.
33 (c) An exercise of power of dkection under which a trust
34 director may release a trustee or another trust director from
35 liability for breach of trust is not effective if:
36 (1) the breach involved the trustee's or other director's willful
37 misconduct;
38 (2) the release wa.s induced by improper conduct ofthe trustee
39 or other directol' in procuring the release; or
40 (3) at the time of the release, the directol' did not know the
41 material facts relating to the b1•each, .
42 (d) A directed trustee that has reasonable doubt about the
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1 directed trustee's duty undel' this sectionruaypetition the court for

2 instructions.
3 (e) The terms of a trust may impose a duty or liability on a
4 dil'ected trustee in addition to the duties and liabilities under this
5 section.
6 Sec, 10. (a) Subject to section 11 of this chapter, a trustee shall
7 provide information to a trust director to the e:xtent the
8 information is reasonably related both to:
9 (1) the powe1·s or duties of the trustee; and
10 (2) the powers or duties of the director,
11 (b) Subject to section 11 of this chapter, a trust director shall
12 provide information to a trustee or another trust director to the
13 e:xtent the :information is reasonably related to:
14 (1) the powers o:r duties of the directo1•; and
15 (2) the powers or duties of the trustee or other director.
16 (c) A trustee that acts in reliance on information provided by a
17 trust director is not liable for a breach of trust to the e:x:tent the
18 breach resulted from the reliance, unless by so acting, the trustee
19 engages in willful misconduct.
20 (d) A trust director that acts in reliance on infol·matlon
21 provided by a trustee or another trust director is not liable for a
22 breach of trust to the extent the breach resulted from the reliance,
23 unless by so acting, the trust director engages in willful
24 misconduct. ·
25 Sec, 11. (a) Unless the terms of a trust provide otherwise:
26 (1) a trustee does not have a duty to:
27 (A) monitor a trust director; or
28 (B) inform or give advice to a settlor, beneficial·y, trustee,
29 o:r trust director concerning an instance in which the
30 trustee might have acted differently than the dh•ector; and
31 (2) by taldng' an action described :in subdivision (1), a trustee
32 does not assume the duty e:x:cluded by subdivision (1),
33 (b) Unless the terms of a trust provide otherwise:
34 (1) a trust dil'ector does not have a duty to:
35 (A) monitor a trustee or another trust director; or
36 (B) infol'm or give advice to a settlor, beneficiary, tmstee,
37 or another trust director concerning an instance in which
38 the director might have acted differently than a trustee or
39 another trust dkector; and
40 (2) by taldng an action desc:dbed in subdivision (1), a trust
41 director does not assume the duty excluded by subdivision (1),
42 Sec. n. The terms of a trust may relieve a co~rustee frorn duty
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1 and liability with respect to another cotrustee's exercise or
2 none:x:ercise of a power of the other cotrustee to the same extent
3 that in a directed trust a directed tmstee is 1·elieved from duty and
4 liability with respect to a trust director's power of direction under
5 sections 9 through 11 of this chapter.
6 Sec.13, (a) An action against a trust director for breach of trust
7 must be commenced within the same limitation period as an action
8 against a tmstee under IC 30..tfw6w12.
9 (b) A report or accounting has the same effect on the limitation
10 period for an action against a trust director for bteach oftl'ust~hat
11 the report Ol' accounting would have under IC 30.-4-6"12 in an
12 action for breach of tl'ust against a trustee who is in a like position
13 and undel' similar circumstances.
14 Sec, 14, In an action against a trust director fol' breach of trust,
15 the director may assert the same defenses a trustee in a like
16 position and under similar circumstances could assert .in an action
17 for breach of trust against the tl'Ustee.
18 Sec. 15. (a) By accepting appointment as a trust director of a
19 trust under this .chapter, the director submits to personal
20 jurisdiction of the courts of the state of Indiana l'egarding any
21 matter !'elated to a power or duty of the director.
22 (b) This section does not preclude other methods of obtaining
23 jurisdiction ove1· a tJ:ust director.
24 Sec. 16. Unless the terms of a trust provide otherwise, the rules
25 applicable to a trustee apply to a trust director regarding the
26 following mattei•s:
27 (1) Acceptance (IC 30-4-2-2),
28 (2) Giving of bond to secUl'e petformance (IC 30-4-6-8),
29 (3) :Reasonable compensation (IC 30-4-5-16),
30 (4) :Resignation and removal (IC 30-4-3-29).
31 (5) Vacancy and appointment of successor (IC 30-4-3-33).
32 Sec. 17. In applying and construing this uniform act,
33 consideration must be given to the need to promote uniformity of
34 the law with respect to its subject matter among the states that
35 enact it.
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COMMITTEE REPORT
Madam President: The Senate Committee on Judiciary, to which
was refened Senate Bill No. 265, has had the same under conside1·ation
and begs leave to report the same back to the Senate with the
recommendation that said bill be AMENDED as follows:
Page 13, line 41, delete "Sec, 1. This 11 and insert "Sec, 1, (a) Subject
to the limitations set forth in subsection (b), thi~'.
Page 14, between lines 2 and 3, begin a new paragraph and insert:
"(b) This chapter does not apply to:
(1) any assets that are listed on an application or financial
statement completed by the trnnsferor and which is submitted
to a lender in connection with a request to obtain or maintain
credit from the lendel·; Ol'
(2) any assets ofa legacy trust that are listed on an application
or financial statement completed on behalf of the legacy trust
and which is submitted to a lender in connection with a
request to obtain or maintain credit from the lender on behalf
of the legacy trust.
In the event that assets described in subsection (b)(1) are later
transferred to a legacy trust and a default occurs under the loan or
extettsion of credit, either before or after the transfer or disposition
under tl1e legacy tl'ust, the lender shall be entitled to proceed
against any assets listed on the applications orfinancialstatements
which were submitted in connection with the lo'an, or any
modifications, amendments, or renewals of the loan. Nothing in this
chapter shall prohibit suchac.tion. A change in the charactel', form,
or ownership of the assets. described in subsection (b)(1) shall in no
way make subsection (b)(1) inapplicable,". ·
Page 14, between lines 25 and 26, begin a new line block indented
~ins~ .
"(7) "Leniler" means a company or entity that extends credit,
including but not limited to 11. financial institution (11.s defined by
lC 28-1w1-3(1)), a company or entity'that extends credit under
re 24-4.4 or IC 24-4.5, or the successors and assigns of the
company or entity. 11 ,
Page 14, line 26, delete 11 (7) 11 and insert 11 (8) 11 ,
Page 141 llne 30, delete "(8) 11 and insert 11 (9) 11 •
Page 14, line 32, delete 11 (9) 11 and insert "(10)".
Page 14, line 34, delete "(10) 11 and insert 11 (11)".
Page 14, line 36, delete "(11)" and insert "(12) 11 •
Page i4, line 38, delete 11(12) 11 and insert 11 (13) 11 •
Page ~5, line 5, delete 11 ~13) 11 and insert 11 (1~)' 1•
ES 265-LS 6487/DI 128
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Page 15, line 5, delete "adviser'"' and insert 11 director 1111 •
Page 15, line 29, after "must" insert ''be signed undel' the penalties
of perjury, and".
Page 17, line 26, delete "A" and insert "Except as provided in
'" subsection (e), a11 • ,
! Page 18, line 26, after "trustee" insert "and the conditions set
forth".
Page 18, line 26, delete 11a form that satisfies".
Page 18, line 26, delete 11and4(4) 11•
Page 18, line 26, delete 11 chapter, 11 and insert "chapter are
satisfled. 11 •
·r Page 18, between lines 34 and 35, begin a new paragraph and insert:
l "(e) If the state of Indiana is a creditor of a transferor, then
notwithstanding subsection (a)(1) and subsection (b), the state of
lndiana may bring an action against a qualified trustee to assert a
claim against or to recover pl'operty that is the subject of a
qualifred disposition by proceeding under the Indiana Uniform
Fraudulent Transfer Act, subject to the standard of evidence in
IC 32. .18-2-14 and IC 32-18-2-15, and the limitation periods in
IC 32. .1s...2. .19.11 •
Page 18, between lines 38 and 39, beginanewparagraphandinsert:
11
(b) In the event the trustee participates in litigation brought by
a lender to enforce its rights under section 1(b)(1) of this chapter,
the trustee may l'ecover the fees and costs incurred in such
Utigationfrom the trust only after the lender has been paid in full, 11.
Page 18, Hue 39, delete 11(b) 11 and :insert "(c) 11 •
Page 18, line 39, after "section 8" insert "of this chapter and the
creditor has not sought to enforce its rights under se(}tion 1(b)(1)",
Page 19, line 11, delete "h.ad 11 and insert 11has 11 •
Page 19, line 16, delete "faith:" and insert "faith, and the
distribution was made to the beneficiary before the c:reditor made
the trustee aware of its claim. 01· commenced an action to enforce
its claim,".
Page 19, line 17, delete 11 (A) 11 •
Page 19, line 21, delete "credito1'11 and insert "trustee was made
aware of the claim or an action was 11.
Page 19, line 21, delete "an action".
Page 19, line 21, delete "claim;" and insert "claim."
Page 19,runinllnes 16through21.
Page 19, delete lines 22 through 26.
Page 19, line 41, delete 11 adviser 11 and insert "director",
Page 20, line 32, delete "an advise1· 11 and insert 11 a trust directol' 11•
ES 265-LS 6487/DI 128
•
32
Page 20, line 34, delete 11 adviser1s11 and insert 11 trust director's",
Page 21, line 1, delete 11 adviser11 and insert "trust director".
Page 21, line 2, delete "adviser" and insert "trust director".
Page 21, line 13, delete 11advisers 11 and insert "trust directors".
Page 21, line 15, delete 11advisers; 11 and insert "directors;".
Page 21, line 19, delete 11advisexs 11 and insert "directors".
Page 21, delete lines 33'tb1'ough 42.
Page 21, delete lines 1 th1'ough 14.
Page 22, delete "Sec. 1711 andinseit"Sec.16, 11 ,
Page 22, between lines 19 and 20, begin anew paragraph and insert:
"Sec. 17, (a) Nothing in this chapter shall be construed to
prohibit a lender from enforcing its l'ights in property identified in
section 1(b) of this chaptel' and, to the e:xtent necessary, naming the
legacy trust or trustee of the trust as a defendant to the action or
proceeding.
(b) If an asset descdbed in subsection 1(b)(1) of this chapter is
transferred to a legacy trust or ttustee of a legacy trust, the
transferor of that asset must send written notice of the tl·ansfer to
the pertinentlenderwithin fifteen (15) days after that transfer. The
transferor must send the notice by certified mail, return receipt
requested, to the registered agent for the lendel', If' there is no
registered agent :for the lender, the transferor must send notice to
one (1) o:f the :following:
. (1) The last Im.own address of the lender.
(2) The last addl'ess specified by the lender for mailing
payments on the obligations.
(3) The address specified by the lender fol' general inquiries
by customers.
The notice must include the name of the transferor, a description
o:fthe asset fransferred, the name 'of the trustee, and the date that
the transfer was completed, Upon request, the transferor ol' trustee
shall provide the lender with a certification of the trust under
IC 30-4-4~4, the names and addresses of the qualified beneficiaries
of the trust, and copies of the pages from the trust instrument that
identify the current trustee and descdbe the trustee's
administrative powers and duties.
(c) Nothing in this chapter shall be construed to authorize any
disposition that is prohibited by the tel·ms of any agreements,
notes, guaranties, mortgages, indentm·es, insh·uments,
underta~tings, or other documents. Any provisions that prohibit
sucn transfer or disposition shall be binding and shall make this
chapter inapplicable,
ES 265-LS 6487/DI 128
•
33
(d) ln the event of a conflict between this section and any other
provision oftbis chapter, this section shall control, 11 •
Renumbet all SECTIONS consecutively,
and when so amended that said bill do pass.
TI
(Reference is to SB 265 as introduced.)

BEAD, Chairperson
Committee Vote: Yeas 6, Nays 4.
SENATE MOTION
Madam President: 1move that Senate Bill 265 be amended to read
as follows:
Page 8, delete lines 2 through 18, beginanewparngraphandinsert:
"SECTION 4. IC 30-4·3-9 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2019]: Seo. 9. (Duty of Trustee
under Control of Third Person)
(a) This section applies to directions given to a trustee before
July 1, 2019, by a person who has power under the terms of the
trust to direct the trustee,
(a} (b) If the terms of the trust give a person a power to direct the
trustee in the administration of the trust and those terms expressly
direct the trustee to rely, or relieve the trustee from liability if he does
rely, on that person's directions, the trustee may do so and will incur no
liability for any loss to, the 1ru.st estate.
~ (c) lf the tel'ms of the trust give a person a powe1· to direct the
trustee in the administration of the trust, except as prnvided in
subsection EaJ (b): of ihls seeittltr.
(1) If the person holds the power as a fiduciary, the trustee has a
duty to refuse to comply with any direotl.on whieh he knows or should
know would constitute a breach of a duty owed by that person as a
:fiduciary.·
(2) If the person holds the power solely foi- his own benefit, the
trustee may refuse to comply only if the attempted exercise of the
power violates the terms of the trust with :respect to that power, 11,
Page 17, line 12, delete "the federal Office of Thrift Supervision,".
Page 18, between lines 10 and 11, begin anewparagraphand:lnsett:
11
(d) To the maximum extent permitted by the 'United States
Constitution and the Indiana Constitution, a court of this state
ES 265-LS 6487/DI 128
•
34
shall exercise jurisdiction over a legacy trust or a qualified
disposition and shall adjudicate a case or controversy brought
before the court regarding, arising out of, or related to a legacy
trust or a qualified disposition if that case or controvel'sy is
otherw.lse within the subject matter judsdiction of the court,
Subject to the United States Constitution and the Indiana
Constitution, a court of this state shall not dismiss or otherwise
decline to adjudicate a case 01• controversy dellcl"ibed 1n this
subsection on the grounds that a com•t of another jul'isdiction has
acquired or may acquil'e Pl'opel' jurisdiction over, or may
PROVIDE proper venue for, the case or controversy or the parties
to the case or controversy. Nothing in this subsection shall be
construed to do either of the following:
(1) Prohibit a transfer or other reassignment of a case 01·
controversy from one court oftbis state to another coul't of
this state.
(2) E:xpand or limit the subject mattel' jurisdiction of a court
of this state,",
Page 20, line 23, delete "and".
Page 21, between JJnes 39 and 401 begin a new line block indented
and insert:
11
(7) The transferor's dght to remove a trustee or trust
director and to appoint a new trustee Ol' trust director as long
as that right does not include the appointment of a person
who is a related or subol'dinate party to the transferor within
the meaning of Section 672(c) of the foternal Revenue Code,
(8) The transferor's potential or actual use of real property
held under a qualliled personal residence trust (as defined in
Section 2702(c) of the Internal Revenue Code),
(b) For the purpose of subsection (a)(6)(A), a qualified trustee
is presumed to have discretion with respect to the clistdbution of
principal unless that discr~tion is denied to the qualified trustee by
the terms of the legacy trust.
Sec. 14. (a) A transferor may appoint one (1) 6r more trust
directors who may have authority under the terms of the trust: 11 ,
Page 22, delete lines 16 through 29,
ReJ?.umber all SECTIONS 'consecutively.
(Reference is to SB 265 as printed Febl'Uaty 8, 2019,)
HEAD
:ES 265-LS 6487/DI 128
•
1
'\'
I
'
35
SENATE MOTION
1I Madam P.resident: l move that Senate Bill 265 be amended to read
: as follows:
Page 22, line 35, delete 11 Seo. 17. 11 and insert 11Sec.16. 11 ,
(Reference is to SB 265 as printed February 8, 2019.)
HEAD
SENATE MOTION
Madam President: l move that Senate Bill 265 be amended to read
as follows: .
Page 18, line 20, delete "order in existence at tbe 11 and insert
11
order. 11 •
(Refernnce is to SB 265 as pdnted February 8, 2019.)
FREEMAN
COlv.tMI'ITEE REPORT
lvfr. Speaker: Your Committee on Judiciary, to which was refetted
Senate Bill 265, has had the same unde1· consideration and begs leave
to report the same back to the House with the recommendation that said
bill do pass.
(Reference is to SB 265 as reprinted February 22, 2019.)
TORR
Committee Vote: Yeas 8, Nays 2
:ms 265-LS 6487/DI 128
•
1
35
SENATE MOTION
Madam President: I move that Senate Bill 265 be amended to read
as follows:
Page 22, line 35, delete 11 Sec. 17, 11 and insert 11 Sec.16. 11 ,
(Reference is to SB 265 as printed February 8, 2019.)
HEAD
SENATE MOTION
Madam.President: l move that Senate Bill 265 be amended to 1·ead
as follows:
Page 18, line 20, delete "order in existence at the" and insert
11
order. 11 •
(Reference is to SB 265 as printed Feb1uary 8, 2019,)
FREEMAN
COMMITTEE REPORT
Mr. Speaker: Your Committee on Judiciary, to which was refen·ed
Senate Bill 265, has had the same under consideration and begs leave
to report the same baokto the House with the recommendation that said
bill do pass. ·
(Reference is to SB 265 as reprinted February 22, 2019.)
TORR
Committee Vote: Yeas 8, Nays 2
ES 265-LS 6487/DI 128
•
JEFFREY B, KOLB*t TEL (812) 882-2280
J, DAVID ROELLGEN*t' FAX (812) 885-2308
YVETTE C, KIRCHOFF*" WWW, etn Ison law.com
BRIAN M. JOHNSON*
CHARLES E. TRAYLOR*
I·
KoLB RoELLGEN & K.:rRdHOFF LLP
LAWYERS
r 801 BUSSERON STREET
p, o, aox 21s
VINCENNES, INDIANA 47591-0215
INFORMATION AND DOCUMENTS NEEDED

FOR ESTATE PLANNING
To prepare your estate plan1 it is ,necessary for us to. obtain certain information and
documents. You are in a position to save legal fees and expenses, if you take the time to provide the
f information requested on this fo1m. Please print your answers, sign below and return this form to us
! preferably before we meet in our office conference.
The information you provide is confidential and will only be used by us to complete the
work you request and to maintain a file for la.tel' references.
Inf01mation is needed concerning all real and personal property in which you own an
interest whether as a sole owner, co~owner, joint owner, life tenant, remainderman, trustee, trust
beneficiary, or otherwise. Also information is needed on all debts owed by you or yom spouse,
Our advice and work will be based on this information and may not be correct if the information is
wrong 9r incomplete.
I UNDERSTAND THAT YOUR ADVICE AND WORK IS BASED ON THE

ACCURACY AND COMPLETENESS OF THE INFORMATION I GIVE TO YOU. TO THE
BEST .OF MY KNOWLEDGE, THE INFORMATION THAT I PROVIDE 1N THIS
DOCUMENT iS ACCURATE AND C01v.lPLETE. AFFIRMED UNDER PENALTIES OF
PERJURY TIIlS · DAY OF _ _ _ _ _ _, _ .
,\1 E~IT
• ADUIIT£o If! INOWIA.&. ILUNOl$ ---'----

' RrolSTl;REO CMl f..!EOIATOR
1
R(OISTa!EDTAl,UI.Vk\EDIA10!1
i "
"Abl,!ITT£() lN N~ JEJ{SEY, OIStRIOl'Of COLUMBIA NH> U!OTED ST!\TES !UFRo.\ECOUflT
I BOAAO CtATiflEO Ul~!AAA TAU Sr AflD ESTATE lAW(EJt UVTIIU5T #J!(l £STAT( srrelALTY BOAAD
.,
f
i
1. JNFORMATION ABOUT lVIB. MY SPOUSE

(IF MARRIED)
·;
1.1. FULL NAME (First Middle Last)
1. 1.1. Nicknames or Other Names

1.1.2, Preferred Signature Name(print)
1.2. RESIDENCE
1.2.1. Street Address

1.2.2. PO Box (if any)
1.2.3. City
1.2.4. County
1.2.5. State
1.2.6, Zip Code
1.2.7. Telephone
1.2.8, Bwmail (if any)
1.2.9. Fax (if any)
1.3. BIR.THDATE
1.4. SOCIAL SECURITY NUMBER
1.5. CITIZENSHIP (circle if USA) USA/_ _ _ __
1.6. OCCUPATION
1.6. 1. Employer or Business (if any)

1,6.2. Telephone
1.6.3. Ewmail (if any)
1.6.4, Fax (if any)
1. 6.5, Retit'ement Date (if any)
1.7. MARRIAGEDATE
Ii.
1.8. PRIOR MARRIAGE? (circle) yes/no yes/no
If yes, fol' each prior spouse:
1.8.1. Name
1.8,2, Date of Dea.th (if dead)
1.8.3, Date of Divorce (if divorced)
1.9. COMMUNITY PROPERTY
1.9 .1. While married ever lived

in Califomia1 Texas1 Idaho1
Nevada1 Washington1 Wisconsin1
Arizona, New Mexico 01·
.,
I
!
Louisiana? (circle) yes/no yes/no
MY SPOUSE
(IF MARRIED)
1.9,2. If yes, name of state and dates
lived there.
1.10. HEALTH CARE FACILITY.

Currently in a Health Care Facility? (circle) yes/no yes/no
If yes:
1.10.1. Name offacility
1.10.2. Level ofcare
1.10 .3. Admission Date
1.10.4. Funding S0urc1;J (circle) private pay/insurance/govt. private pay/insurance/govt.
1.11. HEALTH STATUS
1.12. MEDICARE OR MEDICAID

NUMBER (if any)
1.13, PERSONAL ADVISORS
1.13.1. Accountant
1.13 .2. Investment
1.13.3. Trust Office!'
1.13.4. Bank
1.13.5. Life Insurance
1.13.6. Clergy
1.13.7. Other lawyer
1.14. GOALS (The following are common estate planning goals. Please list the importance of
the goal to you with 1 being the most important. If the goal has no impo1tance, leave blank.)
Asset Protection (complete 1.16)

Reduce Federal Estate Taxes
Avoid Estate Administration
Qualify for Medicaid for Nursing
Home Expenses
Gifts fo1• Beneficiaries with
Special Needs
Power of Attorney
Health Care Representative Appt.
Living Will
Other: - - - - - - -
1. 15. TIME LIM1T (When should

plan be completed?)
1.16. ASSET PROTECTION DUE DILIGENCE

1.16.1 All known Creditors
(DO NOT list monthly
bill unless in arrears)
1.16.2. All potential Creditors

and potential amount
owed.
l, 16.3, Copies of all finanoial Yes/No (ifno explain)

statements or loan
applications provided to
lenders attached?
1.16.4. Copies of all documents Yes/No (if no explain)

that prnhibit disposition of
any asset including but not
limited to agreements, notes,
guaranties, mortgages,
indentures, instruments, 01·
undertaking attached?
1.16.S. Child Suppo1t

(date of order and amount)
1.16.6. Pending Marriage

(date and name and address
for spouse)
2. INFORMATION ABOUT MY HEIRS
"Heirs" are individuals who receive the probate estate If you die without a will. If married, your spouse ls an heir on whom you
already gave information. Information about each othe1• heir is needed even If you are not leaving them any gifts, Who Is an heh-
depends on different circumstances listed below. Adopted Individuals are treated the same as children of the adopting parent. A
husband and wife may have different hell's so please give all hell's,
CIRCUMSTANCES (check which one applies) PROVIDE INFORMATION ON FOLLOWING HEIRS

( ) I have living children 01• llvlng descendants of Living children and descendants
dead chlld1·en of dead children (grlltldohlldren,
etc,)
( ) I am married but no chlldren Living parents
( ) I am not married, no children and no descendants Living parents, brothers, sisters,

and descendants of dead brothers
and sisters. (nieces and nephews,
etc.)
( ) I am not married, no children, no descendants, no Living grandparents

living parents, brothers, sisters, or descendants of dead
brothers and sisters
( ) I am not married, no children, no descendants, no Living brothers and sisters of

living parents, brothers, sisters, or descendants of dead parents (aunts and uncles) or
brothers and sisters and no llvlng grandparent descendants of deceased aunts and
uncles (cousins)
( ) If none ofthe above apply: STATE OF INDIANA(No lnfotmatlon needed)
2.1. NAlvIB (Full Name)

2.2. RELATIONSHIP
2.3. SEX (circle) M/F M/F MIF
2.4. BIRTHDATE/AGE _______ /
---------'/ ---------'/
2,5, IF DEAD, DATE OF
DEATH
2.6. ADDRESS
2.7. TELEPHONE
2.8. SOCIAL
SECURITY#
2.9. SPOUSE (if any)
2.10. CHil.,DREN (ifany)
2.11. SPECIAL NEEDS

3. INFORMATION ABOUT OTHER BENEFICIARIES
., "Other beneficiaries,, would be individuals 01· other entities who are not heirs who will receive gift at death,
i
' STATE OF INDIANA
M 3B
3,1. NAME(FullName)
3,2. FORINDIVIDUALS
3.2.1. RELATIONSHIP
(If any)
3.2,2, SEX (ch'cle) M/F M/F M/F
3,2,3, SOCIAL SECURJTY #
3.2.4. BIRTHDATE/AGE
3.2.5, SPECIFY lF ANY
I
------~' I
SPECIAL NEEDS
3.3. FOR CORPORATION, LLC,

LLP,FLP,PARTNERSHIP
OR OTHER BUSINESS ENTITY
3,3, 1. WHEN CREATED
3.3.2, STATE WHERE
LICENSED
3.3.3. PURPOSE OF GIFT
3.4, FORCHURCH
3,4, L ADDRESS
3,4.2. RULING BODY
3,4.3, PURPOSE OF GIFT
3.5. FOR CHARITY

3.5.1. FEDERALID#
3.5.2, PURPOSE OF GIFT
3D
3.1. NAME (Full Name)
3,2. FOR INDNIDUALS

3.2.1. RELATIONSHIP
(if any)
3,2,2, SEX (circle) M/F M/F MIF
3.2.3, SOCIAL SECURJTY #
3.2.4. BIRTH DATE/AGE I -----~/
3,2,5. SPECIFY IF ANY
SPECIAL NEEDS
3,3, FOR CORPORATION, LLC,

LLP, FLP, PARTNERSHIP
OR OTHER BUSINESS ENTITY
3.3,1. WHEN CREATED
3.3.2, STATE WHERE
LICENSED
3.4, FOR CIUJRCH

3,4. I. ADDRESS
3.4.2, RULING BODY
3,5, FORCHARITY
3,5.1. FEDERALID#
3,5.2, PURPOSE OF GIFT
4. INFORMATION ABOUT PROPOSED FIDUCIA.RIBS
"Fiduciary" ls a foncy word referring to a personal representative, t11Jstee, guardian, attomey-in-fact and various other agents.
If a proposed fiduciary is an individual, he or she should be over the age of 17, of sound mind, not a convicted felon, and
someone the court finds suitable, From a practical viewpoint, the person should be a t11Jsted Individual and should possess the
ability to manage records, investments and bank accounts. If a business entity Is selected, it must be qualified to serve as a
fiduciary in Indiana,
4.1. PERSONAL REPRESENTATIVE

(At death, this person handles the will and estate administl'ation, if any, The term Includes executo1• and administrator, )
PRIMARY ALTERNATE
4.1.1, NAME (How do they
normally sign)
4,1.2. RELATIONSHIP (if any)
4.1,3. ADDRESS
4.1.4. CITY, STATE, ZIP
4.1.5. TELEPHONE
4.1.6. IF BUSINESS
4.1.6.1. OFFICER 1S NAME
4.1.6,2, OFFICE HELD
4.2. TRUSTEE
(This person handles any trnst created, Different persons can be selected for different trusts.)
4.2.1. NAME (How do they

nonnally sign)
4.2.2. RELATIONSHIP (if any)
4.2.3. ADDRESS
4.2.4, CITY, STATE, ZIP
4,2,5, TELEPHONE
4.2.6. IF BUSINESS
4.2.6.1. OFFICER 1S NAME
4.2.6,2, OFFICE HELD
4.3. GUARDIAN
(This person acts as guardian for any minor or disabled children. Different persons can be selected for guardian of person
(parental care) and guardian of estate (fmanoial care),
4.3.1. NA'tvffi (How do they

no1mally sign)
4,3,2, RELATIONSHIP (if any)
4,3.3. ADDRESS
4,3.4. CITY, STATE, ZIP
4,3,5, TELEPHONE
4.3.6, IF BUSINESS
4.3.6.1. Offioer's name
4,3,6,2, Office held
PRJMARY ALTERNATE
.,
4.4, ATTORNEY-IN-FACT
(During your life, this person aots on your behalf under a power of attomey.)
4.4. 1. NAME (How do they

normally sign)
4.4.2, RELATIONSHIP (lfany)
4.4.3, ADDRESS
4.4.4, CITY, STATE, ZIP
4.4.5, TELEPHONE
4.4.6. IF BUSINESS
4,4,6,1. OFFICER'S NAME
4.4.6.2, OFFICE HELD
4.5. HEALTH CARE REPRESENTATIVE

(During your life, this person acts on your behalf In making health care deoislons,)
4,5.1. NAME (How do they

normally sign)
4,5,2, RELATIONSHIP (If any)
4.5,3, ADDRESS
4.5.4, CITY, STATE,ZIP
4,5,5, TELEPHONE
4,5,6. IF BUSINESS
4,5,6,1. OFFICER'S NAJvlE
4.5.6.2, OFFICEHELD
4.6. DOCTOR
(If you make a living wlll or health oare l'epresentative appointment, a copy must be sent to your doctor,)
YOUR DOCTOR YOUR SPOUSE'S

DOCTOR
4.6.1. NAME (How do they
normally sign)
4.6.2, RELATIONSHIP (if any)
4.6.3. ADDRESS
4,6.4, CITY, STATE, ZIP
4.6.5. TELEPHONE
5, DOCUMENTSNEEDED IF IF IT EXISTS
NONE COPY IF NO COPY,
CHECK A'ITACHED7 COMMENTS
HERE (Cfrcle)
5.1. Will and codicil(s) yes/no
., 5.2. Trust and amendment(s)M
!
i
l
either you as trustee,
beneficiary or creator of trust yes/no
5.3. Powers of attomeyMeither given
by you or to you yes/no
5.4. Health Care Representative Appt.M
either given by you or to you yes/no
5.5. Living will yes/no
5.6. All gift tax returns (Fonn 709)
filed on your behalf yes/no
5.7. Income tax return (Form 1040)
filed on your behalf last three years yes/no
5.8. Deeds to real property yes/no
5.9. Appraisals to property yes/no
5.10. Pension plans or profit sharing yes/no
5.11. Life insurance policies on you or
owned by you on others yes/no
5.12. Employee handbook on benefits yes/no
5.13. Financial statements given to bank yes/no
5, 14. Certificate of ownership on
stock> bonds, accounts, and vehicles yes/no
5.15. Any debts in writing owed by you
or owed to you yes/no
5, 16. Any buy or sell agreement you signed yes/no
5.17. Any agreement regarding a business
entity you ovvn an interest in yes/no
5.18. Income tax returns for any of
your closely- held businesses for
last three years yes/no
5.19. Property insurance that lists jewelry,
furniture, etc, yes/no
5,20. Divorce decrees yes/no
5.21. Premarital or Marital Agreements yes/no
5.22. Others? yes/no
Ii 6, lNFORMATION ABOUTYOURASSETS
·1 ASSETS: OWNERS & VALUE: SECURED CURRENT

(Brief description and (Place value under owner's DEBT: GIFTS:
percentage owned) cohunn) Mortgages, (indicate who
YOU YOU& YOUR Liens& currently receives
YOUR SPOUSE Encumbrances assets at death)
SPOUSE
REAL ESTATE:
(indicate where
located) < >
1. House and lot
< >
2.
< >
3,
< >
4.
< >
5.
< >
6.
< >
STOCKS: (indicate if
C corp or S corp;
Include unit & CUSIP,
if any)
1.
< ·>
2.
< >
3,
< >
4.
< >
ASSETS: OWNERS & VALUE: SECURED CURRENT
(Brief description and (Place value under owner's DEBT: GIFTS:
percentage owned) column) Mortgages, (indicate who
Liens & currently receives
YOU YOU& YOUR Encumbrances assets at death)
YOUR SPOUSE
SPOUSE
BONDS:
1. ' < >
2,
< >
MUTUAL FUNDS:
(not pensions 01· IRA's)
1. < >
2.
< >
CASH: (c/a, s/a, c/d's)

1.
< >
2.
< >
3,
< >
4.
< >
DEBT . OWED TO
YOU: (indicate by
whom owed)
1. < >
LIFE INSURANCE
ONYOU:
1.
< >
2.
< >
·r
I
I
ASSETS: OWNERS & VALUE SECURED CURRENT
(Brief description and (Place value under owner's DEBT GIFTS
YOU YOU& YOUR Liens & currently receives
YOUR SPOUSE Encumbrances assets at death)
·r SPOUSE
i.
i LIFE INSURANCE
ON YOUR SPOUSE:
1.
< >
2.
< >
LIFE INSURANCE
ON OTHERS:
1. < >
2.
< >
UNINCORPORATED
BUSINESS:
(partnership, LLC,
LLP,FLP)
1. < >
2.
< >
ROYALTIES:
< >
FARM EQUIPMENT:
< >
LIVESTOCK:
< >
CROPS: (stored &

growing)
< >
ASSETS: OWNERS & VALUE: SECURED CURRENT
(Bl'ief description and (Place value under owner's DEBT: GIFTS:
YOU YOU& YOUR Encumbrances assets at death)
'I YOUR SPOUSE
I SPOUSE
VEHICLES:
1.
< >
2.
< >
3.
< >
COLLECTIONS
(guns, coins, stamps,
antiques, art)
1. < >
2.
< >
IIlIG's:
< >
OTHER:
< >
TRANSFERS WHERE
YOU RETAINED AN
INTEREST: (such as
life estate or right to
use) < >
1.
2.
< >
ASSETS: OWNERS &VALUE SECURED CURRENT
(Brief description and (Place value unde1· owner's DEBT: GIFTS:
Encumbrances assets at death)
YOU YOU& YOUR
YOUR SPOUSE
SPOUSE
POWERS YOU
HAVE TO APPOINT
PROPERTY:
< >
PENSION,
ANNUITIES
IRA's, ETC.:
1.
< >
2.
< >
TOTALEACH
COLUMN: < >
UNSECURED DEBT: < > < > < >
NET TOTAL EACH

COLUMN: (assets
minus secured and
unsecured debt)
LIFETIME GIFTS DONOR & VALUE: SECURED RECIPIENT:
OVER$1000A YEAR (Place value undet• donor) s DEBT: (indicate who
(List year in this column) Mortgages, received gifts)
column) Liens &
YOU YOU& YOUR Encumbrances
YOUR SPOUSE Gift
SPOUSE
1.
< >
2.
< >
3.
< >
4.
< >
5.
< >
6.
< >
7.
< >
8.
< >
TOTAL GIFTS:
EXCLUSIONS:
(Annual per donee per
year amount) < > < > < >
TAXABLE GIFTS:
(Total Gifts minus
Exclusions)
TOTAL EACH
COLUMN: (Net Total
plus Taxable Gifts)
TOTAL ALL
ESTATES
7. GIFTS I WISH TO MAKE
Indicate to whom you wish to leave property by describing property and heirs (2A, 2B, etc) or other
beneficiades (3A, 3B, etc.)
PRIMARY ALTERNATE
BENEFICIARY BENEFICIARY
(if primary does
not survive you)
7,1. TANGIBLEPERSONALPROPERTY:
(choose either (a) or (b))
(a) ALL TANGIBLE PERSONAL PROPERTY _ _ _ _ _ _ _ _ _ _ __
(b) SPECIFIC GIFTS OF TANGIBLE

PERSONAL PROPERTY (describe)
(c) TANGIBLE PERSONAL PROPERTY REMAINING

(after specific gifts above)
7.2. SPECIFIC AMOUNTS
7.3, SPECIFIC GIFTS OF REAL PROPERTY
7.4. RESIDUE (everything not gifted above)
7.5. POWER OF APPOINTMENT(ifany)
7.6. FORGNEDEBT
7.7. ANATOMICALGIFT
LEGACY TRUST
QUALIFIED AFFIDAVIT
(Name of Transferor), upon personal knowledge and belief and pU1'suant to I.C, 30-4-8w5(a), makes
these statements,
1. I, as a Transferor under I.C, 30-4-8-2(13), created the (Transferor's Name) LEGACY

TRUST (Legacy Trust) under J.C. 30-4-8 and execute this affidavit to comply with J.C. 30-
4-8;:S(a), ., .
2. I have full right, title, and authority to transfer property to the Legacy Trust.
! ' ..,.t, ,,.',\ I,• ,,,, 1
.
i V '"'1/ 'I ,,,3.' The transfer of the property to the Legacy Trnst will not render me insolvent.
I do not intend to defraud a creditor by transferring the property to the Legacy Trust.
5, There are no pending or threatened court actions against me, (optional) other than those
identified as follows:
6. I am not involved in any administrative proceedings. (optional) other than those identified
as follows:
7. I do not contemplate filing for relief under the federal banlauptcy code.
8. The property transferred to the Legacy Trust is not derived from unlawful activities.
AFFIRMED UNDER THE PENALTIES FOR PERJURY nus DAY OF

~ - - - - - - - ' 20__.
(Name of Transferor)
RECEIPT
,, t~ '
(Qualified Trustee Name), as Qualified Trustee of the (Transfe1'or's Name) Legacy Trust,
acknowledge receipt of this Quali~eq AfB,µ~vit, . ...
(Qualified Trustee Name)
·EXHlB'IT
~
i
r
-~=----
'--
(TRANSFEROR'S NAME)
LEGACY TRUST
I make this LEGACY TRUST to be effective as of (Effective Date of Trust).
1. PURPOSE. This Trust is created under IC 30-4-8 and is intended to protect the Trust Property
from claims of creditors as provided in that chapter. (optional) It is my intention to transfer assets
to this Trust as a completed gift.
2. TRUST TERMS. Specific trust te1ms are identified in this section.
(optional) 2.1. DISTRIBUTION DIRECTOR. During my lifetime and my spouse's lifetime,

"Distribution Director" refers to(Distribution Director's Name). If the Distribution Director fails
or ceases to serve, "Distribution Director" refers to (Successor Distribution Director's Name). The
Distribution Director must be independent within the meaning ofIRC section 672( c).
(optional) 2.2. INVESTMENT DIRECTOR. "Investment Director" refers to (Investment

Director's Name). If the Investment Director fails or ceases to serve, "Investment Director" refers
to (Successor Investment Director's Name).
2.3. ME. "I", "me", "my" and "mine" refer to (Transferor's Name).
(optional) 2.4. PROTECTOR DIRECTOR. "Protector Director" refers to (Protector Director's

Name). If the Protector Director fails or ceases to serve then "Protector Director" refers to
(Successor's Name). The Protector Director cannot be a Trustee or other Director.
2.5. SPOUSE. "Spouse" shall mean the person identified in this Trust or the living
individual, if any, to whom a Beneficiary (including me) is man'ied at the applicable time during
the Beneficiary's life or, from and after the Beneficiary's death, to whom the Beneficiary was
manied at the time of the Beneficiary's death.
2.6. TRUST. "Trust" refers to the Trust created by this document that shall be named the
TRANSFEROR'S NAME) LEGACY TRUST. "Tmst" also refers to any other Trust created under
this document where appropriate.
2.7. TRUSTEE. "Trustee" refers to (Trustee's Name). If the Trustee fails or ceases to
serve, "Trustee" refers to (Successor Trustee's Name). The Trustee, if an individual, must be 18
or older, a resident of Indiana and independent within the meaning of IRC section 672(c). The
Trustee, if any person other than an individual, must be authorized by Indiana law to be an Indiana
trustee and subject to supervision of the department of financial institutions or the federal Office
of the Comptroller of the Cunency, the Federal Deposit Insurance Corporation, the Board of
Governors of the Federal Reserve System or any successor to these agencies.
2.8. TRUST PROPERTY. "Trust Property" refers to property transferred to this Trust.
EXHIBIT
Page 1 of23
I ·n
2.8.1. TITLE. (Trustee's Name) as trustee of the (TRANSFEROR'S NAME)
LEGACY TRUST shall hold title to all Trust Property.
2.8.2. ADDITIONS. Subject to the Trustee's acceptance, additional contributions

to the Trust Property may be made by me or others. The Trustee may also receive proceeds from
life insurance policies, endowment policies, annuities, pension plans, or other plans or agreements.
(optional) 2.8._. GRANTOR TRUST-POWER TO SUBSTITUTE ASSETS. It is my intent

that this Trust be construed as a "Grantor Trust" under the Intemal Revenue Code and that all
income distributed, held, or accumulated by this Trust shall be taxable to me. I shall have the right
to substitute for the Trust Property assets of equal value. This right can only be exercised in a non-
fiduciary capacity. Under IRC §675(4)(C), the Trust income should be taxed to me.
3. DISTRIBUTIONS. The principal and income shall be distributed as provided in this section.
3.1. DURING MY LIFE - MY SPOUSE, MY DESCENDANTS AND ME. During my

life, the Distribution Director, in the exercise of sole and absolute discretion, may direct
distribution of income or principal from the Trust Property in any amount the Distribution Director
may determine to me, my Spouse or my descendants. Any income not distributed shall be added
to principal at least annually.
(optional) [Do not use if Transferor is making a completed gift to Trust.] 3.1.1. MY VETO
RIGHTS. More than thirty (30) days before making any distributions under this section, the
Distribution Trustee shall notify me in writing of the proposed distributions specifying the
recipient, the property to be distributed and the date of distribution. I may veto any proposed
distribution by giving the Distribution Director written notice before the designated distribution
date specifying what distribution should not be made. If I veto a distribution, the Distribution
Director shall not direct the vetoed distribution. I retain the right to renounce this power to veto
at a later date by giving the Distribution Director written notice renouncing this power. Any
renunciation shall be irrevocable.
3.2. AT MY DEATH- SPOUSE, DESCENDANTS AND PRIMARY BENEFICIARY

TRUST. [Unless provided otherwise in this section,] [A]t my death and if my Spouse survives
me, the Distribution Director, exercising sole and absolute discretion, may direct distribution of
the income and principal of the Trust to my Spouse and my descendants during my Spouse's
lifetime. At my death and my Spouse's death or at my death, ifmy Spouse shall not survive me,
the principal and income shall be distributed pursuant to section 3.3.
(optional) [Do not use if Grantor is making a completed gift to Trust.] 3.2._. MY NONGENERAL
TESTAMENTARY POWER OF APPOINTMENT. The Distribution Director shall direct the pay
out or delivery of all or any portion of the Trnst Property or any rights in the Trnst Property, free of
Trnst, in the manner and amounts and to the persons, excluding me, my estate, my creditors, or
creditors of my estate, as I may appoint by will. No exercise of this power shall be effective unless
specific reference shall be made to the power and the exercise of it. I retain the right to release this
power of appointment in whole or in part or limit the persons for whom the power may be exercised.
Page 2 of23
3.2 . . . ATMY SPOUSE'S DEATH-TAXES AND PRIMARY BENEFICIARY
TRUST. [Unless provided otherwise in this section,] [A]t the death ofmy Spouse, the Distribution
Director shall direct the payment of any increase in death taxes caused by the inclusion of this trust
in my Spouse's taxable estate and then direct the distribution of the principal and income as
provided in section 3.3.
(optional) 3.2._._._. MY SPOUSE'S NONGENERAL TESTAMENTARY POWER

OF APPOINTMENT. The Distribution Director shall direct pay out or delivery of all or any portion
of the Trust Property or any rights in the Trust Property, free of tmst, in a manner and amounts and
to persons, excluding my Spouse, my Spouse's estate, my Spouse's creditors, or creditors of my
Spouse's estate, as my Spouse may appoint by will. No exercise of this power shall be effective
unless specific reference shall be made to the power and the exercise of it. My Spouse shall have the
right to release this power of appointment in whole or in part or limit the persons for whom the power
may be exercised.
(optional) 3.2._._._._. LIMITATION -MY DESCENDANTS. This power of

appointment shall only be exercised in favor of my descendants.
3.3. PRIMARY BENEFICIARY TRUST. On my death and the death ofmy Spouse, the
provisions of this section shall control.
3.3.1. PRIMARY BENEFICIARY - SEPARATE TRUSTS. The Trust Property

shall be divided by the Tmstee into as many separate and equal Trusts as necessmy to provide one
Trust for each of my children, and one Trust for each deceased child who leaves descendants who m·e
living at the time of division. The Trust allocated for a deceased child shall be held, administered,
divided and distributed to or for the benefit of the predeceased child's children 01· predeceased child's
predeceased child's children in the same manner as prnvided for my child. Each child for whom a
Trnst is created shall be the Primary Beneficimy. The Trustee shall not be required to segregate the
assets of these Tmsts physically, but adequate records of each Trust shall be maintained. If an
individual is born after my death who would be a Primmy Beneficiary if born before my death, the
Trnstee shall equitably create a Trust for the new Primmy Beneficiary by reducing the value of
existing Tlusts, per stirpes, to fund the new Trust. It is my intention to make essentially equal
prnvisions for each child and, per stirpes, for the descendants of a deceased child.
3.3.2. NEW DISTRIBUTION DIRECTOR. My Primary Beneficimy shall

nominate a Distribution Director for that Primmy Beneficimy's share which Distribution Director
shall contrnl distributions from that share as provided below
3.3.3. DURING PRIMARY BENEFICIARY'S LIFE-PRIMARY BENEFICIARY,

PRIMARY BENEFICIARY'S SPOUSE AND PRIMARY BENEFICIARY'S DESCENDANTS.
During the life of the Primary Beneficimy, the Distribution Director, in the exercise of sole and
absolute discretion, may direct distribution of income or principal from the Trust Property in any
amount the Distribution Director may determine to the Prima1y Beneficimy, the spouse of the
Prima1y Beneficiary or the descendants of the Primary Beneficimy. Any income not distributed
shall be added to principal at least annually.
Page 3 of23
3.3.3.1. DISTRIBUTION VETO. The Distribution Director shall notify
the Primary Beneficiary of proposed distributions more than thirty (30) days before the distribution
direction is given and shall not direct any distributions vetoed by the Primary Beneficiary in
writing delivered to the Distribution Director before distribution is made.
3.3.4. AT DEATH OF PRIMARY BENEFICIARY PRIMARY

BENEFICIARY'S SPOUSE, PRIMARY BENEFICIARY'S DESENDANTS AND PRIMARY
BENEFICIARY TRUST. [Except as provided in this section,] [A]t the death of the Primary
Beneficiary and if the Primary Beneficiary's Spouse survives the Prima1y Beneficiary, the
Distribution Director, exercising sole and absolute discretion, may direct distribution of the income
and principal of the Trust to the Primruy Beneficiaiy's Spouse and the Primary Beneficiary's
descendants during the Prima1y Beneficiary's Spouse's life. At the death of the Primary
Beneficiary's Spouse or at the death of the Primary Beneficiary, if the Primruy Beneficiruy's
Spouse shall not survive the Primary Beneficiruy, the principal and income shall be subject to the
provisions of section 3 .3 treating the Primary Beneficimy as though the Primary Beneficia1y was
me.
(optional) 3.3.4._. PRIMARY BENEFICIARY'S NONGENERAL

TESTAMENTARY POWER OF APPOINTMENT. The Distribution Director shall direct pay out
or delive1y of all or any portion of the Trust Property or any rights in the Trust Property, free of trust,
in a manner and amounts and to persons, excluding the Primary Beneficiaiy, the Primary
Beneficimy's estate, the Primmy Beneficiary's creditors, or creditors of the Primruy Beneficimy's
estate, as the Primary Beneficiaiy may appoint by will. No exercise of this power shall be effective
unless specific reference shall be made to the power and the exercise of it. The Primary Beneficiary
shall have the right to release this power of appointment in whole or in part or limit the person for
whom the power may be exercised.
(optional) 3.3.4. . . LIMITATION - PRIMARY BENEFICIARY'S

DESCENDANTS. This power of appointment shall only be exercised in favor of the Primary
Beneficiaiy' s descendants.
(optional) 3.3.4. . . LIMITATION - PRIMARY BENEFICIARY'S

SPOUSE. If the power of appointment is exercised in favor of the Primmy Beneficiaiy' s Spouse the
only property right that may be appointed is a right to income for the Primaiy Beneficiary's Spouse's
life or the right to a unitrust distribution for the Primary Beneficiaiy's Spouse's life not to exceed 6%.
(optional) 3.3.4._._. LIMITATION - GST TRUSTS. No power of

appointment without the consent of the Distribution Director shall apply to a Trust that has a11
inclusion ratio of less than one for generation skipping transfer tax purposes which would cause IRC
sections 2041(a)(3) or 2514(d) to apply
3.3.5. IF NO SURVIVING DESCENDANTS - OTHER PRIMARY

BENEFICIARY TRUSTS. If the deceased Primary Beneficiary is not survived by a Spouse or a
descenda11t of the Primary Beneficiary or at the death of the Primaiy Beneficiaiy and Spouse there is
no descendant of the Primary Beneficiaiy and if there is a Primary Beneficiary Trust created under
Page 4 of23
this Tmst still in existence for other Primary Beneficiaries, the Trustee shall distribute the principal
and undistributed income, per stirpes, to the Primary Beneficiary Trusts in existence at the death of
the Primmy Beneficimy.
3.4. IFNO PRIMARY BENEFICIARY TRUST-FINAL GIFT. [Unless otherwise prnvided

in this section,] [I]f there is no Trust for a Primaiy Beneficimy created under section 3 .3, the principal
and undistributed income of the Tmst shall be paid out and distributed, free of Tmst, to one or more
organizations meeting the requirements of IRC sections l 70(c), 2055(a) and 2522(a) as the
Distribution Trustee, exercising sole and absolute discretion, directs.
4. IRREVOCABLE. This Tmst is irrevocable. I cannot amend, modify or alter this Tmst in any
maimer. Neither my estate nor I shall have any reversionary interest in this Trust.
5. PROTECTIVE PROVISION. Neither principal nor income shall be subject to anticipation,

alienation, assignment, pledge, appointment or any voluntmy or involuntary sale, transfer or
mortgage by any person prior to distribution to a Beneficiary (including me), and the Tmstee is
empowered and directed to disregard and defeat any attempt to avoid this provision.
6. TRUSTEE AND DIRECTOR PROVISIONS. The Tmstee or Director shall serve subject to
the provisions in this section.
6.1. VACANCY. If a Trustee or Director fails or ceases to serve as Tmstee or Director, a

Beneficiaiy currently entitled to receive income or principal distribution shall, in writing, select as
a successor Trustee or Director a person that meets the qualifications to serve as Trustee or Director
as provided in section 2 and deliver the written designation to the successor Trustee or Director
who shall be the Tmstee or Director on acceptance in writing. If there is more than one
Beneficiaiy, a majority of the number of cunent Beneficiaries of all tmsts created under this
Legacy Tmst shall select a new Tmstee. A majority of the current Beneficiaries of a trust share
for a Primaiy Beneficiaiy, shall select a new Distribution Director to fill that vacancy.
6.2. REASONABLE FEE. A Tmstee or Director shall be entitled to a reasonable fee for
services provided. A Tmstee or Director shall be paid back for reasonable trust expenses paid by
a Trustee or Director.
-or-
6.2. FIXED FEE. A Trustee or Director shall be entitled to a fee equal to (Amount or
Percentage). A Trustee or Director shall be paid back for reasonable trust expenses paid by a
Trustee or Director.
6.3. NOT LIABLE FOR ACTS OF OTHER TRUSTEES. A Trustee or Director shall not
be liable for the acts of any other Tmstee or Director.
6.4. RESIGNATION. A Tmstee or Director may resign by delivering written notice to a

Beneficiaiy having the power to appoint a successor Trustee or Director under section 6.1. The
notice shall be delivered thirty (30) days before the effective date of the resignation.
Page 5 of23
6.5. REMOVAL. A Trustee or Director may be removed by a Beneficiary who is currently
entitled to receive income or principal distributions by delivering to the Trustee or Director written
notice of the Trustee's or Director's removal as Trustee or Director. If there is more than one
Beneficiary, a majority of the current Beneficiaries of all trusts created by this Legacy Trust must
consent to the removal of the Trustee. A majority of cm1·ent Beneficiaries of a trust share for a
Primary Beneficiary must consent to removal of a Distribution Director for that trust share.
(optional)6._. LIABILITY LIMITED TO BAD FAITH. A Trustee or Director shall not be

personally liable for any action taken or not taken or for any decrease in the value of any property
while in the Trust, whether due to an error of judgment or otherwise, where the Trustee or Director
acted in good faith.
(optional)6._. MAJORITY CONTROL. If there is more than one person acting as Trustee or
Director, a majority of the Trustees or Directors are competent to act as that Trustee or Director
after prior written notice to each Trustee or Director or written waiver of notice by each Trustee
or Director, except where the exercise of a power is confened on a Trustee or Director alone. A
dissenting Trustee or Director has no liability for the acts of the majority.
(optional)6._. ADVISOR. "Advisor" refers to (Advisor's Name: can be Grantor) or any person
designated by "Advisor" in writing who shall act as "Advisor" to the Investment Director with
respect to (describe Advisor's Trust Property). The Investment Director's powers with respect to
this Trust Property shall be subject to obtaining the Advisor's written approval unless:
(a) the Advisor fails to notify the Investment Director of disapproval within 10
days after receiving written notice of the decision to be made;
(b) the Advisor, in wdting, waives or delegates approval;
(c) the Advisor dies; or
(d) the Advisor is incompetent as determined by the written statement of a
physician familiar with my Advisor's medical condition.
Neither the Investment Director nor Advisor shall be liable for any action or inaction occasioned
by the Advisor's disapproval or approval. The Advisor may select in writing delivered to the
Investment Director or a successor Advisor.
7. DUTIES. The duties and limitations on duties of each Trustee and Director are specified in
this section. A Trustee or Director shall only have the duties specified and shall not have the duty
to monitor other Trustees or Directors or be liable for the breach of a duty by another Trustee
except as provided in LC. 30-4-9.
7.1. TRUSTEE. The Trustee, exercising sole and absolute discretion, shall have the duty
to:
(a) Maintain clear and accurate accounts for each Trust;

(b) Take possession and maintain control over Trust Propeiiy except for real or
personal property the Distribution Trustee allows a Beneficiaty to use;
Page 6 of23
(c) Prepare and file or ai1·ange for the preparation and filing of all tax returns
required to be filed by any Trust;
(d) Carry out duties specified under the law of the situs of the Trust except those
contrary to the terms of this Trust or assigned to another Trustee;
(e) Assist the Investment Trustee in its duties, as the Investment Trustee, in the
exercise of sole and absolute discretion, directs;
(f) Assist the Distribution Trustee in its duties, as the Distribution Trustee, in
exercise of sole and absolute discretion, directs;
(g) Implement, without liability, any decision of the Investment Trustee or the
Distribution Trustee; and
(h) Materially participate in the administration of each Trust.
(i) Carry out written directions received from. the Directors regarding decisions
or actions the Directors are authorized to direct.
(optional) 7.2. DISTRIBUTION DIRECTOR. The Distribution Director, exercising sole

and absolute discretion, in a fiduciary capacity, shall have the duty to make all decisions and to
take all actions related to the use or non-use and the distribution or non-distribution of Trust
Property for the benefit of a Beneficiaiy or to a Beneficia1y and shall provide written direction to
the Trustee to ca11y out those decisions or actions.
(optional) 7.3. INVESTMENT DIRECTOR. The Investment Director, exercising sole and
absolute discretion, shall have the duty to make all decisions and to take all actions related to the
investment of Trust Property subject to the powers of any Advisor and shall provide written
direction to the Trustee to carry out those decisions and actions.
(optional) 7.4. PROTECTOR DIRECTOR. The Protector Director shall have the powers in this
Section.
7.4. 1. POWERS. Upon written request from. a Beneficia1y, the Protector Director,
exercising sole and absolute discretion, rnay provide the Trustee written direction to:
(a) Remove a Trustee or Director;

(b) Overrule any decision made by a Trustee or Director including but not
limited to decisions related to distributions from the Trust; investments of
Trust Property or any other decision made or not taken by a Trustee or
Director, if the Protector Director provides written instructions to a Trustee
or Director as to what to do or not to do;
(c) Change the situs of this Trust;
(d) Change the governing law which applies to the administration of the Trust;
(e) Change the construction of this Trust from the governing law of the prior
situs to the governing law of the new situs;
(f) Amend this Trust to cany out my intentions specifically with regard to
requirements ofIC 30-4-8 and the Internal Revenue Code; and;
(g) Terminate this Trust.
Page 7 of23
7.4.2. CONFLICTS WITH TRUSTEE. If there is a conflict between the Protector
Director and a Trustee or Director, the decision of the Protector Director shall control.
(optional) 7.4._. LIMITED LIABILITY. The Protector Director shall be free of any liability,
damage, cost, and expense for any mistake in judgment, fact or law in the management of the
Protector Director's duties except for bad faith.
7.5. NO DUTY UNDER PRUDENT INVESTOR RULE. Any common law or

statutory rule regarding a "prudent person" rule, "prudent investor" rule or similar rule is waived
and shall not apply to the administration of a Trust or Trust Property. It is my intention that the
Trustee exercise sole and absolute discretion in the acquisition and retention of Trust Prope1ty
without regard to prudent investments. Specifically a Trustee shall not have a duty to:
(a) Make the Trust Prope1ty productive;

(b) Preserve the Trust Property;
(c) Treat Beneficiaries impartially;
( d) Diversify the investment of Trust Prope1ty;
(e) Manage the Trust Property in the interest of the Beneficiary;
(f) Review Trust Property and develop an investment plan;
(g) Verify facts relevant to investments;
(h) Use special skills in maldng investments;
(i) Consider any factors in investment including but not limited to:
(1) General economic conditions;
(2) The possible effect of inflation or deflation;
(3) The expected tax consequences of investment decisions or strategies;
(4) The role that each investment or course of action plays within the overall
Trust portfolio, which may include financial assets, interests in closely
held enterprises, tangible and intangible personal prope1ty, and real
prope1ty;
(5) The expected total return from income and the appreciation of capital;
(6) Other resources of the beneficiaries;
(7) Needs for liquidity, regularity of income, and preservation or
appreciation of capital; or
(8) An asset's special relationship or special value, if any, to the purposes
of the trust or to a Beneficiary
(optional) 7.6. NO DUTY TO INFORM. A Trustee or Director shall have no duty to

inform, to report or to account to a Beneficiary or any person except as provided in this section.
A Beneficiary entitled to information under this section must make a written request for the
information from the Trustee. The Trustee shall provide the requested information within thirty
(30) days from receipt of the written request.
7.6.1. DURING MY LIFE. During my life, I, my legal representative or my

attorney-in-fact shall be provided with any information requested.
Page 8 of23
7.6.2. AFTER MY DEATH. After my death, the following persons shall be
provided the information specified upon that person's request:
(a) Beneficiary shall be provided a copy of the Tmst provisions related to the
Beneficiary's distribution and general administrative provisions;
(b) Holder of power of appointment under a Tmst shall be provided
an inventory of Tmst Property subject to that power of appointment;
(c) Primaiy Beneficiary shall be provided with an accounting of that
Primary Beneficia1y shai·e; and
(d) Advisor shall be provided information requested about the Tmst Property
subject to the Advisor's oversight.
7.6.3. DESIGNATED REPRESENTATIVE. My Trustee may appoint a

Designated Representative under LC. 30-4-1-2(7) for any Beneficiary requesting information other
than that provided in this section which Designated Representative has authority to bind that
beneficiary.
7.7. NO DUTY REGARDING COURT PROCEDURES. A Trustee or Director shall have

no duty to register the Trust or provide periodic accountings to the court whether required by
statute or otherwise.
8. TRUSTEE POWERS. A Trustee shall have all the powers necessaiy to fulfill the duties
including but not limited to the powers described in this section and those confened on a Trustee
generally subject to any limitations stated in this Legacy Trust and written direction from
Directors.
8.1. POWERS OF TRUSTEE AND UNSUPERVISED PERSONAL

REPRESENTATIVE. The powers with respect to the Trust Property given a trustee with respect
to Trust Property under IC 30-4-3-3 and given to all unsupervised personal representatives with
respect to estate property under IC 29-1-7.5-3. Where these powers are similar to each other, the
broadest of these powers or discretions shall control.
8.2. CONTRACT PROTECTION. The power to protect the Trustee from personal liability
in any contract entered into on behalf of the trust.
8.3. DISCLAIMER. The power to disclaim and thereby cancel or revoke any power or
discretion, whether granted by will, by statute, by this Trust, or otherwise that is not wanted.
8.4. CONFLICTS OF INTEREST AUTHORIZED. The power to use all the powers
granted a Trustee to deal freely with any member of my family or my friends, with any trust that
I, a member of my family or my friends may have created and with any estate of any member of
my family or my friends even though a Tmstee may be acting as trustee, personal representative,
guardian, attorney-in-fact or agent for any one of those persons or entities.
8.5. COURT GUIDANCE. The power to seek the advice, approval or consent of
the court on any questions without subjecting the entire Trust to court control.
Page 9 of23
8.6. INCOME AND PRINCIPAL. The power to determine whether items should
be charged or credited to income or principal or allocated to income or principal.
8.7. POWER OF ATTORNEY. The power to execute, deliver, and grant to any
individual or corporation a revocable or irrevocable power of attorney to transact any and all
business on behalf of the various trusts created in this Trust.
8.8. MEDICAL INFORMATION. In the determination of my capacity on the

capacity of a Trustee, all individually identifiable health insurance information and medical
records on either me or a Trustee shall be released to the person who is nominated as successor
Trustee or Director to include any written opinion related to my capacity or the capacity of a
Trustee. This specifically applies to information under the Health Insurance Portability and
Accountability Act of 1996, 42 USC 1320(d) and 45 CPR 160~164 and even applies if the person
nominated as successor Trustee has not yet been appointed.
8.9. SPECIAL TRUSTEE. The power to appoint a person to act as "Special

Trustee" under this Trust that a Trustee dete1mines that the Trustee cannot administer the Trust in
a reasonable mam1er. The Special Trustee shall act without bond or security and need not account
to any court. The Special Trustee may be paid reasonable compensation in addition to the
compensation to which a Trustee is entitled under this instrument. A Trustee may remove the
Special Trustee at any time and appoint a different Special Trustee.
8.10. CERTAIN INVESTMENTS AUTHORIZED. The power to receive, acquire,

or hold stocks, bonds, or other capital securities issued by itself or by a parent or subsidiary
corporation, if this acquisition, reception, or retention is in the interest of the Trust and a
Beneficiary and the voting power, if any, is delegated to a Beneficiary and to the parents,
guardians, custodians, or other personal representatives of any incompetent Beneficiruy. When
the acquisition, reception, or retention of securities is not in the interest of the Trust and a
Beneficiary or when, for any reason, the voting power cannot be delegated, the Trustee shall not
voluntru·ily acquire the property, but the Trustee may receive and retain such property until the
same can be disposed in an orderly and businesslike manner without unreasonable sacrifice.
During the period this property is held, the Trustee shall not exercise any voting rights. The
conditions imposed relating to capital securities shall not apply to a corporate trustee's power to
invest in savings accounts, programs, or certificates offered by its commercial depaiiment to the
general public, or to invest in its own trust funds. In addition, the Trustee is specifically authorized
to invest in mutual funds.
8.11. MULTIPLE TRUSTS OR SHARES. The power to:
(a) Invest assets of multiple trusts in a single fund, assigning them undivided
interests in the fund, dividing the income prop01iionately and accounting for
them separately;
(b) Merge or consolidate any Trust together with other Trusts having the same
trustee and substantially the same dispositive provisions; or
(c) Divide any trust into separate shares or trusts.
Page 10 of23
8.12. CLOSELY HELD BUSINESS. The powers listed in this section with respect
to a closely held business. A "closely held business" includes a sole proprietorship, a corporation
not traded on an organized stock exchange, a general patinership, a limited partnership, a limited
liability company, a limited liability partnership and a sole proprietorship.
8.12.1. RETAIN INTEREST. A Trustee is authorized to retain any interest

in the closely held business so long as a Trustee determines the retention or continuance of the
closely held business is in the best interest of the Trust Property or a Beneficiary. The fact that
retention of the closely held business interest may prove to be unproductive or cause a loss to the
Trust Property or a Beneficiary shall not be controlling and a Trustee may freely exercise a
Trustee's absolute and sole judgment and discretion with respect to retaining the closely held
business interest. The dete1mination of a Trustee made in good faith shall be binding and
conclusive on a Beneficiary.
8.12.2. SALE OF ASSETS. A Trustee shall have the power to sell, contract
to sell, exchange, pledge or otherwise deal with or dispose of the closely held business interest
either in its entirety or in p01iions as a Trustee may see fit. A Trustee shall have the power to
execute appropriate instruments and do any and all things necessary, convenient or desirable to
cany out this power.
8.12.3. VOTE. A Trustee is authorized to vote any interest in any closely

held business interest and do anything and talce any step which A Trustee deems advisable to
enable a Trustee to manage, direct and control effectively the internal affairs and business of the
closely held business interest.
8.12.4. REORGANIZE. A Trustee is authorized to change the capital

structure of any closely held business interest to amend its charter, by-laws, atiicles or other
agreements; to dissolve 01· liquidate the closely held business interest or to cause the closely held
business interest to be reorganized, consolidated or merged with another entity.
8.12.5. LOANS. A Trustee may make loans or advances to any closely held
business interest which is held as an asset of the trust estate on the terms and conditions as a Trustee
deems advisable.
8.12.6. SALE OF STOCK. A Trustee may enter into any agreement with
respect to the sale of stock of any closely held business interest as a Trustee deems advisable. A
Trustee may exercise all rights, options and benefits arising under any agreement, as a Trustee, in
a Trustee's sole and absolute discretion, deems necessary and appropriate and may enforce the
provisions of the agreement according to its terms.
8.12.7. CONFLICTS OF INTERESTS. A Trustee may hold positions in

the closely held business either as a director, officer, partner, member, manager, or similar
position. If a Trustee holds such a position, a Trustee may receive compensation for that position
in the closely held business interest. A Trustee may still exercise any voting or other rights
available even though a Trustee may have an investment or other personal interest in the outcome
or the exercise of those rights.
Page 11 of 23
8.13. QUALIFIED SUBCHAPTER S TRUST. It is my intention that certain S
Corporation assets be held by a Qualified Subchapter S Trust as defined under the IRC and any
provision that would disqualify that status shall be disregarded and treated as if not included and
of no effect. A Trustee shall have the power to amend this Trust in any manner required to comply
with the cunent or future requirements as a qualified subchapter S Trust under the IRC or the
regulations.
8.14. TAX ELECTIONS. The power to exercise tax choices, elections, options
and disclaimers, in a manner reasonably believed to minimize taxes and expenses, whether upon
the Trust Property directly or upon a Beneficiary. I recognize this power may affect the amount
that a Beneficiary may receive.
8.15. CHANGE LOCATION OF TRUST. The power to transfer the situs or

location of the Trust to any place.
8.16. ENVIRONMENTAL ISSUES. The powers stated in this section with regard
to real property with environmental issues.
8.16.1. MANNER OF ACCEPTANCE. A Trustee shall not be deemed to

have accepted title to and shall not be obligated to act in any way as a Trustee with respect to any
real property, including any real property owned or operated by a sole proprietorship, a general
partnership, a limited partnership, a limited liability company, a limited liability partnership, a
corporation or any other closely held business which is or may become an asset of the Trust until:
(a) an appropriate environmental audit is performed at the expense of the Trust to

determine that conditions of the real property or operations conducted by the
business enterprise are in compliance with state and federal environmental laws
and regulations affecting the real property or the business enterprise; and
(b) a Trustee accepts the property as an asset of the trust by a separate writing
delivered to me, if living, or, ifl am not living, to a Beneficiary named to receive
distributions from the Trust or the legal representative of a Beneficiary.
8.16.2. REJECTION. A Trustee may decline to accept title or to act as a

Trustee as to any property that a Trustee determines is or may be in violation of any environmental
law regulation but still accept appointment as Trustee as to all other trust property. A Trustee shall
have the right, at any time, to reject any proposed additional property.
8.16.3. INDEMNITY. A Trustee shall be indemnified from the Trust from

any liability or expense, including reasonable attorney fees, incun-ed as a result of any violation,
actual or alleged, of any environmental law or regulation with respect to any property that a Trustee
has actually or allegedly accepted.
8.16.4. POWERS. A Trustee is authorized to take remedial action as a

Trustee determines is appropriate to prevent, abate, remove or otherwise respond to any actual,
threatened or alleged violation of, or otherwise comply with any environmental law or regulation,
Page 12 of 23
or federal, state or local agency or court order, affecting any property. A Trustee may employ
experts to assist or to perform actions with regard to the remedial action. All cost and expenses
incuned by a Trustee shall be paid by the trnst. A Trustee may establish a reasonable reserve for
the payment of anticipated environmental expenses.
8.16.5. LIABILITY LIMITED. A Trustee shall not be liable to me, a

Beneficiaiy, or any other person for any loss or reduction in the value of the trust resulting from
any actual, tlu·eatened or alleged violation of any environmental law or regulation affecting any
Trust Property or for the payment of any expense of remediation unless a Trustee contributed to
the problem by the Trustee's willful misconduct or gross negligence.
8.17. BENEFICIARY'S USE OF PROPERTY. The power to permit a

Beneficiary to enjoy the use of the personal property or personal residence without liability for a
decrease in value unless the decrease in value is caused by the Trustee's intentional act or
negligence.
8.18. DISTRIBUTION -GENERALLY. The power to distribute the estate at

times and on terms as the Trustee may determine. The distribution may be in cash, in kind, partly
in both, or in an undivided interest in property. The distribution Trustee shall have the power to
value the property for distribution purposes under this will reasonably and in good faith and to pay
the cost of storing, insuring and delivering any property to a Beneficiary. The Trustee shall have
no obligation to take income tax basis into account in distributing property in kind or to make
equitable adjustments between or among Beneficiaries because the income tax basis of the
property distributed in kind. The Trustee shall have no obligation to give a Beneficiary a share in
each asset distributed in ldnd or available for distribution in ldnd.
8.19. DISTRIBUTION - INCAPACITATED PERSON. The power to make

distributions to a Beneficiaiy who is a minor or a Beneficiaiy who is otherwise an incapacitated
person by:
(a) Payment of the Beneficiaiy's expenses;

(b) Payment to some other person to be applied for the use and benefit of the
Beneficiary;
(c) Distribution directly to the Beneficiaiy without bond or security;
(d) Distribution to a responsible person or representative who is a natural, foster,
adopted parent of the Beneficiary, or one with whom the Beneficiary resides;
(e) Distribution to an adult who agrees to serve as custodian for the Beneficiary
under the Uniform Transfer to Minors Actor or similar law for distribution to
the Beneficia1y at age twenty-one (21);
(f) Distribution to the guardian or other legal representative wherever appointed;
(g) Distribution to any institution in which the Beneficiaiy is staying;
(h) Purchasing stocks, bonds, insurance or other property in the Beneficia1y's name;
or
(i) Depositing into an account in a bank, financial institution, brokerage or similar
institution in the Beneficiaiy's name.
Page 13 of23
8.20. GENERATION-SIUPPING TRANSFER. The powers stated in this section
with regard to the generation-skipping transfer tax exemption.
8.20.1. PURPOSE. It is my intent to allow the Trustee to create a Trust or

Trusts which qualify for the generation-sldpping transfer tax exemption and for treatment as
separate and independent shares and comply with the "appropriate interest" rules as defined in
Chapter 13 of the Intemal Revenue Code and its regulations. All the provisions in this section
shall be construed so that all divisions and distributions required comply with the requirements of
applicable law or regulations.
8.20.2. POWER TO DIVIDE TRUST. Upon being advised of the

allocation of some or all of my generation-skipping transfer tax exemption under IRC §2631, the
Trustee may divide the Trust or Trusts created under this document into separate Trusts to be
administered under the same terms and conditions.
8.20.3. AMOUNT OF EXEMPT TRUST. One or more Trusts shall be

referred to as the "Exempt Trust" and shall be funded with an amount equal to the amount of the
generation-sldpping, transfer tax exemption allocated to the Trust or Trusts. The other Trust
known as the "Non-exempt Trust" shall be funded with the balance of the Trust.
8.20.4. APPROPRIATE INTEREST. The Trustee shall satisfy the
"appropriate interest" requirement by paying or permanently setting aside property in full
satisfaction of the amount allocated to the Exempt Trust within 15 months of the date of death of
the deemed transferor, by paying "appropriate interest" as defmed in Treasury Regulations
§26.2642-2(b)(4), or any successor regulation, on such amount, or by allocating to the pecuniary
amount a prorated share of Trust income from the valuation date to the payment date. The Trustee
may elect to use whatever methods the Trustee deems just and equitable to a Beneficiaries.
8.20.5. ASSET VALUATION. The Trustee shall fund the exempt trust
with a pecuniary amount in cash or in ldnd, valued as of the date of distribution.
8.20.6. DECEASED CHILD. Any child of mine or a Beneficiaiy shall be

deemed to have died immediately prior to my death or the Beneficiaiy's death if the following
conditions are met:
(a) There is any gift made to the child at my or a Beneficiaiy's death;

(b) The child dies within 90 days immediately after that death; and
(c) By reason of the death of the child the property passes to one or more of the
child's descendants in a transfer that would be a "direct sldp" as defmed in
IRC §2612.
8.20.7. LIABILITY LIMITED. I recognize that the discretion granted to

the Distribution Trustee may affect the amounts passing to a Bene:ficiaiy and to Trusts established
following my death or the death of a Beneficiaiy. The Distribution Trustee shall not be liable for
the exercise of this discretion made in good faith and is not required to make any compensating
adjustments.
Page 14 of23
8.21. LIFE INSURANCE. The powers provided in this section with respect to
any life insurance policies held as part of the Trust.
8.21.1. PREMIUMS. The Trustee may, in the Tmstee's sole and absolute
discretion, pay any premiums or other charges from income or principal. If the Trust Pmperty is
inadequate to pay premiums or charges, the Tmstee may, in the Trustee's sole and absolute
discretion, do one or more of the following;
(a) Use any automatic premium loan feature;

(b) Bormw against any policy cash reserves whether or not on the policy for
which premium or charges will be paid; or
(c) Elect any automatic nonforfeiture feature.
The Trustee shall have no duty to do any of these unless the Trustee received specific written
notice that a premium or charge is not paid.
8.21.2. ADDITIONS. The Trust Property may include any additional

insurance policies, no matter how acquired including, but not limited to acquisition by gift,
conversion, reissues or consolidation.
8.21.3. ENFORCEMENT. The Trustee may, in the Trustee's sole and
absolute discretion, refuse to enter into or maintain any litigation, endorse policy payments, or take
other action respecting any Tmst insurance policies, until it has been indemnified against all
expenses and liabilities that, in the Trustee's judgment, may be involved in such action.
8.21.4. NO DUTY TO INQUIRE. The Trustee need not inquire whether or

not a Tmstee or the Trust has been designated the beneficiaiy of any insurance policy or other
death benefit, and the Trustee need not act with respect to the policies until receipt of written notice
that a Tmstee or the Trust is a beneficiaiy of the policy.
8.21.5. NO DUTY TO DIVERSIFY. The Trnstee may own, hold or invest

in life insurance and shall have no duty to diversify or any other duty with respect to the life
insurance under Indiana's Uniform Prudent Investor Act, LC. 30-4-3.5, or sin1ilar common law.
8.22. PENSION PLAN LIMITATIONS. A Trustee may not distribute to or for the benefit
of my estate, any charity or any other non-individual Beneficiaty any benefits payable to this Trnst
under any qualified retirement plan, individual retirement account or other retirement mrnngement
subject to the "minimum distribution rules" ofIRC §401 (a)(9) or other comparable provisions of
law. It is my intent that all these retirement benefits be distributed to or held for only individual
beneficiaries, within the meaning of IRC §40l(a)(9) and applicable regulations. Accordingly, I
direct that the benefits may not be used or applied for payment of my debts, taxes, expenses of
administration or other claims against my estate; nor for payment of estate, inheritance or similai·
transfer taxes due on account of my death except to the minimum extent that would be required
under applicable state or federal tax apportionment law in the absence of any specific provision on
the subject in my will or this trust. This paragraph shall not apply to any charitable bequest that is
to be funded with retirement benefits as specifically directed by other provisions of this instmment.
Page 15 of 23
8.23. INDIVIDUAL TRUSTEE LIMITATIONS. It is not my intent to subject a Trustee
who is an individual to adverse federal estate tax consequences resulting from the powers given
to a Trustee. A Trustee shall have no power that may include the Trust Property in the gross
estate of a Trustee. Specifically, a Trustee shall not:
(a) Purchase, sell, or otherwise dispose of Trust Property for less than adequate
consideration;
(b) Borrow any part of the Trust Property;
(c) Pay any premium on any life insurance policy where a Trustee is the insured;
and
(d) Distribute any Trust Property which may discharge a Trustee or a Trustee's
legal obligations.
8.24. DESIGNATED REPRESENTATIVE. My Trustee shall have the power to appoint

a "Designated Representative" under LC. 30-4-1-2(7) for any Beneficiary who cannot legally
represent themselves and is not represented under LC. 30-4-6-10.5.
9. GENERAL RULES. The rules in this section shall be used to determine the meaning of this
Trust unless stated otherwise in this Trust.
9.1. HEADINGS, GENDER AND NUMBER. Headings at the beginning of each

numbered section shall not be refe11·ed to in determining what this Trust means. Masculine words
include feminine and neuter meanings. Singular words include plural meaning and plural words
include singular meaning.
9.2. APPLICABLE LAW. This Trust shall be governed and interpreted in accordance with
the laws of Indiana. If the situs of the Trust has changed from Indiana, then the administration of
any Trust shall be in accordance with the laws of the situs of the Trust during any period of
administration in that state.
9.3. GIFT CONDITIONED ON SURVIVORSHIP. Where a gift requires a Beneficiary to

survive me or some other person but no period of time is specified, "survive" shall mean that the
Beneficiary survives for a period of 120 hours after the death referred to in the gift. If the period
of survivorship does not exceed 120 hours with ce1iainty, the gift shall be made as if the
Beneficiary did not survive. If the Beneficiary does not survive and there is no alternate
Beneficiary, the gift shall fail.
9.4. GIFT TO PREDECEASED BENEFICIARY. If the Beneficia1y predeceases the

measuring death on which the gift is based or makes a valid disclaimer, the surviving descendants
of the Beneficiary shall take in the Beneficia1y's place per stirpes. If no descendants of the
predeceased or disclaiming Beneficiary smvive me and no alternate Beneficiary is named, the gift
shall fail.
9.5. GIFT THAT FAILS. A failed gift shall be gifted as a pmi of the residuary Trust estate.
If a portion of the residuary gift fails, that portion shall be gifted under the remaining residumy
gifts.
Page 16 of23
9.6. ENCUMBERED GIFT. Property that is subject to an encumbrance and gifted under
this trust is gifted subject to the encumbrance.
9.7. FORCED TERMINATION. It is my intention that the Trust and Trust Property not
be subject to the common law or statutory rule against perpetuities either now or in the future.
However if the Trnst or Trust Property should be subject to any rule against perpetuities 01· similar
rnle, the Trust shall terminate completely within the longest period of time allowed under the
applicable rule either now or in the future and all principal and undistributed ctment income of the
Trust subject to termination under the applicable rule shall be paid out and distributed, free of trust,
to the Beneficiary then entitled to receive distributions on te1mination.
10. DEFINITIONS. The definitions in this section shall be used in determining the meaning of
these words or phrases in this Trust unless stated otherwise in this Trust.
10.1. BENEFICIARY. 11 Beneficiary 11 , in addition to me and those named as "Beneficia1y",

means any individual, corporation, partnership, LLC, LLP, trust or other organization that receives
a gift made by this Trust. For an individual beneficiary, the term includes the individual's legal
representative, guardian, conservator, trustee, attorney-in-fact, or agent legally authorized to
represent the individual. For other entities, it refers to the individual authorized to bind the entity
with respect to this Trust.
10.2. CHILD. "Child" includes an adopted child and children born to or adopted by me
after the execution of this Trust, but do not include illegitimate children.
10.3. DEATH TAXES. "Death Taxes" includes all inheritance, estate, or other succession
taxes including penalties and interest.
10.4. DESCENDANT. "Descendant" includes children adopted by my descendants or me,

but does not include illegitimate children. For purposes of "individual retirement accounts,"
"qualified retirement plans," or similar tax-deferred retirement an-angement or annuity,
"descendants" or other similar group shall not include an individual who is a member of the group
by virtue of legal adoption if the individual was adopted after the required beginning date or my
death, whichever occurs first and is older than the oldest beneficiary of this Trust who was living
on the earlier of those dates.
10.5. ENCUMBRANCE. 11 Encumbrance 11 means any right or interest in property that

decreases the value of the property, including but not limited to mortgages, liens, taxes,
assessments, covenants, zoning laws, easements or other restrictions.
10.6. FAILS OR CEASES TO SERVE. "Fails or ceases to serve 11 means that the person
fails or ceases to serve when the person:
(a) Dies;
(b) Resigns;
(c) Is adjudicated to be a protected person under the laws of any state;
Page 17 of 23
(d) disappears as determined by the affidavit of my successor Trustee or the
person or persons entitled to appoint a successor;
(e) Is unable to transact a significant part of the business required under this Trust
as certified in writing, by a physician familiar with the condition of any current
fiduciaiy to the person or persons entitled to appoint a successor;
(f) Is no longer legally authorized to administer this Trust;
(g) Is removed; or
(h) Refuses to accept appointment under this Trust.
10.7. GIFT. "Gift11 includes devise, bequest and other terms used to transfer property at
death.
11
10.8. GIVE. Give 11 includes devise, bequeath and other tenns used to transfer property at
death.
10.9. IC. 11 IC" refers to the specified provision of the Indiana Code in effect as of the date
of the Trust, as amended, and future amendments or a successor statute to the provision.
10.10. INCAPACITATED PERSON. 1'Incapacitated person11 means the same as defined

in IC 29-3-1-7.5.
10 .11. IRC. 11 IRC1 1 refers to the specified provision of the United States Intemal Revenue
Code of 1986 in effect as of the date of this trust, as amended, and future amendments or a
successor statute to the provision.
10.12. PER STIRPES. 1'Per stirpes 11 shall have the meaning it is normally given under
Indiana law, though, by way of example, it means that surviving children of a predeceased
Beneficiary share equally the share the Beneficiaiy would receive, if living.
10.13. RESIDUE. "Residue'' or "Residuary" means that po1iion of the Trust Prope1iy
remaining after specific gifts, if any, are made.
10.14. WILL. "Will" includes testament and codicil.
Page 18 of 23
AS EVIDENCE OF THIS TRUST, the Trnstee, Director and I signed two Trnsts each of
which shall be an original.
GRANTOR
(Transferor's Name)
STATE OF (NOTARY'S STATE) )

) ACKNOWLEDGEMENT
COUNTY OF (NOTARY'S COUNTY) )
Before me, a Notary Public in and for this County and State, personally appeared
(Transferor's Name), who acknowledged the execution of the ffl:tegomg Legacy Trnst.
Witness my hand and Notary Seal this _ _ _ _ day of _ _ _ _ _ _ _ _ _ __
My commission expires:
(Notary's Commission Date) (Nota1y 1s Name)
Resident of (Notaiy's County) County, Indiana
Page 19 of23
TRUSTEE'S ACCEPTANCE
(Trustee's Name), as Trustee of The (Transferor's Name) Legacy Trust, acknowledges

receipt of The (Transferor's Name) Legacy Trust dated
_ _ _ _ on the _ day of , and accepts the Trust as of
that date as Trustee.
(Trustee's Name)
Trustee

) ACKNOWLEDGEMENT
(Trustee's Name), who acknowledged the execution of this Legacy Trust as Trustee.
Witness my hand and Notary Seal this _ _ _ _ day of _ _ _ _ _ _ _ _ _ __
(Notary's Commission Date) (Notary's Name)
Resident of (Notmy's County) County, Indiana
Page 20 of23
DISTRIBUTION DIRECTOR'S ACCEPTANCE
(Distribution Director's Name), as Distribution Director of The (Transferor's Name)

Legacy Trust, aclmowledges receipt of The (Transferor's Name) Legacy Trust dated
___, on the _ day of
_ _ _ _, and accepts the Trust--as-ofthat date as Distribution Director.
(Distribution Director's Name)

Distribution Director

) ACKNOWLEDGEMENT
Before me, a Notary Public in and for said County and State, pef onally appeared
(Distribution Director's Name), who aclmowledged the execution of th~isii:e'1s~tlWTrust as
'.In.i•e.,...aae-who, haviug heen duly swam, stated that an,' rspl'esentzrtlwrs tlrerein containet.r""flf@
~- 1)\'S-t<'i ', ... t"t~ '.))u·~ '- 4o,r ,
Witness my hand and Notary Seal this _ _ _ _ day of _ _ _ _ _ _ _ _ _ _ __
ill otary' s Commission Date) (Notary's Name)
Resident of (Notary's County) County, Indiana
Page 21 of 23
INVESTMENT DIRECTOR'S ACCEPTANCE
(Investment Director's Name), as Investment Director of The (Transferor's Name) Legacy

Trnst, acknowledges receipt of The (Transferor's Name) Legacy Trnst dated
_ _ _ _ _ _ _ _ _ _ _, on the _ day of
_ _ _ _ , and accepts the Trnst as of that date as Investment Director.
(Investment Director's Name)

Investment Director

) ACKNOWLEDGEMENT
(Investment Director's Name), who acknowledged the execution of this Legacy Trust as
Investment Director,
Witness my hand and Notary Seal this _ _ _ _ day of _ _ _ _ _ _ _ _ _ _ __
(Notaiy's Commission Date) (Notaiy's Name)
Resident of (Notaiy's County) County, Indiana
Page 22 of23
PROTECTOR DIRECTOR'S ACCEPTANCE
(Protector Director's Name), as Protectol' Director of The (Transfel'or's Name) Legacy

Trust, acknowledges receipt of The (Transferor's Name) Legacy Trust dated
_ _, on the _ day of _ _ _ _ _ _ __
_ _ _ _., and accepts the Trnst as of that date as Protector Director.
(Protector Director's Name)

Protector Director

) ACKNOWLEDGEMENT
(Protector Director's Name), who acknowledged the execution of this Legacy Trust as ~
~ n g bee.J.l-dtll,' SlNei'i1, stated that any representations thct•cin eoa-tainecl are tr ttc. -
Pf<.t!Yi'tcTt.JJe. v,e~
Witness my hand and Notary Seal this day of _ _ _ _ _ _ _ _ _ __
(Notaiy's Commission Date) ~otary's Name)
Resident of (Notary's County) County, Indiana
THIS INSTRUMENT PREPARED BY (PREPARER'S NAME), (PREPARER'S ADDRESS),

(PREP ARER'S CITY, STATE, ZIP), (000) 000-0000.
Page 23 of23
Section
Three
Fraudulent Conveyances
Deborah J. Caruso
Rubin & Levin, P.C.
Mark S. Zuckerberg
Bankruptcy Law Office of Mark S. Zuckerberg, P.C.
Section Three
Fraudulent Conveyances…………………………………….. Deborah J. Caruso

Mark S. Zuckerberg
PowerPoint Presentation
i
Fraudulent
Conveyances
Class 5
Fraudulent Transfers: § 548
(a) (1) The trustee may avoid any transfer (including any transfer to or for the benefit of an insider under an
employment contract) of an interest of the debtor in property, or any obligation (including any obligation to or for
the benefit of an insider under an employment contract) incurred by the debtor, that was made or incurred on or
within 2 years before the date of the filing of the petition, if the debtor voluntarily or involuntarily—
(A) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud
any entity to which the debtor was or became, on or after the date that such transfer was made or
such obligation was incurred, indebted; or
(B) (i) received less than a reasonably equivalent value in exchange for such transfer or
obligation; and
(ii) (I) was insolvent on the date that such transfer was made or such obligation was incurred,
or became insolvent as a result of such transfer or obligation;
(II) was engaged in business or a transaction, or was about to engage in business or a
transaction, for which any property remaining with the debtor was an unreasonably small
capital;
(III) intended to incur, or believed that the debtor would incur, debts that would be beyond
the debtor’s ability to pay as such debts matured; or
(IV) made such transfer to or for the benefit of an insider, or incurred such obligation to or for
the benefit of an insider, under an employment contract and not in the ordinary course of
business.
(2) A transfer of a charitable contribution to a qualified religious or charitable entity or organization shall not be
considered to be a transfer covered under paragraph (1)(B) in any case in which—
(A) the amount of that contribution does not exceed 15 percent of the gross annual income of the
debtor for the year in which the transfer of the contribution is made; or
(B) the contribution made by a debtor exceeded the percentage amount of gross annual income
specified in subparagraph (A), if the transfer was consistent with the practices of the debtor in making
charitable contributions.
§548 Fraudulent Conveyance
Two Theories of Recovery
1. Actual Fraud (a/k/a Fraud in Fact)
• §548(a)(1)(A)
2. Constructive Fraud (a/k/a Fraud in Law)
Less Than Reasonably Equivalent Value
• §548(a)(1)(B)
Elements for “Actual Fraud”
§548(a)(1)(A)
• Elements
• Debtor transferred an interest in property
• Transfer occurred within 2 (two) years before the
date of filing
• Made with an actual intent to hinder, delay, or
defraud
Actual Intent
• Trustee must prove “actual intent” to defraud
creditors
• The focus of the inquiry is state of mind of debtor
• Neither malice nor insolvency are required
• Culpability on part of transferee not essential
• Actual intent need not be shown by direct evidence
• It may be inferred from circumstances
• Certain indicia called “Badges of Fraud”
See Gouveia v. Cahillane (In re Cahillane), 408 B.R. 175, 191 (Bankr. N.D. Ind.
2009).
Badges of Fraud
It is the rare case in which a transferor admits that he intended to
make an impermissible transfer. Thus, courts often infer
fraudulent intent by considering certain "badges of fraud," the
most common of which are:
(1) the transfer or obligation was to an insider;

(2) the debtor retained possession or control of the property
transferred after the transfer;
(3) the transfer or obligation was concealed;
(4) the debtor had been sued or threatened with suit;
(5) the transfer was of substantially all the debtor’s assets;
(8) the debtor was insolvent or became insolvent; and
(9) substantial debt was incurred.
Once the trustee establishes the existence of several badges of

fraud, there is a presumption of fraudulent intent.
Elements for “Less than
Reasonably Equivalent Value”
§548(a)(1)(B)
• Elements
• Debtor transferred an interest in property
• Transfer occurred within 2 (two) years before the date of filing
• Made for less than reasonably equivalent value
• And one of the following:
-insolvent as a result of such transfer;
-engaged in business with unreasonably small capital;
-incurred debts beyond ability to pay;
-made the transfer for the benefit of insider
• Courts, in determining whether a debtor received reasonably
equivalent value, “consider all of the circumstances of the
transfer, including ‘the fair market value of what was transferred
and received, whether the transaction took place at arm’s length,
and the good faith of the transferee.’”
Zeddun v. Griswold (In re Wierzbicki), 830 F.3d 683, 687 (7th Cir. 2016)
(quoting Smith v. SIPI, LLC (In re Smith), 811 F.3d 228, 240 (7th Cir.
2016)).
ACTUAL FRAUD – The key is the intent to hinder, delay, or defraud
creditors out of a debtor’s interest in property of the estate. Was the
debtor intending to thwart creditors?
Investment firm used millions of dollars of customer investments (which

should have been segregated by law) as security for a $312M loan from
Bank of NY Mellon. The Firm filed for bankruptcy, and trustee sought to
dislodge the bank’s secured position. The investment manager’s intent to
return funds was immaterial. Exposing the victim to a substantial risk of
loss of which the victim is unaware can satisfy the intent requirement.
In re Sentinel Mgmt. Group, 728 F.3d 660 (7th Cir. 2013).
Debtor files for bankruptcy three months after disclaiming inheritance

under father’s will causing proceeds to pass to her children. Trustee
argued she must have had an interest in the inheritance in order to
disclaim it, but the state law says once you disclaim the property such
disclaimer relates back to the date of the testator’s death. Even though
there may have been intent to defraud, the disclaimed inheritance is not
property of the estate.
In re Atchison, 925 F.2d 209 (7th Cir. 1991).
ACTUAL FRAUD – (cont’d)
Under a “Ponzi scheme presumption,” the existence of a Ponzi scheme

satisfies the actual intent element under section 548(a)(1)(A) of the
Bankruptcy Code as a matter of law “because transfers made in the
course of a Ponzi scheme could have been made for no purpose other
than to hinder, delay or defraud creditors.”
Picard v. Citibank, N.A. (In re Benard L. Madoff Inv. Secs. LLC), 12 F.4th 717
(2nd Cir. 2021) (quoting Picard v. Estate (Succession) of Igoin (In re BLMIS),
525 B.R. 871, 892 n.21 (Bankr. S.D.N.Y. 2015)).
CONSTRUCTIVE FRAUD - To transfer property for less than adequate
consideration may be desperate, foolish, or imprudent, and the receipt of
such a transfer a pure windfall, but neither the transfer nor the receipt is
in and of itself dishonest. Therefore, intent is not the issue; the issue is
reasonable equivalent value.
One person owns two corporations (I.M. & I.W.). I.M borrowed $300,000
from Bank, later defaulted on the loan, and had to liquidate. Bank
allowed I.M. to use proceeds from liquidation to pay off trade creditors so
long as I.W. guaranteed the $300,000 loan (intercorporate guarantee).
The guarantee was secured by virtually all of I.W.’s assets. I.W. paid on
the principal and interest as it became due totaling $72,076.49 principal
and $26,863.45 interest. I.W. then filed bankruptcy. Both parties agreed
that the guarantees had made I.W. insolvent. As a secured creditor,
Bank obtained relief from stay and liquidated the remaining assets
collecting a total of $444,507.55 including amounts paid prior to BK.
Trustee sought a turnover of those funds. While I.W. may have received
an indirect benefit by maintaining a relationship with joint trade partners,
it did not receive a reasonable equivalent value. Leibowitz v. Parkway
Bank & Trust Co. (In re Image Worldwide), 139 F.3d 574 (7th Cir. 1998).
CONSTRUCTIVE FRAUD - (cont’d)
W owned a 40-acre farm where she lived for a time with her minor children
and their father G. G sued W in state court for unjust enrichment and
slander of title, and in 2011 a state court judge found that G did not have
and never has had title to the farm. G appealed the decision, which was
dismissed in 2012. In March 2012, in order to put an end to the litigation,
W gave G a quitclaim deed and $1, and in exchange W would receive G’s
promise to abandon the appeal and to assume approximately $149,000 in
liabilities secured by the property. W filed a chapter 7 bankruptcy fourteen
months later. At the time of the transfer, and after all encumbrances, W
had approximately $151,000 of equity in the farm. The Trustee sought to
avoid the transfer, and the court held that what G’s promise to assume
liability for the mortgages and liens on the properties were worth no more
than the amount of the encumbrances. Further, G’s promise to end the
state-court appeal “was essentially worthless, ” and had only nuisance
value. At the time of the transfer, G’s appeals against W had already been
dismissed, and W gave up a $300,000 farm in which she had $151,000 in
equity and had not received reasonable equivalent value for the transfer.
Indirect non-economic intangible benefits (e.g. avoiding further family
conflict) are not sufficient to constitute reasonably equivalent value. In re
Wierzbicki, 830 F.3d at 687-89. See also Gresk v. Bulmer (In re Bulmer),
2017 Bankr. LEXIS 379, *12-13 (Bankr. S.D. Ind. Feb. 10, 2017).
Self-Settled Trusts in Bankruptcy: § 548(e)
(e) (1) In addition to any transfer that the trustee may otherwise avoid, the trustee may avoid any
transfer of an interest of the debtor in property that was made on or within 10 years before the
date of the filing of the petition if–
(A) such transfer was made to a self-settled trust or similar device;
(B) such transfer was made by the debtor;
(C) the debtor is a beneficiary of such trust or similar device; and
(D) the debtor made such transfer with actual intent to hinder, delay, or defraud any
entity to which the debtor was or became, on or after the date that such transfer was
made, indebted.
(2) For the purpose of this subsection, a transfer includes a transfer made in anticipation of
any money judgment, settlement, civil penalty, equitable order, or criminal fine incurred by, or
which the debtor believed would be incurred by—
(A) any violation of the securities laws (as defined in section 3(a)(47) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(47))), any State securities laws, or any
regulation or order issued under Federal securities laws or State securities laws; or
(B) fraud, deceit, or manipulation in a fiduciary capacity or in connection with the
purchase or sale of any security registered under section 12 of 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78l and 78o(d)) or under section 6 of the Securities
Act of 1933 (15 U.S.C. 77f).
Avoidance of Transfers
under §548(e)
• Section 548(e) was added to the Bankruptcy Code as part
of BAPCPA in 2005.
• The enactment of the statute was Congress’ reaction to the
state statutes authorizing domestic asset protection trusts
similar to Indiana’s Legacy Trust (Ind. Code §§ 30-4-8-1 –
30-4-8-16).
• A trustee has a ten year look back period to avoid a
transfer under Section 548(e) into a self-settled trust if
the transfer was made by the debtor with the actual
intent to hinder, delay, or defraud any entity to which the
debtor was or became, on or after the date that the
transfer was made, indebted.
§548(e) Elements
• Trustee has a ten year look back period to avoid a
transfer under Section 548(e) if–
• The transfer was made to a self-settled trust or similar
device;
• The transfer was made by the debtor;
• The debtor is the beneficiary of the transfer; and
• The transfer was made by the debtor with the actual intent
to hinder, delay, or defraud
• On its face, the statute does not require the debtor to
have been insolvent at the time of transfer.
Identifying a
“Self-Settled Trust” or “Similar Device”
• The Bankruptcy Code does not define “self-settled trusts” or “similar device,”
therefore courts have looked to state law to determine whether a trust is self-
settled pursuant to Section 548(e) of the Bankruptcy Code.
• "A self-settled trust has been defined as '[a] trust in which the settlor is also the person
who is to receive the benefits from the trust, usually set up in an attempt to protect the
trust assets creditors.’” Smith v. Pollack (In re Pollack), 2016 WL 270012 at *5 (Bank.
D.N.H. Jan. 20, 2016) (quoting Safanda v. Castellano (In re Castellano), 514 B.R. 555,
561 (Bankr. N.D. Ill. 2014)).
• In general, courts have required that the trust receiving the transfer be
irrevocable and contain a spendthrift clause.
• Main issue for court to determine is whether the debtor made the transfer with
the actual intent to hinder, delay, or defraud– this language is the same as
section 548(a)(1)(A), therefore some courts look to whether badges of fraud
exist.
• Ordinarily state law creates and defines a debtor’s interest in property,

however Congress codified section 548(e) of the Bankruptcy Code in order to
have federal law control in the case of a self-settled trust. Battley v. Mortensen
(Mortensen), 2011 Bankr. LEXIS 5560, *18 (Bankr. D. Alaska May 26, 2011).
• The stated purpose of the debtor’s trust, created 4 years prior to his
bankruptcy filing, was “to maximize the protection of the trust estate
or estates from creditors’ claims of the Grantor or any beneficiary and
to maximize all wealth transfer taxes.” The bankruptcy court did not
apply Alaska law that provided a settlor’s expressed intention to
protect assets from a beneficiary’s potential future creditors is not
evidence of an intent to defraud. Instead, the court held that a settlor’s
expressed intention to protect assets by placing them into a self-settled
trust could be evidence of an intent to defraud, and the transfer to the
debtor’s trust was avoided under section 548 of the Bankruptcy Code.
Mortensen, 2011 Bankr. LEXIS 5560 at *19.
• The court pointed to an affidavit of solvency executed by the debtor in

upholding the judgment entered for debtor’s attorney who had helped
create an offshore asset protection trust eighteen months prior to the
bankruptcy filing, and against the bankruptcy trustee who had brought
an adversary to recover the attorney’s fees and costs as fraudulent
transfers under section 548 of the Bankruptcy Code, as well as damage
claims for legal malpractice and unjust enrichment. Goldberg v. Rosen
(In re Akram Niroomand, Nos. 1:11-cv-23232-KMM; 10-03321-AJC, 2012
U.S. App. LEXIS 21600, *4 (11th Cir. Oct. 17, 2012).
• Implied trusts, resulting and constructive trusts, are not “self-settled
trusts” as they are not created with the intent to create a trust. The
court noted that in creating section 548(e), Congress intended to
reverse the actions of state legislation that authorized domestic asset
protection trusts, which “generally require (1) an irrevocable trust; (2)
an independent trustee; (3) absolute discretion; and (4) distributions
to beneficiaries, including the settlor.” The court held that because the
state requirements to establish asset protection trusts contemplated
the creation of an express trust, resulting and constructive trusts are
not “similar devices” pursuant to section 548 of the Bankruptcy Code.
Therefore, the trust allegedly created by debtor corporation's transfer
of its interest in real estate to a limited liability company owned by its
principal was not subject to avoidance under section 548(e) of the
Bankruptcy Code. Quality Meat Prods., LLC v. PorCo, Inc. (In re
PorCo, Inc.), 447 B.R. 590, 595-98 (Bankr. S.D. Ill. 2011). See also
Rodriguez v. Cyr (In re Cyr), 602 B.R. 315 (Bankr. W.D. Tex. 2019)
(discussing the methods courts determine whether a trust is “self-settled
trust” or “similar device”)
• A debtor retained an attorney to set up an asset protection trust, which
was established in September 2008, with the primary goal to protect a
portion of his assets from creditors. Thereafter, debtor transferred “all
or substantially all” of his property into the trust. The chapter 7 trustee
produced evidence that established that the debtor personally owned
very little, and the trust appeared to own most of the income producing
assets. Further, the debtor created the trust at a time when he had
already begun to experience substantial financial problems. One issue
addressed by the court was that the trust had been created under
Alaska law, which recognizes self-settled trusts. The debtor, and a
majority of the property that was transferred into the trust, was located
in Washington, which did not recognize self-settled trusts but also had
a strong public policy against self-settled asset protection trusts. After
determining that Washington state law applied, and not Alaska state
law, the court determined that the transfers made to the self-settled
trust were void pursuant to state statute RCW 19.36.020. The court
then determined that five of the badges of fraud existed and supported
an inference of actual fraudulent intent by the debtor to hinder, delay,
or defraud his current or future creditors, even though debtor testified
that he established the trust merely for estate planning purposes.
Waldron v. Huber (In re Huber), 493 B.R. 798 (Bankr. W.D. Wash
2013).
• A debtor’s mother created a revocable living trust, and debtor and her
siblings were listed as beneficiaries. The trust included a spendthrift
provision, as well as a provision that provided upon the filing of a
bankruptcy proceeding by any of the beneficiaries where the trust
property might vest in a third party, that beneficiary’s interest would
terminate, and the trustee would hold that interest in a discretionary
trust. The debtor notified the trustee of her intention to file
bankruptcy and the trustee moved the debtor’s portion of the trust
estate from one account to another, as permitted by the terms of the
trust. Thereafter the trustee distributed the debtor’s siblings’ share of
the trust. The bankruptcy trustee filed an action to avoid the transfer
of the debtor’s interest in the trust. The bankruptcy court held that the
transfer to a discretionary trust was a device similar to a self-settled
trust, and that the chapter 7 trustee had met his burden of establishing
that the transfer was avoidable pursuant to section 548(e) of the
Bankruptcy Code. The district court disagreed and held that the record
did not support the application of section 548(e) because at all times
the debtor’s potential share in the trust remained the property of the
living trust, and the transfer into the second account was not a transfer
of an interest of the debtor. Safanda v. Castellano, 2015 U.S. Dist. LEXIS
54458, *25 (N.D. Ill. April 27, 2015)
• The debtor created an irrevocable living trust, listing his children as
beneficiaries. The trust was also the owner of an LLC that owned two
business bank accounts. The debtor argued that the trust was a valid
Tennessee Asset Protection Trust (“TAPT”), and therefore the
business bank accounts were excluded from the debtor’s bankruptcy
estate pursuant to section 541(c)(2) of the Bankruptcy Code. The
trust, however, failed to qualify as a TAPT– the spendthrift clause only
protected the beneficiaries upon the debtor’s death, not the settlor
during his lifetime; the trust agreement did not contain the required
qualified affidavit; and the debtor as the trustee of the trust was not
considered a qualified trustee under Tennessee state law. As a result,
the bankruptcy court held that the debtor’s interest in the trust was
not excluded from his bankruptcy estate pursuant to section 541(c)(2).
The court briefly discussed the application of section 548(e) but
declined to make a final determination as to the debtor’s fraudulent
intent until after an evidentiary hearing, if necessary. In re Erskine,
550 B.R. 362 (Bankr. W.D. Tenn. 2016).
Theory 3
other State or Federal Law
• Do not forget under §544(b), the trustee can use other state
or federal fraudulent transfer statute.
• The trustee may avoid any transfer of an interest of the

debtor in property or any obligation incurred by the debtor
that is voidable under applicable law by a creditor holding
an unsecured claim that is allowable under section 502 of
this title or that is not allowable only under section 502(e)
of this title.
Indiana Uniform Fraudulent Transfer Act:
Ind. Code § 32-18-2 et seq.
32-18-2-14 (a) A transfer made or an obligation incurred by a debtor is voidable as to a creditor, whether the
creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the
transfer or incurred the obligation:
(1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or
(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
(A) was engaged or was about to engage in a business or a transaction for which the remaining assets of the
debtor were unreasonably small in relation to the business or transaction; or
(B) intended to incur or believed or reasonably should have believed that the debtor would incur debts
beyond the debtor's ability to pay as the debts became due.
(b) In determining actual intent under subsection (a)(1), consideration may be given, among other factors, to
whether:
(1) the debtor retained possession or control of the property transferred after the transfer;
(2) the transfer or obligation was disclosed or concealed;
(3) before the transfer was made or the obligation was incurred, the debtor had been sued or threatened with suit;
(4) the transfer was of substantially all the debtor's assets;
(7) the value of the consideration received by the debtor was reasonably equivalent to the value of the asset
transferred or the amount of the obligation incurred;
(8) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was
incurred; and
(9) the transfer occurred shortly before or shortly after a substantial debt was incurred.
32-18-2-15 Transfers voidable as to present creditors;
creditor's burden of proof
Sec. 15. (a) A transfer made or an obligation incurred by

a debtor is voidable as to a creditor whose claim arose
before the transfer was made or the obligation was
incurred if:
(1) the debtor made the transfer or incurred the obligation
without receiving a reasonably equivalent value in
exchange for the transfer or obligation; and
(2) the debtor:
(A) was insolvent at that time; or
(B) became insolvent as a result of the transfer or
obligation.
(b) Subject to section 12(d) of this chapter, a creditor
making a claim for relief under this section has the burden
of proving the elements of the claim for relief by a
preponderance of the evidence
Indiana Bankruptcy Property Exemptions
Updated Dollar Amounts
TITLE 750 DEPARTMENT OF FINANCIAL INSTITUTIONS
ARTICLE 1. UNIFORM CONSUMER CREDIT CODE
Rule 1. Dollar Amounts
. . .
(c) The dollar amounts set forth in IC 34-55-10-2, as amended, which are required to be
adjusted by IC 34-55-10-2.5, as amended, shall on March 1, 2022, be as follows (and next
subject to adjustment no later than March 1, 2028):
Amended Dollar Amounts Provisions Relating To
IC 34-55-10-2(c)(1) $22,750 Personal or family residence
IC 34-55-10-2(c)(2) $12,100 Other real estate or tangible property
IC 34-55-10-2(c)(3) $450 Intangible personal property
Scenarios
Scenario 1
• Fred had an antique pickup truck which
he gave to his son Lamont 2 months
before filing bankruptcy.
• Trustee avoids transfer, but Fred had
$10,000 left of exemptions he could have
used.
• Issue: Can Fred use his remaining
$10,000 to protect some of his pickup
which trustee has now brought back into
estate?
Answer
• See §522(g)
• The debtor may exempt property that the trustee
recovers under section 550 of the Code, to the
extent that the debtor could have exempted such
property if
• such transfer was not a voluntary transfer of such
property by the debtor; and
• the debtor did not conceal such property;
OR
• the debtor could have avoided such transfer
under §522(f) as a non PMSI
Scenario 2
• Daisy May “Granny” transfers house to her
grandson Jethro for the estate planning
purposes. Jethro needs to file bankruptcy.
Jethro transfers home back to Granny
immediately prior to filing the bankruptcy.
Jethro has never paid even a penny towards
the house.
• Issue: can trustee avoid Jethro’s transfer of
home back to Granny?
Answer
• See §541(d) which limits the estate’s interest in property in which
the debtor holds only legal title and not an equitable interest, to
the extent of the debtor’s legal interest but not to the extent of any
equitable interest
• State property law defines the line between bare legal title and
equitable interests – Form over substance
• Various theories are used under state law:
• Constructive Trust – A constructive trust may be imposed if circumstances are
such as to render it inequitable for the holder of legal title to retain the title
• Resulting Trust - To create a resulting trust, the transferee need only show that
the money used to originally purchase the property was from him and not from
the transferor. However, it must be shown that the money used for the purchase
was not a loan
• Equitable lien – Equity from the relationship of the parties may declare an
equitable lien out of consideration of the right and justice based upon the
fundamental principles of equity, such as where one joint owner party pays for
purchase of the property, pays for the improvements, pays for the taxes, etc.
Scenario 3
• Debtors had a home with equity.
• Both Debtors lose their jobs
• Home, worth hundreds of thousands of
dollars, but still went into foreclosure.
• Home was sold at Sheriff’s Sale for $1.
• Debtors then filed bankruptcy.
• Issue: Can Trustee avoid sale of home as
fraudulent?
Answer
• See BFP Resolution Trust Corp 511 U.S. 531 (1994)
• US Supreme Court held that the “reasonably
equivalent value” under §548(a)(2) does not mean
either “fair market value” or “fair foreclosure price.”
• Rather, “a fair and proper price, or a ‘reasonable
equivalent value,’ for foreclosed property, is the price
in fact received at the foreclosure sale so long as all the
requirements of the state’s foreclosure law have been
complied with.”
• Transfer may not be avoided
Scenario 4
• Debtor had a fully exempt retirement account
which he borrowed from immediately prior to
filing. Debtor gave all of the exempt assets to
his pregnant unmarried daughter to help her
buy a home.
• Issue: can trustee avoid a prepetition transfer
of assets which would have been fully exempt
had the transfer not occur?
Answer
• Majority view
• The trustee could avoid the debtor’s prepetition
transfer as fraudulent and recover the settlement
funds for the estate. The court concluded that the “No
Harm, No Foul” approach was “misguided” because
all of the debtor’s property, including exemptible
property, is presumed to be part of the estate until the
debtor claims exemptions. Creditors can be harmed
by the transfer of exemptible property because it is
never certain that the debtor will actually exempt
such property from the estate If the debtor chooses
not to claim the exemption, that property can be used
to satisfy creditors’ claims. Therefore, the “No Harm,
No Foul” approach is “inconsistent with the
Bankruptcy Code.”
Answer
• Minority View
• The seminal case applying the “No Harm, No Foul”
doctrine is Jarboe v. Treiber (In re Treiber). The
trustee sought to avoid the transfer, but the court
allowed the debtor’s transfer to stand. The residence
was exemptible, so the creditors would not have
shared in the proceeds of the sale anyway had the
debtor not made the transfer. The court reasoned
simply: “In short, - no harm, no foul.”
Scenario 5
• Mr. and Mrs. Brady come into office and
inform you that immediately prior to filing
bankruptcy they had transferred a vehicle to
son Greg. The car had always been in parents
name for insurance purposes, but Greg had
made all the payments for the car. The car
was paid in full and is worth more than the
state exemptions allow.
• Issue: Was the transfer of the car to Greg a
fraudulent transfer?
Answer
• See §541(d) which limits the estate’s interest in property in which
the debtor holds only legal title and not an equitable interest, to
the extent of the debtor’s legal interest but not to the extend of any
equitable interest
• State property law defines the line between bare legal title and
equitable interests – Form over substance
• Various theories are used under state law:
• Constructive Trust – A constructive trust may be imposed if circumstances are
such as to render it inequitable for the holder of legal title to retain the title
• Resulting Trust - To create a resulting trust, the transferee need only show that
the money used to originally purchase the property was from him and not from
the transferor. However, it must be shown that the money used for the purchase
was not a loan
• Equitable lien – Equity from the relationship of the parties may declare an
equitable lien out of consideration of the right and justice based upon the
fundamental principles of equity, such as where one joint owner party pays for
purchase of the property, pays for the improvements, pays for the taxes, etc.
Scenario 6
• Al and Peg get divorced.
• Al was tired and just wanted to be done,
so he transferred home/car/boat all to
Peg, and then files for bankruptcy.
• Issue: Can Trustee undo transfer of assets
from a divorce proceeding if transfer had
been ordered by divorce court?
Answer
• The fact that a transfer occurs in the context of a
divorce proceeding does not immunize such
transfer from attack under 11 U.S.C.S. §548 by a
trustee in bankruptcy for one of the marital
partners.
• Divorce proceedings with unequal divisions of
property may be an attempt to keep assets away
from the creditor of one spouse and consequently
are open to attack as actual fraudulent transfers
• Where a transfer of property is made to a spouse by
means of a fast-track divorce on the eve of
bankruptcy, this is often evidence of a fraudulent
scheme to keep property from creditors
• See In Re Hill 342 B.R. 183 (Bankr. D. N.J. 2006)
Scenario 7
• Mr. Peterschmidt had reluctantly given son-in-
law Peter $100,000 to start on earthworm farm.
• Only upon realizing the farm was “going under”
did son-in-law grant a security interest in the
earthworm farm to Mr. Peterschmidt.
• The granting and perfection of the security
interest was done more than a year before Peter
files for bankruptcy, but long after the money
had been loaned and done once Peter realized he
planned to cut bait.
• Issue: Was the perfection of the security interest
in the business assets a fraudulent transfer?
Answer #1
• If the trustee’s theory of recovery is based upon
fraud, the trustee must show the fraudulent intent
can be imputed to the transferee (Father-in-law).
• It does not need to be actual fraud
• If at the time of the transfer, the transferee had
notice of circumstances which would arouse the
suspicion of any ordinarily prudent man and cause
him to make inquiry as to the purpose for which the
transfer was made, which inquiry would disclose the
fraudulent intent, the transaction is subject to attack
Answer #2
• If the trustee’s theory of recovery is that the debtor
did not receive reasonably equivalent value for the
transfer, the transferee can assert the debtor
received equivalent value in exchange for the
transfer.
• Section 548 defines “value” to include “securing …
[an] antecedent debt”
• See, for example, In re Anand, 210 B.R. 456 (Bankr.
N.D. Ill. 1997); In re Countdown of Conn., Inc., 115
B.R. 18 (Bankr. D. Conn. 1990)
Scenario 8
• Everything was going well for Mr. and Mrs. Smith.
They were acquiring wealth and growing their real
estate development firm. They met with an estate
planning lawyer to revise their estate plan. They
were also interested in preserving wealth and
protecting their assets and set up a legacy trust to
hold most of their assets. Five years later, the real
estate market crashed, and Mr. and Mrs. Smith had
judgments against them for $20 million dollars.
They met with a bankruptcy lawyer who advised
them to file bankruptcy. The legacy trust held assets
worth $3 million dollars.
• Issue: Will Mr. and Mrs. Smith be able to retain the
assets in their legacy trust?
Answer
• Assuming the Smiths have a valid legacy trust formed pursuant
to I.C. § 30-4-8 and have satisfied all of the state requirements,
including a qualified affidavit containing the statements found in
I.C. § 30-4-8-5 and the appointment of at least one qualified
trustee, a bankruptcy court may find that the trust was a “self-
settled trust” or similar device.
• The main issue for the bankruptcy court to determine, however,
is whether the debtor had actual intent to hinder, delay, or
defraud.
• The qualified affidavit could be used as evidence to counter an
argument that requisite fraudulent intent existed, or at least raise an
issue of fact for a trustee bringing an action under section 548(e).
See Erskine, 550 B.R. at 374.
• The Smiths’ affidavit would include the following statements.
• That the transfer will not render the transferor insolvent;
• That the transferor does not intend to defraud a creditor by transferring
property;
• That there are no pending or threatened court actions against the transferor;
• That the transferor is not involved in any administrative proceedings other than
identified in the affidavit;
• That the transferor does not contemplate filing for relief under the federal
bankruptcy code…I.C. §§ 30-4-8-5(a)(2)-(6).
Section
Four
Asset Protection in Divorce—
What Works and . . .
Kendra G. Gjerdingen
Mallor Grodner LLP
Bloomington and Indianapolis, Indiana
Asset Protection in Divorce—What Works and . . .
The best time to think about how to protect assets in a divorce is before the marriage takes
place. Planning for the possibility of divorce is never pleasant and many people are reluctant to
bring up the topic when marriage is being contemplated. But not doing so at that stage of a
relationship can leave assets unprotected and subject to division in a dissolution. Resolving issues
of property ownership and distribution before things go sour in a marriage saves money, time, and
emotional distress.
For purposes of divorce and legal separation in Indiana, property means all of the assets
owned by the parties separately or jointly, including:
(1) a present right to withdraw pension or retirement benefits;

(2) the right to receive pension or retirement benefits that are not forfeited upon
termination of employment or that are vested (as defined in Section 411 of
the Internal Revenue Code) but that are payable after the dissolution of
marriage: and
(3) the right to receive disposable retired or retainer pay (as defined in 10
U.S.C. 1408(a)) acquired during the marriage that is or may be payable after
the dissolution of marriage.
Ind. Code § 31-9-2-98(b).
By statute, the court must divide all of the property of the parties owned at the time the
petition for dissolution or legal separation is filed, whether it is “(1) owned by either spouse before
the marriage; (2) acquired by either spouse in his or her own right: (A) after the marriage; and (B)
before final separation of the parties; or (3) acquired by their joint efforts.” Ind. Code § 31-15-7-
4(a). No asset in which a party’s interest has vested may be excluded from the marital estate the
trial court must divide and award. See, e.g., Wanner v. Hutchcroft, 888 N.E.2d 260, 263 (Ind. Ct.
App. 2008); Moyars v. Moyars, 717 N.E.2d 976 (Ind. Ct. App. 1999). In addition, the statute
provides there is a rebuttable presumption “that an equal division of the marital property between
the parties is just and reasonable.” Ind. Code Ann. § 31-15-7-5.
1
Protecting Assets Prior to Marriage
Premarital Agreement
Indiana caselaw has recognized premarital agreements since the late 1800s. In Buffington
v. Buffington, 151 Ind. 200, 51 N.E. 328, 329 (1898), the Court stated: “It is the firmly-established
rule in this state that antenuptial contracts are not in such disfavor as to require rigid construction.
On the contrary, they are favored by the law as promoting domestic happiness and adjusting
property questions which would otherwise often be the source of fruitful litigation.” However,
until In re Marriage of Boren, 475 N.E.2d 690, 693 (Ind. 1985), premarital agreements were
upheld only with respect to the application of the agreement upon the death of a spouse and not
upon the dissolution of the marriage. In Boren, the Supreme Court noted that it had previously
held that “antenuptial contracts are favored by the law as ‘promoting domestic happiness and
adjusting property questions which would otherwise often be the source of fruitful litigation.’” Id.
Prior to Boren, “policy considerations . . . dictated that antenuptial agreements providing for
property settlement upon divorce are not binding upon the court.” Id. The Boren court discussed
the fact that policy considerations regarding both marriage and prenuptial agreements had changed
significantly as the institution of marriage and marriage laws changed. Id. at 693-94.
Two of the significant changes in the institution of marriage and marriage laws in
recent years are the increase in the number of divorces and the implementation of
“no-fault” divorce laws. A natural consequence of the increased number of
divorces is the increased number of subsequent marriages. As more and more
persons, especially those who are older and have children from previous marriages,
enter into subsequent marriages, they may wish to protect their property interests
for the benefit of themselves and/or their children. Such agreements can only
promote or facilitate marital stability by settling the expectations and
responsibilities of the parties.
Id. at 694.
Premarital agreements are upheld as “valid and binding so long as they are entered into
2
freely and without fraud, duress, or misrepresentation and are not, under the particular
circumstances of the case, unconscionable.” In re Marriage of Boren, 475 N.E.2d 690, 693 (Ind.
1985).
In 1995, Indiana adopted the Uniform Premarital Agreement, codified at Indiana Code 31-
11-3.1 For purposes of the Uniform Premarital Agreement Act, property means “an interest,
present or future, legal or equitable, vested or contingent, in real and personal property, including
income and earnings.” Ind. Code § 31-9-2-98(a). A premarital agreement is an agreement between
prospective spouses executed in contemplation of marriage and only becomes effective upon the
marriage. Ind. Code § 31-11-3-2. It must be in writing and signed by both parties, but it is
enforceable without consideration other than the marriage. Ind. Code § 31-11-3-4. The parties
may address any matter not in violation of public policy or a statute imposing a criminal penalty,
but it may not affect the right of a child to support. Ind. Code § 31-11-3-5. Nor can a premarital
agreement include provisions regarding custody and parenting time, which must be determined by
a court in accordance with the best interests of the child. Ind. Code § 31-17-2-8, -15 & -4-1.
Premarital agreements are most commonly either “title-based” agreements or “defined
property” agreements. Each has advantages and disadvantages.
The title-based agreement divides the property into three classifications, Spouse 1’s
Separate Property, Spouse 2’s Separate Property, and Marital Property. The classifications are
based solely on how the asset is titled at the time the petition for dissolution or legal separation
is filed. If it is titled in solely in one person’s name, it is that person’s separate property. If it is
1
The Uniform Premarital Agreement Act applies to premarital agreement signed on or after July
1, 1995, but not before. Ind. Code § 31-11-3-1. Agreements signed before this date are valid
under contract law so long as they are entered into freely and without fraud, duress, or
misrepresentation, and are not unconscionable. Rider v. Rider, 669 N.E.2d 160 (1996).
3
jointly-titled, it is marital property. It is simple and easy to implement, and it does not require
any asset tracing. However, the parties must be careful not to jointly title separate property or it
will immediately become marital property. Both parties must agree and take action to transform
it back to separate property. One party cannot unilaterally do so. Even though the agreement
was drafted to lessen discord, if one party does not clearly understand that how or when an asset
was acquired is not relevant to the determination of separate property, the resulting distribution
of assets could be perceived as unfair.
In a defined property agreement, which property will be each spouse’s separate property
and which property will be marital property is precisely defined based upon a description other
than title, such as premarital property, inherited or gifted property, property acquired from a
party’s separate earnings or the earnings from premarital or gifted or inherited property. It is a
more flexible agreement but requires careful drafting and attention to detail. It may also require
asset tracing and is more likely to have unintended ambiguities or vagueness.
Both types of agreement may also address how the marital property is to be divided. If it
does not, the statutory presumption may be rebutted. Often counsel for the party who does not
have a significant amount of separate property will insist that the agreement not provide for an
equal division of marital property in the event of a dissolution, leaving that up to the court if the
parties cannot agree.
Executing a valid and enforceable premarital agreement is only the first step in asset
protection. Equally important is acting after the marriage in a manner that is consistent with the
terms of the agreement. Separately titled assets must remain separately titled if it is a title-based
agreement and separate assets must not be commingled if it is a defined property agreement.
4
Protecting Assets After Marriage
Postnuptial Agreement
Unlike for premarital agreements, there is no statutory authority in Indiana for postmarital
agreements, which are sometimes referred to as reconciliation agreements.2 The requirements for
postmarital agreements in Indiana come from caselaw. Public policy consideration regarding risk
that postmarital agreements might promote the dissolution of marriages were also discussed in
Boren. The Indiana Supreme Court first observed that agreements entered into to protect property
interests “can only promote or facilitate marital stability by setting the expectations and
responsibilities of the parties.” Boren 475 N.E.2d at 694. The Indiana Court of Appeals used the
Supreme Court’s observations in Boren to conclude in Flansburg v. Flansburg, 581 N.E.2d 430,
437 (Ind. Ct. App. 1991), that “a reconciliation agreement may be enforced as long as it is entered
into freely and without fraud or misrepresentation, or it is not otherwise unconscionable. Id.
A key distinction between the two agreements is that while premarital agreements require
no other consideration than the marriage, postmarital agreements require consideration. Initially,
it was thought a dissolution or legal separation proceeding needed to be pending prior to
reconciliation. Hall v. Hall, 27 N.E.3d 281, 285 (Ind. Ct. App. 2015). In Hall, the Court of
Appeals
acknowledge[d] the language used in Gaskell and Flansburg and recognize that,
most often, the initiation of dissolution proceedings will in fact precede the
execution of a reconciliation agreement as it did in those cases. Nevertheless, we
2
Some states have adopted a version of the Uniform Premarital and Marital Agreement Act
(UPMAA) which proposes a set of uniform standards for recognition and validity of marital
agreements. See, e.g., Colo. Rev. Stat. Ann. § 14-2-303. A marital agreement is defined as “an
agreement between spouses who intend to remain married which affirms, modified, or waives a
martial right or obligation during the marriage or at legal separation, marital dissolution, death of
one of the spouses, or the occurrence or nonoccurrence of any other event. The term includes an
amendment, signed after the spouses marry, of a premarital agreement or marital agreement.” Id.
at § 14-2-302.
5
disagree with Husband that such is a condition precedent to a valid and enforceable
reconciliation agreement. The proper inquiry is whether the agreement was
executed in order to preserve and extend a marriage that otherwise would have been
dissolved but for the execution of the agreement, see Flansburg, 581 N.E.2d at 434,
regardless of whether formal separation has already occurred or legal proceedings
initiated.
Id. at 285-86 (also citing Gaskell v. Gaskell, 900 N.E.2d 13, 17 (Ind. Ct. App. 2009)).
Accordingly, it is no longer necessary for a dissolution proceeding to be pending prior to
reconciliation, as long as the parties are “sufficiently separated.” Id. at 285.
The Court in Hall concluded by quoting Boren:
As our supreme court has eloquently observed, “The truth is, it is exceedingly
difficult to imagine why, in any case where there is no fraud, courts should displace
the judgment of contracting parties and substitute their own. No persons in the
world can so well and so justly judge as the contracting parties themselves, and it
is only in the strongest and clearest cases that courts should disregard their
judgment, and never where there is neither positive wrong nor fraud.” Boren, 475
N.E.2d at 694.
Id. at 287. The question after Hall was whether ending its opinion in this way was indicative of
the future enforceability of postmarital agreements. A lingering issue is the qualification of
“sufficiently separated” for purposes of the enforceability of a postmarital agreement.
The Court of Appeals examined the issue again in Buskirk v. Buskirk, 86 N.E.3d 217 (Ind.
Ct. App. 2017). In Buskirk, the parties had a disagreement, Wife left home for several days and
the parties discussed ending the marriage as a result of the disagreement, but they decided that
making an agreement about keeping their property and income separate would solve their
disagreement and allow their marriage to continue. The agreement the couple signed contained
mutual releases and stated: “[I]n order to better effect harmonious domestic tranquility Husband
and Wife desire to resolve their respective rights in the estates of the other during the lifetime of
the parties hereto and have reached an agreement concerning the respective rights that each
party claims in the property of the other.” Id. at 223-24 (emphasis added by appellate court). The
6
Court of Appeals held “[t]he Agreement was entered into as a reconciliation agreement, was made
with valid consideration, set forth the parties' intent to waive any rights to property of the other,
and is enforceable.” Id. at 225.
Until Indiana enacts the UPMAA or revises the UPAA to include postmarital agreements,
uncertainty still exists. Because of the limited guidance as to what constitutes separation, if
dissolution proceedings are not pending, it is important to take a close look at your client’s
circumstances to prevent issues with enforceability. Factors to consider include changes in living
arrangements, separation of financial resource, changes in the division of responsibilities or
obligations, and any other facts that show by their conduct that the parties are sufficiently
separated. Timing is also an important consideration. Be sure your client understands there is a
risk of the agreement being set aside if one party choses to file soon after it is executed. For now,
in Indiana, the postmarital agreement is a reconciliation agreement, i.e., a tool to develop a plan
and expectations for both parties in an attempt to prolong the marriage.
The In Marriage QDRO®
Most private employee-benefit plans are qualified under the Employee Retirement Income
Security Act (“ERISA”). Qualified Domestic Relations Orders are used in dissolutions to divide
qualified retirement accounts between parties after the entry of the dissolution decree and are
exempt from ERISA’s anti-assignment provision.3
In 2014, Marcus T. Foote began utilizing the same statutory authority to facilitate the
transfer of funds between married couples to allow them unrestricted access to retirement benefits
without penalty at any time. See https://inmarriageqdro.com/about-us/. ERISA defines the term
3
Under ERISA, a qualified retirement plan is not allowed to alienate any part of a participant’s
retirement account, which means it is protected from creditors and cannot be attached. Congress
provided an except for spouses, former spouses, and children.
7
“alternate payee” as “any spouse, former spouse, child, or other dependent of a participant who is
recognized by a domestic relations order as having a right to receive . . . the benefits payable
under a plan with respect to such participant.” 29 U.S.C. § 1056(d)(3)(K) (emphasis added).
Similarly, the United States Tax Code defines “alternate payee” as “any spouse, former spouse,
child or other dependent of a participant who is recognized by a domestic relations order as having
a right to receive . . . the benefits payable under a plan with respect to such participant.” 26
U.S.C. § 414(p)(8). Foote uses this language to provide married, not divorcing, spouses with
unrestricted access to retirement benefits without penalty. The QDRO must be signed by a court
as part of a court process and issues pursuant to state domestic relations law. See also
https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/
publications/qdros.pdf (“A domestic relations order that provides for child support or recognizes
marital property rights may be a QDRO, without regard to the existence of a divorce proceeding.
Such an order, however, must be issued pursuant to state domestic relations law and create or
recognize the rights of an individual who is an alternate payee (spouse, former spouse, child, or
other dependent of a participant.”)
In Indiana, that might be as part of a reconciliation, as long as dissolution proceedings have
been filed so that an order can be issues pursuant to Indiana’s domestic relations law.
https://inmarriageqdro.com/what-is-a-qdro/. The use of the In Marriage QDRO® has not been
ruled upon by Indiana appellate courts.
Tools Available Before and After Marriage
Trusts
Trusts may protect assets in the event of a divorce. One advantage in using a trust is to
avoid the prenuptial conversation. However, the level of protection provided by a trust in the event
8
of a divorce depends on who establishes the trust, the terms of the trust, and how the trust is
administered. What may be best for tax planning is often not what is best for divorce planning.
A trust in connection with a premarital agreement is one of the most effective ways to
protect a beneficiary’s interest from the claims of the beneficiary’s soon to be ex-spouse, but the
protections are not absolute or automatic. The goal is to keep a person’s interest in a trust from
being considered marital property in a dissolution action.
The determinative question when examining a trust beneficiary’s interest and the Indiana
definition of marital property is whether the person has an interest that is present and possessory.
Loeb v. Loeb, 301 N.E.2d 349, 353 (Ind. 1973). Loeb was a case of first impression, in which the
Indiana Supreme Court considered whether the husband’s vested remainder interest subject to a
condition subsequent in a trust created by his mother should be included in the marital estate. Id.
Husband’s interest was subject to a complete defeasance, because if he predeceased his mother,
he would take nothing under the trust. The Court held that husband was “not presently possessed
of any pecuniary value which could have been before the court for disposition.” Id. I.e., his future
interest was too remote to be included in the marital pot.
The ruling in Loeb was not overruled by revised definition of marital property subsequently
adopted and discussed infra. See Harrison v. Harrison, 88 N.E.3d 232, 236 n. 2 (Ind. Ct. App.
2017). In Harrison, Wife’s interests in family trusts were subject to a complete defeasance,
because if she predeceased her parents, she would take nothing. In addition, her possessory interest
to receive distributions from the trust was subject to the discretion of a majority of the four trustees.
Id. at 235. The Indiana Court of Appeals ruled that Wife’s interests in the family trusts were too
remote because, again, she was not “presently possessed of any pecuniary value which could have
been before the court for disposition.” Id. (quoting from Loeb, at 353). The Court also noted that
9
Wife’s interests were not capable of valuation because the distributions were discretionary and
receipt of distributions in previous years did not guarantee future distributions. Id. at 236 n.2.
Domestic Asset Protection Trust (Legacy Trust)
Although the Domestic Asset Protection Trust (DAPT) was initially used by individuals
and families to shield their assets from creditors, it turned out also to be a good vehicle in other
states to protect assets in a divorce. As recently as 2014, only 15 states allowed this structure. The
laws of some of those states blocked some or all creditors, but not spouses, from gaining access to
assets and at least one also blocked spouses.4 While it was possible for Hoosiers to take advantage
of those laws by transferring assets to a trustee who was domiciled in a state that recognized
DAPTs, it was not without risks as discussed by other presenters.
Indiana’s Legacy Trust statute became effective July 1, 2019. Legacy Trusts are addressed
in Jeffrey Kolb’s presentation “Protecting Assets with Legacy Trusts.” Indiana Code section 30-
4-8-8(a) provides in pertinent part:
Except as provided in subsection (e), a claim against property that is the subject of
a qualified disposition to a legacy trust is barred by section 7 of this chapter unless
the claim is one (1) of the following:
....
(2) An action to enforce the child support obligations of the transferor

under a judgment or court order.
(3) A court judgment or order for the division of property in a dissolution

of the transferor's marriage or a legal separation between the transferor and the
4
Nevada was a popular state to use for protecting assets in a divorce, because the Nevada Asset
Protection Trust (NAPT) allowed no “exception creditors.” A NAPT could not be reached by
creditors, including a divorcing spouse. See Pagliarini, Robert, “How to Protect Yourself in a
Divorce Using a Domestic Asset Protection Trust,”
https://www.forbes.com/sites/robertpagliarini/2014/05/15/how-to-protect-yourself-in-a-divorce-
using-a-domestic-asset-protection-trust/?sh=4426ebdf3cb6.
10
transferor's spouse, if the transferor's qualified distribution to the legacy trust was
made:
(A) after the date of the transferor's marriage that is subject to the
dissolution or legal separation; or
(B) within thirty (30) days before the date of the transferor's
marriage that is subject to the dissolution or legal separation unless the
transferor provided written notice of the qualified disposition to the other
party to the marriage at least three (3) days before making the qualified
disposition.
Thus, a Legacy Trust might be used as a substitute for a prenuptial agreement, but only to protect
assets that are owned by the person who is transferring the assets and that are assignable by that
person and only if the transfer is at least 30 days before the marriage.
There is no caselaw yet addressing Indiana’s Legacy Trust in the context of determining
the marital pot in a dissolution action. In speculating about the interplay of an Indiana Legacy
Trust and Indiana dissolution laws, two concepts are at play. The first is whether the spouses
retained beneficiary interest in the Legacy Trust is marital property under Indiana law. The second
concept is whether the Legacy Trust assets can be used by a court to satisfy a property settlement
obligation, even if it might not be considered part of the marital estate.
If a valid, premarital5 Legacy Trust was established, the anticipated answer is the retained
beneficiary interest is not marital property, because a Legacy Trust is by definition a discretionary
trust that cannot include any mandatory distributions. Accord Harrison, 88 N.E.3d 232. However,
an argument could be made that a retained beneficial interest in a Legacy Trust is a thing of value
and thus property because the discretionary nature goes to valuation, not whether is should be
excluded from the martial estate. A public policy argument could be made that a marital
5
Pursuant to Indiana Code section 30-4-8-8(a)(3), if the spouse transfers the assets to the legacy
trust after the marriage, the assets that were transferred will not be protected from inclusion in the
marital estate to be divided in a divorce or legal separation.
11
relationship between spouses is a totally different relationship than that with commercial creditors.
Another argument could raise the issue of consent and knowledge. It is acceptable to exclude
certain property from the marital estate through a valid premarital agreement if the other spouse
has provided informed consent. That is not present with a Legacy Trust created prior to 30 days
before a marriage. If the Legacy Trust was established at least 30 days prior to the marriage and
contains only assets transferred before then, it is likely assets in the trust cannot be used by a court
to satisfy a property settlement obligation.
Trusts Created by a Third Party
If a third-party created the trust, the rights of the beneficiary in and to the trust assets will
determine the extent to which it is included in the marital estate.
a. “The Trustee shall distribute the net income of the trust.” If this language
is used, the beneficiary can compel the trustee to make distributions, so the beneficiary has
a present interest in a pecuniary value. See, e.g., Loeb, 301 N.E.2d at 353. But can it be
valued or is the nature too speculative to be valued? See, e.g., Harrison, 88 N.E.3d at 236
n.2.
b. “The Trustee may, in the Trustee’s sole discretion, distribute
principal/income . . . “ What matters with this language is the discretion of the trustee and
convincing them that the discretion should be exercised. Id. at 235.
c. Spendthrift clause. The inquiry is whether the language is sufficient to
limit the beneficiary’s access to the property in the trust.
d. What strings does the beneficiary hold? For example, what right does the
beneficiary have to remove the party exercising discretion? In the context of a dissolution
case, a party seeking to include trust property or income in the marital estate may want to
12
investigate to see how the trust has been administered and the extent to which the
beneficiary has wielded some control over the administration of the trust, both explicitly
and in practice.
e. Protecting a child’s inheritance in their divorce.
i. Irrevocable/revocable. As long as the trust remains revocable, the
interests of any beneficiary in the trust are subject to the control of the settlor and
represent an expectancy, not a present interest in anything with pecuniary value.
ii. Draft in some flexibility. Include conditions on the beneficiary’s
interest which prevents distribution in the event that the beneficiary is the subject
of a dissolution petition that is pending at the time the distribution would otherwise
be made.
iii. Or draft with some discretion that gives the trustee the right to
evaluate the conditions and circumstances present at and around the time of a
proposed distribution to determine if it is appropriate.
Asset Protection Gone Wrong
Uniform Fraudulent Transfers Act (UFTA)
The Indiana Uniform Transfers Act (UFTA), codified at Indiana Code chap. 32-18-2,
governs whether a transfer of assets by a debtor to another individual or entity is fraudulent. The
statute is set out in the materials from Deborah J. Caruso and Mark S. Zuckerberg. A spouse, or
former spouse, can be considered a creditor pursuant to the UFTA, and conveyances made prior
to or after a dissolution to “protect” assets can be set aside.
In Hernandez-Velazquez v. Hernandez, 136 N.E.3d 1130 (Ind. Ct. App. 2019), the Court
of Appeals upheld the trial court’s setting aside of Husband’s conveyances of several real estate
13
properties to a third party when the parties’ marriage began to deteriorate. Although Wife did not
cite the UFTA in her petition for dissolution, she used language from the statute alleging Husband
“made the conveyances . . . with the intent to hinder, delay, and defraud creditors, including Wife,
to protect and preserve the real property for Husband’s own use and benefit, and to prevent and
hinder Wife from collecting and receiving, . . . the amount due Wife in this dissolution of marriage
action.” Id. at 1134. Wife’s petition also brought the third party into the proceedings. Id. The
trial court found the UFTA applied to Husband’s conveyances to the third party and that Wife was
a creditor under the UFTA. Id. at 1135.
On appeal Husband argued that Wife was not a creditor under the UFTA, because he had
purchased the properties and he had the legal right to decide to whom they should be conveyed.
Id. at 1136. The appellate court found that the facts supported the trial court’s finding that the
properties were part of the marital estate for purposes of the dissolution action and, because Wife
had a claim to the properties, she was a creditor under the UFTA. Id. at 1137. The Court of
Appeals went on to find at least five “badges of fraud” present in the transactions and affirmed the
trial court. Id. at 1138-39.
In Holland v. Ketcham, 181 N.E.3d 1030 (Ind. Ct. App. 2021), Wife was ordered in the
dissolution decree to pay Husband a property equalization payment of over $200,000.00 within
ninety days. On the ninetieth day, Wife used the cash assets she received in the divorce to purchase
real property that she titled jointly in her name and her soon to be new husband, who did not
contribute to the purchase price. Id. at 1032. Husband brought an action against Wife and her
new husband under the UFTA, alleging Wife had transferred her cash assets into the real estate
“in an attempt to hinder, delay, or defraud him as the judgment creditor under the dissolution
decree.” Id.
14
The Court of Appeals reversed the trial court’s judgment for the defendants. It held that
eight “badges of fraud” showed Wife “had the actual intent to hinder, delay, or defraud [Husband]
as her judgment creditor under the dissolution decree.” Id. at 1038. The court also found that the
new husband had acted “in concert” with Wife in the commission of a fraudulent transfer. Id. at
1039.
Foreign or Offshore Bank Account and Offshore Asset Protection Trust
Individuals may choose to deposit money in a bank located outside the U.S. for a number
of reasons, including low or no taxes, greater privacy, easy access to deposits, and protection
against local political or financial stability. They also may use them because they are harder to
detect, especially if a spouse and their attorney are not aware of the particular forms that are
required to be filed for these accounts.6 Another tool is setting up an offshore asset protection
trust and international LLC and then setting up an international bank account in the name of the
LLC. See Divorce Asset Protection, https://www.assetprotetionplanners.com/strategies/divorce.
But even though these are touted as “steps to protect assets for divorce,”7 beware. Those assets
may be brought back into the marital estate if you can prove fraud or constructive fraud or the
violation of a restraining order.
In addition to reviewing the tax returns for the IRS forms that are required to be filed, you
may be able to find off-shore assets by examining the other spouse’s foreign travel, looking for
travel to foreign destinations that provide these protections, such as the Cook Islands,8 the Cayman
6
See https://offshorecorporation.com/taxforms/.
7
The authors answer their own question of “is this safe” with “[k]eep in mind you are employing
this strategy because your assets are not safe by leaving them where they are” and “keep in mind
that local court can penetrate just about anything you do domestically.” Id.
8
International Offshore Jurisdiction Spotlight—Cook Islands as a Tax Haven,
https://www.offshore-protection.com/cook-islands-tax-haven.
15
Islands,9 Belize,10 and the Bahamas,11 reviewing financial records to see if all income has been
deposited, and reviewing bank, brokerage, and investment accounts for evidence of large transfers
or withdrawals that cannot be traced to know accounts.
But Wait, There’s More--Unwinding Complex Estate Planning Devices
Complex estate and financial planning devises used by couples during times of marital
bliss to preserve family wealth can complicate the liquidity, taxability, and valuation of assets if
those blissful times end and divorce proceedings begin.
Life Settlement of Insurance Policy
A life settlement is where a life insurance policy owner sells the policy to a third party for
more than the cash value offered by the insurance company. The purchaser becomes the
beneficiary of the policy and is responsible for all of the subsequent premium payments. While
life settlements are not appropriate in most dissolution cases, depending on the specific facts and
circumstances, they may provide liquid assets in the division of the marital estate or be a source
of funds for marital support.
For example, if an on-going business is a major part of the marital estate and one spouse
wants to retain it and the other spouse will not agree to spread the cash equalization payment over
a long enough period of time to allow the business to generate the necessary income to make the
payments, an existing life insurance policy may provide a source of funds for the payment.
9
International Offshore Jurisdiction Spotlight—Cayman Islands as a Tax Haven,
https://www.offshore-protection.com/cayman-islands-tax-haven.
10
Why Belize Ranks in the Top for Offshore Banking,
https://www.georgetowntrust.com/blog/why-belize-ranks-in-the-top-for-offshore-banking
11
International Offshore Jurisdiction Review—Bahamas as a Tax Haven,
https://www.offshore-protection.com/bahamas-tax-havens.
16
However, there are tax consequences that must be considered if this source is going to be used to
fund a property settlement.
Charitable Contribution Carryovers
Another asset protection device used to preserve family wealth that might cause
complications in a dissolution are charitable contribution carryovers resulting from contributions
to Charitable Remainder Unitrusts, Charitable Remainder Annuity Trusts, and private
foundations. Ownership of the assets contributed are irrelevant if the parties remain married when
the contribution is made and during the carryover period and joint returns are filed. However, if a
dissolution occurs before the charitable contributions can be fully utilized in the carryover period,
unanticipated issues may arise that affect this asset protection device. Because the tax benefit
resulting from the excess charitable contributions in the year of the gift cannot be allocated by a
marital settlement agreement between the spouses to the non-titled spouse,12 the usefulness of the
carryover may be negatively impacted. In addition, the carryforward deduction may have
economic value to be included in the marital estate.13 If so, expert testimony will be required with
respect to the present value of the future tax benefits.
12
Revenue Ruling 76-267,1976-2 C.B. 71; https://www.taxnotes.com/research/federal/irs-
guidance/revenue-rulings/rev.-rul.-76-276/dc20?h=*.
13
Dombrowski v. Dombrowski, 131 N.H. 654, 559 A.2d 828 (1989); Charitable Contribution
Carry Forwards and Divorce, https://divorceoutcomes.com/personal-divorce/when-tax-carry-
forwards-exist-in-the-marital-estate/.
17
Section
Five
Asset Protection Planning:
First and Third-Party Special Needs Trusts
by Robert W. Fechtman
April 27, 2022

Section Five
Asset Protection Planning: First and

Third-Party Special Needs Trusts………………………....Robert W. Fechtman
I. First-Party Special Needs Trusts ......................................................................................1
II. Third-Party Special Needs Trusts ....................................................................................2
A. A Testamentary Special Needs Trust for a Surviving Spouse .............................3
B. The “Tandem” Special Needs Trust ....................................................................5
C. Special Needs Trusts Incorporating the Power to Withdraw Additions ..............6
III. Settlement Preservation Trusts ........................................................................................7
IV. Asset Protection Trusts for Minors and Young or At-Risk Adults..................................7
Appendix A – Trust for the Sole Benefit of *BFN
Appendix B – Trust for the Benefit of *BFN
Appendix C – Last Will and Testament of *X
Appendix D - *X Family Trust Agreement
Appendix E - *(Client ) Settlement Preservation Trust With Special Needs Trust

Provisions (Sample Language)
i
ROBERT W. FECHTMAN, JD, CELA
Robert Fechtman is a life-long resident of Indiana. He graduated from

Northwestern University with a degree in music and a major in economics, and he
received his JD from Rutgers School of Law. He also attended the University of San
Diego’s Institute on International and Comparative Law at Magdalen College, Oxford
University. In 6th and 7th grade, Mr. Fechtman went away to school to sing with the
American Boychoir in Princeton, New Jersey.
Mr. Fechtman focuses his practice on the problems of older and disabled persons,
particularly special needs trusts, estate planning and trusts, health law, Medicaid
planning, guardianships and decedents’ estates. He is a frequent writer and speaker on a
variety of estate planning, disability and elder law topics. He has been certified as an
elder law attorney by the National Elder Law Foundation.
He is a member of the National Academy of Elder Law Attorneys, and he is a

two-time Past President of the Indiana Chapter of the National Academy of Elder Law
Attorneys. He is a member and a Past President of the Special Needs Alliance, which is a
national, non-profit, invitation-only network of lawyers dedicated to disability and public
benefits law. He is also a member of the Elder Law Section and the Probate, Real
Property and Trusts Section of the Indiana State Bar Association, and a member of the
Indianapolis Bar Association. Mr. Fechtman is a sustaining member of the Indiana Trial
Lawyers Association. He is currently serving on the Board of Directors of the National
Elder Law Foundation, which is the accrediting organization for elder law attorneys, and
he is the current President of the Board of The Indianapolis Children’s Choir.
ii
DISCLAIMER
Although every effort has been made to obtain the best information available
for presentation herein, the reader must recognize that many of the issues in
this area, particularly as they relate to public benefits, are part of a rapidly
changing body of law and administrative interpretation.
The author makes no warranties about the legal conclusions stated herein
and this is not intended as legal advice to any individual. Application of the
principals discussed in this paper to specific cases should only be taken upon
the advice of knowledgeable counsel.
iii
Asset Protection Planning:
First and Third-Party Special Needs Trusts
by Robert W. Fechtman
I. First-Party Special Needs Trusts
A special needs trust is essentially an investment vehicle that can hold funds for the
benefit of a disabled individual, and can use those funds to provide items and services for that
individual to improve their quality of life, without jeopardizing eligibility for public benefits,
such as Medicaid and Supplemental Security Income (“SSI”).
The trustee of the special needs trust must have sole and absolute discretion over the use
of the trust funds for the sole benefit of the recipient of public benefits. This means that the trust
must be worded so that the trustee is not required to make any payments of income or trust
principal directly to the recipient of public benefits.
Even though the special needs trust is designed to preserve eligibility for public benefits
such as Medicaid and SSI, it is actually quite surprising to see the many different ways that
special needs trust funds have been used for the benefit of recipients of public benefits, without
causing any problems with those public benefits.
A first-party special needs trust, which is a special needs trust that holds assets originally
belonging to the recipient of public benefits, such as Medicaid and SSI, must meet certain
requirements if it is not to interfere with eligibility for those public benefits:
1. The recipient of public benefits must be less than sixty-five (65) years old at the time the
trust is established.
2. The special needs trust must be established by the recipient of public benefits him or herself,
by a parent, grandparent, or guardian of the recipient of public benefits, or by a court.
3. The special needs trust must be irrevocable.
4. The trust must include a provision that states that any funds remaining in the trust at the
death of the trust beneficiary (the recipient of public benefits) are available to reimburse the
State for its Medicaid costs on behalf of that trust beneficiary. Although, in the case of a
pooled special needs trust, such as The Arc of Indiana Trust, the trust is allowed to retain a
portion of any remaining funds for the benefit of other beneficiaries of the pooled trust, prior
to the reimbursement to the State. The Arc Trust retains one-half (1/2) of any funds
remaining at the death of the trust beneficiary.
A form of a first-party special needs trust is attached hereto as Appendix A.
II. Third-Party Special Needs Trusts.
When the special needs trust holds assets that originally belonged to someone other than
the disabled individual (a parent or grandparent, for example) the trust does not need to include a
provision that states that any funds remaining in the trust at the death of the trust beneficiary (the
recipient of public benefits) are available to reimburse the State for its Medicaid costs on behalf
of that trust beneficiary since the time that the trust was established. And, in the case of a pooled
special needs trust, such as The Arc of Indiana Master Trust, the trust does not necessarily retain
a portion of any remaining funds for the benefit of other beneficiaries of the pooled trust. In fact,
The Arc retains none of the funds remaining at the death of the trust beneficiary, unless the
individual who funded the trust wishes to leave any of the remaining funds for the benefit of
other beneficiaries of The Arc.
So, the parent of a child with special needs can use a special needs trust to make sure that
their child is taken care of after they are gone, and the parent can ensure that any of the trust
funds that are not used for the benefit of that child go to other members of the family when that
child passes away. This is the best of both worlds. Medicaid and SSI can assist the disabled
2
individual, the special needs trust can supply supplemental items and services to improve the
quality of life, and the trust funds remaining at the death of the disabled individual can come
back to the family, without Medicaid or SSI having any claim to any of these funds.
Indiana Health Coverage Program Policy Manual (“IHCPPM”)1 Section 2615.75.20.10
deals with trusts established on or after August 11th, 1993 that are not governed by OBRA ‘93. It
says, these trusts “must be reviewed for the purpose of determining the ‘availability’ of the trust.
Some examples are trusts created by a Will (testamentary trust) . . . .” The general rule
regarding availability of resources is given at IHCPPM Section 2605.15.00, which states:
“Resources are available if the owner has the unrestricted right, authority or legal ability to
liquidate or dispose of the property or his share of the property. Resources must be available in
order to be counted in the eligibility determination.”
A form of a third-party special needs trust is attached hereto as Appendix B.
A. A Testamentary Special Needs Trust for a Surviving Spouse
405 IAC 2-3-1.1 includes language regarding a Medicaid transfer penalty that will be
implemented if the Medicaid applicant or recipient failed to take action to receive assets which they
were entitled to receive by law.
This aspect of the rule will impact a nursing home spouse, if the community spouse happens
to be the first to die, and he or she does not leave enough to the nursing home spouse to satisfy the
spousal allowance specified by Ind. Code §1-4-1 and/or the statutory right of election specified by
Ind. Code §1-3-1. The rule will invoke a Medicaid transfer penalty, even if the surviving, nursing
1
The IHCPPM is the integrated program policy manual for Medicaid, the Supplemental
Nutrition Assistance Program (“SNAP,” formerly known as Food Stamps), and Temporary
Assistance for Needy Families (“TANF”), which was formerly Aid to Families with Dependent
Children (“AFDC”). The IHCPPM, as such, does not have the effect of a law, or even a
regulation, but it purports to interpret the Federal and Indiana laws and regulations.
3
home spouse simply fails to elect to take against the Will of the deceased community spouse.
However, the rule also provides knowledgeable counsel with a very effective solution to the
potential problem of the Medicaid transfer penalty. Under 405 IAC 2-3-1.1(i)(4), the rule states:
“In the case of a surviving spouse who fails to take a statutory share of a deceased
spouse’s estate, no penalty will be imposed if the deceased spouse has made other
equivalent arrangements to provide for a spouse’s needs. ‘Other equivalent
arrangements’ includes, but is not limited to, a trust established for the benefit of the
surviving spouse.”
Since, in this scenario, the surviving spouse is a nursing home spouse who is receiving
Medicaid assistance, the community spouse will want to use a special needs trust for the benefit of
that surviving spouse. The special needs trust will be designed to leave all of the discretion
regarding the distribution of income and principal with the trustee of the trust, so that the trust assets
can be used to supplement, not supplant, the Medicaid assistance to which the surviving spouse is
entitled.
The community spouse will not want to use an inter vivos trust as the special needs trust.
An inter vivos trust established after August 11th, 1993, and funded with the assets of the
Medicaid recipient or the Medicaid recipient’s spouse, will be governed by 42 U.S.C.
1396p(d)(4)(A). Accordingly, the entire principal of the trust will be considered as a countable
resource of the Medicaid recipient, even though the trust is worded as a special needs trust.
A testamentary special needs trust will not cause a problem with the ongoing Medicaid
eligibility of the nursing home spouse, because the special needs language leaves all of the
discretion regarding distributions to the trustee, and the trust assets are not “available” to the
Medicaid recipient. Counsel should be sure to fund the special needs trust with enough of the
community spouse’s assets to satisfy the spousal allowance and the statutory right of election
4
relevant to the particular case. The author has recently been using the following language for this
purpose:
“In the event my *husband/wife, *, survives me by thirty (30) days, then I devise
and bequeath to *, as Trustee, in trust for the benefit of *(spouse), an amount sufficient to
prevent any period of ineligibility for Medicaid for *(spouse) based on the statutory
rights of a spouse to elect to Take Against the Will of a deceased spouse as set forth in
Ind. Code §29-1-3, or any successor section, and also based on the Surviving Spouse
Allowance as set forth in Ind. Code §29-1-4, or any successor section.”
For clients who have utilized an inter vivos trust to avoid the necessity of opening a
probate estate for administration through a court, the special needs trust described above should
still be established through a Will. However, there is no need to do away with the inter vivos
trust. Simply specify that the proper funds will go from the inter vivos trust to the trustee of the
special needs trust created in a Will, and this special needs trust will come into being at the death
of the testator or testatrix, as a result of the Will being spread of record with a court pursuant to
Ind. Code §29-1-7-3.
A form of a will containing a testamentary special needs trust for a surviving spouse is
attached hereto as Appendix C.
B. The “Tandem” Special Needs Trust
Parents or grandparents who establish third-party special needs trusts for children or
grandchildren with special needs very often choose only a succession of family members to be
the trustees. It is certainly possible that most family members will be able to do the job of trustee
with a reasonable amount of guidance from the attorney who drafted the special needs trust, but
there may be times when another source of help to the trustee will be desirable.
Indiana attorney Bill Holwager pioneered the concept of the “tandem” special needs trust
by pairing his third-party special needs trusts with The Arc of Indiana Master Trust. Mr.
Holwager’s inspiration was the idea that his clients would want to have family members as
5
trustees, to be in charge of the investments, but that The Arc, with its many years of experience
with hundreds of beneficiaries of its pooled special needs trust, would be in the best position to
manage the actual trust distributions and the resulting need to report these trust distributions to
the pertinent public benefits agencies. In one of Mr. Holwager’s “tandem” trusts, the family
member trustee has the sole authority over the trust investments, but he or she may only make
distributions to The Arc Trust for the benefit of the trust beneficiary.
The author’s preference is a “tandem” trust where the trustee has the option to make
distributions to The Arc Trust, or another pooled special needs trust. So, if the trustee feels
confident with both the investments and the distributions, he or she need not necessarily involve
the pooled special needs trust, but the way to get this sort of help is described in the trust and is
always available to the trustee.
C. Special Needs Trusts Incorporating the Power to Withdraw Additions
It is possible to incorporate the power to withdraw additions with the concept of a special
needs trust, if the testator wishes additions to the special needs trust to qualify for the annual
exclusion for estate tax purposes. It is important, however, not to do this by using the typical
Crummey powers, which allow the beneficiary of the trust to withdraw these additions. If the
beneficiary has the power to withdraw additions, the local Medicaid authorities would certainly
have a good argument that this power changes the character of the money that is in the special needs
trust, making the trust a self-settled special needs trust rather than a third-party special needs trust.
The way around this problem is simply to give someone other than the disabled beneficiary
of the special needs trust the power to withdraw the additions. This is supported by the Tax Court
case of Cristofani v. Commissioner, 97 T.C. 74 (1991), where the tax court allowed the annual
6
exclusion for gifts to a trust where the power to withdraw the additions was held by vested
contingent remaindermen.
III. Settlement Preservation Trusts
First-party special needs trust must be irrevocable in order to preserve eligibility for needs-
based public benefits. While federal and state laws allow these special needs trusts to be quite
flexible, the irrevocability of such trusts is more than a little bit daunting to families who have no
idea at the time of a personal injury settlement or judgment whether the child receiving the
settlement or judgment will ever need public benefits. A settlement preservation trust is designed to
start out as a discretionary support trust, with the ability to convert to a first-party special needs trust
under the right circumstances.
A form of a settlement preservation trust is attached hereto as Appendix D.
IV. Asset Protection Trusts for Minors and Young or At-Risk Adults
Most parents agree that they don’t want to leave money to minors, young adults, or
individuals who are at-risk for any reason, without protecting that money in some sort of a trust. Of
course, opinions differ on the ages at which minors and young adults will be old enough and/or
mature enough to handle the money. The common procedure is to establish a trust, and give the
trustee some general guidance about the kinds of distributions that the settlors of the trust think
would be reasonable. A standard such as health, education, maintenance, and support, with a strong
emphasis on education, is the norm. Then, the trustee is instructed to give the income and principal
of the trust to the beneficiaries when they reach certain ages, or stages. Perhaps, the trustee will
start giving the income to the beneficiaries when they reach age 21, and then give them one-third of
the principal at ages 25, 30 and 35. It is also possible to tie these principal distribution to life events,
7
like graduation from an accredited college or university, although it can be difficult to define these
life events so that they are adaptable to different future circumstances.
Trusts for multiple beneficiaries, such as brothers and sisters, can be designed as “separate
shares trusts,” where the trustee divides the available funds into separate shares for each beneficiary.
That way, when the trustee spends funds for the benefit of one beneficiary, it is that beneficiary’s
share that is being spent, and this has no impact on the other beneficiaries of the trust. On the other
hand, trusts for multiple beneficiaries can be designed as “pot trusts,” where there is a single pot for
all of the beneficiaries of the trust. The obvious concern with a pot trust is that a large portion of the
trust funds, or even all of the trust funds, will be spent for the benefit of one beneficiary, and the
other beneficiaries may not be very happy about that.
In the unlikely event that a beneficiary of the trust will die before they have received all of
the money being held in trust for them, it makes sense to “recycle” the trust for their surviving issue,
if any, so they in turn will not receive the money until they are old enough and/or mature enough to
handle it.
A form of an asset protection trust for minors and young or at-risk adults is attached
hereto as Appendix E.
8
Appendix A
TRUST FOR THE SOLE BENEFIT OF
*BFN
Appendix A

*BFN
Trust Purpose ................................................................................................................................ 2
Trust Estate ................................................................................................................................... 2
Irrevocability ................................................................................................................................. 3
Administration of Trust During *Ben’s Life .............................................................................. 3
A. Personal Decisions. ................................................................................................. 3
B. Distribution of Income and Principal. ..................................................................... 3
C. Reporting and Financial Requirements of Trustee. ................................................ 5
Death of *Ben ................................................................................................................................ 6
Spendthrift Clause ........................................................................................................................ 6
Administration of Trust ............................................................................................................... 7
A. Governing Law. ...................................................................................................... 7
B. Method of Payment. ................................................................................................ 7
C. Compensation. ........................................................................................................ 7
D. Charges to Trust. ..................................................................................................... 8
Trustee Powers .............................................................................................................................. 8
A. Power to Sell. .......................................................................................................... 8
B. Power to Invest. ...................................................................................................... 9
C. Power to Invest in Non-Income Producing Property. ............................................. 9
D. Power to Conserve Trust Estate. ............................................................................. 9
E. Power to Take All Actions Necessary. ................................................................... 9
Resignation and Replacement of Trustee ................................................................................. 10
A. Replacement of Trustee ........................................................................................ 10
B. Resignation of Trustee .......................................................................................... 10
ii
Appendix A
C. Successor Trustee.................................................................................................. 10
SCHEDULE A............................................................................................................................. 11
iii
Appendix A
*BFN
THIS AGREEMENT is entered into this _______ day of ____________________, 2022,
pursuant to an Order of the * County * Court. Robert W. Fechtman, (“Trustee”) is appointed
Trustee for the benefit of *BFN (“*Ben” or “Beneficiary”).
WITNESSETH THAT:
WHEREAS, *Ben now resides at * in the City of *, State of Indiana, and was injured as a
result of *, and he now suffers from *; and
WHEREAS, *Ben will receive a personal injury settlement for the injuries sustained in
the above-referenced accident; and
WHEREAS, this Court approved the creation of this Trust Agreement for *Ben’s benefit,
and Ordered the settlement funds that would otherwise be payable to *Ben to be paid to this
Trust so that funds will be available to pay for specialized products and services over *Ben’s
lifetime; and
WHEREAS, the anticipated costs of *Ben’s care and medical and rehabilitation needs
over his lifetime exceed the resources currently available to him, including all sums received as a
result of the aforementioned settlement; and
WHEREAS, medical and rehabilitation technology is advancing at a rapid rate, and
during *Ben’s lifetime these advances may enable him to achieve a level of restoration and
rehabilitation not currently possible; and
WHEREAS, federal law permits the assets of a disabled person under age sixty-five (65),
who is or may become eligible for Medicaid assistance under Title XIX of the Social Security
Act, to be protected in a trust for the sole benefit of the disabled person; and
Appendix A
WHEREAS, the Trustee has agreed to hold and administer such property as may be
received hereunder, upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and mutual covenants contained
herein, and other valuable consideration, the parties do hereby agree as follows:
ARTICLE I.
Trust Purpose
The purpose of this Trust is to protect *Ben’s long-term interests, generally to provide
supplemental care during his lifetime, to make available to him such restorative and
rehabilitation services that are or will become available to help him achieve as normal a physical
and/or cognitive functioning as is possible and to increase the quality of his life, after utilizing
available assistance from governmental and private agencies and when such assistance or
benefits are incomplete or insufficient, and not to replace assistance or benefits or to render *Ben
ineligible for any assistance or benefits to which he would otherwise be entitled or eligible, and
which are in his best interest.
ARTICLE II.
Trust Estate
This Trust estate shall consist of those funds ordered by the Court to be paid to the Trust,
from time to time. The Trustee agrees to hold, administer, and distribute all of such property as
the principal of a Trust estate, in accordance with the provisions contained herein. The Trustee
shall receive only that property ordered by the Court. The foregoing sentence shall not prohibit
the Trustee from receiving income earned by the Trust estate or from reinvesting the Trust estate.
2
Appendix A
ARTICLE III.
Irrevocability
The Trust created by this Agreement shall be irrevocable.
ARTICLE IV.
Administration of Trust During *Ben’s Life
A. Personal Decisions.
Any decisions with respect to matters that are personal to *Ben, such as the selection of
physicians, or other health care and rehabilitation professionals, or facilities, living arrangements
for *Ben and similar matters shall be made by *Ben or *Ben’s guardian.
B. Distribution of Income and Principal.
Except as limited herein, the Trustee may spend or indefinitely retain the income and
principal of this Trust, subject to the mandatory distribution upon termination of this Trust. Any
net income not so disbursed shall be added to the principal of the Trust. The Trustee, in
determining whether to make any distribution to or for the benefit of *Ben, shall consider the
advisability of making such distribution in light of the amount to which he may be entitled from
any insurance program or governmental agency, including but not limited to TRICARE benefits,
Medicaid (medical assistance), or Supplemental Security Income (SSI) benefits. The Trustee
shall not supplant services, assistance and medical care available to *Ben from any such source,
unless the Trustee, in the Trustee’s sole discretion, determines that the benefits to *Ben of the
services, assistance, and medical care available through such programs are outweighed by the
burdens imposed on *Ben by the programs, and that *Ben’s long-term interest will best be
served by other means. The Trustee may employ legal counsel to assist in this determination,
3
Appendix A
and shall be held harmless for actions or inactions done in reasonable reliance on the report or
opinion of such counsel.
In the event the Trustee is requested to release any part of the trust estate to *Ben, or
*Ben’s guardian, to pay for expenses that are otherwise paid for by public assistance programs
for which *Ben is eligible, or to petition the Court, or any administrative agency, for the release
of any part of the trust estate for such purpose, then the Trustee is authorized to deny such
request. The Trustee is further authorized, in the Trustee’s sole, absolute, complete and
unfettered discretion, to take whatever administrative or judicial steps the Trustee deems
necessary to continue *Ben’s public assistance program eligibility. However, it is not required to
maintain such eligibility, if it is not in *Ben’s best interest to do so. The Trustee’s discretion to
determine the use of the Trust funds should not be replaced by any other party’s, including any
court, administrative agency or other person, except as provided for otherwise herein. The
Trustee’s discretion should not be tested by any other person’s standard of reasonableness, but
should be based solely on what is reasonable for *Ben given his special circumstances.
The Trustee is authorized to rely on the advice of any person authorized under
Paragraph A of this Article, or of legal counsel, in making expenditures under this provision.
The Trustee may, for example, employ legal counsel to determine whether the proposed
expenditure is for services that are ordinarily paid for by Medicaid or other insurance or public
benefit programs to which *Ben may otherwise be entitled. The Trustee shall be held harmless
against and in respect of any and all losses, liabilities, judgments, damages and expenses arising
out of the Trustee’s reliance on such person’s advice.
4
Appendix A
C. Reporting and Financial Requirements of Trustee.
The Trustee shall be required to prepare and file the following financial information and
secure certain protective financial arrangements as follows:
1. Inventory.
Within ninety (90) days after his appointment as Trustee, Robert W. Fechtman shall file
with the Court a complete inventory of the property subject to the Trustee’s control, together
with an oath or affirmation that the inventory is believed to be complete and accurate as far as
information permits;
2. Accounting.
The Trustee shall file an annual written verified account of the Trustee’s administration
with the Court, not more than thirty (30) days after the anniversary date of the Trustee’s
appointment;
3. Agency Agreement.
The Trustee shall transfer all of the trust principal to a financial institution organized
under the laws of Indiana or of the United States and operating a financial investment business
located within Indiana, to administer the trust principal as an agent for the Trustee.
The Trustee shall submit a certification of such agency agreement with the Inventory and
with each annual accounting required herein;
4. Bond.
The Trustee must execute and file a bond relating to the duties of the Trustee’s office.
The original bond documentation shall be retained in the Court’s files. The initial bond shall be
in an amount equal to the aggregate value of the Trust principal plus one year’s estimated net
income derived from Trust assets.
5
Appendix A
At each annual accounting cycle, the bond shall be increased or decreased if the value of
the Trust principal increases or decreases, as the case may be, by at least ten percent (10%) from
the value as stated on the last prior accounting.
ARTICLE V.
Death of *Ben
Upon *Ben’s death, the Trustee shall, as soon as practicable, terminate the Trust and
distribute and convey the entire remaining balance of the Trust as follows:
A. The Trustee shall pay to the State of Indiana (and such other state as may
provide Medicaid assistance to *Ben) such amount of the trust estate as is legally
required to meet the requirements of 42 U.S.C. §1396p(d)(4)(A), or the corresponding
provision of any successor Medicaid laws.
B. The Trustee shall pay the remaining trust estate to the Personal
Representative of *Ben’s probate estate.
B. The Trustee shall then pay Ten and 00/100 Dollars ($10.00) to * and the
remainder of the trust estate to the Personal Representative of *Ben’s probate estate.
ARTICLE VI.
Spendthrift Clause
No interest under this instrument shall be transferable, attachable, or assignable by any
beneficiary, or be subject during his life to the claims of his creditors. If any attempt should be
made by any creditor of the beneficiary to reach any rights, benefits, or interests of the
beneficiary, the Trustee may apply the income or principal to which the beneficiary would
otherwise be entitled, for his support and maintenance, or the support and maintenance of those
6
Appendix A
dependent upon the beneficiary in such manner as the Trustee in the Trustee’s sole discretion
shall determine.
ARTICLE VIII.
Administration of Trust
A. Governing Law.
This instrument and the dispositions hereunder shall be construed and regulated and their
validity and effect shall be determined by the laws of Indiana.
B. Method of Payment.
The Trustee may make payments to or on behalf of the beneficiary in any one or more of
the following ways:
1. To any person or organization furnishing care, support, maintenance, or
education for such beneficiary; or
2. By making expenditures directly on behalf of the beneficiary.
The Trustee shall not be required to see to the application of any funds so paid, and the
receipt by such payee shall be full acquittance to the Trustee. The decision of the Trustee as to
direct payments or application of funds shall be conclusive and binding upon all parties in
interest.
C. Compensation.
The Trustee shall be entitled to reasonable compensation for services in administering
and distributing the Trust and to reimbursement for expenses. The Trustee shall also be entitled
to reasonable additional compensation for extraordinary services rendered; provided, however,
that the Trustee shall give notice to *Ben’s guardian, before such additional compensation for
extraordinary services is remitted to the Trustee.
7
Appendix A
D. Charges to Trust.
All reasonable expenses in establishing, maintaining, administering, and defending this
Trust, including but not limited to reasonable attorneys fees, accounting fees, Trustee fees, taxes,
and costs, shall be a proper charge to the Trust. This shall also include any guardian’s fees and
guardian’s attorney’s fees as authorized by the Court, pursuant to the guardianship proceedings.
ARTICLE IX.
Trustee Powers
The Trustee and any Successor Trustee, shall have all powers enumerated under the
Indiana Code and any other power that may be granted by law, to be exercised without the
necessity of Court approval, as the Trustee, in the Trustee’s sole discretion, determines to be in
the best interest of the beneficiary.
The Trustee may petition the Court for instructions and guidance in the administration of
this Trust.
Said Trustee powers are to be construed in the broadest possible manner and shall include
the following, and shall pertain to both principal and income, but shall in no way be limited
thereto:
A. Power to Sell.
To sell, assign, exchange, convey or otherwise transfer any part or all of the property held
under the terms hereof at such times and upon such terms and conditions as the Trustee may
deem prudent and for the best interest of the Trust, and to receive and receipt for the proceeds of
any such sale, assignment, conveyance, or other transfer.
8
Appendix A
B. Power to Invest.
To invest and reinvest any and all funds coming into the Trustee’s possession for
investment in such securities or property, real or personal, as the Trustee may in the Trustee’s
absolute and uncontrolled discretion deem proper and suitable, including corporate stocks of all
classes. The Trustee may engage in the above-mentioned investment vehicles, so long as the
Trustee reasonably believes that any such transaction is in the best interest of the beneficiary of
this Trust.
C. Power to Invest in Non-Income Producing Property.
To invest in non-income producing, depreciating assets if, in the Trustee’s discretion,
such investment appears prudent and is in the best interest of *Ben.
D. Power to Conserve Trust Estate.
To take any action with respect to conserving or realizing upon the value of any property
of the Trust, and with respect to foreclosures, reorganizations, or other changes affecting the
property of the Trust; to collect, pay, contest, compromise, or abandon demands of or against the
Trust, wherever situated; and to execute contracts, notes, conveyances, and other instruments,
including instruments containing covenants and warranties binding upon and creating a charge
against the Trust.
E. Power to Take All Actions Necessary.
To exercise all the above powers and to do such other acts which in the Trustee’s sole
judgment are needful or desirable for the proper and advantageous control, management and
investment or reinvestment of the property held in trust hereunder to the same extent and with
the same effect as might legally be done by an individual in absolute ownership and control of
said property.
9
Appendix A
ARTICLE X.
Resignation and Replacement of Trustee
A. Replacement of Trustee
*Ben’s guardian, or any interested party on *Ben’s behalf, may petition the Court to
replace the Trustee.
B. Resignation of Trustee
Any Trustee may resign at any time by giving written notice, specifying the effective date
of the resignation, to *Ben’s guardian and to the Court.
C. Successor Trustee
In the event that Robert W. Fechtman resigns as Trustee, or is removed, then the Court
shall designate a Successor Trustee.
IN WITNESS WHEREOF, this Agreement has been signed on the day and year first
written above.
Robert W. Fechtman
Trustee
Created and approved this .
JUDGE OF THE * COUNTY

* COURT
10
Appendix A

*BFN
SCHEDULE A
DATE DESCRIPTION VALUE
11
Appendix B
TRUST FOR THE BENEFIT
OF
*BFN
This instrument prepared by Robert W. Fechtman, Atty. #17316-49, Fechtman Law Office, 8555
River Road, Suite 420, Indianapolis, IN 46240. Telephone (317) 663-7200.
Appendix B
OF *BFN
Trust Purpose ................................................................................................................................ 1
Trust Funding ............................................................................................................................... 2
Revocability ................................................................................................................................... 2
A. Reservation of Power to Revoke. ...................................................................................................... 2
B. Trust Becomes Irrevocable. ............................................................................................................... 3
Determination of Incapacity ........................................................................................................ 3
Special Administrative Provisions ............................................................................................... 3

A. Administration and Distribution of Income and Principal. ............................................................... 3
B. Guidelines for the Trustee’s Exercise of Discretion.......................................................................... 5
C. Annual Accounting. ........................................................................................................................... 6
Distribution on Beneficiary’s Death ............................................................................................ 6
Spendthrift Provision ................................................................................................................... 8
Consultation with The Arc and Early Termination of Trust ................................................... 9
Failure of Trust Purpose ............................................................................................................ 10
Receipt of Government Funds ................................................................................................... 11
General Administrative Provisions ........................................................................................... 11

A. Governing Law. ............................................................................................................................... 11
B. Method of Payment. ........................................................................................................................ 11
C. Waiver of Bond. .............................................................................................................................. 12
D. Compensation. ................................................................................................................................. 12
E. Income Tax. ..................................................................................................................................... 12
F. Power to Delegate Responsibility. .................................................................................................. 12
Trustee Powers ............................................................................................................................ 13
A. Power to Invest. ............................................................................................................................... 13
B. Power to Sell.................................................................................................................................... 13
C. Power to Conserve Trust Estate. ..................................................................................................... 13
D. Power to Invest in Non-Income Producing Property. ..................................................................... 14
E. Power to Take All Actions Necessary. ............................................................................................ 14
Succession of Trustees ................................................................................................................ 14
A. Succession of Trustees. ................................................................................................................... 14
B. Resignation of Trustee. .................................................................................................................... 15
C. Removal of Trustee. ........................................................................................................................ 15
ii
Appendix B
D. Accounts Rendered and Accepted. .................................................................................................. 15

SCHEDULE A............................................................................................................................. 16
SCHEDULE B ............................................................................................................................. 17
iii
Appendix B
OF *BFN
THIS AGREEMENT is entered into this * day of *, 2022, by and *among/between
*Grantor1 and *Grantor2 of * County, Indiana (“Grantors and Trustee”), for the benefit of *BFN
(hereinafter, “*Ben”). Whenever the term “Trustee” is used in this document, it shall apply
equally to any “Successor Trustee” “Co-Trustees” or remaining “Co-Trustee.” Whenever used
herein, the term “Grantor” will have the same meaning as the term “Settlor” as defined in the
Indiana Code section 30-4-1-2, or its successor section.
WITNESSETH THAT:
WHEREAS, the Grantors wish the Trustee to utilize the limited funds available to protect
*Ben’s legal rights, and to provide supplemental items and incidental services for him without
replacing any forms of private or public assistance to which he would otherwise be entitled; and
WHEREAS, the Grantors wish the corpus of the trust remaining at the death of *Ben to
be distributed pursuant to Article VI herein; and
NOW THEREFORE, in consideration of the promise and mutual covenants herein
contained and other valuable consideration, the parties do hereby agree as follows:
ARTICLE I.
Trust Purpose
The purpose of this Trust is to utilize the limited funds available to the Trustee for *Ben,
to protect *Ben’s legal rights, and to provide supplemental items and incidental services for him,
after utilizing available assistance from governmental and private agencies and when such
Appendix B
assistance or benefits are incomplete or insufficient, and not to replace such assistance or
benefits or to render *Ben ineligible for any assistance or benefits to which he would otherwise
be entitled or eligible.
ARTICLE II.
Trust Funding
The Grantors have delivered to the Trustee, the property described in Schedule A. Such
property and any other property that may be received by the Trustee as additions to this Trust
(including any property devised by the Wills of the Grantors or any family member or friend of
the family, or the proceeds of life insurance policies as listed on Schedule B) shall be held and
disposed of by the Trustee on the terms stated in this Agreement.
ARTICLE III.
Revocability
A. Reservation of Power to Revoke.
The Grantors expressly reserve the power (subject only to the prior payment of the
Trustee’s commissions and other expenses in respect thereof) at any time and from time to time
during the lives of the Grantors, by a notice in writing filed with the Trustee at least thirty (30)
days prior to the effective date thereof:
1. Power to Withdraw. To withdraw any or all of the trust estate free of the provisions of
this Agreement; and,
2. Power to Amend. To alter, amend, or revoke this Agreement. However, the duties,
responsibilities, and rate of compensation of the Trustee, as herein provided, shall not be
altered or modified by any such amendment without the written consent of the Trustee.
2
Appendix B
B. Trust Becomes Irrevocable.
This Trust, or a part hereof, shall become irrevocable upon the occurrence of any of the
following events:
1. The incapacity of both of the Grantors, but the Trust shall be irrevocable only for the
period of such incapacity.
2. The death of both of the Grantors.
3. By the subsequent written declaration of both of the Grantors, or the surviving
Grantor, or the subsequent written declaration of the duly appointed agent(s) of both
of the Grantors, or the surviving Grantor, that the Trust is irrevocable.
ARTICLE IV.
Determination of Incapacity
The mental and physical capacities of the Grantors and any Trustee are important factors
in the administration of this Trust, and for purposes of this Agreement, any incapacity shall be
determined by the Grantor’s or a Trustee’s treating physician. The standard a physician shall use
to determine whether the Grantor or a Trustee is incapacitated is whether the Grantor or a
Trustee lacks the physical or mental capabilities to manage his or her own business or financial
affairs. All references to incapacity in this Agreement shall be based on this standard.
ARTICLE V.
Special Administrative Provisions
A. Administration and Distribution of Income and Principal.
The Trustee shall invest and reinvest the assets of the Trust and shall collect the income
therefrom and pay the expenses thereof. Except as limited herein, the Trustee, in the Trustee’s
3
Appendix B
sole and absolute discretion, may spend for the benefit of *Ben or indefinitely retain the income
and principal of this Trust, subject only to the mandatory distribution upon termination of this
Trust. The Trustee, in making any distribution to or for the benefit of *Ben, shall consider the
advisability of making such distribution in light of the amount to which the beneficiary may be
entitled from any governmental agency, including but not limited to Social Security
Administration benefits, TRICARE benefits, Medicaid (medical assistance), and Supplemental
Security Income (SSI) benefits. The Trustee shall not supplant services, assistance and medical
care available to *Ben from any such source, unless the Trustee, in the Trustee’s sole discretion,
determines that the benefits to *Ben of the services, assistance, and medical care available
through such programs are outweighed by the burdens imposed on *Ben by the programs, and
that *Ben’s long-term interest will best be served by other means. The Trustee may employ
legal counsel to assist in this determination, and shall be held harmless for actions or inactions
done in reasonable reliance on the report or opinion of such counsel.
[When *Ben attains the age of twenty-one (21) years, the Trustee may pay to or for the
benefit of *Ben, all of the net income of the trust estate, in quarterly (or other mutually
convenient) installments. The Trustee shall have the sole discretion to make this decision, based
on *Ben’s ability to handle the funds and on *Ben’s possible, continuing need for public
benefits, such as Medicaid and SSI. If the Trustee determines that *Ben should not begin to
receive the net income of the trust estate at age twenty-one (21) years, then the Trustee shall
reconsider this decision every three (3) years.
When *Ben attains the age of *twenty-five (*25) years, the Trustee may distribute to
*Ben *one-third (1/3) of the trust estate existing on such birth date. When *Ben attains the age
of *thirty (*30) years, the Trustee may distribute to *Ben one-half (1/2) of the trust estate
4
Appendix B
existing on such birth date. When *Ben attains the age of *thirty-five (*35) years, the Trustee
may terminate the trust and distribute the remaining principal of the trust estate and any
undistributed income to *Ben. The Trustee shall have the sole discretion to make these
decisions, based on *Ben’s ability to handle the funds and on *Ben’s possible, continuing need
for public benefits, such as Medicaid and SSI. If the Trustee determines that *Ben should not
receive these distributions of the trust estate at ages *twenty-five (*25), *thirty (*30), and
*thirty-five (*35) years, respectively, then the Trustee shall reconsider each of these decisions
every three (3) years.
In the event that *Ben attains the age of *twenty-five (*25), *thirty (*30), or *thirty-five
(*35) years before the funding of the Trust, then, upon such funding, the Trustee shall make the
above-referenced decisions, and shall then reconsider each decision every three (3) years, if
necessary.]
B. Guidelines for the Trustee’s Exercise of Discretion.
Expenditures that are within the contemplation of the Grantors are services for *Ben’s
protection and advocacy, education and training, legal services, travel, recreational items or
events, special personal services, special health, dental, therapeutic, or habilitation services that
will improve *Ben’s quality of life that are not otherwise available to him. Expenditures may be
made directly to any family members of the Grantors, or any other person who takes *Ben into
his or her home or provides special care or attention to him, to reimburse such person for costs
associated with such shelter, care or attention. The Trustee may, for instance, pay for the
addition of a room to the home of a family member of *Ben to accommodate him on such terms
as the Trustee may determine would be in the best interests of *Ben.
5
Appendix B
C. Annual Accounting.
The Trustee shall render an annual accounting and statement of accounts to *Ben or his
legal guardian and the Grantors, if then living. The Trustee is relieved from any requirement as
to routine Court accountings that may now or may hereafter be required by the statutes in force
in any jurisdiction, although the Trustee is not precluded from obtaining judicial approval of the
Trustee’s accounts.
ARTICLE VI.
Distribution on Beneficiary’s Death
[OPTION 1]Upon the death of *Ben, the Trustee shall pay such funeral and burial
expenses for *Ben as the Trustee, in the Trustee’s sole and absolute discretion, determines to be
necessary, taking into account *Ben’s probate estate and all other sources of payment. The
Trustee shall then distribute and convey the entire amount of the trust property and accumulated
income then remaining as follows:
If *Ben has issue surviving, then the Trustee shall distribute and convey the entire
amount of the trust property and accumulated income to *Ben’s children, in equal shares, per
stirpes. Provided, however, that if any such surviving issue is under the age of * (*) years, then
such issue’s share shall be distributed to the Trustee of the * Family Trust Agreement, dated *,
2011, as now written or hereafter amended, in trust. Such property shall be held, managed and
distributed pursuant to the terms of such Trust. If for any reason such Trust is not in existence at
the time of the event of this distribution, or if this distribution is not or cannot be effective in
accordance with the terms hereof, then the Trustee shall hold, administer and distribute the trust
property according to the terms of such Trust, and, for that purpose such Trust is hereby
incorporated, as now written or hereafter amended, by reference, into this Trust.
6
Appendix B
If *Ben dies without issue surviving, then the Trustee shall distribute and convey the
entire amount of the trust property and accumulated income then remaining to *, *, and any
children of the Grantors born or adopted after the date of the execution of this document, in equal
shares, per stirpes. Provided, however, that any such share for an individual who is under the
age of * (*) years shall be distributed to the Trustee of the * Family Trust Agreement, dated *,
2011, as now written or hereafter amended, in trust. Such property shall be held, managed and
distributed pursuant to the terms of such Trust. If for any reason such Trust is not in existence at
the time of the event of this distribution, or if this distribution is not or cannot be effective in
accordance with the terms hereof, then the Trustee shall hold, administer and distribute the trust
property according to the terms of such Trust, and, for that purpose such Trust is hereby
incorporated, as now written or hereafter amended, by reference, into this Trust.
Provided, however, if no beneficiary of the * Family Trust Agreement survives at the
time of this distribution, then the Trustee shall distribute and convey the entire amount of the
trust property and accumulated income then remaining to *Grantor1 and *Grantor2, or the
survivor of them. If *Grantor1 and *Grantor2 both predecease the event of this distribution, then
the entire amount of the trust property and accumulated income then remaining shall be
distributed to *.
If any beneficiary receiving property hereunder is under the age of twenty-one (21)
years, then the Trustee shall distribute such beneficiary’s share of the net income or other trust
property to a suitable custodian under the Uniform Transfers or Gifts to Minors Act of the state
in which they are domiciled.
[OPTION 2] Upon the death of *Ben, the Trustee shall pay such funeral and burial
expenses for *Ben as the Trustee, in the Trustee’s sole and absolute discretion, determines to be
7
Appendix B
necessary, taking into account *Ben’s probate estate and all other sources of payment. The
Trustee shall then distribute and convey the entire amount of the trust property and accumulated
income then remaining as follows:
If *Ben has issue surviving, then the Trustee shall distribute and convey the entire
amount of the trust property and accumulated income to *Ben’s children, in equal shares, per
stirpes.
If *Ben has no surviving issue, then the Trustee shall distribute and convey the entire
amount of the trust property and accumulated income then remaining to *Grantor1 and
*Grantor2, or the survivor of them. If *Grantor1 and *Grantor2 both predecease the event of this
distribution, then the entire amount of the trust property and accumulated income then remaining
shall be distributed to *.
If any beneficiary receiving property hereunder is under the age of twenty-one (21)
years, then the Trustee shall distribute such beneficiary’s share of the net income or other trust
property to a suitable custodian under the Uniform Transfers or Gifts to Minors Act of the state
in which they are domiciled.
ARTICLE VII.
Spendthrift Provision
8
Appendix B
dependent upon the beneficiary in such manner as the Trustee, in the Trustee’s sole discretion
shall determine.
ARTICLE VIII.
Consultation with The Arc and Early Termination of Trust
The Arc of Indiana is an organization that provides services to disabled individuals. The
Arc has also established a pooled funds trust that may be funded on behalf of a disabled
individual. As a condition to receiving the services provided by The Arc, a disabled individual
must be enrolled in The Arc Trust. The Grantors contemplate two different occasions when it
would be in the best interest of *Ben for the Trustee to fund The Arc Trust on *Ben’s behalf.
Those two occasions are:
A. If at any time the trust estate shall be of such value that the Trustee
determines that continued administration of the Trust is not economical, then the Trustee
may terminate the Trust and distribute the entire trust principal and any undistributed
income to National Bank of Indianapolis U/A, Trustee for The Arc of Indiana Master
Trust, dated October 24, 1988, for the benefit of *Ben.
B. If the Trustee determines that it would be in *Ben’s best interest to receive
services from The Arc through The Arc Trust, thereby gaining the benefit of The Arc’s
expertise with individual advocacy on behalf of disabled persons, distribution of funds
for the benefit of disabled persons, and public benefits regulations, then the Trustee may
distribute an amount of trust principal to National Bank of Indianapolis U/A, Trustee for
The Arc of Indiana Master Trust. The amount of initial funding and the method for
making periodic additions to The Arc of Indiana Master Trust shall be determined by the
Trustee. The Trustee is authorized to enroll *Ben in The Arc of Indiana Master Trust,
9
Appendix B
notwithstanding the fact that the terms of that Trust may vary from the terms of this
Trust, and the Trustee may pay from this Trust any enrollment fee required for
participation in The Arc.
If, at any time, *Ben is domiciled in a state other than Indiana, if the Trustee determines
that there is an acceptable pooled funds trust available in such state, then the Trustee may
distribute an amount of trust principal to such trust, upon the same terms as those described in
Paragraphs A and B of this Article.
ARTICLE IX.
Failure of Trust Purpose
A. If the Trustee determines, after consultation with legal counsel, that because of a
change in the law the existence of this Trust or any benefits provided hereunder will disqualify
*Ben from any necessary payments (as determined by the Trustee), benefits or services from any
government program so as to frustrate the purpose of this Trust to be a supplemental source of
assistance to *Ben, and an amendment to the Trust would, in the opinion of legal counsel, enable
the purpose of the Trust to be substantially carried out, then the Trustee may amend the Trust. If,
in the opinion of counsel, the trust purpose cannot be substantially carried out by amending the
Trust, then the Trustee may prematurely terminate this Trust and distribute the assets pursuant to
Article VI.
B. In the event the spendthrift provisions of this Trust, as they apply to *Ben, are not
enforced by order or determination of a Court, then the Trustee may prematurely terminate this
Trust and distribute the assets pursuant to Article VI hereof. If the existence of this Trust or any
benefits provided hereunder as determined by order of a Court should disqualify *Ben from
necessary payments, benefits or services from government programs, the Trustee shall consult
10
Appendix B
with legal counsel and any other appropriate professionals or organizations concerning the
continued existence of the Trust, and then may, in the Trustee’s sole and absolute discretion,
terminate this Trust and distribute all of the assets pursuant to Article VI hereof.
ARTICLE X.
Receipt of Government Funds
The Trustee is authorized to accept governmental assistance payments as the
“representative payee” or “responsible person” for *Ben; however, such funds shall be
maintained in a specific and separately identifiable account and shall not be commingled with or
become a part of the funds held under the terms of this Agreement.
ARTICLE XI.
General Administrative Provisions
A. Governing Law.
The Trustee may pay, transfer, or assign income or principal in any one or more of the
following ways: (1) directly to a beneficiary; (2) to the guardian of the person or of the property
of a beneficiary during the incapacity of a beneficiary; or, (3) by expending such income or
principal directly to a provider of goods or services, or (4) to a suitable custodian under the
Uniform Transfers or Gifts to Minors Act.
11
Appendix B
C. Waiver of Bond.
To the extent that any such requirements can be legally waived, no Trustee shall ever be
required to give any bond as Trustee, to qualify before, or be appointed by any Court, or to
obtain the order of approval of any Court in the exercise of any power of discretion hereunder,
although the Trustee may do so at that Trustee’s discretion.
D. Compensation.
and distributing the Trust and to reimbursement for expenses.
E. Income Tax.
The Trustee shall be responsible for the timely filing of all income tax returns required to
be filed by the Trust and shall make estimated tax payments if such payments are due. If, in
good faith, the Trustee incorrectly estimates such payments and as a result the Trust incurs added
interest or penalties, the Trustee shall be exonerated.
F. Power to Delegate Responsibility.
One Co-Trustee may delegate to the other Co-Trustee responsibility for routine
transactions such as receiving and endorsing income checks and drafts, investing or reinvesting
trust assets, and payment of the bills of a beneficiary, and the delegating Co-Trustee shall be
relieved of any responsibility with respect to the exercise of such rights and powers during the
period of the delegation. Major changes in investment strategy or major expenditures for items
that are discretionary in nature, however, whenever possible, shall be done after consultation of
one Co-Trustee with the other and with the consent of both Co-Trustees.
12
Appendix B
ARTICLE XII.
Trustee Powers
the best interest of the beneficiary. No person who deals with the Trustee shall be required to
inquire into the propriety of any of the Trustee’s actions, nor shall any person, except as provided
herein, who transfers money or other property to the Trustee be required to see to the application
of such money or property. The powers granted herein are to be construed in the broadest
possible manner and shall include the following, and shall pertain to both principal and income,
but shall in no way be limited thereto:
A. Power to Invest.
To invest and reinvest the trust estate in any kind of real or personal property without
regard to any law restricting investment by a Trustee and without regard to current income.
B. Power to Sell.
To sell any trust property, for cash or on credit, at public or private sales; to exchange any
trust property for other property; and to determine the prices and terms of sales and exchanges.
C. Power to Conserve Trust Estate.
To take any action with respect to conserving or realizing upon the value of any trust
property, and with respect to foreclosures, reorganizations, or other changes affecting the trust
property; to collect, pay, contest, compromise, or abandon demands or claims belonging to or
held against the trust estate, wherever situated; and to execute contracts, notes, conveyances, and
13
Appendix B
other instruments, including instruments containing covenants and warranties binding upon and
creating a charge against the trust estate.
D. Power to Invest in Non-Income Producing Property.
such investment appears prudent and is in the best interest of the beneficiary.
said property.
ARTICLE XIII.
Succession of Trustees
A. Succession of Trustees.
[OPTION 1]If *Trustee resigns, dies, or is determined to be incapacitated, then * is
designated as Successor Trustee. In the event that * resigns, dies, is removed or is determined to
be incapacitated, then * is designated as Second Successor Trustee.
[OPTION 2]If one Co-Trustee resigns, dies, or is determined to be incapacitated, then the
remaining Co-Trustee shall continue to serve as the sole Trustee. If both Co-Trustees resign, die,
or become incapacitated, then * is designated as Successor Trustee. In the event that * resigns,
dies, is removed or is determined to be incapacitated, then * is designated as Second Successor
Trustee.
14
Appendix B
B. Resignation of Trustee.
of the resignation, to the Successor Trustee, and to the Grantors, or surviving Grantor. If there
remains no Trustee of this Trust, then *Ben or any interested party on his behalf may petition a
Court of competent jurisdiction to appoint a Successor Trustee.
C. Removal of Trustee.
The Grantors, or surviving Grantor, may remove the Trustee, or any Successor Trustee, at
any time without cause, by giving written notice and a reasonable period of time not to exceed
sixty (60) days for the existing Trustee to transfer assets and complete the technical mechanics
involved in transfer.
D. Accounts Rendered and Accepted.
Any Successor Trustee may accept, without examination or review, the accounts
rendered and the property delivered by or for a predecessor Trustee, without incurring any
liability or responsibility for so doing.
IN WITNESS WHEREOF, the parties have executed this Trust Agreement on the day
and year first written above.
*Grantor1 *Grantor2
Grantor and Co-Trustee Grantor and Co-Trustee
15
Appendix B
TRUST FOR THE BENEFIT OF
*BFN
SCHEDULE A
16
Appendix B
TRUST FOR THE BENEFIT OF
*BFN
SCHEDULE B
17
Appendix C
LAST WILL AND TESTAMENT
OF
*X
I, *X, of * County, Indiana, being of sound and disposing mind and memory, do make,
publish, and declare this to be my Last Will and Testament, and I hereby revoke all Wills and
Codicils heretofore made by me.
ARTICLE I.
Payment of Debts, Expenses, Taxes, Etc.
I direct that my enforceable debts, expenses of my last illness, and funeral and
administration expenses of my estate, shall be paid by my Personal Representative from the
principal of my estate.
I further direct that all estate and succession taxes (including interest and penalties
thereon) payable by reason of my death shall be paid out of and be charged generally against my
residuary estate without reimbursement from any person.
ARTICLE II.
Simultaneous Death Provision
If my spouse and I die simultaneously or under such circumstances that it is difficult or
impossible to determine conclusively which of us died first, it shall be presumed for purposes of
construction of this Will and any Trust Agreement that I have created that I died first.
ARTICLE III.
Specific Bequests
I bequeath the following items of property to the following individuals:

Appendix C
ARTICLE IV. (OPTION 1)
Disposition of Personal Effects and Household Goods
I direct my Personal Representative to distribute to or for the benefit of my spouse *S, such
of my separate personal effects and household goods and the like not otherwise effectively disposed
of, such as jewelry, clothing, furniture, furnishings, silver, books, pictures, motor and recreational
vehicles, as *S may select, or as my Personal Representative may select in *S’s best interest. Any
remaining personal effects and household goods not so selected shall be distributed to my children,
*, who survive me for thirty (30) days, in shares of substantially equal value, per stirpes, to be
divided as they shall agree, or if they shall fail to agree within five (5) months after my death, as my
Personal Representative shall determine.
ARTICLE V. (OPTION 2)
Disposition of Personal Effects and Household Goods
I bequeath all my separate personal effects and household goods and the like not
otherwise effectively disposed of, such as jewelry, clothing, furniture, furnishings, silver, books,
pictures, motor and recreational vehicles, to my children, *C1 and *C2, who survive me for
thirty (30) days, in shares of substantially equal value, to be divided as they shall agree, per
stirpes, or if they shall fail to agree within five (5) months after my death, as my Personal
Representative shall determine.
2
Appendix C
ARTICLE VI.
Disposition of Residuary Estate
In the event that my spouse, *S, does not survive me by thirty (30) days, then I devise
and bequeath all my residuary estate, being all property, real and personal, tangible and
intangible, wherever situated, in which I may have any interest at the time of my death not
otherwise effectively disposed of to my children, *C1 and *C2, in equal shares, per stirpes.
(Option 1) In the event my spouse, *S, survives me by thirty (30) days, then I devise and
bequeath to *, as Trustee, in trust for the benefit of *S, an amount sufficient to prevent any
period of ineligibility for Medicaid for *S based on the statutory rights of a spouse to elect to
Take Against the Will of a deceased spouse as set forth in Indiana Code §29-1-3, or any
successor section, and also based on the Surviving Spouse Allowance as set forth in Indiana
Code §29-1-4, or any successor section. The remainder of my residuary estate shall be
distributed to my children, *C1 and *C2, in equal shares, per stirpes. The property held in trust
for my spouse shall be administered in accordance with the following terms and conditions:
(Option 2) In the event my spouse, *S, survives me by thirty (30) days, then I devise and
bequeath all my residuary estate to *TE as Trustee, in trust for my spouse. Such property shall
be administered in accordance with the following terms and conditions:
A. Payments of Net Income and Principal.
The Trustee may, after taking into consideration all other forms of income and property
of my spouse from any source, pay to or for the benefit of my spouse, at any time and from time
to time, so much of the net income of the trust estate and so much of the principal of such trust
estate as the Trustee, in the Trustee’s sole discretion, deems advisable to meet *his/her needs for
reasonable comfort and welfare and to protect *his/her legal rights. These expenditures may be
made even to the point of exhaustion of the Trust assets as the Trustee may determine. However,
3
Appendix C
in making any such distributions, the Trustee shall consider the effect of such distributions on
any public benefit which *S may be eligible to receive, and shall make such distributions in a
manner that will supplement and not reduce such benefits. Any net income not so distributed
shall be incorporated into the principal of the trust estate.
B. Distribution Upon *S’s Death.
Upon *S’s death, the Trustee shall pay the expenses of my spouse’s funeral and expenses
of wrapping up *his/her affairs as the Trustee, in the Trustee’s sole and absolute discretion,
deems necessary, taking into account my spouse’s probate assets and all other sources of
payment. The Trustee shall then, as soon as practicable, terminate the Trust and distribute the
remaining trust assets to my children, *C1 and *C2, in equal shares, per stirpes.
C. Spendthrift Clause.
No interest under the Trust created in this Will shall be transferable or assignable by any
beneficiary, or be subject during a beneficiary’s life to the claims of *his/her creditors, including
alimony claims. If any attempt should be made by any creditor of a beneficiary to reach any
rights, benefits or interests of a beneficiary, the Trustee may apply the income or principal to
which the beneficiary would otherwise be entitled, as the Trustee, in the Trustee’s sole
discretion, shall determine.
D. Payments.
During the administration of the Trust, the Trustee may pay, transfer, or assign income or
principal in any one or more of the following ways: (1) directly to a beneficiary; (2) to the
guardian of the person or of the property of a beneficiary during the incapacity of a beneficiary;
or, (3) by expending such income or principal directly to a provider of goods or services for the
reasonable comfort, welfare and protection of the legal rights of a beneficiary.
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Appendix C
E. Governing Law.
validity and effect shall be determined by the laws of the State of Indiana.
F. Failure of Trust Purpose.
If the Trustee determines, after consultation with legal counsel, that because of a change
in the law the existence of this Trust or any benefits provided hereunder will disqualify *S from
any necessary payments (as determined by the Trustee), benefits or services from any
government program so as to frustrate the purpose of this Trust to be a supplemental source of
assistance to *S, and an amendment to the Trust would, in the opinion of legal counsel, enable
the purpose of the Trust to be substantially carried out, then the Trustee may amend the Trust. If,
in the opinion of counsel, the trust purpose cannot be substantially carried out by amending the
Trust, then the Trustee may prematurely terminate this Trust and distribute the assets pursuant to
Paragraph B of this Article VI.
In the event the spendthrift provisions of this Trust, as they apply to *S, are not enforced
by order or determination of a Court, then the Trustee may prematurely terminate this Trust and
distribute the assets pursuant to Paragraph B of this Article VI. If the existence of this Trust or
any benefits provided hereunder as determined by order of a Court should disqualify *S from
necessary payments, benefits or services from government programs, the Trustee shall consult
with legal counsel and any other appropriate professionals or organizations concerning the
continued existence of the Trust, and then may, in the Trustee’s sole and absolute discretion,
terminate this Trust and distribute all of the assets pursuant to Paragraph B of this Article VI.
G. Trustee’s Compensation.
Any Trustee shall be entitled to reasonable compensation for services in administering
and distributing the trust property and to reimbursement for expenses.
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Appendix C
H. Succession of Trustee.
In the event that *TE is unable or unwilling to serve as Trustee, then * is designated as
Successor Trustee.
ARTICLE VII.
Uniform Transfers to Minors
If any beneficiary receiving property under this instrument is under the age of twenty-one
(21) years, then I direct my Personal Representative to distribute that beneficiary’s property to a
proper custodian under the Indiana Uniform Transfers or Gifts to Minors Act of the state in
which they are domiciled.
ARTICLE VIII.
Powers of the Trustee
The Trustee and any Successor Trustee shall have all powers enumerated under the
necessity of court approval as the Trustee, in the Trustee’s sole discretion, determines to be in the
best interests of the beneficiaries. Said powers are to be construed in the broadest possible
manner and shall include the following, and shall pertain to both principal and income, but shall
in no way be limited thereto:
A. Retain Property.
To retain any property received from my estate without liability for loss due to lack of
diversification or non-productivity.
B. Investments.
6
Appendix C
C. Sale of Trust Assets.
D. Actions with Regard to Trust Assets.
property; to collect, pay, contest, compromise, or abandon demands of or against the trust estate,
wherever situated; and to execute contracts, notes, conveyances, and other instruments, including
instruments containing covenants and warranties binding upon and creating a charge against the
trust estate.
ARTICLE IX.
Personal Representative
I hereby appoint *PR as Personal Representative of this my Last Will and Testament. I
request that my Personal Representative serve without posting bond, or if bond be required of my
Personal Representative, that a minimum bond be requested. In the event that *PR dies, resigns,
fails to qualify, or is unable or unwilling to act, I appoint *PR2 as Personal Representative of my
estate under the same terms.
My Personal Representative with respect to my estate shall have all powers enumerated
and granted to a Personal Representative under the Indiana Code, including the power to petition
for and administer my estate without Court supervision, and any other power that may be granted
by law, to be exercised without the necessity of Court approval, as my Personal Representative
determines to be in the best interests of the beneficiaries.
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Appendix C
IN TESTIMONY WHEREOF, I have subscribed my name to this my Last Will and
Testament, consisting of * (*) typewritten pages, including this page and the page containing the
self-proving clause, all in the presence of the persons witnessing it at my request on this
day of *, 2022, at Indianapolis, Indiana.
*X
Testator
This instrument, consisting of * (*) typewritten pages, was signed, published, and
declared by *X, the Testator, to be his Last Will and Testament, in our presence. We then in his
presence, and in the presence of each other, signed our names as witnesses to the same this
day of *, 2022.
8555 N. River Road, Suite 420

WITNESS Signature Address
*Robert W. Fechtman Indianapolis, Indiana 46240

WITNESS Printed City, State, Zip Code
8555 N. River Road, Suite 420

WITNESS Signature Address
*Melissa A. Mullen Indianapolis, Indiana 46240

WITNESS Printed City, State, Zip Code
8
Appendix C
ATTESTATION FOR SELF-PROVEN

LAST WILL AND TESTAMENT OF
*X
Comes now *X, Testator, and *Robert W. Fechtman and *Melissa A. Mullen, the
subscribing witnesses herein, who hereby declare under the penalties of perjury that we have
signed and executed this instrument designated as the Last Will and Testament of *X.
1. That the Testator executed the instrument as the Testator’s Will.
2. That, in the presence of both witnesses, the Testator signed or acknowledged the
signature already made or directed another to sign for the Testator in the Testator’s presence.
3. That the Testator executed the Will as a free and voluntary act for the purposes
expressed in it.
4. That each of the witnesses, in the presence of the Testator and of each other,
signed the Will as witnesses.
5. That the Testator was of sound mind when the Will was executed.
6. That to the best knowledge of each of the witnesses the Testator was, at the time
the Will was executed, eighteen (18) years or more of age.
All of which is attested to this day of *, 2022.
*X WITNESS
Testator
WITNESS
9
Appendix D
*X FAMILY TRUST AGREEMENT
Appendix D
Trust Funding ............................................................................................................................... 1
Revocability ................................................................................................................................... 2
A. Reservation of Power to Revoke. ...................................................................................................... 2
B. Trust Becomes Irrevocable. .............................................................................................................. 2
Determination of Incapacity ........................................................................................................ 3
Designation of Beneficiaries ......................................................................................................... 3
Special Administrative Provisions ............................................................................................... 3

A. Investment of Assets. ........................................................................................................................ 4
B. Net Income. ....................................................................................................................................... 4
C. Principal Payments. ........................................................................................................................... 4
D. Partial Distribution at Age Twenty-Five (25). .................................................................................. 5
E. Partial Distribution at Age Thirty (30). ............................................................................................. 5
F. Total Distribution at Age Thirty-Five (35). ...................................................................................... 5
G. Reaching Distribution Age Before Funding. .................................................................................... 5
H. Disabled Beneficiary. ........................................................................................................................ 5
I. Predeceased Beneficiary. .................................................................................................................. 6
J. Annual Accounting. .......................................................................................................................... 8
Spendthrift Provision ................................................................................................................... 8
General Administrative Provisions ............................................................................................. 9

A. Governing Law. ................................................................................................................................ 9
B. Method of Payment. .......................................................................................................................... 9
C. Waiver of Bond. ................................................................................................................................ 9
D. Compensation.................................................................................................................................... 9
E. Income Tax. ...................................................................................................................................... 9
F. Power to Delegate Responsibility. .................................................................................................. 10
Trustee Powers ............................................................................................................................ 10
A. Power to Invest................................................................................................................................ 11
B. Power to Sell. .................................................................................................................................. 11
C. Power to Conserve Trust Estate. ..................................................................................................... 11
D. Power to Invest in Non-Income Producing Property. ..................................................................... 11
E. Power to Take All Actions Necessary. ........................................................................................... 11
Succession of Trustees ................................................................................................................ 12
A. Succession of Trustees. ................................................................................................................... 12
B. Resignation of Trustee. ................................................................................................................... 12
C. Removal of Trustee. ........................................................................................................................ 12
D. Accounts Rendered and Accepted. ................................................................................................. 13
SCHEDULE A............................................................................................................................. 14
SCHEDULE B ............................................................................................................................. 15
ii
Appendix D
iii
Appendix D
THIS AGREEMENT is entered into this * day of *, 2022, by and *among/between
*Grantor1 and *Grantor2 of * County, Indiana (“Grantors and Trustee”). Whenever the term
“Trustee” is used in this document, it shall apply equally to any “Successor Trustee”
“Co-Trustees” or remaining “Co-Trustee.” Whenever used herein, the term “Grantor” will have
the same meaning as the term “Settlor” as defined in the Indiana Code section 30-4-1-2, or its
successor section.
WITNESSETH THAT;
WHEREAS, the Grantors wish to deliver to the Trustee certain property to be held in
trust for the use and purposes and upon the terms and conditions hereinafter set forth; and,
NOW THEREFORE, in consideration of the promise and mutual covenants herein
contained and other valuable consideration, the parties do hereby agree as follows:
ARTICLE I.
Trust Funding
The Grantors have delivered to the Trustee, the property described in Schedule A. Such
property and any other property that may be received by the Trustee as additions to this Trust
(including any property devised by the Wills of the Grantors or any family member or friend of
the family, or the proceeds of life insurance policies as listed on Schedule B) shall be held and
disposed of by the Trustee on the terms stated in this Agreement.

Appendix D
ARTICLE II.
Revocability
A. Reservation of Power to Revoke.
The Grantors expressly reserve the power (subject only to the prior payment of the
Trustee’s commissions and other expenses in respect thereof) at any time and from time to time
during the lives of the Grantors, by a notice in writing filed with the Trustee at least thirty (30)
days prior to the effective date thereof:
1. Power to Withdraw. To withdraw any or all of the trust estate free of the provisions of
this Agreement; and,
2. Power to Amend. To alter, amend, or revoke this Agreement. However, the duties,
responsibilities, and rate of compensation of the Trustee, as herein provided, shall not be
altered or modified by any such amendment without the written consent of the Trustee.
B. Trust Becomes Irrevocable.
This Trust, or a part hereof, shall become irrevocable upon the occurrence of any of the
following events:
1. The incapacity of both of the Grantors, but the Trust shall be irrevocable only for the
period of such incapacity.
2. The death of both of the Grantors.
3. By the subsequent written declaration of both of the Grantors, or the surviving
Grantor, or the subsequent written declaration of the duly appointed agent(s) of both
of the Grantors, or the surviving Grantor, that the Trust is irrevocable.
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Appendix D
ARTICLE III.
Determination of Incapacity
The mental and physical capacities of the Grantors and any Trustee are important factors
in the administration of this Trust, and for purposes of this Agreement, any incapacity shall be
determined by the Grantor’s or a Trustee’s treating physician. The standard a physician shall use
to determine whether the Grantor or a Trustee is incapacitated is whether the Grantor or a
Trustee lacks the physical or mental capabilities to manage his or her own business or financial
affairs. All references to incapacity in this Agreement shall be based on this standard.
ARTICLE IV.
Designation of Beneficiaries
The beneficiaries of this Trust are *, * and any children of the Grantors born or adopted
after the date of the execution of this document. The beneficiaries of this Trust may also include
issue of *, *, *, and issue of any children of the Grantors born or adopted after the date of the
execution of this document, if any issue of the Grantors predeceased the Grantors, or if any issue
of the Grantors subsequently dies and this Trust is designated to receive funds that have been
held in trust for such deceased issue.
ARTICLE V.
Special Administrative Provisions
If the Trustee receives any funds that have not been designated for the benefit of
particular beneficiaries of this Trust, then the Trustee shall divide such funds into separate shares
for the children of the Grantors, equally, per stirpes, and the Trustee shall hold each beneficiary’s
share in trust pursuant to the terms and conditions herein. If the Trustee receives any funds that
3
Appendix D
have been designated for the benefit of particular beneficiaries of this Trust, then the Trustee
shall divide such funds into separate shares according to such designation, or the Trustee shall
add such funds to the separate shares already being held for the benefit of such beneficiaries, and
the Trustee shall hold each beneficiary’s share in trust pursuant to the terms and conditions
herein.
A. Investment of Assets.
The Trustee shall invest and reinvest the trust assets, collect the income therefrom and
pay the expenses thereof.
B. Net Income.
The Trustee may pay to or for the benefit of the beneficiary of a share under the age of
*twenty-one (21) years, at any time and from time to time, so much of the net income of the trust
estate of a share as the Trustee deems advisable for the support, maintenance, health and
education (including but not limited to college, graduate and professional education) of such
beneficiary. The educational expenses shall include tuition, books, student fees, room and board
and reasonable spending money incident to obtaining the education as determined by the sole
discretion of the Trustee. Any net income not so distributed shall be incorporated into the
principal of the trust estate of the share.
Once the beneficiary of a share reaches the age of twenty-one (21) years, the Trustee
shall pay to or for the benefit of such beneficiary all of the net income in quarterly (or other
mutually convenient) installments.
C. Principal Payments.
The Trustee may invade the principal of each share of the trust estate from time to time as
the Trustee, in the Trustee’s sole discretion, deems necessary in view of the present needs and
4
Appendix D
future welfare, in case of illness, accident or emergency of the beneficiary of such share, or in
furthering the beneficiary’s education.
D. Partial Distribution at Age Twenty-Five (25).
When the beneficiary of a share reaches the age of twenty-five (25) years, the Trustee
shall distribute one-third (1/3) of the trust estate of such share existing on such birth date to such
beneficiary.
E. Partial Distribution at Age Thirty (30).
When the beneficiary of a share reaches the age of thirty (30) years, the Trustee shall
distribute one-half (1/2) of the trust estate of such share existing on such birth date to such
beneficiary.
F. Total Distribution at Age Thirty-Five (35).
When the beneficiary of a share reaches the age of thirty-five (35) years, the Trustee shall
terminate that share of the Trust and, as soon as practicable, distribute the remaining principal of
the trust estate of such share and any undistributed income to such beneficiary.
G. Reaching Distribution Age Before Funding.
In the event that a beneficiary reaches the age of twenty-five (25), thirty (30), or thirty-
five (35) years before the funding of the Trust, then upon such funding, the Trustee shall, as soon
as practicable, distribute one-third (1/3), two-thirds (2/3) or all of the trust estate of such share to
such beneficiary.
H. Disabled Beneficiary.
Notwithstanding anything to the contrary contained herein, if a beneficiary of a share is
or becomes disabled according to Social Security criteria, during the period of such disability,
the Trustee shall not administer such share according to the terms of Paragraphs A through G of
5
Appendix D
this Error! Reference source not found., but instead shall administer such share as a special
needs trust, as follows:
Except as limited herein, the Trustee, in the Trustee’s sole and absolute discretion, may
spend for the benefit of such beneficiary of a share, or indefinitely retain the income and
principal of such share. The Trustee, in making any distribution to or for the benefit of such
beneficiary of a share, shall consider the advisability of making such distribution in light of the
amount to which the beneficiary may be entitled from any governmental agency, including but
not limited to Social Security Administration benefits, TRICARE benefits, Medicaid (medical
assistance), and Supplemental Security Income (SSI) benefits. The Trustee shall not supplant
services, assistance and medical care available to such beneficiary of a share from any such
source, unless the Trustee, in the Trustee’s sole discretion, determines that the benefits to such
beneficiary of the services, assistance, and medical care available through such programs are
outweighed by the burdens imposed on such beneficiary by such programs, and that such
beneficiary’s long-term interest will best be served by other means. The Trustee may employ
I. Predeceased Beneficiary.
In the event that a beneficiary dies prior to attaining the age of * (*) years, the Trustee
shall pay such funeral and burial expenses for such beneficiary as the Trustee, in the Trustee’s
sole and absolute discretion, determines to be necessary, taking into account such beneficiary’s
probate estate and all other sources of payment. The Trustee shall then distribute the remaining
trust estate and any undistributed income of such share as follows:
If such beneficiary has issue surviving, the Trustee shall terminate such share of this
6
Appendix D
Trust and distribute the principal and any accumulated income to such deceased beneficiary’s
children in equal shares, per stirpes. Provided, however, that if any such surviving issue is under
the age of * (*) years, then such issue’s share of this trust shall continue to be held in trust, for
the benefit of such issue pursuant to the terms and conditions of this Article; or
If such beneficiary dies without issue surviving, the Trustee shall terminate such share of
this Trust and distribute the principal and any accumulated income to the siblings of such
beneficiary, including * and any children of the Grantors born or adopted after the date of the
execution of this document, in equal shares, per stirpes. Provided, however, that any amount
being distributed to other beneficiaries of this * Family Trust Agreement shall stay in this Trust
and be added to the existing shares of such beneficiaries, and any amount for * shall be
distributed to the Trustee of the Trust for the Benefit of *, dated *, 2022, as now written or
hereafter amended, in trust. Such property shall be held, managed and distributed pursuant to the
terms of such Trust. If for any reason such Trust is not in existence at the time of the event of
this distribution, or if this distribution is not or cannot be effective in accordance with the terms
hereof, then the Trustee shall hold, administer and distribute the trust property according to the
terms of such Trust, and, for that purpose such Trust is hereby incorporated, as now written or
hereafter amended, by reference, into this Trust.
Provided, however, if there remain no beneficiaries of this * Family Trust Agreement and
* also predeceases the event of this distribution without issue surviving, then the Trustee shall
distribute and convey the entire amount of the trust property and accumulated income then
remaining to *Grantor1 and *Grantor2, or the survivor of them. If *Grantor1 and *Grantor2
both predecease the event of this distribution, then the entire amount of the trust property and
accumulated income then remaining shall be distributed to *.
7
Appendix D
If any beneficiary receiving property hereunder is under the age of twenty-one (21) years,
then the Trustee shall distribute such beneficiary’s share of the net income or other trust property
to a suitable custodian under the Uniform Gifts or Transfers to Minors Act of the state in which
they are domiciled.
J. Annual Accounting.
The Trustee shall render an annual accounting and statement of accounts to the
beneficiaries or their legal guardian(s), if any, and the Grantors, if then living. The Trustee is
relieved from any requirement as to routine court accountings that may now or may hereafter be
required by the statutes in force in any jurisdiction, although the Trustee is not precluded from
obtaining judicial approval of the Trustee’s accounts.
ARTICLE VII.
Spendthrift Provision
dependent upon the beneficiary in such manner as the Trustee, in the Trustee’s sole discretion
shall determine.
8
Appendix D
ARTICLE XI.
General Administrative Provisions
A. Governing Law.
The Trustee may pay, transfer, or assign income or principal in any one or more of the
following ways: (1) directly to a beneficiary; (2) to the guardian of the person or of the property
of a beneficiary during the incapacity of a beneficiary; or, (3) by expending such income or
principal directly to a provider of goods or services, or (4) to a suitable custodian under the
Uniform Transfers or Gifts to Minors Act.
C. Waiver of Bond.
To the extent that any such requirements can be legally waived, no Trustee shall ever be
required to give any bond as Trustee, to qualify before, or be appointed by any Court, or to
obtain the order of approval of any Court in the exercise of any power of discretion hereunder,
although the Trustee may do so at that Trustee’s discretion.
D. Compensation.
and distributing the Trust and to reimbursement for expenses.
E. Income Tax.
The Trustee shall be responsible for the timely filing of all income tax returns required to
be filed by the Trust and shall make estimated tax payments if such payments are due. If, in
9
Appendix D
good faith, the Trustee incorrectly estimates such payments and as a result the Trust incurs added
interest or penalties, the Trustee shall be exonerated.
F. Power to Delegate Responsibility.
One Co-Trustee may delegate to the other Co-Trustee responsibility for routine
transactions such as receiving and endorsing income checks and drafts, investing or reinvesting
trust assets, and payment of the bills of a beneficiary, and the delegating Co-Trustee shall be
relieved of any responsibility with respect to the exercise of such rights and powers during the
period of the delegation. Major changes in investment strategy or major expenditures for items
that are discretionary in nature, however, whenever possible, shall be done after consultation of
one Co-Trustee with the other and with the consent of both Co-Trustees.
ARTICLE XII.
Trustee Powers
the best interest of the beneficiary. No person who deals with the Trustee shall be required to
inquire into the propriety of any of the Trustee’s actions, nor shall any person, except as provided
herein, who transfers money or other property to the Trustee be required to see to the application
of such money or property. The powers granted herein are to be construed in the broadest
possible manner and shall include the following, and shall pertain to both principal and income,
but shall in no way be limited thereto:
10
Appendix D
A. Power to Invest.
B. Power to Sell.
C. Power to Conserve Trust Estate.
property; to collect, pay, contest, compromise, or abandon demands or claims belonging to or
held against the trust estate, wherever situated; and to execute contracts, notes, conveyances, and
other instruments, including instruments containing covenants and warranties binding upon and
creating a charge against the trust estate.
D. Power to Invest in Non-Income Producing Property.
such investment appears prudent and is in the best interest of the beneficiary.
said property.
11
Appendix D
ARTICLE XIII.
Succession of Trustees
A. Succession of Trustees.
[OPTION 1]If *Trustee resigns, dies, or is determined to be incapacitated, then * is
designated as Successor Trustee. In the event that * resigns, dies, is removed or is determined to
be incapacitated, then * is designated as Second Successor Trustee.
[OPTION 2]If one Co-Trustee resigns, dies, or is determined to be incapacitated, then the
remaining Co-Trustee shall continue to serve as the sole Trustee. If both Co-Trustees resign, die,
or become incapacitated, then * is designated as Successor Trustee. In the event that * resigns,
dies, is removed or is determined to be incapacitated, then * is designated as Second Successor
Trustee.
B. Resignation of Trustee.
of the resignation, to the Successor Trustee, and to the Grantors, or surviving Grantor. If there
remains no Trustee of this Trust, then *Ben or any interested party on his behalf may petition a
Court of competent jurisdiction to appoint a Successor Trustee.
C. Removal of Trustee.
The Grantors, or surviving Grantor, may remove the Trustee, or any Successor Trustee, at
any time without cause, by giving written notice and a reasonable period of time not to exceed
sixty (60) days for the existing Trustee to transfer assets and complete the technical mechanics
involved in transfer.
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Appendix D
D. Accounts Rendered and Accepted.
Any Successor Trustee may accept, without examination or review, the accounts
rendered and the property delivered by or for a predecessor Trustee, without incurring any
liability or responsibility for so doing.
IN WITNESS WHEREOF, the parties have executed this Trust Agreement on the day
and year first written above.
*Grantor1 *Grantor2
Grantor and Co-Trustee Grantor and Co-Trustee
13
Appendix D
SCHEDULE A
14
Appendix D
SCHEDULE B
15
Appendix E
*(CLIENT) SETTLEMENT PRESERVATION TRUST
WITH SPECIAL NEEDS TRUST PROVISIONS (SAMPLE LANGUAGE)
Language regarding separation into two separate trusts:
1.1. SEPARATE SUBTRUSTS - This Trust shall be divided into two (2)
separate subtrusts. The first subtrust shall be a Settlement Preservation Trust. The second
subtrust shall be a Special Needs Trust. The first subtrust shall be identified as the “Settlement
Preservation Trust” or “Settlement Preservation Subtrust.” The second subtrust shall be
identified as the “Special Needs Trust” or “Special Needs Subtrust.”
1.2. INTENTION
1.2.1. Public Benefits Eligibility - At the time this Trust is established, it
is uncertain as to whether *BFN will ever require means-tested public benefits. So long as
*BFN is not otherwise eligible for means-tested public benefits, it is intended that the Trustee
shall retain the trust assets in the Settlement Preservation Trust. If, in the future, *BFN becomes
or may become eligible for means-tested public benefits but for the assets contained in the
Settlement Preservation Trust, it is intended that the Trustee shall distribute assets from the
Settlement Preservation Trust to the Special Needs Trust.
If *BFN is eligible for means-tested public benefits, it is intended that *BFN receive all
government entitlements to which *BFN would otherwise be entitled, but for the existence of
this Trust and distributions hereunder. In view of the vast costs involved in caring for a disabled
person, a direct distribution would be rapidly dissipated. The purpose of the Trust is to permit
the use of trust assets to supplement, and not to supplant any benefits or assistance of any Federal
or State governmental entity for which *BFN may be eligible or which *BFN may be receiving.
Appendix E
Trust funds shall not be expended on routine support obligations for which *BFN’s parents are
liable under applicable State law.
All provisions of the Special Needs Subtrust are intended to be construed and interpreted
such that this Trust Agreement meets the requirements of 42 U.S.C. §1396p(d)(4)(A), as
amended on August 10, 1993, by the Omnibus Budget Reconciliation Act of 1993, Pub. L. No.
103-66, and subsequent regulations duly promulgated in compliance with the Federal and State
enabling statutes and regulations and guidelines including the Social Security Administration’s
Program Operations Manual (“POMS”), e.g. SI 01120.201, SI 01120.203B and SI 01120.203D
and and 42 U.S.C. §1382a; 20 C.F.R. §416.1100, 1121, 1141 et seq.
Language regarding allocation between separate trusts and distributions from those trusts:
SECTION 2. SETTLEMENT PRESERVATION TRUST
2.1. DISTRIBUTIONS - During *BFN’s lifetime:
2.1.1. Income - The Trustee may, at its sole, absolute and unfettered
discretion, pay to *BFN or apply for the benefit of *BFN so much of the income which, in the
Trustee’s discretion, is necessary for the health, education, maintenance, support and welfare of
*BFN.
2.1.2. Principal - The Trustee may, at its sole, absolute and unfettered
discretion, pay to *BFN or apply for the benefit of *BFN so much of the principal which, in the
Trustee’s discretion, is necessary for the health, education, maintenance, support and welfare of
*BFN.
2.2. WITHDRAWAL RIGHTS - *BFN shall have the right to withdraw
principal from the trust upon attaining the age of thirty (30) years.
2
Appendix E
2.3. DISTRIBUTION TO SPECIAL NEEDS SUBTRUST - The Trustee may
distribute the remaining principal, and accrued income if any, in the Settlement Preservation
Subtrust to the Special Needs Subtrust. The decision to distribute funds rests solely in the
discretion of the Trustee. The Trustee is encouraged to seek the opinion of legal counsel when
making decisions under this provision and may rely on such opinion without liability.
SECTION 3. SPECIAL NEEDS TRUST
3.1. DISTRIBUTIONS DURING BENEFICIARY’S LIFETIME
3.1.1. Discretionary Distributions - Except as limited herein, the Trustee
may spend or indefinitely retain the income and principal of this Trust, subject to the mandatory
distribution upon termination of this Trust. Any net income not so disbursed shall be added to
the principal of the Trust. The Trustee, in determining whether to make any distribution to or for
the benefit of *BFN, shall consider the advisability of making such distribution in light of the
amount to which he may be entitled from any insurance program or governmental agency,
including but not limited to TRICARE benefits, Medicaid (medical assistance), or Supplemental
Security Income (SSI) benefits. The Trustee shall not supplant services, assistance and medical
care available to *BFN from any such source, unless the Trustee, in the Trustee’s sole discretion,
determines that the benefits to *BFN of the services, assistance, and medical care available
through such programs are outweighed by the burdens imposed on *BFN by the programs, and
that *BFN’s long-term interest will best be served by other means. The Trustee may employ
In the event the Trustee is requested to release any part of the trust estate to *BFN, or
*BFN’s guardian, to pay for expenses that are otherwise paid for by public assistance programs
3
Appendix E
for which *BFN is eligible, or to petition the Court, or any administrative agency, for the release
of any part of the trust estate for such purpose, then the Trustee is authorized to deny such
request. The Trustee is further authorized, in the Trustee’s sole, absolute, complete and
unfettered discretion, to take whatever administrative or judicial steps the Trustee deems
necessary to continue *BFN’s public assistance program eligibility. However, it is not required
to maintain such eligibility, if it is not in *BFN’s best interest to do so. The Trustee’s discretion
to determine the use of the Trust funds should not be replaced by any other party’s, including any
court, administrative agency or other person, except as provided for otherwise herein. The
Trustee’s discretion should not be tested by any other person’s standard of reasonableness, but
should be based solely on what is reasonable for *BFN given his special circumstances.
Language regarding termination of the trusts and possible Medicaid reimbursement:
3.1. TERMINATION
3.1.1. Termination During Beneficiary’s Lifetime – The Trustee may
terminate this Trust during the lifetime of *BFN, if *BFN is no longer disabled or otherwise
becomes ineligible for Supplemental Security Income (SSI) and Medicaid, or when the Trust
fund no longer contains enough assets to justify its continued administration.
Upon early termination, the Trustee is to pay prior to reimbursement of medical
assistance to the State(s):
(i) all taxes due from the Trust to the State(s) or Federal Government due to
the termination of the Trust, and
(ii) reasonable fees and administrative expenses associated with the

termination of the trust.
4
Appendix E
Other than payment of the taxes, fees, and expenses listed above, the Trustee shall pay
the State(s), as primary assignee, all amounts remaining in the Trust at the time of termination up
to an amount equal to the total amount of medical assistance paid on behalf of *BFN under the
State Medicaid Plan(s). After payment of the aforementioned taxes, fees, expenses, and
reimbursement of medical assistance, the Trustee shall pay any remaining trust assets to *BFN.
No entity other than the Trust beneficiary may benefit from the early termination after
payment of taxes and administrative expenses outlined above and after reimbursement to the
State(s).
3.1.2. Termination at Beneficiary’s Death
3.1.2.1. Taxes and Expenses - The Trustee may pay all federal
and state taxes due because of the death of *BFN and any administrative expenses and costs
attendant to terminating or settling this Trust, including legal fees and any costs or fees
associated with the preparation of final accountings or making any distributions provided for
herein. Such taxes, administrative expenses and costs attendant to terminating or settling this
Trust shall be paid first out of the Trust’s income and then out of principal.
3.1.2.2. Reimbursement for Medical Assistance - If the Special
Needs Trust has been funded:
3.1.2.2.1. State Reimbursement - Upon the death of
*BFN, notice shall be provided to the State Medicaid Agency. The State shall receive all monies
and assets remaining in the Trust upon the death of *BFN, after payment of administration
expenses and taxes, up to an amount equal to the total medical assistance paid on behalf of *BFN
under the State plan.
5
Appendix E
The Trustee is directed to obtain a payoff statement from the State Medicaid Agency and
carefully to review the statement for accuracy. The Trustee is encouraged to obtain professional
help to review the detailed statement and verify the services, costs, and accuracy of the amounts
listed as owing. The cost of such professional help shall be paid from the Trust assets as an
administrative expense.
3.1.2.2.2. Multiple State Reimbursement - If *BFN
has received medical assistance from more than one state, each state that provided medical
assistance shall be repaid. If the Trust has insufficient assets to repay all medical assistance
benefits received, then each state shall be paid its proportionate share of the remaining Trust
assets.
SECTION 4. RESIDUARY TRUST ESTATE - After repayment to Medicaid, if
required, as provided in the subsection above entitled "Reimbursement for Medical Assistance,"
any remaining principal and income of the Settlement Preservation Trust and the Special Needs
Trust shall be distributed as follows:
4.1. ASSISTANCE TO *BFN’S ESTATE
4.1.1. Specific Bequests, Funeral and Administration Expenses - To the
extent that *BFN’s probate estate is insufficient to satisfy all specific bequests under *BFN’s
Will; the expenses of *BFN’s last illness, funeral and burial; legally enforceable claims against
her or her estate; any estate, inheritance or other death taxes, including any interest and penalties
with respect to those taxes not caused by negligent delay, payable to any federal, state or foreign
taxing authority; any statutory or Court ordered allowances for qualifying family members; and
the costs and expenses of administration of *BFN’s estate, the Trustee is authorized, in its sole
6
Appendix E
and absolute discretion, to direct the use of assets from *BFN’s residuary trust estate for such
purposes either directly by making such payments or by paying such amounts to her Executor.
4.2. POWER OF APPOINTMENT - Thereafter, the Trustee shall distribute the
remaining Trust Estate to such persons, in such amounts, and upon such terms and conditions as
*BFN shall appoint under the terms of his Last Will and Testament, making specific reference to
this power. However, this power of appointment shall not be exercisable in favor of Beneficiary,
Beneficiary’s estate, Beneficiary’s creditors, or the creditors of Beneficiary’s estate.
4.3. FAILURE TO EXERCISE POWER OF APPOINTMENT - If *BFN has
not validly exercised this power to appoint by Will, the remaining principal and accrued income,
if any, shall be distributed under the Intestacy Laws of the State in which Beneficiary resides at
the time of her death.
7
Section
Six
CREDITORS’ CLAIM ENFORCEMENT
AGAINST DECEDENTS’ PROPERTY
April 27, 2022
Jeff R. Hawkins
Hawkins Elder Law
999 North Section Street
Post Office Box 382
Sullivan, Indiana 47882-0382
Tel: 812-268-8777
Fax: 812-268-8838
Email: jeff@hawkinselderlaw.com
Web: www.HawkinsElderLaw.com
PART 1. INTRODUCTION
1.1. Purpose
This outline has three informational objectives to help readers understand the relative rights a
deceased debtor’s creditors versus the people entitled to receive the deceased debtor’s assets:
(1) the two principal doctrines governing how ownership of the decedent’s assets passes after
the decedent’s death;
(2) the procedural requirements for a creditor to assert election claims against the deceased
debtor’s assets; and
(3) some of the strategies that probate lawyers may use to defend the decedent’s beneficiaries
against claims of the decedent’s creditors.
The author intends this outline to present a balance between plaintiffs’ and defendants’
perspectives. However, the pursuit of that balance required the author to philosophically extend
beyond a principally defendant-centric outlook from three decades of helping people transfer
wealth to their families and helping the families receive and protect the wealth transfers. Although
a few plaintiffs’ cases have influenced the author’s perspectives, those influences are admittedly
nominal.
1.2. Threshold Questions About a Decedent’s Assets

A January 1951 Saturday Evening Post story by reporter Robert M. Yoder featured this description
of the reporter’s interview with bank robber Willie Sutton: 1
Someone once asked Slick Willie Sutton, the bank robber, why he robbed banks. The question
might have uncovered a tale of injustice and lifelong revenge. Maybe a banker foreclosed on
the old homestead, maybe a banker’s daughter spurned Sutton for another.
1
1951 January 20, The Saturday Evening Post, Volume 223, Issue 30, Someday They’ll Get Slick Willie Sutton by
Robert M. Yoder, P. 17
Sutton looked a little surprised, as if he had been asked “Why does a smoker light a cigarette?”
“I rob banks because that’s where the money is,” he said, obviously meaning “in the most
compact form.” That eye for the simple essential may be the secret of a singular success.
Whether a lawyer is pursuing or defending a decedent’s assets in claims proceedings, success

requires a procedural awareness of how, when, and where assets flow from the decedent’s cold
grasp.
1.3. Two Major Channels Passing Decedents’ Assets

A decedent’s assets generally flow through two channels to the people legally entitled to receive
the assets after the decedent’s death:
(1) the decedent’s “probate estate;” and
(2) title transfer systems that bypass the decedent’s “probate estate.”
Part 2 of this outline describes the first channel and Part 3 describes the second channel.
PART 2. CREDITORS’ CLAIMS IN DECEDENTS’ “PROBATE ESTATES”
2.1. Probate Terminology Matters – What is a Decedent’s “Estate?”

IC 29-1-14-2 2 says a claimant must “… file a succinct definite statement thereof in the office of
the clerk of the court in which the letters were issued.” Although is it a subtle distinction, a
decedent’s “estate” is not the same thing as the forum in which a claimant files a claim against a
decedent’s estate. So, the first fundamental question to evaluate the vulnerability of a decedent’s
property to claim enforcement is: “what is the decedent’s estate?”
The Probate Code’s claim enforcement procedures in IC Chapter 29-1-14 distinguish between the
estate administration proceeding in probate court and the statutorily defined concept of a
“decedent's estate.” The first sentence of IC 29-1-14-2 restricts the enforcement of most claims
2
Please note that the PDF version of this outline contains hyperlinks to online resources that are currently relevant
and publicly available without subscriptions in spring 2022. Hyperlinks to statutes link to the 2021 Indiana Code
published on the Indiana General Assembly website at http://iga.in.gov/. Although this outline's author has attempted
to indicate any statutory additions, amendments, or repeals in the General Assembly's 2022 session, hyperlinks in this
outline will not automatically update or account for any statutory additions, amendments, or repeals by the General
Assembly after 2022. Also, hyperlinks to other Indiana government resources may become similarly stale after this
outline's publication in spring 2022.
Creditors’ Claim Enforcement Against Decedents’ Property

Page 2 of 41
against a decedent or the decedent’s estate unless the claim holder files a “succinct definite
statement” of the claim “in the office of the clerk of the court in which the letters were issued.”
Notice that the above-quoted text of the first sentence of IC 29-1-14-2 does not say that the
claimant must file the claim in the “estate.” The distinction between the decedent’s “estate” and
the forum in which a personal representative administers the estate is a fundamental Probate Code
concept. The Probate Code’s “estate” definition appears in IC 29-1-1-3(a)(11), which says:
"Estate" denotes the real and personal property of the decedent or protected person, as from
time to time changed in form by sale, reinvestment, or otherwise, and augmented by any
accretions and additions thereto and substitutions therefor and diminished by any decreases
and distributions therefrom.
The Probate Code refines the estate concept further with this general rule definition of a decedent’s
“probate estate” in IC 29-1-1-3(a)(32) (with emphasis added):
"Probate Estate" denotes the property transferred at the death of a decedent under the
decedent's will or under IC 29-1-2, in the case of a decedent dying intestate.
So, what assets does the probate estate exclude? Perhaps that question’s best answer focuses on
the general rule’s exceptions. Essentially, all a decedent’s assets are part of the decedent’s probate
estate (often called “probate property”) unless state or federal law causes assets to pass outside the
probate estate (often called “nonprobate property”).
This outline describes nonprobate property in Part 3. The rest of Part 2 describes probate property
and the procedural issues concerning creditors’ claims against probate property.
2.2. Decedents’ Probate Property Title Passage

2.2.1. Immediate Title Passage
IC 29-1-7-23(a) states that title to a decedent’s probate property passes as follows (with
emphasis added):
(a) When a person dies, the person's real and personal property passes to persons to
whom it is devised by the person's last will or, in the absence of such disposition, to the
persons who succeed to the person's estate as the person's heirs; but it shall be subject to
the possession of the personal representative and to the election of the surviving spouse
and shall be chargeable with the expenses of administering the estate, the payment of other
claims and the allowances under IC 29-1-4-1, except as otherwise provided in IC 29-1.

Page 3 of 41
Similarly, the text of IC 29-1-1-3(a)(32) quoted in Section 2.1 of this outline states that title to
a decedent's probate property (real and personal) passes “at the death of” the decedent. So, if
it decedent’s probate property passes at the moment of the decedent’s death, the title passage
occurs automatically and instantaneously. The next question is: to whom does a decedent’s
probate property pass upon the decedent’s death?
2.2.2. Title Passage to Distributees

It is too much of a mouthful to say “heirs of an intestate decedent or beneficiaries of a testate
decedent's will” in this discussion. Thankfully, IC 29-1-1-3(a)(9) furnishes “distributees” as a
defined term to encompass “those persons who are entitled to the real and personal property of
a decedent under a will, under the statutes of intestate succession, or under IC 29-1-4-1.”
2.2.3. Testate Estate Title Passage Questions Concerning the Probate Estate’s Suspended
Existence
Three important questions concern the potential title passage of probate property under the
decedent’s will:
(1) If the decedent’s probate property passes to distributees automatically under the will
upon the decedent’s death, how does that happen?
(2) What are the time limits, if any, for the distributees to present the decedent’s will and
claim the probate property title passage?
(3) What can the distributees of an intestate decedent do to resolve the question of whether
the decedent died intestate?
2.2.4. Wills Must Be Admitted to Probate

IC 29-1-7-24 answers the first question of Subsection 2.2.3 with the following requirement for
the perfection of distributees entitlement to claimant a testate decedent’s probate property
under a will:
Except as provided in IC 29-1-13-2, no will is effective for the purpose of proving title to, or
the right to the possession of, any real or personal property disposed of by the will, until it
has been admitted to probate.

Page 4 of 41
IC 29-1-7-4 provides an à la carte menu of petition options that include a petition to probate a
will without petitioning for appointment of a personal representative or issuance of letters
testamentary. 3
IC 29-1-7-15.1 answers the second and third questions of Subsection 2.2.3 with rules that limit:
• the admission of a decedent’s will to probate (IC 29-1-7-15.1(a), (g), and (h)); and
• a personal representative’s power to “possess” the decedent’s real and personal

property (IC 29-1-7-15.1 (b)-(e)).
3
IC 29-1-7-4 Petitions; hearing
(a) Any interested person or a personal representative named in the will may petition the court having jurisdiction of
the administration of the decedent's estate:
(1) to have the will of such decedent, whether the same is written or is unwritten, is in his possession or not, is
lost, destroyed, or without the state, probated;
(2) for the issuance of letters testamentary to the executor named in said will for the administration of said estate;
(3) for the appointment of an administrator with the will annexed if no executor is designated in said will or if the
person so designated is not qualified, dead, or refuses to serve; or
(4) for the appointment of an administrator for the estate of any person dying intestate.
(b) A petition for probate may be combined with a petition for the issuance of letters testamentary, or as administrator
with the will annexed, and a person interested in the probate of a will and in the administration of the estate may
petition for both.
(c) No notice that a will is to be offered for probate or that it has been probated shall be required.
(d) No notice of the filing of, and hearing on, the petition described in this section shall be given to or served upon
any person. If the petition described herein is filed in term time, it shall be heard forthwith by the court, and if filed in
vacation, it shall be heard by the judge of said court if present, or in his absence by the clerk of the said court.
(e) If:
(1) an interested person petitions for the appointment of an administrator for the estate of a person dying intestate;
and
(2) a petition to dissolve the marriage of the decedent and the decedent's spouse is pending in an Indiana court or
the court of another state at the time of the decedent's death;
the court may not appoint the decedent's spouse to be the administrator of the decedent's estate.
(f) Subsection (e) does not apply to a petition for appointment of an administrator for the estate of a person dying
intestate if the application of subsection (e) is waived in an agreement signed by each person, except a person who is
incapacitated or a minor, who is eligible for a distribution from the decedent's net estate under IC 29-1-2-1. A waiver
may be submitted to the court at any time before the appointment of an administrator.

Page 5 of 41
2.2.5. Race to the Courthouse to Resolve the Probate Estate’s Suspended Existence
The following language of IC 29-1-7-15.1(a) creates a potential race to the courthouse between
proponents of a decedent’s will and people otherwise entitled to receive probate property as
the decedent’s intestate distributees under IC 29-1-2-1 (with emphasis added):
(a) When it has been determined that a decedent died intestate and letters of administration
have been issued upon the decedent's estate, no will shall be probated unless it is presented
for probate:
(1) before the court decrees final distribution of the estate; 4 or
(2) in an unsupervised estate, before a closing statement has been filed. 5
So, a decedent's estate (not estate administration) remains in a kind of suspended existence
until a court admits a decedent’s will to probate or the limit to probating a will applies under
IC 29-1-7-15.1(a).
It may surprise people other than probate lawyers that distributees sometimes delay probating
decedents’ wills for many years or decades. Although IC 29-1-7-15.1(g) appears to place time
limits on probating a decedent’s will, an exception to those time limits under IC 29-1-7-15.1(h)
permits a will to be probated if:
(1) no estate proceedings have been commenced for a decedent; and
(2) an asset of the decedent remains titled or registered in the name of the decedent.
The admission of a decedent’s will to probate under IC 29-1-7-13(a) (with or without the
appointment of a personal representative to administer the probate estate) perfects title passage
to the will’s beneficiaries, but it does not cause the title to pass. Instead, the title of a
decedent’s assets passes immediately, automatically, and without human intervention under IC
29-1-7-23(a).
4
IC 29-1-17-2
5
IC 29-1-7.5-4

Page 6 of 41
2.3. Personal Representative’s Power of Possession
2.3.1. Personal Representative’s Interception of Title Passage
A personal representative can disrupt the title passage under IC 29-1-7-23(a) because the title
passage is “subject to the possession of the personal representative…” 6 However, IC 29-1-7-
15.1(b)-(e) balances the equities of the personal representative’s power to possess the probate
property against the distributees’ entitlement to receive the probate property 7 as follows:
6
IC 29-1-7-23(a).
7
(b) No real property located in Indiana of which any person may die seized shall be sold by the executor or
administrator of the deceased person's estate to pay any debt or obligation of the deceased person, which is not a lien
of record in the county in which the real property is located or to pay any costs of administration of any decedent's
estate, unless a petition for administration is filed in court under section 5 of this chapter not later than five (5) months
after the decedent's death and the clerk issues letters testamentary or letters of administration not later than seven (7)
months after the decedent's death.
(c) If:
(1) a petitioner files a petition for administration filed in an estate to which subsection (b) may apply; and
(2) the clerk of the court does not issue letters testamentary or of administration and publish notice of the estate
administration under subsection (a) not later than thirty (30) days after the petition for administration has been
filed;
the petitioner shall serve the following notice on each creditor in the manner provided under section 7(d) of this chapter
not later than forty-five (45) days after the petition for administration has been filed:
NOTICE OF PETITION FOR ADMINISTRATION
In the _______ Court of __________ County, Indiana.
Notice is hereby given that a petition for administration was filed on the ___ day of ____, 20___, in cause
number _________________, concerning the estate of ___________, deceased, who died on the _____ day of
_______, 20___, but the clerk of the court has not issued letters testamentary or of administration.
The estate includes real property that may be subject to sale restrictions under IC 29-1-7-15.1.
All persons who have claims against this estate, whether or not now due, must file their claims in the office of
the clerk of this court not later than seventy-five (75) days after the date on which the petition for administration
was filed, or not later than thirty (30) days after the date on which the petitioner serves this notice, to prevent the
application of real property sale restrictions to the claims, whichever is later.
Dated at __________, Indiana this ____ day of ______________, 20___.
________________________________________as the Petitioner.
(d) The limitation described in subsection (b) on the sale of real property does not apply to a claim if:
(1) a petition for administration is filed in court under section 5 of this chapter not later than five (5) months after
the decedent's death;
(2) the claimant files the claim in the office of the clerk of the court not later than:
(A) seventy-five (75) days after the date on which the petition for administration was filed; or
(B) thirty (30) days after the date on which the petitioner serves the notice required in subsection (c);
whichever is later; and

Page 7 of 41
2.3.2. Personal Representative’s Distribution Deed Distractions
Illusionists and pickpockets apply their trades by distracting their target audiences from what
is really happening. Likewise, IC 29-1-7.5-3.4 distracts and deludes many Indiana lawyers into
a mistaken belief that a personal representative transfers title to the distributees in an
unsupervised estate administration by delivering a deed of distribution to distributees. 8
However, notwithstanding statute’s use of “distribution” and “distribute,” a personal
representative’s deed of distribution to the decedent’s distributees under that section does not
really “distribute” anything. Why? Because, again, the title passage only occurs under IC 29-
1-7-23(a), “subject to the possession of the personal representative.”
IC 29-1-7.5-3.4 merely provides a mechanism for the personal representative in an

unsupervised estate to waive and release to the distributees the personal representative’s
perfected power to possess and divest title.
(3) the failure of the clerk to issue letters testamentary or letters of administration not later than seven (7) months
after the decedent's death is not the result of the petitioner's failure to comply with the requirements of:
(A) this article;
(B) the Indiana Rules of Trial Procedure; or
(C) the local rules of the court.
(e) The court shall order the limitation described in subsection (b) inapplicable to a claimant's claim concerning the
sale of real property if any interested person files a motion for findings under this subsection and the court finds that
the following conditions apply:
(1) A petition for administration was filed in court under section 5 of this chapter not later than five (5) months
after the decedent's death.
(2) More than thirty (30) days have elapsed since the petition was filed.
(3) The claimant is a reasonably ascertainable creditor under section 7 of this chapter.
(4) The claimant filed a claim in the estate not later than seventy-five (75) days after the date on which the petition
for administration was filed, or not later than thirty (30) days after the date on which the petitioner serves the
notice required in subsection (c), whichever is later.
(5) The petitioner has not satisfied the provisions of subsection (c).
8
IC 29-1-7.5-3.4 Distribution of real property
Sec. 3.4. (a) This section applies to the distribution of real property by a personal representative to a devisee or
heir under this chapter.
(b) The conveyance subscribed by the personal representative under this section is sufficient to distribute all title
in the real property to the devisee or heir if the conveyance includes substantially the following language:
"A.B. is the personal representative of the estate of C.D., deceased. This estate is pending as Cause Number
___________ in __________ County, Indiana. The personal representative, by virtue of the power given a personal
representative under Indiana law, hereby distributes to E.F. the following described real estate: (insert description)."

Page 8 of 41
The corresponding provision in a supervised estate to IC 29-1-7.5-3.4 is a court’s entry of a
decree of final distribution under IC 29-1-17-2, 9 which (with emphasis added):
“shall operate as the final adjudication of the transfer of the right, title, and interest of the
decedent to the distributees therein designated; but no transfer before or after the decedent's
death by an heir or devisee shall affect the decree, nor shall the decree affect any rights so
acquired by grantees from the heirs or devisees.” 10
Note that the italicized portion of the above-quoted IC 29-1-17-2 text says the decree of final
distribution is an adjudication of transfer – not the transfer, itself. Why? Because, again, the
title passage only occurs under IC 29-1-7-23(a), “subject to the possession of the personal
representative.”
2.3.3. Refocusing on Intestate and Testate Title Passage

To refocus attention to intestate and testate title passage, let’s review IC 29-1-1-3(a)(32), which
says:
"Probate Estate" denotes the property transferred at the death of a decedent under the
decedent's will or under IC 29-1-2, in the case of a decedent dying intestate. (emphasis
added).
2.3.4. Intestate Title Passage – a Family Thing

IC Chapter 29-1-2 governs title passage of an intestate decedent’s estate. It is easy to identify
an intestate decedent's heirs if you know the family tree. the title passage depends on the
decedent’s pre-death marital status and the decedent’s proximity of genealogical relationship
to the decedent’s descendant, ancestors, or more remotely related family members.
2.3.5. Testate Title Passage – Decedent’s Will Admitted to Probate

As Subsection 2.2.3 of this outline has previously stated, a testate decedent's estate (not estate
administration) remains in a kind of suspended state of existence until someone resolves the
uncertainty. Subsection 2.2.4 of this outline has stated that IC 29-1-7-24 requires a will to be
admitted to probate before it can cause title to pass to the will’s beneficiaries and IC 29-1-7-
24 authorizes a petitioner to petition to probate a will without or without full estate
9
See especially subsections (f)-(g).
10
IC 29-1-17-2(f).

Page 9 of 41
administration. As also previously stated in Subsection 2.2.5 of this outline, IC 29-1-7-
15.1(a) explains how to resolve the uncertainty concerning an unprobated will and IC 29-1-7-
15.1(g) and (h) frame the time limits and exceptions to time limits for that determination.
2.4. Personal Representative’s Administration of a Decedent’s Probate Estate

2.4.1. Personal Representative’s Appointment
IC 29-1-10-1(a) provides the following sequence of priorities for the appointment of a personal
representative:
(1) To the executor or executors designated in a will that has been admitted to probate.
(2) To a surviving spouse who is a devisee in a will that has been admitted to probate.
(3) To a devisee in a will that has been admitted to probate.
(4) To the surviving spouse, or to the person or persons nominated by the surviving spouse
or to the surviving spouse and the person or persons nominated by the surviving spouse.
(5) To:
(A) an heir;
(B) the person or persons nominated by an heir; or
(C) an heir and the person or persons nominated by an heir.
(6) If there is not a person listed in subdivisions (1) through (5), then to any other qualified
person.
2.4.2. Personal Representative’s Fiduciary Duty to Distributees and Creditors

The Indiana Court of Appeals has issued the following guidance concerning a personal
representative’s responsibility to distributees and creditors:
• A personal representative has a fiduciary obligation to administer a decedent’s probate

estate impartially “for the benefit of and the protection of creditors and distributees.”11
• …a personal representative owes a duty to all interested parties, including the Tax
Department, to administer the estate impartially. Such personal representative is
11
Fall v. Miller, 462 N.E.2d 1059, 1061 (Ind. App. 1984).

Page 10 of 41
regarded as an officer of the court and he must look to the court or the law for his
authority in dealing with estate assets. 12
• Furthermore, the personal representative is charged with the responsibility of

preserving the estate; and, he shall not interfere with the estate entrusted to him. 13
• The personal representative has a duty to care for and conserve the assets of a decedent's
estate so that such assets are not wasted or mismanaged. 14
• Ind. Code § 29-1-16-1 provides in relevant part that a personal representative shall be
liable for any loss to the estate arising from his neglect or wrongful acts or omissions
or for any other negligent or willful act or nonfeasance in his administration of the
estate by which loss to the estate arises. Likewise, Indiana courts have held that a
personal representative who fails to use due diligence in collecting a claim due the
estate becomes personally liable for any loss caused thereby. 15
2.4.3. Personal Representative’s Management of a Decedent’s Probate Estate

Subsection 2.3.1 of this outline has already stated that title passage under IC 29-1-7-23(a) is
“subject to the possession of the personal representative.” Subsection 2.3.1 also stated that a
personal representative’s power to possess the decedent’s probate property is subject to
limitations under IC 29-1-7-15.1(b)-(e). So, the personal representative must exercise the
fiduciary responsibility to evaluate creditors’ claims filed under IC Chapter 29-1-14 and
enforce valid claims against the decedent’s probate assets.
12
Indiana Dept. of State Revenue, Inheritance Tax Div. v. Cohen's Estate, 436 N.E.2d 832 (Ind. App. 1982) (citing
State ex rel. Department of Financial Institutions v. Kaufman, 218 Ind. 74, 30 N.E.2d 978 (Ind.1941)).
13
Id, (citing Ind.Code 29-1-13-2).
14
Id, (citing Alerding v. Allison, 170 Ind. 252, 83 N.E. 1006 (Ind.1908) and Beardsley, Executor v. Marsteller, 120
Ind. 319, 22 N.E. 315 (Ind.1889)).
15
Id, (citing Condit, Executor v. Winslow, 106 Ind. 142, 5 N.E. 751 (Ind.1886)).

Page 11 of 41
2.5. Creditors’ Claims Against a Decedent’s Probate Estate
2.5.1. Governmental Claims
IC 29-1-4-1 establishes the deadlines for creditors to file claims against a decedent’s probate
estate. However, Subsection (a) excludes from the deadlines:
• “expenses of administration” and
• “claims of the United States, the state, or a subdivision of the state.”
Therefore, governmental creditors have no deadlines to file claims against a decedent’s probate
estate. However, there is a big difference between filing a claim and enforcing it. This outline
will feature circumstances when even governmental creditors must walk away empty-handed.
2.5.2. Family and Social Services Administration’s Estate Recovery Against a Deceased
Medicaid Recipient’s Probate Estate
IC 12-15-9-1 authorizes the Indiana Family and Social Services Administration (the “FSSA”)
to file a claim for reimbursement from a decedent’s estate if FSSA’s Medicaid program paid
Medicaid benefits on the decedent’s behalf after the decedent became 55 years of age. 16
IC 12-15-9-2 prohibits FSSA from enforcing claims against:
(1) Real estate of a recipient while it is necessary for the support, maintenance, or comfort
of the surviving spouse, a dependent child less than twenty-one (21) years of age, or a
dependent who is nonsupporting because of blindness or other disability.
(2) Personal property necessary for the support, maintenance, or comfort of the surviving
spouse, a dependent child less than twenty-one (21) years of age, or a dependent who is
nonsupporting because of blindness or other disability.
(3) Personal effects, ornaments, or keepsakes of the deceased.
16
IC 12-15-9-1 Amount of claim; preference
Sec. 1. Upon the death of a Medicaid recipient, the total amount of Medicaid paid on behalf of the recipient after
the recipient became fifty-five (55) years of age must be allowed as a preferred claim against the estate of the
recipient in favor of the state. The affidavit of a person designated by the secretary to administer this section is
evidence of the amount of the claim and is payable after the payment of the following in accordance with IC 29-
1-14-9:
(1) Funeral expenses for the recipient, not to exceed three hundred fifty dollars ($350).
(2) The expenses of the last illness of the recipient that are authorized or paid by the office.
(3) The expenses of administering the estate, including the attorney's fees approved by the court.

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IC 12-15-9-0.5 establishes a broad definition of “estate” that includes a decedent’s probate
estate and a decedent’s nonprobate property. 17
2.5.3. Nongovernmental Claims Against a Decedent’s Probate Estate

The only deadlines for nongovernmental creditors to collect a debt against a decedent’s
probate personal property appear in IC 29-1-4-1. Subsection (a) provides that a creditor must
file a claim:
with the court in which such estate is being administered within:

(1) three (3) months after the date of the first published notice to creditors; or
(2) three (3) months after the court has revoked probate of a will, in accordance with
IC 29-1-7-21, if the claimant was named as a beneficiary in that revoked will;
whichever is later.
Subsection (b) says:
No claim shall be allowed which was barred by any statute of limitations at the time of
decedent's death.
Subsection (c) counterbalances Subsection (b) as follows:
No claim shall be barred by the statute of limitations which was not barred at the time of
the decedent's death, if the claim shall be filed within:
(1) three (3) months after the date of the first published notice to creditors; or
(2) three (3) months after the court has revoked probate of a will, in accordance with
IC 29-1-7-21, if the claimant was named as a beneficiary in that revoked will;
whichever is later.
17
IC 12-15-9-0.5"Estate" and "nonprobate transfer"
Sec. 0.5. (a) As used in this chapter, "estate" includes:
(1) all real and personal property and other assets included within an individual's probate estate;
(2) any interest in real property owned by the individual at the time of death that was conveyed to the
individual's survivor through joint tenancy with right of survivorship, if the joint tenancy was created after
June 30, 2002;
(3) any real or personal property conveyed through a nonprobate transfer; and
(4) any sum due after June 30, 2005, to a person after the death of a Medicaid recipient that is under the terms
of an annuity contract purchased after May 1, 2005, with the assets of the Medicaid recipient.
(b) As used in this chapter, "nonprobate transfer" has the meaning set forth in IC 32-17-13-1.

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Finally, Subsection (d) since this ultimate deadline for nongovernmental creditors to file claims
against a decedent’s estate if the claim is not otherwise barred by the preceding subsections:
All claims barrable under subsection (a) shall be barred if not filed within nine (9) months
after the death of the decedent.
2.6. Secured Claims Against a Decedent’s Encumbered Property

IC 29-1-14-1 requires a secured creditor to file a claim against a deceased debtor’s probate estate
just like the requirement for an unsecured creditor to file a claim. However, IC 29-1-14-2 also
requires a secured creditor to include a reference in the written statement of claim to the location
of the creditor’s recorded lien. IC 29-1-14-6 incorporates the "Uniform Act Governing Secured
Creditors Dividends in Liquidation Proceedings" by reference for the next steps in a creditor’s
enforcement of a secured claim under IC Chapter 30-2-7.
Generally, a secured creditor may expect to collect against the decedent’s probate estate assets that
the creditor’s lien encumbers. The amount of the recovery, however, may depend on whether the
encumbered property value is sufficient to satisfy the unpaid debt. To the extent the debt exceeds
the value of the collateral, the excess portion of creditor’s claim will be unsecured and subject to
the claims proceedings under IC Chapter 29-1-4.
2.7. Requirements for a Claim Against a Decedent’s Probate Estate

IC 29-1-14-2 is an unusually dense Probate Code section that does not separate its provisions into
subsections. 18 The section requires a creditor to file a “succinct definite statement” of the creditor’s
18
IC 29-1-14-2 Actions; definite statement; personal representative actions; deductions from claims
Sec. 2. No action shall be brought by complaint and summons against the personal representative of an estate for
the recovery of any claim against the decedent or the decedent's estate, except in the enforcement of claims for
injury to person or damage to property arising out of negligence as provided in section 1 of this chapter, but the
holder thereof, whether such claim be due or not, shall file a succinct definite statement thereof in the office of
the clerk of the court in which the letters were issued. The clerk shall send by United States mail or by personal
service an exact copy of such statement to the personal representative of the estate. Any claims of the personal
representative against the decedent shall be made out and filed in the office of the clerk of the court in which the
letters were issued. If any claim against the decedent is founded upon any written instrument, alleged to have
been executed by the decedent, the original or a complete copy thereof, shall be filed with the statement, unless
it is lost or destroyed, in which case its loss or destruction must be stated in the claim. The statement shall set
forth all credits and deductions to which the estate is entitled and shall be accompanied by the affidavit of the
claimant or the claimant's agent or attorney, that the claim, after deducting all credits, set-offs, and deductions to
which the estate is entitled, is justly due and wholly unpaid, or if not yet due, when it will or may become due,
and no claim shall be received unless accompanied by such affidavit. If the claim is secured by a lien on any real
or personal property, such lien shall be particularly set forth in such statement, and a reference given to where the
lien, if of record, will be found. If the claim is contingent, the nature of the contingency shall also be stated. No

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claim against the decedent’s estate, regardless of whether the claim is presently due or
contingent. 19 The section also sets out the elements of that a claimant must satisfy to enforce a
claim.
2.8. Claim Collection Priorities for a Decedent’s Probate Estate

Unsecured creditors with timely filed claims have few worries about a decedent’s solvent probate
estate. However, IC 29-1-14-9 establishes the following priorities for satisfaction of creditors
unsecured claims against a decedent’s insolvent probate estate:
(1) Costs and expenses of administration, except funeral expenses, expenses of a tombstone,
and expenses incurred in the disposition of the decedent's body.
(2) Reasonable funeral expenses, expenses of a tombstone, and expenses incurred in the
disposition of the decedent's body. However, in any estate in which the decedent was a
recipient of public assistance under IC 12-1-1 through IC 12-1-12 (before its repeal) or any of
the following, the amount of funeral expenses having priority over any claim for the recovery
of public assistance shall not exceed the limitations provided for under IC 12-14-6, IC 12-14-
17, and IC 12-14-21:
TANF assistance.
TANF burials.
TANF IMPACT/J.O.B.S.
Temporary Assistance to Other Needy Families (TAONF) assistance.
ARCH.
Blind relief.
Child care.
Child welfare adoption assistance.
Child welfare adoption opportunities.
Child welfare assistance.
Child welfare child care improvement.
Child welfare child abuse.
statement of claim need be filed as provided in this section as to those claims which are paid by the personal
representative within three (3) months after the date of the first published notice to creditors or the period allowed
under IC 29-1-7-7. However, in instances where a cause of action was properly filed and commenced against a
decedent prior to the decedent's death, the same shall be continued against the personal representative or
successors in interest of the deceased, who shall be substituted as the party or parties defendant in such action,
and in such instance it shall not be necessary for the claimant to file a claim as herein provided. In any action thus
continued the recovery, if any, shall be limited as otherwise provided by law.
19
A sample claim appears as Appendix 1 of this Outline.

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Child welfare child abuse and neglect prevention.
Child welfare children's victim advocacy program.
Child welfare foster care assistance.
Child welfare independent living.
Child welfare medical assistance to wards.
Child welfare program review action group (PRAG).
Child welfare special needs adoption.
Food Stamp administration.
Health care for indigent (HCI).
ICES.
IMPACT (food stamps).
Title IV-D (ISETS or a successor statewide automated support enforcement system).
Title IV-D child support administration.
Title IV-D child support enforcement (parent locator).
Medicaid assistance.
Medical services for inmates and patients (590).
Room and board assistance (RBA).
Refugee social service.
Refugee resettlement.
Repatriated citizens.
SSI burials and disabled examinations.
Title XIX certification.
(3) Allowances made under IC 29-1-4-1.
(4) All debts and taxes having preference under the laws of the United States.
(5) Reasonable and necessary medical expenses of the last sickness of the decedent, including
compensation of persons attending the decedent.
(6) All debts and taxes having preference under the laws of this state; but no personal
representative shall be required to pay any taxes on any property of the decedent unless such
taxes are due and payable before possession thereof is delivered by the personal representative
pursuant to the provisions of IC 29-1.
(7) All other claims allowed.
All is not lost for an industrious unsecured creditor whose claim remains unsatisfied because the
decedent’s probate estate was insolvent. Later sections of this outline will describe the alternative

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collection procedures to pursue property that the decedent transferred through nonprobate
transfers.
2.9. Creditors’ Claims Against a Decedent’s Probate Real Property.

2.9.1. Brief History Lesson on Personalty Versus Realty
Indiana’s former probate laws required a decedent’s personal representative to satisfy claims
from the decedent’s personal property before liquidating the real property. The law
corresponded to this statement of an English rule of equity:
For lands are in equity a favoured fund, insomuch that the heir at law, or devisee of a
mortgagor, may demand to have the estate mortgaged by such devisor himself, cleared out
of the personalty. 20
Although the Indiana General Assembly removed most of the real versus personal property
distinctions in claim satisfaction, real property’s persistent priority remains embedded in IC
29-1- 7-15.1(b).
2.9.2. Creditors’ Interception of Probate Real Property Title passage

The personal representative’s perfected power to possess and divest title under IC 29-1-7-
23(a) disrupts the automatic and immediate passage of title to the distributees. A creditor may
perfect the personal representative’s power to possess and divest title under IC 29-1-7-23(a) by
filing a Petition for Administration within five months after the decedent’s death and securing
the clerk’s issuance of letters testamentary or letters of administration to the personal
representative within seven months after the decedent’s death in satisfaction of those
requirements under IC 29-1-7-15.1 (b)-(e). Subsection 2.9.4 of this outline will address the
procedural prerequisites for a personal representative’s sale of a decedent’s real property under
IC 29-1-7-15.1 (b)-(e) after Subsection the overview of IC 29-1-7-15.1 in
2.9.3. Overview of Procedural Functions of IC 29-1-7-15.1

IC 29-1-7-15.1 seems to confuse many lawyers. To resolve the confusion, it is important to
remember the contexts that IC 29-1-7-15.1 governs:
20
Blackstone, William, Commentaries on the Laws of England, Vol. 2, Page 333, Clarendon Press, Oxford, 1778
(Paraphrasing the English High Court of Chancery in Bartholomew v. May, 1 Atk. 487, 26 Eng.Rep. 309 (Ch. 1737)).

Page 17 of 41
 IC 29-1-7-15.1(a) governs when the conclusion of the formal administration of a
decedent’s estate as a supervised estate or unsupervised estate cuts off the eligibility of a
will for admission to probate (with or without formal probate estate administration).
 IC 29-1-7-15.1(b)-(e) regulates the authority of a court-appointed personal

representative to sell a decedent’s real property.
 IC 29-1-7-15.1(f) protects a BFP who purchases a decedent’s real property if a will is

not admitted to probate within five months after the decedent’s death or a will contest has
not commenced the statutory deadlines for filing a will contest.
 IC 29-1-7-15.1(g) provides some limiting rules for admitting Will to probate that would
rarely actually prohibit the probate of a will. 21
 IC 29-1-7-15.1(h) provides that there is no deadline to probate of will whatsoever if:
• there has been no formal estate administration following a Petition for

Administration,
• an asset remains titled or registered in the name of the decedent, and
• nothing has happened to prevent the admission of a will to probate under IC 29-1-
7-15.1(g).
2.9.4. The 5-Month & 7-Month Rules Governing a Personal Representative’s Sale of a
Decedent’s Real Property Under IC 29-1-7-15.1(b) 22
IC 29-1-7-15.1(b) has had a contentious history over the past decade. Until the General
Assembly’s 2018 amendments, 23 IC 29-1-7-15.1(b)’s text read as follows:
(b) No real estate situate in Indiana of which any person may die seized shall be sold by
the executor or administrator of the deceased person's estate to pay any debt or obligation
of the deceased person, which is not a lien of record in the county in which the real estate
21
Don’t be distracted by the three-year deadline of subpart (1) because the rule applies to the later of the three subparts,
and subparts (2) and (3) require some action in probate court before their timelines begin running.
22
A procedural diagram for the “5-Month & 7-Month Rules” appears in Appendix 2 of this outline.
23
2018 SEA 247, SEC. 6; 2018 P. L. 163, SEC. 6.

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is situate, or to pay any costs of administration of any decedent's estate, unless letters
testamentary or of administration upon the decedent's estate are taken out within five (5)
months after the decedent's death.
In 2012, an Indiana Court of Appeals opinion interpreting subsection (b) held:
…we find that Indiana Code section 29-1-7-15.1(b) is not a limitation on the trial court's
authority to issue an order for the sale of real estate under Indiana Code section 29-1-15-
3. 24
In 2013, the Indiana General Assembly effectively overrode and superseded the Court of
Appeals opinion in Estate of Roy by clarifying that a court cannot authorize a personal
representative to take an action that the Probate Code otherwise prohibits when the General
Assembly enacted IC 29-1-10-21, which read as follows until the General Assembly revised
the statute in 2021: 25
Sec. 21. (a) All authority to act with respect to an estate administered under IC 29-1-
7 and IC 29-1-7.5 is vested exclusively in the personal representative.
(b) If this article prohibits an action by the personal representative, the prohibition restricts
the personal representative, regardless of court order, unless:
(1) a majority in interest of the distributees expressly consent to the proposed
action; or
(2) the statute imposing the restriction expressly permits a court to approve the
prohibited action.
Representatives of the Indiana State Bar Association, FSSA, and the Attorney General of
Indiana negotiated a series of legislative amendments in 2018, 2019, and 2021 that led to the
current version of IC 29-1- 7-15.1.
The current version of IC 29-1- 7-15.1 keys on whether someone files a petition for
administration (as defined in IC 29-1-1-3(a)(31)) within 5 months after the decedent’s
death. If there is no petition for administration within that 5-month deadline, IC 29-1- 7-
15.1(b) prohibits the sale of real property composing part of the probate estate (as defined in
24
State ex rel. Family and Social Services Admin. v. Estate of Roy, 963 N.E.2d 78, 84-85 (Ind.App. 2012) (Transfer
denied).
25
2021 SEA 184, SEC.4; P.L.184-2021, SEC.4.

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IC 29-1-1-3(a)(32)) to pay creditors’ claims without distributee consent under IC 29-1-10-
21(b).
Even if someone files a petition for administration within 5 months after the decedent’s death,
the prohibition under IC 29-1- 7-15.1(b) on a sale to satisfy creditors’ claims still applies if the
Clerk does not issue letters testamentary or letters of administration within 7 months after the
decedent’s death unless the Court enters an order with findings under IC 29-1- 7-15.1(e).
IC 29-1-7-15.2 provides that the anti-sale protection of real property under IC 29-1- 7-15.1(b)
extends to the proceeds of sale if a majority in interest of the distributees consent to a sale
under IC 29-1-10-21. 26
2.10. Procedural Strategies for Distributees’ Protection of Probate Assets Against Claims
2.10.1. Strategy 1: Skip Probate Administration
The title passage affidavit provisions of IC 29-1- 7-23(b)-(d) offer a cost-effective and
strategically advantageous alternative to probate administration if:
• the probate estate only comprises real property,
• the distributees are mutually cooperative, and
• none of the distributees has judgment liens or other legal or financial vulnerabilities.
26
IC 29-1-7-15.2 Sale of real property; permitted use of proceeds
Sec. 15.2. (a) This section applies to real property subject to section 15.1(b) of this chapter, if the personal
representative sells the real property to:
(1) satisfy a lien of record in the county in which the real property is located;
(2) pay costs of administration; or
(3) use the sale proceeds for any other payment or distribution approved by the written consent of a majority
in interest of the distributees under IC 29-1-10-21.
(b) The proceeds of the sale of real property described in subsection (a) will retain the same protection that section
15.1(b) of this chapter provides to real property with respect to payment of any debt or obligation of the deceased
person not described in subsection (a).

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In that case, consider documenting the automatic transfer of legal title to the real property under
IC 29-1- 7-23(b)-(d) instead of filing a petition for administration and administering the real
property through formal probate administration.
2.10.2. Strategy 2: Petition for Administration More Than 5 Months After Decedent’s
Death – No Claims Filed
If the probate estate only comprises real property and the distributees are either uncooperative
or financially vulnerable, consider filing a petition for administration later than 5 months
after the decedent’s death, selling the real property, and distributing the sale proceeds with
the same asset protection under IC 29-1-7-15.2 that would apply under IC 29-1- 7-15.1(b) to
the distribution of the real property in-kind under IC 29-1- 7-23(b)-(d).
2.10.3. Strategy 3: Petition for Administration More Than 5 Months After Decedent’s
Death – Late Claims Filed
If, after filing a petition for administration more than 5 months after the decedent’s death under
the preceding recommendation, a creditor files a claim in the estate, consider these steps:
• unless the estate has an affirmative defense on the merits (e.g. mistaken identity, accord
and satisfaction, claim value miscalculation, etc.), affirmatively allow the claim with a
qualifying statement that: 27
o explains the applicability of IC 29-1- 7-15.1(b) to the distribution of the real

property in-kind under IC 29-1- 7-23(b)-(d);
o states that the probate estate lacks sufficient personal property to satisfy the
claim; and
o states that the personal representative will file a closing statement showing the
claim as allowed with insufficient personal property to satisfy the claim and
stating that the personal representative will
27
This outline does not furnish a sample claim allowance statement because

Page 21 of 41
 make and record a personal representative’s deed to
the distributees under IC 29-1-7.5-3.4 28 or
 sell the real property and distributed to the distributees free of creditors
claims under IC 29-1-7-15.2.
• DO NOT DENY A GOVERNMENT CLAIM AS UNTIMELY FILED – government

claims are exempt from the claims deadline under IC 29-1-14-1(a), so all government
claims are timely filed and the denial will bog down the estate administration in
unnecessary and unpredictable litigation; and
• File a closing statement documenting the applicability of IC 29-1-7-15.1(b) to the

distribution of the real property in-kind under IC 29-1- 7-23(b)-(d), or the sale of the
real property for permissible reasons under IC 29-1-7-15.1(b) or with distributee
consent under IC 29-1-10-21(b) and distribution of the sale proceeds to the distributees
free of creditors claims under IC 29-1-7-15.2.
2.10.4. Strategy 4: Pursue Real Property Under IC 29-1- 7-23(b)-(d) and (Temporarily)
Abandon Low-Value Personal Property
This strategy may be ideal for some families if:
• the probate estate comprises real property and accounts or other intangible personal
property held by financial institutions or other third parties worth a total probate estate
value (real and personal) exceeding the $50,000 limit for effectuating the transfer of
personal property with a small estate affidavit under IC 29-1-8-1; 29
• the distributees are mutually cooperative; and
• none of the distributees is financially vulnerable.
If all those conditions exist, consider the following steps:
28
As stated previously, a personal representative's deed of distribution is not really a transfer of title, but a release of
the personal representative’s power of divestiture described in IC 29-1- 7-23(a).
29
2022 HEA 1208, SEC. 1., P.L. 151-2022, SEC. 1., increases the limit to $100,000 on July 1, 2022.

Page 22 of 41
• document the automatic transfer of legal title to the real property under IC 29-1- 7-
23(b)-(d);
• abandon the personal property by refraining from filing a petition for administration to
claim the personal property; and
• help the distributees claim the abandoned personal property under Indiana’s Revised
Unclaimed Property Act 30 through the Indiana Attorney General’s Unclaimed Property
website.
Note that IC 32-34-1.5-50 provides for enforcement of debts against unclaimed property 31 and
10 IAC 1.5-4-8 provides a creditor’s proof of claim procedure, 32 so the personal property
30
IC Chapter 32-34-1.5.
31
IC 32-34-1.5-50 Delivery of property to owner; payment of enforceable debt
Sec. 50. (a) Not later than thirty (30) days after a claim is allowed under section 49(b) of this chapter, the attorney
general shall pay or deliver to the owner the property or pay to the owner the net proceeds of a sale of the property,
together with income or gain to which the owner is entitled under section 33 of this chapter.
(b) Property held under this chapter by the attorney general is subject to a claim for the payment of an enforceable
debt the owner owes in this state for:
(1) child support arrearages, including child support collection costs and child support arrearages that are
combined with maintenance;
(2) a civil or criminal fine or penalty, court costs, surcharge, or restitution imposed by a final order of an
administrative agency or a final court judgment; or
(3) state or local taxes, penalties, and interest that have been determined to be delinquent or as to which notice
has been recorded with the local taxing authority.
(c) Before delivery or payment to an owner under subsection (a) of property or payment to the owner of net proceeds
of a sale of the property, the attorney general first shall apply the property or net proceeds to a debt under subsection
(b) the attorney general determines is owed by the owner. The attorney general shall pay the amount to the appropriate
state or local agency.
(d) The attorney general may make periodic inquiries of state and local agencies in the absence of a claim filed under
section 48 of this chapter to determine whether an apparent owner included in the unclaimed property records of this
state has enforceable debts described in subsection (b). The attorney general first shall apply the property or net
proceeds of a sale of property held by the attorney general to a debt under subsection (b) of an apparent owner which
appears in the records of the attorney general and deliver the amount to the appropriate state or local agency.
32
10 IAC 1.5-4-8 Creditors; proof of claim
Authority: IC 32-34-1.5-87
Affected: IC 32-34-1.5
Sec. 8. Any creditor of an apparent owner claiming an interest in unclaimed property in the custody of the attorney
general shall file the following with the attorney general:
(1) A certified copy of a final judgment establishing the debt owed by the apparent owner.

Page 23 of 41
abandonment strategy offers no assurance that the family may recover free of debts through
the unclaimed property system. However, it may be more likely that a creditor would monitor
and file a claim against a decedent’s probate estate than that the creditor would monitor and
file a claim against the decedent’s the unclaimed property.
2.10.5. Strategy 5: Seek appointment of a Personal Representative to Scrutinize Claim

Merits
If a claim seems inevitable, a decedent’s distributees may want to seek appointment of a
personal representative to scrutinize and challenge claims on their merits.
IC 29-1-14-11 imposes the following mandate on the personal representative scrutinize claims
(with emphasis added):
IC 29-1-14-11 Inquiry into correctness; liability on bond

Sec. 11. Before allowing or paying claims against the estate he represents, it shall be the
duty of every personal representative to inquire into the correctness of all claims
against the estate and make all available defenses thereto, and if he fails so to do, he
shall be liable on his bond, at the suit of any person interested in the estate, for all
damages sustained by the estate in consequence of such neglect.
So, a personal representative should not hastily approve a claim just to satisfy the applicable
deadlines for claim allowance or disallowance of IC 29-1-14-10(a) and (b). 33 Instead, a prudent
(2) Proof that the judgment is first in time within the apparent owner's county of residence.
(3) Proof by affidavit or otherwise that the debt has not been extinguished by the statute of limitations and has not
been satisfied in whole or in part.
(Office of Attorney General for the State; 10 IAC 1.5-4-8; filed Jul 1, 1997, 4:15 p.m.: 20 IR 3002; readopted filed
Aug 14, 2003, 1:15 p.m.: 27 IR 946; readopted filed Oct 6, 2009, 9:03 a.m.: 20091104-IR-010090575RFA; readopted
filed Oct 26, 2015, 1:48 p.m.: 20151125-IR-010150149RFA; readopted filed Nov 10, 2021, 4:13 p.m.: 20211208-IR-
010210426RFA)
33
IC 29-1-14-10 Allowance; disallowance; expenses of administration
Sec. 10. (a) On or before three (3) months and fifteen (15) days after the date of the first published notice to
creditors, the personal representative shall allow or disallow each claim filed not later than three (3) months after
the date of the first published notice to creditors, and as to any claim filed not later than nine (9) months after the
decedent's death by a claimant (other than the United States, the state, or a subdivision of the state) who did not
receive notice of administration under IC 29-1-7-7, the personal representative shall allow or disallow the claim
not later than fifteen (15) days after the date of filing of the claim.
(b) The personal representative shall allow or disallow each claim filed by the United States, the state, or a
subdivision of the state on or before the later of:
(1) three (3) months and fifteen (15) days after the first published notice to creditors; or

Page 24 of 41
personal representative should disallow a claim if the personal representative believes the
personal representative needs evidence of the claim’s merits. IC 29-1-14-10(c) and (d) indicate
that the method of a personal representative’s allowance or disallowance of a claim depends
on the status of rules for that action issued by the Indiana Supreme Court, if any, or local rules
if the Supreme Court has not yet given guidance on the subject. 34 If the personal representative
disallows the claim or takes no action within the deadlines for claim allowance or disallowance,
any party may petition the court to set the claim for trial under IC 29-1-14-10(e). 35
A few disputes emerged in the past couple of years about evidentiary requirements for claims
filed against decedents’ estates by the Estate Recovery Unit of the Indiana Family and Social
Services Administration (the “FSSA”). In those cases, FSSA argued that an FSSA employee’s
affidavit in support of an FSSA claim under IC 12-15-9-1 36 required no copies of supporting
(2) fifteen (15) days after the date on which the United States, the state, or a subdivision of the state filed the
claim.
34
(c) The personal representative shall make appropriate notations on the margin of the claim and allowance docket
showing the action taken as to the claim, or, in a jurisdiction that has implemented electronic filing, by making
appropriate notations of the action taken as to the claim according to rules established by the Indiana supreme court,
or if the Indiana supreme court adopts no rule regarding the notations, then by local rules established by the court
where the claim is filed.
(d) If a personal representative determines that the personal representative should not allow a claim in full, the
claim shall be noted "disallowed". The clerk of the court shall give written notice to a creditor if a claim has been
disallowed in full or in part. In a jurisdiction that has implemented electronic filing, written notice to a creditor
concerning a disallowed claim, in full or in part, shall be given according to rules established by:
(1) the Indiana supreme court; or
(2) local rules established by the local court where the claim is filed if rules from the Indiana supreme court
have not yet been promulgated.
NOTE: This outline does not furnish a form for the Personal Representative's allowance or disallowance of a claim
because of the methodological variances that may exist in local rules until the Supreme Court's issues rules to
standardize the process.
35
See the explanation in Subsection 3.11.4 of this outline concerning a claimant's obligation under IC 32-17-13-7(f)
to petition to set a claim for trial as a prerequisite for enforcing the claim against nonprobate transferees.
36
IC 12-15-9-1Amount of claim; preference
Sec. 1. Upon the death of a Medicaid recipient, the total amount of Medicaid paid on behalf of the recipient
after the recipient became fifty-five (55) years of age must be allowed as a preferred claim against the estate of
the recipient in favor of the state. The affidavit of a person designated by the secretary to administer this section
is evidence of the amount of the claim and is payable after the payment of the following in accordance with IC
29-1-14-9:
(1) Funeral expenses for the recipient, not to exceed three hundred fifty dollars ($350).
(2) The expenses of the last illness of the recipient that are authorized or paid by the office.
(3) The expenses of administering the estate, including the attorney's fees approved by the court.

Page 25 of 41
records or other admissible evidence to shift the burden of proof to the personal
representative. 37
Although the trial courts’ allowance of FSSA’s claims over the personal representatives’
objections struck this author as unconstitutional takings of property without due process of
law, 38 the personal representatives and distributees elected not to appeal the decisions. When
this author spoke to the Deputy Attorney General responsible for supervising all FSSA claims
in 2021, the Deputy Attorney General said FSSA had already initiated an informal practice of
sharing supporting claim records with personal representatives’ counsel to avoid unnecessary
evidentiary arguments. Still, the statutory ambiguities under which the courts allowed the
FSSA claims remain unresolved by legislation or an appellate court’s opinion.
Some claims may expire under statutes of repose and statutes of limitations. For example, most
federal tax liens expire under the 10-year statute of limitations for collection established in 26
U.S.C. § 6502 unless circumstances exist that extend or suspend the10-year limitations
period. 39 So, a diligent person representative should investigate whether a claimant has expired
under an applicable statute of limitation or statute of repose.
PART 3. CLAIMS AGAINST NONPROBATE TRANSFEREES
3.1. Procedural Policy for Claims Against Nonprobate Transferees

IC Chapter 32-17-13 presents a densely intricate procedural gauntlet that a deceased transferor’s
claimants must navigate flawlessly to collect their claims against the deceased transferor’s
nonprobate transferees. 40
The chapter’s principal policy protects the nonprobate transferees’ due process rights because:
37
See copies of trial court orders overruling the personal representatives' evidentiary objections in two 2020 cases
included in the addenda of this outline.
38
U.S. Const. amend. XIV, §1.
39
See the Internal Revenue Manuals Part 5, Subsection 5.17.2.2.2, published online at
https://www.irs.gov/irm/part5/irm_05-017-002 (last visited by the author on April 4, 2022).
40
Procedural diagrams for claims against nonprobate transferees appear in Appendix 3 through Appendix 5 of this
Outline.

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• the private nature of nonprobate transfers tends to isolate nonprobate transferees from
notice about probate estate proceedings; and
• nonprobate transferees would have no reason to anticipate probate estate proceedings

if a deceased transferor’s estate plan passed 100% of the deceased transferor’s assets
through nonprobate transfer instruments.
3.2. Nonprobate Transfer Definitions

IC 32-17-13-1(a) provides a general rule defining a “nonprobate transfer” as follows:
(a) As used in this chapter, "nonprobate transfer" means a valid transfer, effective at death, by
a transferor:
(1) whose last domicile was in Indiana; and
(2) who immediately before death had the power, acting alone, to prevent transfer of the
property by revocation or withdrawal and:
(A) use the property for the benefit of the transferor; or
(B) apply the property to discharge claims against the transferor's probate estate.
IC 32-17-13-1(b) excludes the following transfers from the nonprobate transfer definition:
(b) The term does not include a transfer at death (other than a transfer to or from the deceased
transferor's probate estate) of:
(1) a survivorship interest in a tenancy by the entireties real estate;
(2) a life insurance policy or annuity;
(3) the death proceeds of a life insurance policy or annuity;
(4) an individual retirement account or a similar account or plan; or
(5) benefits under an employee benefit plan.
IC 32-17-13-1(c) provides that a nonprobate transfer on a multiparty account of the deceased

transferor if the deceased transferor’s last domicile was in Indiana. 41
41
(c) With respect to a nonprobate transfer involving a multiple party account, a nonprobate transfer occurs if the last
domicile of the depositor whose interest is transferred under IC 32-17-11 was in Indiana. IC 32-17-13-1(c)

Page 27 of 41
IC 32-17-13-1(d) provides that a nonprobate transfer of a motor vehicle or watercraft occurs if the
transferee obtains a certificate of title in Indiana under IC 9-17. 42
IC 32-17-13-1(e) provides that “a transfer on death transfer completed under IC 32-17-14 is a

nonprobate transfer.” 43
3.3. Party Definitions and Liability of Nonprobate Transferees

IC 32-17-13-2(a) identifies the persons entitled to enforce claims filed against deceased
transferors’ probate estates as follows:
(a) As used in this chapter, "claimant" means the surviving spouse or a surviving child, to the
extent that statutory allowances are affected, or a person who has filed a timely claim in a
deceased transferor's probate estate under IC 29-1-14, and is entitled to enforce the claim
against a transferee of a nonprobate transfer.
IC 32-17-13-2(b) identifies the recipient of a nonprobate transfer as follows:
(b) As used in this chapter, "nonprobate transferee" means a person who acquires an interest
in property by a nonprobate transfer.
IC 32-17-13-2(c) establishes a nonprobate transferee’s liability to a claimant as follows:
(c) Except as otherwise provided by statute, a transferee of a nonprobate transfer is subject to

liability to a deceased transferor's probate estate for:
(1) allowed claims against the deceased transferor's probate estate; and
(2) statutory allowances to the decedent's spouse and children;
42
(d) With respect to a motor vehicle or a watercraft, a nonprobate transfer occurs if the transferee obtains a certificate
of title in Indiana under IC 9-17. IC 32-17-13-1(d)
43
IC 32-17-14 is the Indiana Transfer on Death Property Act (the "TOD Act"), which authorizes a transferor to make
pay on death (POD) transfers of bank accounts and transfer on death (TOD) transfers of almost conceivable kind of
asset. However, IC 32-17-14-2.5 provides the following TOD Act exclusions:
This chapter does not apply to property, money, or benefits paid or transferred at death under:
(1) an employee benefit plan governed by the Employees Retirement Income Security Act of 1974;
(2) an individual retirement account; or
(3) a similar account or plan intended to qualify for a tax exemption or deferral under the Internal Revenue
Code;
unless the provisions of this chapter are incorporated into the governing instrument or beneficiary designation in
whole or in part by express reference.

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to the extent the decedent's probate estate is insufficient to satisfy those claims and allowances.
IC 32-17-13-2(d) provides that a nonprobate transferee’s liability “may not exceed the value of
nonprobate transfers received or controlled by the nonprobate transferee.”
If a nonprobate transferee has contributed to the nonprobate transferee’s acquisition of the property
that nonprobate transferee received from the deceased transferor, IC 32-17-13-2(e) provides that
“the liability of the nonprobate transferee does not include the net contributions of the nonprobate
transferee.”
3.4. Apportionment of Nonprobate Transferees’ Liability to the Probate Estate

IC 32-17-13-3 apportions multiple nonprobate transferees’ liability to the probate estate as follows:
IC 32-17-13-3 Priority of liability to probate estate
Sec. 3. Nonprobate transferees are liable for the insufficiency described in section 2 of this
chapter in the following order:
(1) As provided in the deceased transferor's will or other governing instrument.
(2) To the extent of the value of the nonprobate transfer received or controlled by the trustee
of trusts that can be amended, modified, or revoked by the decedent during the deceased
transferor's lifetime. If there is more than one (1) such trust, in proportion to the relative
value of the trusts.
(3) Other nonprobate transferees in proportion to the values received.
3.5. Abatement of Beneficiaries’ Trust Interests by Nonprobate Transfer Claims

If a claimant enforces an allowed claim to recover the claim deficiency against a trust, IC 32-17-
13-4 provides the following abatement rule:
IC 32-17-13-4 Beneficiary interests in trusts

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 trust.
3.6. Instrument’s Apportionment Provisions Concerning Nonprobate Transferees’ Liability

If an instrument establishing a nonprobate transfer apportions liability among multiple nonprobate
transferees, IC 32-17-13-5 applies the apportionment as follows:
IC 32-17-13-5 Apportionment of liability by instrument

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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.
3.7. Forum of Proceedings to Enforce Claims Against Nonprobate Transferees

IC 32-17-13-6(a) provides the following rule concerning the jurisdictional location of proceedings
to enforce claims against nonprobate transferees:
(a) 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.
IC 32-17-13-6(b) establishes the nature of a proceeding against nonprobate transferees as a

separate court case as follows:
(b) A proceeding under this chapter may be commenced as a separate cause from a cause in
which a probate action is pending with respect to a deceased transferor of a nonprobate transfer
by filing a complaint against a nonprobate transferee as a defendant and serving a summons
and a complete copy of the complaint to each defendant under the Indiana Rules of Trial
Procedure.
3.8. Claims Concerning Deceased Transferors Dying Before July 1, 2018

Most claims against nonprobate transferees concerning decedents dying before July 1, 2018, are
time-barred under IC 32-17-13-7(a)-(c) or IC 32-17-13-8(a) in spring 2022. For those claims to be
enforceable, personal representatives or claimants had to commence collection lawsuits against
nonprobate transferees under IC 32-17-13-7(a)-(c) or IC 32-17-13-8(a) before January 1, 2020.
Although the Indiana Supreme Court’s pandemic emergency orders could have tolled some cases
long enough to remain pending, those cases must be increasingly rare in spring 2022.
3.9. Medicaid Estate Recovery Claim Deadline Exemption

IC 12-15-9-0.6(d) provides a limited exemption from deadlines in IC Chapter 32-17-13 concerning
claims of the Estate Recovery Unit of the Indiana Family and Social Services Administration (the
FSSA) against a deceased transferor’s nonprobate transferees. The exemption under IC 12-15-9-

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0.6(d) applies a deceased transferor who received Medicaid benefits failed to disclose the deceased
transferor’s assets to disclose to the county office of the FSSA’s Division of Family Resources.
A strict construction would limit the exemption to assets that a deceased transferor failed to
disclose under the express language of the statute. The exemption should not apply if the deceased
transferor disclosed assets as part of the deceased transferor’s compliance with Medicaid eligibility
requirements, and then established nonprobate transfers after the disclosure.
3.10. Medicaid Estate Recovery Exemptions of Nonprobate Transfers Established Before

April 30, 2002, and Assets Determined by FSSA to be Exempt or Unavailable Before April
30, 2002
IC 12-15-9-0.8 excludes from FSSA’s estate recovery authority a decedent’s nonprobate property
that:
(1) the office determined were exempt or unavailable assets; or
(2) were transferred out of the probate estate;
before May 1, 2002.
FSSA’s exemption from deadlines for claims against nonprobate transferees under IC 12-15-9-
0.6(d) may have mixed effects on nonprobate transfers described in IC 12-15-9-0.8. Although IC
12-15-9-0.8(1) excludes nonprobate assets that FSSA determined were exempt or unavailable
before May 1, 2002, FSSA could not have determined that nonprobate assets were exempt or
unavailable without the deceased Medicaid recipient’s disclosure of those assets in the Medicaid
application process. However, the exclusion in IC 12-15-9-0.8(2) makes no express or implied
disclosure requirement, and the deadline exemption under IC 12-15-9-0.6(d) only exempts from
FSSA’s claims against nonprobate transferees from deadlines under IC Chapter 32-17-13
concerning undisclosed assets. So, it appears that if a decedent received Medicaid benefits after
age 55 and established a nonprobate transfer of assets before May 1, 2002, FSSA could not enforce
a claim against the decedent’s nonprobate transferees, regardless of whether the decedent disclosed
the assets to FSSA. 44
44
The interplay of IC 12-15-9-0.6(d) and IC 12-15-9-0.8 are not purely academic considerations. Suppose a person
disabled by illness or injury received Medicaid benefits before and after reaching 55 years of age in the 1990s, and
then acquired sufficient wealth by earnings, inheritance, or marriage to no longer qualify for Medicaid. In that case,

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3.11. Claims Concerning Assets Transferred Through Nonprobate Transfers Concerning
Deceased Transferors Dying After June 30, 2018
3.11.1. Deadline to File and Serve a Claim Against a Deceased Transferor’s Probate
Estate
IC 32-17-13-7(d)(1) requires a deceased transferor’s claimant to complete the following
actions within 5 months after the deceased transferor’s death:
 file a claim against the deceased transferor’s probate estate; and
 deliver a copy of the claim to each nonprobate transferee known by the claimant.
Although government creditors’ claims are exempt from the claims deadline underIC 29-1-4-
1, even a government creditor must comply with the requirement to file a claim against the
deceased transferor’s probate estate under IC 32-17-13-7(d)(1).
The procedural requirement of filing a claim in the deceased transferor’s probate estate within
5 months after the deceased transferor’s death necessitates the following action sequence
within the 5-month deadline:
 someone must file a petition for administration (defined in IC 29-1-1-3(a)(31));
 the court must enter an order granting the petition and appointing a personal
representative for the deceased transferor’s estate; and
 the claimant must file the claim in the deceased transferor’s open estate.
3.11.2. Deadline to File and Serve a Written Demand

Generally, IC 32-17-13-7(d)(2) requires a claimant to:
the person could have simply withdrawn from Medicaid without disclosing the new wealth. Although FSSA would
have estate recovery rights for those old Medicaid benefits, IC 12-15-9-0.8(2) would prohibit FSSA from claiming
against the deceased former Medicaid recipient's nonprobate transferees if the decedent had established and funded a
revocable trust, pay on death or transfer on death beneficiary designation, or another nonprobate transfer device before
April 30, 2002.

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• file a written demand in the deceased transferor’s probate estate for the personal
representative to commence proceedings against nonprobate transferees under IC
Chapter 32-17-13;
• serve a copy of the written demand on the personal representative; and
• serve copies of the written demand on each known nonprobate transferee. 45
IC 32-17-13-7(d)(3) subjects the written demand delivery requirements of IC 32-17-13-7(d)(2)

to IC 32-17-13-7(j), which this outline will discuss further momentarily.
3.11.3. Written Demand Contents

IC 32-17-13-7(e) specifies the following requirements for the written demand’s contents:
(1) The cause number of the deceased transferor’s estate.
(2) A statement of the claimant’s interest in the deceased transferor’s estate and nonprobate
transfers, including the date on which the claimant filed a claim in the deceased transferor’s
estate.
(3) A copy of the claim attached as an exhibit to the written demand.
(4) A description of the nonprobate transfer, including:
(A) a description of the transferred asset, as the asset would be described under IC 29-
1-12-1, regardless of whether the asset is part of the decedent’s probate estate, subject
to the redaction requirements of the Indiana administrative rules, established by the
Indiana supreme court;
(B) a description or copy of the instrument by which the deceased transferor established
the nonprobate transfer, subject to the redaction requirements of the Indiana
administrative rules, established by the Indiana supreme court; and
(C) the name and mailing address of each nonprobate transferee known by the claimant.
45
A sample written demand appears in Appendix 6 of this Outline.

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3.11.4. Requirement of a Claimant’s Diligent Probate Estate Claim Prosecution
One of the deadlines under IC 32-17-13-7(f) depends on when the claimant’s claim is finally
allowed in the deceased transferor’s probate estate. So, IC 32-17-13-7(f) requires claimants to
pursue their claims aggressively against the deceased transferor’s probate estate.
IC 32-17-13-7(f) creates a time bar for claimants to pursue probate estate claim proceedings
under IC 29-1-14-10 that does not exist in the Probate Code concerning claims in solvent
estates that require no additional collection proceedings against nonprobate transferees.
The Probate Code’s deadline for the personal representative allow or disallow a non-
governmental claim filed in the deceased transferor’s probate estate under IC 29-1-14-10(a)
requires the personal representative to allow or disallow a claim:
• on or before 3 months and 15 days after the date of the first published notice to creditors
if the claim was filed not later than 3 months after the date of the first published notice
to creditors; and
• not later than 15 days after the date of filing of a claim filed not later than 9 months
after the decedent’s death by a claimant (other than the United States, the state, or a
subdivision of the state) who did not receive notice of administration under IC 29-1-7-
7.
The Probate Code’s deadline to for the personal representative allow or disallow a
governmental claim filed in the deceased transferor’s probate estate under IC 29-1-14-10(b)
requires the personal representative to allow or disallow a claim filed by the United States, the
state, or a subdivision of the state on or before the later of:
• 3 months and 15 days after the first published notice to creditors; or
• 15 days after the date on which the United States, the state, or a subdivision of the state
filed the claim.
IC 32-17-13-7(f) bars the commencement of the proceeding against nonprobate transferees

unless the claimant presses the claim in the deceased transferor’s probate estate aggressively

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and petitions to set the claim for trial in the probate court under IC 29-1-14-10(e) within 30
days after the personal representative’s applicable deadline has expired under IC 29-1-14-10(a)
or IC 29-1-14-10(b) to allow or disallow the claim. 46
3.11.5. Direct Claimant Action If Personal Representative Declines or Fails to Act

IC 32-17-13-7(g) contemplates that a personal representative may affirmatively decline to
pursue claims against nonprobate transferees or simply fail to pursue the claims. If a personal
representative affirmatively declines or fails to pursue a claim within 30 days after receiving a
claimant’s written demand, the claimant may commence a proceeding against nonprobate
transferees directly in the name of the decedent’s estate. In that case, the claimant must
commence the proceeding at the claimant’s expense.
3.11.6. Statutory Exoneration for a Personal Representative’s Declination or Failure to

Act
IC 32-17-13-7(h) protects a personal representative from liability for declining or failing to
pursue a claim against nonprobate transferees. This statutory exoneration contrasts with the
personal representative’s statutory duties to possess and preserve it decedent’s estate under IC
29-1-13-1. 47
The statutory exoneration can be a significant factor in one or more of the asset protection
strategies described in Section 0 of this outline.
46
A sample petition to set claim for trial appears in Appendix 7 of this Outline.
47
IC 29-1-13-1 Possession of property; duties of personal representative
Sec. 1. Every personal representative shall have a right to take, and shall take, possession of all the real and
personal property of the decedent. The personal representative:
(1) shall pay the taxes and collect the rents and earnings thereon until the estate is settled or until delivered
by order of the court to the distributees;
(2) shall keep in tenantable repair the buildings and fixtures under the personal representative's control;
(3) may protect the buildings and fixtures under the personal representative's control by insurance; and
(4) may maintain an action:
(A) for the possession of real property; or
(B) to determine the title to real property.

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3.11.7. Protection of Secured Creditors’ Interests
IC 32-17-13-7(i) affirmatively protects a creditor’s right to enforce “a valid and otherwise
enforceable lien, warrant, mortgage, pledge, security interest, or other comparable interest
against property included in a nonprobate transfer.” However, a secured creditor must
satisfy the elements of IC Chapter 32-17-13 to recover a deficiency judgment against it
decedent’s nonprobate transferees if a mortgage foreclosure or comparable sale of the
decedent’s encumbered assets does not satisfy the decedent’s debt.
3.11.8. Deadline for Filing and Serving the Written Demand

IC 32-17-13-7(j) requires the claimant to complete the written demand filing and delivery by
the later of:
 7 months after the deceased transferor’s death; or
 30 days after the final allowance of the claimant’s claim in the deceased transferor’s
probate estate.
Subsection (j) accommodates protracted claim adjudication in the administration of the

decedent’s probate estate. If a claimant satisfies all the requirements of the preceding
subsections, the claimant does not necessarily have to make and deliver the written demand
under IC 32-17-13-7(d) earlier than 30 days after the claim adjudication ends by judgment or
agreement.
To illustrate this delayed timing, imagine a personal injury plaintiff winning a jury verdict
couple of years after punctually filing and vigilantly prosecuting a personal injury claim against
a decedent’s probate estate. In that case plaintiff could enforce the jury verdict against the
decedent’s nonprobate transferees by making and delivering the written demand under IC 32-
17-13-7(d) within 30 days after the jury verdict’s entry.
3.11.9. Deadline for Commencement of Proceedings Against Nonprobate Transferees

Concerning Deceased Transferors Dying That June 30, 2018
IC 32-17-13-8(b) establishes the filing deadlines for lawsuits against decedents’ nonprobate
transferees. The subsection considers that a personal representative may:

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• file a written notice in the administration of the deceased transferor’s probate estate
stating that the personal representative does not intend to commence a proceeding
against the nonprobate transferees; 48 or
• decline or fail to commence a proceeding against the nonprobate transferees. 49
If the personal representative files a written notice of intent not to commence a proceeding, the
claimant who has satisfied the written demand requirements of IC 32-17-13-7(d) or IC 32-17-
13-7(j), IC 32-17-13-8(b)(1) requires the claimant to file a lawsuit against the nonprobate
transferees within 30 days after the personal representative’s filing of the notice.
If the personal representative simply declines or fails to commence a proceeding against the
nonprobate transferees, the claimant must file the lawsuit against the nonprobate transferees
within 90 days after the final allowance of the claim in the administration of the deceased
transferor’s probate estate. 50
3.11.10. Statutory Exoneration of Obligors and Trustees for Transfers to Non probate
Transferees
IC 32-17-13-9 exonerates debtors or third-party holders of a deceased transferor’s assets from
transferring the assets in a nonprobate transfer to the no transferees. This exoneration contrasts
with the general rule that a fiduciary must act impartially toward a decedent’s creditors and
beneficiaries.
3.11.11. Obligations, Rights, and Priorities of Successful Personal Representatives and

Claimants
IC 32-17-13-10 governs a successful claimant’s rights and responsibilities toward other
claimants and the nonprobate transferees.
Subsection (a) requirements a personal representative to include the personal representative’s

recovery against nonprobate transferees in the personal representative’s inventory of the
deceased transferor’s probate estate and distribute the recovered assets as the personal
48
IC 32-17-13-8(b)(1).
49
IC 32-17-13-8(b)(2).
50
A sample Complaint Against Nonprobate Transferees appears in Appendix 8 of this Outline.

Page 37 of 41
representative would distribute or pay any other assets of the deceased transferor’s probate
estate.
In Subsection (b), the maxim “to the victor belong the spoils” describes a claimant’s right to
apply a successful assets recovery directly to the decedent’s debt to the claimant, without
requiring the claimant to remit the recovery to the personal representative.
If multiple claimants pursue claims successfully against nonprobate transferees, Subsection (c)
allocates the recovery proceeds among the claimants according to the claimant priorities in the
administration of a decedent’s probate estate. 51
Subsection (d) requires a successful claimant to file a full or partial satisfaction of the
claimant’s claim in the administration of the deceased transferor’s probate estate, depending
on whether the claimant recovers a full or partial payment of the claimant.
3.12. Counter-Punching as an Asset Protection Strategy Against Nonprobate Claims

3.12.1. Avoid Filing a Petition for Administration Within 5 Months After the Deceased
Transferor’s Death
A deceased transferor’s transferees have a strong incentive to discourage the filing a petition
for administration of the deceased transferor’s probate estate within 5 months after the
deceased transferor’s date of death.
The 5-month deadline to file a claim against the deceased transferor’s probate estate under IC
32-17-13-7(d)(1) creates an unusual stumbling block for creditors accustomed to the normal
deadline for claims against a decedent’s probate estate. While a creditor generally has up to 3
months after the first publication of notice of administration to file a claim against a decedent’s
probate estate, IC 32-17-13-7(d)(1) since that time limit at 5 months after the date of the
decedent’s death.
If no one files a petition for administration of a deceased transferor’s probate estate, there is
no estate in which a creditor may file a claim to satisfy IC 32-17-13-7(d)(1). A creditor’s claim
51
IC 29-1-14-9.

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will be time-barred if the creditor does not take the initiative to open the estate and filed a claim
within that deadline.
3.12.2. Seeking Appointment as Personal Representative

A personal representative nominated in a testate decedent’s will may petition for appointment
to administer and solvent decedent’s estate. An intestate decedent’s distributee or nonprobate
transferee may also want to petition for appointment as the decedent’s personal representative
to maintain a stabilizing influence on the estate administration and any corresponding
proceedings against nonprobate transferees.
The personal representative and the personal representative’s counsel are entitled to recover
their fees and costs as administrative claims having greater priority than all other creditors’
claims. 52 If the personal representative is also a distributee or a nonprobate transferee, a
personal representative’s fee may be the only benefit the personal representative may receive
from the decedent’s assets.
3.12.3. Personal Representative’s Duty to Scrutinize Claim Merits

As stated in Subsection 2.10.5 of this Outline, a personal representative’s scrutiny of claims
under IC 29-1-14-11 may expose the claims vulnerabilities on the merits. So, the strategy in
Subsection 2.10.5 of this Outline for seeking appointment of a person representative and
scrutinizing claims may serve nonprobate transferees equally well if the probate estate is
insolvent as it protects distributees in a solvent estate.
3.12.4. Personal Representative’s Role as the Claim Procedures Enforcer

The demanding procedural requirements of IC Chapter 32-17-13 should embolden lawyers to
defend nonprobate transferees against creditors’ claims through diligent attention to the
chapter’s procedural details in the same way that a skillful criminal defense lawyer requires a
52
IC 29-1-14-9 Classification of claims; preferences
Sec. 9. (a) All claims shall be classified in one (1) of the following classes. If the applicable assets of the estate
are insufficient to pay all claims in full, the personal representative shall make payment in the following order:
(1) Costs and expenses of administration, except funeral expenses, expenses of a tombstone, and expenses
incurred in the disposition of the decedent's body.
*****

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prosecutor to satisfy procedural requirements and prove the defendant’s guilt on each statutory
element of each alleged crime. Although the chapter should not deter diligent creditors, details-
attentive counsel can use the chapter’s demanding procedural requirements to:
• enforce the requirements relentlessly in litigation; or
• negotiate for nonprobate transferees-friendly settlements.
3.12.5. Claim Settlement Negotiations

Some creditors appreciate the concept that a “bird in the hand is worth two in the bush.” Those
creditors’ priorities may make them amenable to negotiating the values of their claims in
exchange for immediate cash payments. Nonprobate transferees may use the statutory
procedural requirements for claim enforcement as incentives for claimants to compromise their
claims and eliminate the costly time commitments required to satisfy all the procedural
deadlines. Although claimants may assert contractual rights to recover attorney fees, costs, and
prejudgment interest, many claimants are willing to waive or reduce those amounts in
negotiated settlements.
3.12.6. Pursue Asset Values in Claim Enforcement Sales

A decedent’s person representative, distributees, and nonprobate transferees did not despair
over a claimant’s successful claim enforcement if underlying asset values may exceed the
claim amount.
A decedent’s person representative and the nonprobate transferees may have opportunities to
promote an asset sale or otherwise enhance an asset’s marketability enough to sell the asset or
a value exceeding the claim value.
Even if a claim’s value exceeds the values of assets that are subject to the claim, market forces
may create opportunities for the nonprobate transferees to acquire the assets for bargain prices
in poorly-attended sales. Unlike banks and other holders of real property mortgages, some
creditors lack the required sophistication to recover assets full values in judgment execution
sales. In those cases, nonprobate transferees may be able to purchase the assets for amounts far
below the assets’ fair market values.

Page 40 of 41
PART 4. CONCLUSION
Lawyers may find this outline and its appendices useful for representing plaintiffs or defendants.
The power of knowledge may help a lawyer wielding superior scholarship and case preparation
overcome factual and strategic disadvantages and overwhelm a less diligent counterpart. However,
humility and empathy distinguish a masterful lawyer from a technically proficient lawyer
characterized by self-righteous hubris. The latter lawyer may win cases, but a masterful lawyer
wins the admiration and respect of the court, counsel, and parties, regardless of a case’s outcome.

Page 41 of 41
Appendix 1
STATE OF INDIANA ) IN THE SCHMO CIRCUIT COURT

COUNTY OF SCHMO )
) CAUSE NO. 00C01-2204-ES-000001
IN THE MATTER OF THE )
SUPERVISED ADMINISTRATION )
OF THE ESTATE OF )
JOBY SCHMO, )
Deceased )
)
ESTATE CLAIM
The Claimant, Snuffy Smith, now files a claim against the above-captioned estate as follows:
Claimant’s Name: Snuffy Smith
Claimant’s Address: 555 Smith Lane, Schmoville, IN 47000
Claimant’s Telephone Number: 555-555-5555
Description of Claimant’s Claim: Grain consumed in the Claimant's field by Boss, the decedent's
grand champion hog.
Amount of Claimant’s Claim: $10,000.00
I, Snuffy Smith, solemnly swear or affirm under penalty for perjury that this claim, after deducting
all credits, setoffs, and deductions to which the estate is entitled, is justly due and wholly unpaid to
the best of my knowledge and belief.
____________________________________
Snuffy Smith, as the Claimant
STATE OF INDIANA, COUNTY OF SCHMO

Subscribed and sworn to me before me, a Notary Public in and for said County and State, this day,
April ___, 2022
____________________________________
Commission Number: ________________________ Notary Public
Commission Expiration: _____________________ Printed Name: ________________________
County of Residence: __________________
Appendix 2
Personal Representative's Authority to Sell Decedent's Real Property Under IC 29-1- 7-15.1 (b)-(e)
Petitioner Letters
served Notice of Petition
Issued within 7 for Administration Decedent's
Petition for Administration
No months after Yes filed within 5 months Date of Death
on each creditor within 45
Decedent's after Decedent's (DoD)
days after filing
DoD? DoD?
petition?
Yes No
Claimant
filed a claim Claimant Yes
within 30 days after filed a claim within
petitioner served 75 days after petition for
administration No
notice of
petition was filed
Yes
Personal
Court Yes
Representative
entered may sell Personal Representative may not sell
IC 29-1-7-15.1(e) real property Decedent's real property, except
affirmative to pay secured claims and costs of
findings? No
administration, unless more than 50%
in interests of distributees give written
consent to the sale to pay claims
No
Decedent's real
property devolves
to distributees
APPENDIX 3
FSSA & Other Creditors' Claims Against Nonprobate Transferees of Decedents Dying After June 30, 2018
Decedent's (D) Suit against D's

Date of Death (DoD) nonprobate transferees
may run its course on Yes
after 6-30-2018
finally allowed probate
Notice of PR's intent
court claim
not to sue nonprobate
transferees filed in
Private Creditor (PC) or Yes D's probate estate?
Family & Social Services
Administration (FSSA)? No
Yes No Yes
Were D's
nonprobate
FSSA
Did D disclose transferees sued
PC within 90 days Were D's
nonprobate assets to nonprobate
after filing & Were D's nonprobate
FSSA in Medicaid case? transferees
service of transferees sued within 9
(NOTE: D's Beneficiary months after D's DoD? sued within
designation disclosure written demand?
30 days
Creditor filed a not required) after the
claim against D's notice filing?
probate estate Yes
within 5 Yes No
months after
D's DoD?? Yes
No Creditor delivered writte
Did D establish n demand to PR & D's
nonprobate transfer known nonprobate
before April 30, 2002? transferees & filed it in No
Yes Creditor cannot probate court within 7
No
claim against D's months after D's DoD?
nonprobate
transferees
Yes
Yes
Creditor petitioned for claim Creditor cannot
Creditor's claim has trial against D's probate estate claim against D's
been finally allowed within 30 days after under PR's nonprobate
in D's probate estate? IC 29-1-14-10(e) deadline? transferees
No
Appendix 4
NON-GOVERNMENTAL
CLAIMS AGAINST NONPROBATE TRANSFEREES
[IC 32-17-13 for Decedents dying after June 30, 2018]
Claim is
unenforceable
Is there an against
YES NO
administration of decedent's (D's) estate nonprobate
(E) for claimant (C) to file a claim? transferees
IC 32-17-13-7(d) (NPTs)
because
no estate
administreation
was opened or
the estate is
YES NO solvent
Is D's E solvent?
IC 32-17-13-2(c)
Claim is Unenforceable
Claim is Enforceable
YES
Did C file claim
in E & serve claim on PR & each NO
(NPT) within 5 mos. after D's death?
IC 32-17-13-7(d)(1)
If PR didn't
YES allow/disallow claim, did C petition NO
for trial within 30 days after PR's deadline under
IC 29-1-14-10(a)?
IC 32-17-13-7(f)
Did C file written

YES demand for suit in E & serve PR & NO
each NPT within 7 mos after D's death?

IC 32-17-13-7(d)(2)-(3)
Appendix 4
NON-GOVERNMENTAL
CLAIMS AGAINST NONPROBATE TRANSFEREES
Page 2
Did C file written

YES demand for suit in E & NO
serve PR & NPTs within 30 days after
final claim allowance in E?
IC 32-17-13-7(j)
YES Did PR or C sue NPTs NO

within 9 mos. after D's death?
IC 32-17-13-8(b)
After final claim
YES allowance in E, if PR filed notice of NO
intent not to file suit, did C file suit within 30
days after PR filed the notice?
IC 32-17-13-8(b)(1)
If PR did not file

YES notice of intent not to file NO
suit, did C file suit within 90 days after

IC 32-17-13-8(b)(2)
Thanks to Jeffrey B. Kolb, of Vincennes, for permission to reproduce and update this diagram.
Appendix 5
GOVERNMENTAL CLAIMS
AGAINST NONPROBATE TRANSFEREES
[IC 32-17-13 for Decedent's dying after June 30, 2018]
Is there an
YES administration of the decedent's NO Claim is
(D's) estate (E) unenforceable
IC 32-17-13-7(d) against
nonprobate
transferees
(NPTs)
because no
YES Is D's E insolvent? NO estate
IC 32-17-13-2(c) administreation
was opened
or estate is
solvent
If FSSA is
YES NO
claimant (C), did D fail to disclose
asset of nonprobate transfer to C?
IC 12-15-9-0.6(d)
If FSSA is C,
YES did D establish nonprobate NO
transfer after April 30, 2002?

IC 12-15-9-0.8
Did claimant (C)

YES file claim in E & serve claim on NO
PR & each nonprobate transferee (NPT) within
5 mos. after D's death?
IC 32-17-13-7(d)
If PR didn't
YES allow/disallow claim, did C petition NO
for trial within 30 days after PR's deadline
under IC 29-1-14-10(a)?
IC 32-17-13-7(f)
Appendix 5
GOVERNMENTAL CLAIMS
AGAINST NONPROBATE TRANSFEREES
Page 2
Did C file
YES written demand for suit in E & NO
serve PR & each NPT within 7 mos after
D's death?
IC 32-17-13-7(d)
Did C file written

YES demand for suit in E & NO
serve PR & NPTs within 30 days after
IC 32-17-13-7(j)
YES NO
Did PR or C sue NPTs
within 9 mons after D's death?
IC 32-17-13-6(b))
After final claim

allowance in E, if PR filed
YES
notice of intent not to file suit, did C file NO
suit within 30 days after PR filed
the notice?
IC 32-17-13-8(b)
If PR did not file

YES notice of intent not to file suit, NO
did C file suit within 90 days
after final claim allowancein E?
IC 32-17-13-8(b)
Thanks to Jeffrey B. Kolb, of Vincennes, for permission to reproduce and update this diagram.
Appendix 6

)
COUNTY OF SCHMO ) CAUSE NO. 00C01-2111-ES-000011
)
OF THE ESTATE OF )
JOBY SCHMO, )
Deceased )
WRITTEN DEMAND FOR PROCEEDINGS AGAINST NONPROBATE TRANSFEREES

The Claimant, Snuffy Smith, makes this Written Demand for Proceedings Against Nonprobate
Transferees under Ind. Code § 32-17-13-7 and says as follows:
1. Joby Schmo (the “Decedent”) died intestate on November 31, 2021.
2. The Court appointed Billy Bob Schmo to serve as the Decedent’s Personal Representative and
the Clerk issued Letters of Administration to the Personal Representative on November 31, 2021.
3. The Publisher’s Affidavit of the Schmo County Gazette states that it published the first notice
to creditors on December 17, 2021.
4. The Claimant filed his claim against the Decedent’s estate on February 29, 2022 (the “Claim”).
5. More than three months and 15 days have elapsed since the first publication of notice to creditors
and the Personal Representative has neither allowed nor disallowed the Claim within the deadline
specified in Ind. Code § 29-1-14-10(a).
6. The Claimant filed a Petition to Set Claim for Trial in the Schmo Circuit Court on April 4, 2022,
a date that was less than 30 days after the expiration of the Personal Representative’s deadline to
allow or disallow the Claim under Ind. Code § 29-1-14-10(a).
NOW, THEREFORE, the Claimant demands that the Personal Representative commence
proceedings against the following transferees of nonprobate transfers by the Decedent:
Nonprobate Transfer Transferee Name Transferee Address

Transfer on Death Transfer of a 25%
interest in Boss, the Decedent's grand 90 N. Schmo Ave.
Billy Bob Schmo
champion hog Schmoville, IN 47000
Appendix 6
Nonprobate Transfer Transferee Name Transferee Address

Cindy Lou Who-Schmo
Ernest T. Schmo
Jimmy Joe Schmo
____________________________________
I, Snuffy Smith, affirm under penalty for perjury that the foregoing representations are true.
____________________________________
Snuffy Smith
_______________________________
Lawyer Lolly,Jr., Claimant’s Counsel
Lolly, Lolly & Lolly
1 Schmo St.
Schmoville, IN 47000
Ph. 555-555-5550
Appendix 7

)
COUNTY OF SCHMO ) CAUSE NO. 00C01-2111-ES-000011
)
OF THE ESTATE OF )
JOBY SCHMO, )
Deceased )
PETITION TO SET CLAIM FOR TRIAL

The Claimant, Snuffy Smith, petitions the Court to set the Claimant’s claim for trial under Ind. Code
§ 29-1-14-10(e) and says as follows in support of the petition:
1. Joby Schmo (the “Decedent”) died intestate on November 31, 2021.
2. The Court appointed Billy Bob Schmo to serve as the Decedent’s Personal Representative and
the Clerk issued Letters of Administration to the Personal Representative on November 31, 2021.
4. The Claimant filed his claim against the Decedent’s estate on February 29, 2022 (the “Claim”).
6. The Claimant is filing this petition on April 4, 2022, a date that is less than 30 days after the
expiration of the Personal Representative’s deadline to allow or disallow the Claim under Ind.
Code § 29-1-14-10(a).
NOW, THEREFORE, the Claimant prays the Court to enter an order setting the Claim for trial.
____________________________________
Appendix 7
____________________________________
Snuffy Smith
_______________________________
1 Schmo St.
Ph. 555-555-5550
Appendix 8

)
COUNTY OF SCHMO ) CAUSE NO. 00C01-2301-CC-000011
)
SNUFFY SMITH, EX REL. ESTATE OF )
JOE SCHMO, )
)
Plaintiff, )
)
v. )
)
BILLY BOB SCHMO, CINDY LOU )
WHO-SCHMO, ERNEST T. SCHMO, )
AND JIMMY JOE SCHMO, )
)
Defendants. )
VERIFIED COMPLAINT AGAINST NONPROBATE TRANSFEREES

Plaintiff Snuffy Smith complains in the name of the Estate of Joe Schmo against the Defendants, Billy
Bob Schmo, Cindy Lou Who-Schmo, Ernest T. Schmo, And Jimmy Joe Schmo, and says as follows:
1. Boss, the grand champion hog owned by Joby Schmo (the “Deceased Transferor”), entered the
Plaintiff’s field and consumed $10,000 worth of corn on September 31, 2021.
2. The Deceased Transferor died intestate on November 31, 2021.
3. The Schmo Circuit Court appointed Billy Bob Schmo to serve as the Decedent’s Personal
Representative and the Clerk issued Letters of Administration to the Personal Representative or
administration of the Deceased Transferor’s estate under Cause Number 00C01-2111-ES-000011
(the “Estate”) on November 31, 2021.
5. Plaintiff filed his claim to recover $10,000 in damages against the Decedent’s estate (the
“Claim”) on February 29, 2022.
Appendix 8
7. Plaintiff filed a Petition to Set Claim for Trial in the Schmo Circuit Court on April 4, 2022, a
date that was less than 30 days after the expiration of the Personal Representative’s deadline to
allow or disallow the Claim under Ind. Code § 29-1-14-10(a).
8. Plaintiff delivered a Written Demand for Proceedings Against Nonprobate Transferees under
Ind. Code § 32-17-13-7 to each of the Personal Representative and the Defendants and filed a copy
of the Written Demand for Proceedings Against Nonprobate Transferees in the Estate on April 31,
2022.
9. The Schmo Circuit Court entered a judgment allowing the Claim on November 31, 2022 (the
“Claim Allowance Judgment”) and finding that the Deceased Transferor’s probate estate was
insolvent.
10. The Personal Representative has failed to commence proceedings against the Defendants, so
Plaintiff is entitled to commence proceedings in the name of the Estate under Ind. Code § 32-17-
13-7(g).
11. Plaintiff holds an allowed claim by the Claim Allowance Judgment in the amount of
$10,000.00, and Plaintiff is entitled to judgment against the Defendants to enforce the Claim
Allowance Judgment in the amount of $10,000.00 and the costs of this proceeding under Ind. Code
§ 32-17-13-6.
NOW, THEREFORE, Plaintiff prays the Court for entry of judgment for $10,000.00 and the costs
of this proceeding in favor of Plaintiff and against the Defendants to be apportioned among the
defendants as follows:
1. Against Defendant Billy Bob Schmo, 25%;

2. Against Defendant Cindy Lou Who-Schmo, 25%;
3. Against Defendant Ernest T. Schmo, 25%; and
4. Against Defendant Jimmy Joe Schmo, 25%.
____________________________________
Snuffy Smith, as the Plaintiff ex rel. the Estate
of Joe Schmo
Appendix 8
____________________________________
Snuffy Smith
_______________________________
1 Schmo St.
Ph. 555-555-5550
Jeff R. Hawkins
Hawkins Elder Law
PART 1. INTRODUCTION
Purpose:
1. Two Main Asset Channels From Decedent to Beneficiaries
2. Creditors’ Procedural Requirements in Each Channel
3. Beneficiaries’ Asset Protection Strategies in Each Channel

TWO ASSET CHANNELS:
1. Decedent’s Probate Estate
2. Title Transfer Systems that Bypass the Probate Estate

Key Questions:
1. WHAT transfers?
2. WHEN does it transfer?
3. HOW does it transfer?
4. WHERE does it go?

PART 2.
CREDITORS’ CLAIMS IN “PROBATE ESTATES”
Probate Code Terminology
What is an “Estate?”
A decedent’s “Estate” is:
• The set of economic rights and interests remaining
after the decedent’s death,
• NOT the court case opened to administer the Estate.
IC 29-1-1-3(a)(32): "Probate Estate" denotes
WHAT: the property transferred
WHEN: at the death of a decedent
HOW & WHERE:
o under the decedent's will OR
o under IC 29-1-2 [Intestate distribution rules],
in the case of a decedent dying intestate.
WHEN, WHAT, WHERE & HOW - IC 29-1-7-23(a):
(a) When a person dies, the person's real and personal
property passes to persons to whom it is devised by the
person's last will OR, in the absence of such disposition, to
the persons who succeed to the person's estate as the
person's heirs; BUT it shall be subject to the possession of
the personal representative AND to the election of the
surviving spouse AND shall be chargeable with the expenses
of administering the estate, the payment of other claims AND
the allowances under IC 29-1-4-1, EXCEPT as otherwise
provided in IC 29-1.
TO WHOM?
• IC 29-1-1-3(a)(6): "Devise" or "legacy" = Transfer under a
Decedent’s Will of either real or personal property or both.
• IC 29-1-1-3(a)(8): "Devisee" and "legatee" = Beneficiary of the
devise or legacy under a Decedent’s Will
• IC 29-1-1-3(a)(14): "Heirs" = people entitled to a Decedent’s real
and personal property under the statutes of intestate succession
• IC 29-1-1-3(a)(9): Devisees & Heirs = Distributees
More Probate Property Transfer Questions
• How does a decedent’s probate property pass to
distributees automatically under the will upon the
decedent’s death?
• Are there time limits for the distributees to present the
decedent’s will and claim probate property?
• How can the distributees of an intestate decedent
determine whether the decedent died intestate?
• How can a creditor intercept a deceased debtor’s probate
property from title passage at death?
How does a decedent’s probate property pass to distributees
automatically under the will upon the decedent’s death?
• It’s a kind of suspended animation.
• A testate decedent’s title transfers immediately and
automatically under IC 29-1- 7-23(a), but:
• IC 29-1-7-24:
Except as provided in IC 29-1-13-2, no will is effective for
the purpose of proving title to, or the right to the
possession of, any real or personal property disposed of by
the will, until it has been admitted to probate.
IC 29-1-7-4 Petitions; hearing
(a) Any interested person or a personal representative named in the
will may petition the court having jurisdiction of the administration of
the decedent's estate:
(1)to have the will of such decedent, whether the same is written or
is unwritten, is in his possession or not, is lost, destroyed, or
without the state, probated;
****
(b) A petition for probate may be combined with a petition for the
issuance of letters testamentary, or as administrator with the will
annexed, and a person interested in the probate of a will and in the
administration of the estate may petition for both.
IC 29-1-7-4 Petitions; hearing (Continued)
(c) No notice that a will is to be offered for probate or that it has been
probated shall be required.
(d) No notice of the filing of, and hearing on, the petition described in
this section shall be given to or served upon any person. If the
petition described herein is filed in term time, it shall be heard
forthwith by the court, and if filed in vacation, it shall be heard by the
judge of said court if present, or in his absence by the clerk of the
said court.
Are there time limits for distributees to present a decedent’s
will and claim probate property?
YES – It could be a courthouse race under IC 29-1-7-15.1(a):
(a) When it has been determined that a decedent died intestate
and letters of administration have been issued upon the
decedent's estate, no will shall be probated unless it is presented
for probate:
(1) before the court decrees final distribution of the estate; or
(2) in an unsupervised estate, before a closing statement has
been filed.
How can a creditor intercept a deceased debtor’s probate
property from title passage at death?
IC 29-1-7-23 (a) When a person
dies, the person's real and
personal property passes to
persons …; BUT it shall be subject
to the possession of the personal
representative AND to the
election of the surviving spouse
AND shall be chargeable with the
expenses of administering the
estate, the payment of other
claims AND the allowances under
IC 29-1-4-1, except as otherwise
provided in IC 29-1.
Personal Representative’s Probate Title Interception
• Who can be appointed personal representative?
• What are the personal representative’s duties?

Who can be appointed personal representative?
IC 29-1-10-1(a):
1. Executor designated in a probated will
2. Surviving spouse included as a devisee in a probated will
3. Another devisee in a probated will
4. Surviving spouse or surviving spouse’s nominee
5. An heir or heir’s nominee
6. Anyone else, including a creditor’s nominee
What are the personal representative’s duties?
Fall v. Miller, 462 N.E.2d 1059, 1061 (Ind. App. 1984)
• Fiduciary obligation to administer a decedent’s probate estate
impartially for the benefit and protection of creditors AND
distributees;”
• Preserve & conserve assets against waste & mismanagement;
• Liable for any loss to the estate arising from his neglect or
wrongful acts or omissions or for any other negligent or willful
act or nonfeasance; and
• Liable for any loss in failure to collect a claim diligently.
Claim = In Rem Civil Complaint Against Probate Estate
IC Chapter 29-1-14 governs claims.
IC 29-1-4-1 sets claim deadlines.
• Claims without deadlines under IC 29-1-4-1(a):
o “expenses of administration” and
o “claims of the United States, the state, or a subdivision of the
state.”
Nongovernmental Claims Under IC 29-1-4-1(a):
(a) A creditor must file a claim with the court in which such
estate is being administered within:
o 3 months after the date of the first published notice to
creditors; or
o 3 months after the court has revoked probate of a will, in
accordance with IC 29-1-7-21, if the claimant was named as a
beneficiary in that revoked will;
whichever is later.
Nongovernmental Claims Under IC 29-1-4-1(b) & (c):
(b) No claim if SOL barred it at the time of decedent's death.
(c) If not barred by SOL at the time of the decedent's death,

claim must be filed within:
o 3 months after first published notice to creditors; or
o 3 months after the court has revoked probate of a will, under
IC 29-1-7-21, if the claimant was named as a beneficiary in
that revoked will;
whichever is later.
Nongovernmental Claims Under IC 29-1-4-1(d)-(f) :
d) All claims barrable under subsection (a) are barred if not

filed within 9 months after the decedent’s death.
e) Creditors can enforce mortgages, pledges, and other liens

without finding a claim, but they must file timely claims to
collect collateral sale deficiencies.
f) A tort claim not barred by an SOL may proceed within the

SOL, but must be filed within subsection (a)’s deadlines to
collect against the probate estate assets.
Succinct Claim Statement Under IC 29-1-4-2:
Written claim is filed in the Clerk’s office, then the Clerk sends
the claim to the personal representative.
Written claim based on an instrument signed by the decedent

must include the instrument.
Written claim must account for all credits, settles, and

deductions.
Written contingent claim must describe the contingencies.

Claim Priorities Under IC 29-1-4-9:
1. Costs and expenses of administration (including PR &
lawyer fees).
2. Reasonable funeral expenses and related expenses subject to
caps for deceased public assistance recipients.
3. Surviving spouse and child allowances under IC 29-1- 4-1.
4. Debts and taxes having preference under United States laws.
5. Medical expenses of decedent’s last illness.
6. Debts and taxes having preference under Indiana law (2022).
7. All other claims.
Real Property Sale to Pay Claims
IC 29-1-7-15.1(b)-(e)
Strategies to Protect Property for Distributees:
1. Skip probate administration and claim real property by real
property title passage affidavit under IC 29-1- 7-23(b) if:
• the probate estate only comprises real property,
• the distributees are mutually cooperative, and
• none of the distributees has judgment liens or other legal or
financial vulnerabilities.
2. Petition for administration more than 5 months after

decedent’s death if:
• probate estate only comprises real property and
• distributees are either uncooperative or financially vulnerable.
IC 29-1- 7-15.2 protects sale proceeds like IC 29-1- 7-15.1(b)
protects real property from sale to pay claims.
3. If a claim is filed and the petition for administration of a real
property-only estate was filed more than 5 months after
decedent’s death:
• ALLOW the claim, unless the PR has an affirmative claim
defense; and
• Include a claim allowance statement stating:
o Applicability of IC 29-1- 7-15.1(b);
o Probate estate lacks personal property to satisfy the claim; and
o PR will file an insolvent estate closing statement and distribute
or sell real property.
4. Pursue real property under IC 29-1- 7-23(b)-(d) and temporarily
abandon low-value personal property if:
• Probate estate comprises real property and intangible personal
property held by banks or other third parties worth a total probate
estate value (real and personal) exceeding the $50,000 limit
($100,000 for the decedents dying after June 30, 2022);
• Distributees are mutually cooperative; and
• Distributees are financially sound.
Distributees can claim personal property Indiana’s Revised
Unclaimed Property Act.
5. Seek PR appointment to scrutinize merits of an inevitable,

timely-filed claim as mandated by IC 29-1-14-11:
Sec. 11. Before allowing or paying claims against the estate he
represents, it shall be the duty of every personal representative
to inquire into the correctness of all claims against the estate
and make all available defenses thereto, and if he fails so to
do, he shall be liable on his bond, at the suit of any person
interested in the estate, for all damages sustained by the estate
in consequence of such neglect.
PART 3 – CLAIMS AGAINST NONPROBATE TRANSFEREES
Counter-Punching as an Asset Protection
Strategy Against Nonprobate Claims
1. Avoid filing a petition for administration within 5 months after
the deceased transferor’s death because the claimant must file a
claim against the decedent’s probate estate Within 5 months
after the deceased transferor’s death before pursuing claims
against nonprobate transferees.
• A claimant cannot file a claim within 5 months if there is no estate
administration in which to file the claim.
• A claimant can file a petition for administration, but some creditors
are unfamiliar with probate estate administration procedures.
2. Seek appointment of a personal representative.

• The personal representative sets the pace and can require the
claimant to follow the rules.
• Even if the creditor satisfies procedural requirements with a
claim that consumes all nonprobate property, the personal
representative and personal representative’s counsel are entitled
to fees and reimbursement of expenses.
2. Seek appointment of a personal representative.
• The personal representative sets the pace and can require the
claimant to follow the rules.
• The person representative can challenge the claim against the
probate estate on the merits, whereas a nonprobate transferee
has no control over those proceedings.
• Even if the creditor satisfies procedural requirements with a
claim that consumes all nonprobate property, the personal
representative and personal representative’s counsel are entitled
to fees and reimbursement of expenses.
3. Negotiate a Claim Settlement because the procedures for claims

against nonprobate transferees are a daunting gauntlet that
creditors may prefer to avoid with claim compromises.
4. Pursue asset values in claim enforcement sales.
• Family members may be able to purchase assets at bargain prices.
• Alternatively, asset sales may yield dividends after satisfying
claims.
CONCLUSION
1. Prepare factual and statutory analysis thoroughly.
2. Remember, all details maybe essential!
3. Humility and empathy go a long way.

THANK YOU
Jeff R. Hawkins
Hawkins Elder Law
999 North Section Street
Post Office Box 382
Sullivan, Indiana 47882-0382
Tel: 812-268-8777
Fax: 812-268-8838
Email: jeff@hawkinselderlaw.com
Web: www.HawkinsElderLaw.com
Section
Seven
Ethical Considerations for
Asset Protection Strategies
Dentons Bingham Greenebaum LLP
Myekeal Smith
Dentons Bingham Greenebaum LLP
Section Seven

Asset Protection Strategies…………………………... Margaret M. Christensen
Myekeal Smith
PowerPoint Presentation
Article – Understanding Conflicts of Interest Arising from a Material Limitation on

Representation
i
Asset Protection Strategies
&
Myekeal Smith
April 27, 2022

AGENDA
• Competence (Rule 1.1)

• Confidentiality (Rule 1.6)
• Conflicts of Interest (Rules 1.7 – 1.10)
• Rule 5.4 (Professional Independence)
• Clients with Diminished Capacity (Rule 1.14)
• Rule 1.2 (Scope of Representation and Allocation of Authority Between
Client and Lawyer)
• Duties to Third Parties and Tribunals (Rules 3.3; 4.1-4.4)
• Aiding a Client’s Fraudulent Transactions (Rule 1.2(d))
• When “Stuff” Happens (Rules 1.4; 8.4)
2
Competence
3
Competence
Indiana Rule of Professional Conduct 1.1:
A lawyer shall provide competent representation to a

client. Competent representation requires the legal
knowledge, skill, thoroughness and preparation
reasonably necessary for the representation.
Month Day, Year 4

Technological Competence
Indiana Rule of Professional Conduct 1.1, Comment 6
To maintain the requisite knowledge and skill, a lawyer

should keep abreast of changes in the law and its
practice, including the benefits and risks associated
with the technology relevant to the lawyer’s practice,
engage in continuing study and education and comply
with all continuing legal education requirements to which
the lawyer is subject.
Month Day, Year 5

When “Stuff” Happens
Indiana Rule of Professional Conduct 2.1; Preamble [2]
• In representing a client, a lawyer shall exercise independent professional

judgment and render candid advice. In rendering advice, a lawyer may
refer not only to law but to other considerations such as moral, economic,
social and political factors, that may be relevant to the client's situation.
• As advisor, a lawyer provides a client with an informed understanding of
the client's legal rights and obligations and explains their practical
implications.
• A lawyer has the duty to advise clients about foreseeable and
potentially undesirable effects of irrevocable asset protection
transactions
6
Confidentiality
7
Revealing confidential information
Indiana Rule of Professional Conduct 1.6
(a) A lawyer shall not reveal information relating to

representation of a client unless the client gives
informed consent, the disclosure is impliedly
authorized in order to carry out the representation or
the disclosure is permitted by paragraph (b).
8
Revealing confidential information
• In re Goebel (1998)
• Facts:
- Lawyer A represented criminal client
- His partner, Lawyer B, represented guardianship client
- Guardianship client happened to be a state witness in criminal case against
criminal client
- Criminal client demanded location of guardianship client from Lawyer A
- Lawyer A acquiesced, showing criminal client an envelope with the address
- Criminal client murdered guardianship client’s husband
• Verdict:
- Court held confidential information was broad, including all information
concerning representation and regardless of the source
- Lawyer’s fear for his own safety did not justify his revelation
9
SCOPE OF CONFIDENTIALITY
Confidentiality: LAWYER must stay quiet

• Ethical obligation in all contexts.
• Applies to information learned from client in scope of representation.
• Client may authorize disclosure.
Privilege: LAWYER AND CLIENT can stay quiet
• Prevents compelled disclosure to tribunal.
• Applies to communications with client for purpose of seeking legal
advice.
• Client may waive privilege.
10
Conflicts Of Interest
CONFLICTS OF INTEREST
Rule of Professional Conduct 1.7
(a) Except as provided in paragraph (b), a lawyer shall not represent a

client if the representation involves a concurrent conflict of interest. A
concurrent conflict of interest exists if:
(1) the representation of one client will be directly adverse to
another client; or
(2) there is a significant risk that the representation of one or more
clients will be materially limited by the lawyer's responsibilities to
another client, a former client or a third person or by a personal
interest of the lawyer.
12
Rule of Professional Conduct 1.7
(b) Notwithstanding the existence of a concurrent conflict of interest

under paragraph (a), a lawyer may represent a client if:
(1) the lawyer reasonably believes that the lawyer will be able to
provide competent and diligent representation to each affected
client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a claim by
one client against another client represented by the lawyer in the
same litigation or other proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing.
13
Material Limitations
• “The purpose of the rules against representing conflicting interests is

not only to prevent dishonest conduct, but also to avoid placing the
honest practitioner in a position where he may be required to choose
between conflicting duties or attempt to reconcile conflicting interests.”
Pekin v. Scagliotti, 2013 WL 2697583, *5 (Cal. Ct. App. 2013)
• “Loyalty to a client is impaired when an attorney is burdened with

conflicting interests or responsibilities that prevent a lawyer from
considering, recommending, or carrying out an appropriate course of
action for the client.”
Seresky v. Warden, 31 Conn. L. Rptr. 228, (Conn. Super. Ct. 2001)
• Would an attorney be tempted to diminish the vigor of one

representation in order to promote the interests of another client?
14
Matter of Lantz, 442 N.E.2d 989 (Ind. 1982)
• Attorney prosecuted a criminal defendant in his capacity as a part-time

prosecutor
• At the same time represented the criminal defendant in an unrelated
civil matter.
• Lantz’s “dual and diametrically opposed duties to the State and to his
client compromised his independent professional judgment.”
• You cannot sue your own client – compromises your
independence and loyalty.
15
Matter of Daley, 116 N.E.3d 457 (Ind. 2019)
• Attorney represents two criminal defendants without realizing they are

co-defendants in the same matter.
• Co-Defendant A wanted to serve as State’s witness against Co-
Defendant B.
• Daley did not read the Probable Cause Affidavit or determine Co-
Defendant B’s identity.
• Daley recognized his mistake at a pre-trial conference. He immediately
withdrew but still received a public reprimand.
• It’s your responsibility to determine client identity and do a robust
conflict analysis.
16
Conflicts of Interest:
Self-Interested
Transactions
RENEGOTIATING FEES
• Rule 1.8.(a): “A lawyer shall not enter into a business

transaction with a client. . .”
• Rule 1.8(a), Comment 1: “. . . Paragraph (a) applies when a
lawyer seeks to renegotiate the terms of the fee
arrangement with the client after representation begins in
order to reach a new agreement that is more advantageous
to the lawyer than the initial fee arrangement.”
• Rule 5.7, Comment 5: When a client-lawyer relationship
exists with a person who is referred by a lawyer to a
separate law-related service entity controlled by the lawyer,
individually or with others, the lawyer must comply with Rule
1.8(a).
18
WRITING MYSELF INTO THE WILL?
• Rule 1.8(c): A lawyer shall not solicit any substantial gift from a client,
including a testamentary gift, or prepare on behalf of a client an
instrument giving the lawyer or a person related to the lawyer any
substantial gift unless the lawyer or other recipient of the gift is related to
the client.
• For purposes of this paragraph, related persons include a spouse, child,
grandchild, parent, grandparent or other relative or individual with whom
the lawyer or the client maintains a close, familial relationship.
19
ACCEPTING GIFTS-Comments To Rule 1.8
• Comment 6: A lawyer may accept a gift from a client, if the transaction

meets general standards of fairness. For example, a simple gift such as
a present given at a holiday or as a token of appreciation is permitted. (A
substantial gift may be voidable under the doctrine of undue influence).
• Comment 7: If effectuation of a substantial gift requires preparing a legal
instrument such as a will or conveyance the client should have the
detached advice that another lawyer can provide. The sole exception to
this Rule is where the client is a relative of the donee.
• Comment 8: A Lawyer may solicit future employment, such as being
named the executor of the client’s estate.
20
ACTING AS EXECUTOR:
“special position of obligation & responsibility”
“As an attorney and executor of the estate, the

respondent entered into a fiduciary relationship which
placed him in a special position of obligation and
responsibility. Pleading ignorance of the very mechanics of
the job for which he was hired is inconsistent with the essence
of his fiduciary position.”
Matter of Woolbert, 672 N.E.2d 412, 416 (Ind. 1996)

• (violated 29-1-10-13 by taking unauthorized fees during pendency of
supervised estate)
• 1-year suspension
21
ACTING AS PERSONAL REPRESENTATIVE:
In re Miller, 730 N.E.2d 171, 172 (Ind. 2000)
• Respondent was appointed personal representative and attorney for an

estate pending
• Over 5 years, wrote 111 checks totaling $148,925 from the estate
payable to himself. The checks were for varying amounts and were not in
sequential order. Of the $148,925, only $80,000 could be identified as
attorney fees and executor fees.
• While the respondent, as attorney and personal representative of the
estate, had authority to pay himself fees pursuant to Ind. Code 29–1–
7.5–3, he breached his fiduciary duty to the estate by paying himself
$68,925 more than the identifiable executor and attorney fees.
• 8.4(d) violation (conduct prejudicial to the administration of
justice); 12-month suspension
22
Third Party Payor
THIRD PARTY PAYING FOR LEGAL SERVICES
Rule 1.7, Comment 13
• A lawyer may be paid from a source other than the
client, including a co-client, if the client is informed of
that fact and consents and the arrangement does not
compromise the lawyer's duty of loyalty or independent
judgment to the client.
• See Rule 1.8(f). If acceptance of the payment from any other source
presents a significant risk that the lawyer's representation of the client
will be materially limited by the lawyer's own interest in accommodating
the person paying the lawyer's fee or by the lawyer's responsibilities to a
payer who is also a co-client, then the lawyer must comply with the
requirements of paragraph (b) before accepting the representation,
including determining whether the conflict is consentable and, if so, that
the client has adequate information about the material risks of the
representation.
24
Rule 1.8.
• (f) A lawyer shall not accept compensation for

representing a client from one other than the client
unless:
(1) the client gives informed consent;
(2) there is no interference with the lawyer's independence
of professional judgment or with the client-lawyer
relationship; and
(3) information relating to representation of a client is
protected as required by Rule 1.6.
25
. . . Because third-party payers frequently have interests that

differ from those of the client, including interests in minimizing
the amount spent on the representation and in learning how
the representation is progressing, lawyers are prohibited from
accepting or continuing such representations unless the
lawyer determines that there will be no interference with the
lawyer's independent professional judgment and there is
informed consent from the client.
26
Sometimes, it will be sufficient for the lawyer to

obtain the client's informed consent regarding the
fact of the payment and the identity of the third-party
payer.
• Rule 1.6, Confidentiality
• Rule 1.7, Conflict of Interest
27
Rule 5.4: Professional Independence
(c) A lawyer shall not permit a person who recommends,

employs, or pays the lawyer to render legal services for
another to direct or regulate the lawyer's professional
judgment in rendering such legal services.
Comments:
• [1] . . . . Where someone other than the client pays the lawyer's fee or
salary, or recommends employment of the lawyer, that arrangement does
not modify the lawyer's obligation to the client.
• [2] Rule 1.8 requires informed consent and third-party payor may not
dictate legal strategy
28
Joint Representation
JOINT REPRESENTATION PERMISSIBLE
There is nothing inherently wrong in

representing multiple clients where their
interests are aligned.
Cincinnati Ins. Co. v. Wills, 717 N.E.2d 151, 161 (Ind. 1999)
30
JOINT REPRESENTATION
Representation of Debtors and Creditors
• Cannot represent parties on opposite sides of the “V”

• Can represent opposing parties in unrelated matters, with valid conflict
waivers.
In re Art Van Furniture, LLC, 617 B.R. 509 (Bankr. Del. 2020).
31
Representation of Borrowers and Guarantors in Credit
Transactions
• Closely held business that filed for Chapter 11 bankruptcy.
• The owners of the corporation were also the guarantors of the
corporation’s debt.
• Attorney, who had previously represented the owners of the closely held
corporation in state court, filed a petition to appear as counsel for the
debtor corporation. The trustee of the estate filed a motion to disqualify
the attorney and to disgorge the fees that the attorney purportedly
earned on the matter.
• The 9th Circuit found that the attorney attempted to avoid the guarantors’
personal liability on a loan to the debtor corporation, there was a conflict
in representing the company in the Bankruptcy proceedings where the
attorney would have to argue the opposite.
In re Plaza Hotel Corp.,
1990 Bankr. LEXIS 2898 (9th Cir. 1990).
32
Representation of Responsible Parties and Creditors in
Environmental Liability Matters
• Dispute as to who was responsible for environmental clean up
• Lawyer represented a defendant insurance carrier. His former firm had
represented the parent company of another defendant in unrelated
matters.
• Law firm was disqualified
• The co-defendant’s parent company did not have a separate legal team, and
therefore the parent company controlled all of the co-defendant’s legal affairs.
AND
• The lawyer representing the insurance carrier was not screened off from the
firm’s work for the parent company.
Lennar Mare Island, LLC v. Steadfast Ins. Co.,
105 F. Supp. 3d 1100 (E.D. Cal. 2015).
33
Representation of Business Entities and Owners
• Attorney represented family-owned corporation, controlled by “elderly

and incapacitated matriarch, one son who managed business
operations, and 6 siblings with ownership interest.
• The “Managing Son” consulted attorney about voting control of the
corporation and used that legal advice to advance his own interests
and exercise control, getting mother to transfer stock to him, removing
his siblings from the company’s governing board, terminating two
siblings from employment at the corporation, and defending suits
brought against him from those siblings.
• Attorney represented son in the resulting lawsuit, sought to hold
corporation in contempt, while still representing the corporation in other
matters.
Matter of C.S. (2010)
34
Representation of Fiancées in Prenuptial Agreements
• An attorney drafted a prenuptial agreement wherein Wife waived her

right of election. After the couple was married, the husband died, and
the attorney represented the estate.
• The wife then filed a motion to exclude the attorney from representing
the husband’s estate. The court found that the wife was fraudulently
induced into executing the prenuptial agreement by the attorney.
• The court found that in the wife’s contest of the will, the attorney would
likely be called as a witness and that would therefore present a conflict
vis a vis the attorney's previous concurrent representation of the
husband and wife.
In re Van Zandt, 117 A.D.2d 812 (N.Y. App. Div. 1996).
35
Representation of Married Couples
• An attorney at a law firm drafted the wills of husband and wife which
provided for a marital trust and subsequent trust where husband’s
children were beneficiaries.
• When wife died, there was a dispute over whether her residuary estate
or marital trust should pay estate and inheritance taxes.
• Attorney who drafted a will was disqualified from representing the
trustee because the attorney would have to take a position directly
adverse to the interest of the wife.
Fiduciary Trust Internat. of California v. Superior Court,
218 Cal. App. 4th 465 (Ct. App. Cal. 2013).
36
JOINT REPRESENTATION PERMISSIBLE
It’s okay, until it’s not.
Draft a robust conflict consent.
37
Other Conflicts of Interest:
Former Client
Former Client
Rule 1.9: Duties to Former Clients
(a) A lawyer who has formerly represented a client in a matter shall not
thereafter represent another person in the same or substantially related
matter in which that person’s interests are materially adverse to the
interests of the former client
- UNLESS the former client gives informed consent, confirmed in writing
(b) A lawyer shall not knowingly represent a person in the same or
substantially related matter in which a firm with which the lawyer formerly
was associated had previously represented a client
Comments:
• [3] matters are substantially related if (1) they involve the same
transaction, or dispute; or (2) if there is a substantial risk confidential
information obtained in prior representation would materially advance
the client’s position
39
Former Client – Substantially Related?
In re Robak, 654 N.E.2d 731, 735 (Ind. 1995).
• Attorney’s representation of husband’s estate violated rules of professional conduct where
the attorney drafted a will for wife with knowledge of a marital property agreement, and wife
later sought to invalidate the same agreement, while attorney sought to establish validity of
agreement to preserve estate assets.
• The court observed, “[i]n a general sense, [husband’s attorney’s] duty to aid in the
preservation of the estate’s assets was materially adverse to the wife’s objective of seeking
more from the estate than was originally provided to her in the client’s estate plan.” Id. at
735.
Rust v. Lawson, 714 N.E.2d 769 (Ind. Ct. App. 1999)
• No conflict of interest where an attorney previously represented a party in a single criminal
case and later represented a couple adopting the party’s child, by drafting proposed
findings of fact and conclusions of law.
• “[W]e cannot equate [attorney’s] representation of Rust and subsequent representation of
the Lawsons as a changing of sides in the present matter.”
In re Kirsch, 83 N.E.3d 699 (Ind. 2017)
• Attorney violated Rule 1.7 by representing intended adoptive parents and then assisting the
birth mother in selecting other adoptive parents).
40
Oregon Ethics Op. 2005-148

• Whether Rule 1.9 permits representation of one spouse in a divorce after a
lawyer has done joint estate planning for the couple will depend on whether there
is a “matter specific” or “information specific” conflict
Pennsylvania Ethics Op. 2005-107 (2005)
• Where lawyer represented married couple to execute reciprocal wills and all
communications occurred in the presence of both spouses, the lawyer would be
permitted to later represent the husband in the couple’s divorce on the
understanding that there was no information that the lawyer could use to the
disadvantage of the former client
Atkins v. Trans Union, LLC, 869 F.3d 514, 520 (7th Cir. 2017)
• An attorney’s former representation of Trans Union did not preclude him from
representing a consumer in an action against Trans Union because
representation did not involve substantial risk of the attorney using Trans Union’s
confidential information.
41
Lucci v. Lucci, 150 A.D.2d 650 (N.Y. App. Div. 1989)

• Denied husband’s petition to disqualify his wife’s attorneys because there
was no substantial relationship between wife’s attorney’s prior
representation of husband in sale of assets, formation of corporation, and
purchase of residence and the marital dissolution.
Mathias v. Mathias, 525 N.W.2d 81 (Wis. Ct. App. 1994)
• Concluding “as a matter of law that estate planning which is reasonably
contemporaneous with initiation of divorce proceedings is substantially
related to issues which may arise in those proceedings.”
42
Other Conflicts of Interest:
Imputed Conflicts
43
Imputed Conflicts
Rule 1.10
(a) While lawyers are associated in a firm, none of them shall knowingly
represent a client when any one of them practicing alone would be
prohibited from doing so by Rules 1.7, 1.9, or 2.2
• UNLESS the prohibition is based on a personal interest of the prohibited lawyer
and does not present a significant risk of materially limiting the representation
of the client by the remaining lawyers in the firm.
Rule 1.10, Comment [3]
The rule in paragraph (a) does not prohibit representation where neither
questions of client loyalty nor protection of confidential information are
presented
But see Rule 1.8(k)
Personal conflicts of interest are also imputed to law firm partners, with the
exception of sexual relationship with clients
44
Imputed Conflicts
Definition of “firm” under Rule 1.10

• Comment [1] “firm” includes lawyers employed in a legal services
organization or law department
• Comment [2] a firm of lawyers is essentially one lawyer for purposes of
the rules governing loyalty to the client
45
Imputed Conflicts
Matter of Sexson, 613 N.E.2d 841 (Ind. 1993)

• “Association” is treated as a firm if presented to the
public suggesting it operates as a firm
• Shared letterhead
• Shared phone lines
• Shared personnel
• Other factors:
• Private agreements
• Level of association
• Access to confidential information
46
Representing Clients With
Diminished Capacity
47
Rule 1.14: Client with Diminished Capacity
(a) When a client's capacity to make adequately considered decisions in

connection with a representation is diminished, whether because of
minority, mental impairment or for some other reason, the lawyer shall, as
far as reasonably possible, maintain a normal client-lawyer relationship
with the client.
(Mandatory)
48
(b) When the lawyer reasonably believes that the client has diminished
capacity, is at risk of substantial physical, financial or other harm unless
action is taken and cannot adequately act in the client's own interest, the
lawyer may take reasonably necessary protective action, including
consulting with individuals or entities that have the ability to take action to
protect the client and, in appropriate cases, seeking the appointment of a
guardian ad litem, conservator or guardian.
(Permissive)
49
(c) Information relating to the representation of a client with diminished

capacity is protected by Rule 1.6. When taking protective action pursuant
to paragraph (b), the lawyer is impliedly authorized under Rule 1.6(a) to
reveal information about the client, but only to the extent reasonably
necessary to protect the client's interests.
50
(d) This Rule is not violated if the lawyer acts in good faith to comply with
the Rule.
51
When to Seek a Guardianship
Rule 1.14,
• Comment 5
• If a lawyer has reasonable belief that a client is at risk of substantial
physical, financial or other harm unless action is taken, AND
• Normal client-lawyer relationship cannot be maintained as provided in
paragraph (a) because the client lacks sufficient capacity to
communicate or to make adequately considered decisions in
connection with the representation, then paragraph (b) permits the
lawyer to take protective measures deemed necessary.
52
When to Seek a Guardianship
Rule 1.14
• Comment 7
• Is it necessary to protect the client's interests?
• Is it required by procedural rules?
• “In many circumstances, however, appointment of a legal
representative may be more expensive or traumatic for the client than
circumstances in fact require.”
53
Decision to Seek a Guardianship
• “When a client is unable to act adequately in his own interest, a lawyer

may take appropriate action including seeking the appointment of a
guardian. The lawyer may consult with diagnosticians and others,
including family members, in assessing the client’s capacity and for
guidance about the appropriate protective action. The action taken
should be the least restrictive of the client’s autonomy that will yet
adequately protect the client in connection with the representation.
• American Bar Association Formal Op. 96-404
• “In dealing with a client with a disability, the lawyer has a

heightened degree of professional responsibility to insure that the
best interest of the client is served.”
• Alabama State Bar Formal Op. 1995-03.
54
Poor Judgment or Diminished Capacity
“There is no bright line between difficult and disabled clients and, thus,
none between the application of subparagraphs (a) and (b). . . . [This
determination] can and should be made, however, upon all aspects of
the situation, including . . . opinions of medical experts.”
Alabama State Bar Formal Op. 1995-03.
55
• “Rule 1.14(b) does not authorize the lawyer to take protective action because
the client is not acting in what the lawyer believes to be the client’s best
interest.”
• Colorado Formal Ethics Op. 126 (2015)
• “Clearly subsection (b) means more than a belief that a client is a bad
businessman.”
• Connecticut Informal Ethics Opinion 98-17 (attorney merely noticed that client
made “questionable” business decisions)
• “You must believe that your client cannot act in her own best interests, but this
should not be based upon what you believe are ill-considered judgments
alone. If you feel that you have doubts about your client’s ability to act in her
best interests, it may be appropriate to seek guidance from an appropriate
diagnostician.”
• Connecticut Informal Ethics Op. 97-19.
56
Rule 1.14
• Comment 6
• Consider and balance such factors as:
• client's ability to articulate reasoning leading to a decision,
• variability of state of mind and ability to appreciate consequences of a
decision;
• substantive fairness of a decision; and
• consistency of a decision with the known long-term commitments and
values of the client.
• In appropriate circumstances, the lawyer may seek guidance from an
appropriate diagnostician.
57
Exploring Less Restrictive Alternatives
• Rule 1.14, Comment 7 requires “least restrictive alternative”

• Seeking appointment of guardian under subsection(b) should only be
used as “a last resort.”
• Alabama State Bar Formal Op. 1995-03.
• Lawyer representing “marginally competent client” must maintain “as
regular a lawyer-client relationship as possible and adjust representation
to accommodate a client’s limited capacity before resorting to a request
for a [guardian]”
• Oregon Ethics Op. 2005-159
• “Even where the appointment of a guardian is the only appropriate
alternative, that course, too, has degrees of restriction…the least
restrictive course” might seek a limited guardianship.
• ABA Formal Ethics Op. 96-404 (1996)
58
• “The commentary to 1.14 makes clear that even if maintaining the

ordinary client lawyer relationship may not be possible, a client lacking
legal competence often has the ability to understand, deliberate upon,
and reach conclusions about matter affecting the client’s own well being.”
• Alaska Bar Assoc. Ethics Op. 94-3.
59
• Consulting with concerned family members

• Durable power of attorney (if capacity to execute)
• Revocable trust (if capacity to execute)
• Using a reconsideration period to permit clarification or improvement of
circumstances
• Consulting with/referral to support groups, professional services, adult-
protective agencies or others with the ability to protect the client.
Rule 1.14, cmt 5; ABA Formal Op. 96-404.
60
Maintaining a ‘Normal’ Relationship
• “[t]his obligation implies that the lawyer should continue to treat the client with attention and
respect, attempt to communicate and discuss relevant matters, and continue as far as
reasonably possible to take action consistent with the client’s directions and decisions.”
• Rule 1.14, cmt 5; ABA Formal Op. 96-404
• Duty to maintain normal relationship precludes lawyer from acting solely as arm of the court
by using lawyer’s assessment of client’s “best interests” to justify waiver of client’s rights
without consultation, revealing client’s confidences, disregarding client’s wishes, or
presenting evidence against client.
• Colorado Ethics Op. 126 (2015)
• For example, in In re Flack, the court held duty to maintain normal client-lawyer relationship
with impaired client meant “duty to abide by her estate planning objectives”
• In re Flack, 33 P.3d 1281 (KS. 2001)
• Where a client wishes to be present at trial, his attorney may not make recommendations
that contravene client’s wishes, even if in the name of client’s “best wishes.”
• In re Lee, 754 A.2d 426 (Md. Ct. Spec. App. 2000)
61
Identification of Your Client
• “The fact that a client suffers a disability does not diminish the lawyer's
obligation to treat the client with attention and respect. Even if the person
has a legal representative, the lawyer should as far as possible accord
the represented person the status of client, particularly in maintaining
communication.”
• Rule 1.14, cmt 2
• Normal conflict rules apply in the case of a disabled client.
62
• Your client may not be the person paying the fees.

• Be wary of the third-party payor who wants to call the shots.
• Third-party payor does not affect lawyer’s duty of loyalty or independent
judgment to the client. Rule 1.8(f)
• Do not allow acceptance of payment from third party to create material
limitation on the lawyer’s representation. Rule 1.7
63
• “The client may wish to have family members or other persons

participate in discussions with the lawyer. When necessary to assist in
the representation, the presence of such persons generally does not
affect the applicability of the attorney-client evidentiary privilege.
Nevertheless, the lawyer must keep the client's interests foremost
and, except for protective action authorized under paragraph (b),
must look to the client, and not family members, to make decisions
on the client's behalf.”
• Rule 1.14, cmt. 3
64
• Look to legal representative if one is already appointed

• For minors, typically look to parents as the natural guardians (subject to
exceptions depending on the facts)
• “If the lawyer represents the guardian as distinct from the ward, and is
aware that the guardian is acting adversely to the ward's interest, the
lawyer may have an obligation to prevent or rectify the guardian's
misconduct. See Rule 1.2(d).” Rule 1.14, cmt 4
65
Reminder About Confidentiality
(a) A lawyer shall not reveal information relating to representation of a

client unless the client gives informed consent, the disclosure is impliedly
authorized in order to carry out the representation or the disclosure is
permitted by paragraph (b). Rule 1.6
66
Disclosures of Client’s Condition
• Disclosure of the client's diminished capacity could adversely affect the

client's interests (e.g., proceedings for involuntary commitment).
• Rule 1.14, cmt 8; S.C. Bar Ethics Advisory Op. 94-35.
• Information relating to the representation is protected by Rule 1.6.
Therefore, unless authorized to do so, the lawyer may not disclose such
information.
• When taking protective action pursuant to paragraph (b), the lawyer is
impliedly authorized to make the necessary disclosures, even when the
client directs the lawyer to the contrary.
• Rule 1.14, cmt 8
67
• “Given the risks of disclosure, paragraph (c) limits what the lawyer may
disclose in consulting with other individuals or entities or seeking the
appointment of a legal representative. At the very least, the lawyer
should determine whether it is likely that the person or entity
consulted with will act adversely to the client's interests before
discussing matters related to the client. The lawyer's position in such
cases is an unavoidably difficult one.”
• Rule 1.14, cmt 8
68
Compare with California, which prohibits guardianship proceedings without

client’s consent:
“[It]t is unethical for an attorney to institute conservatorship proceedings

contrary to the client’s wishes, since by doing so the attorney will be
divulging the client’s secrets and representing either conflicting or adverse
interests.”
State Bar of Cal. Standing Committee on Prof. Resp.
and Cond. Formal Op. No 1989-112.
69
“The lawyer’s professional judgment concerning the client’s competency

should be corroborated by professional consultations and reports. The
lawyer may also consult with close relatives of the client with the client’s
consent and whose advice the client might respect to determine if the
refusal to accept the settlement is the result of a significant disability rather
than simply unreasonable.”
• Rhode Island Ethics Op. RI-76.
70
Disclosures to Family
• Cannot make disclosures unnecessary to complete objective of

representation.
• Attorney, who was hired by father of adult child with diminished capacity
to represent child in obtaining Social Security Disability Benefits, could
not release results of psychiatric evaluation to father.
• Illinois State Bar Association Op. on Prof. Cond. No. 00-02.
71
Disclosures to a Physician
• Can make necessary disclosures to evaluate need for guardianship

under section (b).
• “The disclosures necessary for the lawyer to seek expert advice when
there is reason to suspect impairment threatening serious harm to the
client are impliedly authorized in order to carry out the representation
within the meaning of Model Rule 1.6.”
• ABA Informal Opinion 89-1530
• “Attorney should be commended for soliciting advice from the neurologist
in determining the nature of Client’s condition”
• South Carolina Bar Ethics Advisory Op. 94-35.
72
Disclosures to a Physician
• “A lawyer may consult a client’s physician concerning a medical

condition which interferes with the client’s ability to communicate or
make decisions concerning the representation even though the client
has not consented and is currently incapable of doing so.”
• “It is difficult to think of a more appropriate diagnostician with whom the
lawyer can consult concerning a client’s suspected disability than a
physician who, incidentally, is also subject to a duty to maintain
confidences communicated by the patient or on the patient’s behalf.”
• ABA Informal Op. 89-1530.
73
Disclosures to a Adversary
• “Continued representation should not violate the lawyer-client privilege

nor prejudice the client’s interests by informing the adversary of the
client’s mental condition.”
• Rhode Island Ethics Op.RI-76.
74
Disclosures to Tribunals
• Even if lawyer believes that course of action supported by guardian is in

the client’s best interests, a lawyer must still inform the court of his or her
client’s opposition to course of action supported by both the guardian and
the lawyer.
• Alaska Bar Assoc. Ethics Op.94-3.
75
Client Disagreement with Guardian
• Client may not be able to articulate convincingly the reasons why the
client does not wish to follow the guardian’s plan.
• If the client cannot be persuaded, the lawyer’s duty is to represent
the interests of the client.
• If the guardian [still insists on taking the suggested course of action], it is
the lawyer’s duty to make his client’s wishes known to the court.
Alaska Bar Assoc. Ethics Op.94-3.
76
Termination of Representation
• Conflicting authority among various states

• Some states require the guardian to be appointed before attorney may
withdraw
• Others suggest it is the better course, but do not require it.
• California doesn’t allow lawyers to initiate guardianship proceedings
against their clients, but does permit withdrawal if the client’s conduct
prevents the attorney from carrying out the representation.
77
Duties to Third Parties and
Tribunals
78
Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal or fail to correct a
false statement of material fact or law previously made to the tribunal
by the lawyer;
(2) fail to disclose to the tribunal legal authority in the controlling
jurisdiction known to the lawyer to be directly adverse to the position of
the client and not disclosed by opposing counsel; or
(3) offer evidence that the lawyer knows to be false. If a lawyer, the
lawyer's client, or a witness called by the lawyer, has offered material
evidence and the lawyer comes to know of its falsity, the lawyer shall
take reasonable remedial measures, including, if necessary, disclosure
to the tribunal. A lawyer may refuse to offer evidence, other than the
testimony of a defendant in a criminal matter, that the lawyer
reasonably believes is false.
79
Candor Toward the Tribunal
Indiana Rule of Professional Conduct 3.3 (cont.):
(b) A lawyer who represents a client in an adjudicative proceeding and who

knows that a person intends to engage, is engaging or has engaged in
criminal or fraudulent conduct related to the proceeding shall take
reasonable remedial measures, including, if necessary, disclosure to the
tribunal.
(c) The duties stated in paragraphs (a) and (b) continue to the conclusion
of the proceeding and apply even if compliance requires disclosure of
information otherwise protected by Rule 1.6. (d) In an ex parte proceeding,
a lawyer shall inform the tribunal of all material facts known to the lawyer
which will enable the tribunal to make an informed decision, whether or not
the facts are adverse.
80
Sanctions for Aiding a Client’s
Fraudulent Transactions
81
Attorney Fraud and Criminal Conduct
Indiana Rule of Professional Conduct 8.4(c)
Indiana Rule of Professional Conduct 8.4(c) provides that it is professional

misconduct for a lawyer to:
[E]ngage in conduct involving dishonesty, fraud, deceit or
misrepresentation[.]
82
Attorney Fraud & Criminal Conduct
Sanctions for Aiding Client’s Fraudulent Transactions
• Oklahoma attorney disbarred for actively participating in his client’s
cover-up of a prior healthcare fraud.
• In a separate proceeding, attorney was convicted of misprision (18 US
Code § 4) which proscribes having knowledge of and concealing the
commission of another felony.
• The attorney actively participated in his client's healthcare fraud cover-
up. The attorney concealed the client’s fraudulent transactions and
prepare memorandums formalizing the fraudulent transfers.
• The Oklahoma Supreme Court found that disbarment was warranted
because the fraud was widespread and egregious and brought disrepute
to the legal profession.
State ex rel. Okla. Bar Ass'n v. Golden, 201 P.3d 862 (Okla. 2008).
83
Truthfulness in Statements to
Others
84
Truthfulness in Statements to Others
(b) A lawyer who represents a client in an adjudicative proceeding and who

knows that a person intends to engage, is engaging or has engaged in
criminal or fraudulent conduct related to the proceeding shall take
reasonable remedial measures, including, if necessary, disclosure to the
tribunal.
(c) The duties stated in paragraphs (a) and (b) continue to the conclusion
of the proceeding and apply even if compliance requires disclosure of
information otherwise protected by Rule 1.6. (d) In an ex parte proceeding,
a lawyer shall inform the tribunal of all material facts known to the lawyer
which will enable the tribunal to make an informed decision, whether or not
the facts are adverse.
85
• Attorney and her parents engaged in a lengthy campaign aimed at
concealing and shuffling assets to keep them out of the hands of their
creditors. In a suit to collect on the debts, counsel for the creditor was led
to believe by documents created by the attorney and her parents that the
family had transferred the contested funds to Korea. The attorney did not
correct this misunderstanding during the proceedings.
• When it was discovered that the attorney assisted in the concealment
and did not affirmatively correct the mistaken belief that the disputed
funds were wired to Korea, the attorney was charged with, inter alia,
failing to be truthful in her statements to others in violation of Rule 4.1.
• Disbarred
Atty. Griev. Comm'n v. Pak,
929 A.2d 546 (Md. Ct. App. 2007).
86
• District attorney represented himself to be a public defender to a

negotiate the surrender of a murderer.
• 3-months suspension, stayed during 12-month probation
• “This sanction reaffirms for all attorneys, as well as the public, that
purposeful deception by lawyers is unethical and will not go unpunished.”
In the Matter of Paulter,
47 P.3d 1175 (Colo. 2002).
87
Dealing With Unrepresented
Persons
88
Dealing With Unrepresented Persons
In dealing on behalf of a client with a person who is not represented by

counsel, a lawyer shall not state or imply that the lawyer is
disinterested.
When the lawyer knows or reasonably should know that the unrepresented
person misunderstands the lawyer's role in the matter, the lawyer shall
make reasonable efforts to correct the misunderstanding.
The lawyer shall not give legal advice to an unrepresented person,
other than the advice to secure counsel, if the lawyer knows or
reasonably should know that the interests of such person are or have a
reasonable possibility of being in conflict with the interests of the client.
89
Respect for Rights of Third
Parties
90
Respect for Rights of Third Persons
(a) In representing a client, a lawyer shall not use means that have no
substantial purpose other than to embarrass, delay, or burden a third
person, or use methods of obtaining evidence that violate the legal rights
of such a person.
(b) A lawyer who receives a document relating to the representation of the
lawyer's client and knows or reasonably should know that the document
was inadvertently sent shall promptly notify the sender.
91
Respect for Rights of Third Persons
• Attorney represented a bank with a lien in a person’s house.
• Homeowners filed for Chapter 7 Bankruptcy and the bank’s lien was due
to be discharged. Following the discharge, the couple applied for a home
equity loan, but the attorney’s client bank never formally released the
lien.
• The attorney contacted the couple and told them that the lien was never
avoided in bankruptcy, and that they would release the lien in exchange
for $1,000. The attorney did not consult his file when he told the
company this.
• Public Reprimand
In re Wagner, 744 N.E.2d 418 (Ind. 2001).
92
93
Indiana Rule of Professional Conduct 1.4
(a) A lawyer shall:
(1) promptly inform the client of any decision or circumstance with
respect to which the client's informed consent, as defined in Rule
1.0(e), is required by these Rules;
(2) reasonably consult with the client about the means by which the
client's objectives are to be accomplished;
(3) keep the client reasonably informed about the status of the matter;
(4) promptly comply with reasonable requests for information; and
(5) consult with the client about any relevant limitation on the lawyer's
conduct when the lawyer knows that the client expects assistance not
permitted by the Rules of Professional Conduct or other law or
assistance limited under Rule 1.2(c).
94
Indiana Rule of Professional Conduct 1.4 (cont.)
(b) A lawyer shall explain a matter to the extent reasonably necessary to

permit the client to make informed decisions regarding the representation.
95
Indiana Rule of Professional Conduct 1.4 and 8.4(c)
• Attorney represented a client in an appeal of the denial of her petition to

expunge a prior conviction.
• Attorney failed to timely file the appellate brief. When the client
repeatedly asked about the status of her appeal, the attorney replied
implying that the appeal had been filed.
• The Court of Appeals dismissed the appeal for the attorney's failure to
file the brief, and when the client asked about the dismissal, attorney
sent the client a purportedly file marked copy of the brief.
• Attorney then sought leave from the court of appeals to belatedly file the
brief. The Court of Appeals dismissed the client’s appeal with prejudice
and the attorney did not inform the client of dismissal.
• 90-day suspension, without automatic reinstatement.
In re Ellison, 87 N.E.3d 460 (Ind. 2017).
96
In re Ellison Takeaway
• The duty to communicate with a client extends to communicating with

clients about a mistake, and the effects of the mistake on the clients’
case.
• The court in Ellison opined that the attorney’s act of lying to and
misleading the client in conjunction with the attempt to cover-up and
conceal the mistake elevated a relatively small offense into a more
serious offense.
Month Day, Year 97

Thank you
Meg Christensen Myekeal Smith

D +1 317 635 8900 D +1 317 635 8900
E margaret.christensen@dentons.com E Myekeal.smith@dentons.com
Dentons Bingham Greenebaum LLP Dentons Bingham Greenebaum LLP

2700 Market Tower 2700 Market Tower
10 West Market Street 10 West Market Street
Indianapolis, IN 46204 Indianapolis, IN 46204
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Month Day, Year 98

[Pending Publication in Res Gestae as of March 17, 2022]
Understanding Conflicts of Interest Arising from a Material Limitation on Representation
By: Margaret Christensen and Vienna Bottomley
It is no great revelation that Indiana Rule of Professional Conduct 1.7(a)(1) prevents

attorneys from representing multiple clients directly adverse to one another, meaning, litigants on
the opposite side of the “v,” or parties with competing interests to a contract negotiation. The more
interesting conflict discussion arises under Rule 1.7(a)(2), which prohibits representations where
“there is a significant risk that the representation of one or more clients would be materially
limited” by other obligations or personal interests. The terms “significant risk” and “materially
limited” are inevitably fact sensitive, and the prudent attorney should err on the side of obtaining
informed consent any time information related to one representation might be useful or detrimental
to another client’s legal objectives.
Direct Adversity
Sometimes a conflict of interest should be apparent from the outset of a representation, but
attorneys must make reasonable efforts to understand the identity of clients, known adverse parties,
and adverse witnesses at the outset of a case. These include a situation in which a lawyer advocates
in one matter “against a person the lawyer represents in some other matter,” even if the two matters
are “wholly unrelated.” Rule 1.7, Cmt. [6]. For instance, in Matter of Lantz, 442 N.E.2d 989 (Ind.
1982), an attorney prosecuted a criminal defendant in his capacity as a part-time prosecutor, while
at the same time representing the criminal defendant in an unrelated civil matter. The Indiana
Supreme Court concluded that Lantz’s “dual and diametrically opposed duties to the State and to
his client compromised his independent professional judgment.” In such a situation, the attorney
should have known that he could not represent the State as a prosecutor, even though the criminal
and civil matters involving his client were entirely unrelated.
In contrast to Lantz the respondent in Matter of Daley, 116 N.E.3d 457 (Ind. 2019) (Mem.),
was disciplined for violating Rule 1.7(a) after he entered into separate representations of two
criminal co-defendants with opposing interests. Daley had been appointed to serve as Co-
Defendant A’s public defender. Id. Co-Defendant A informed Daley that another defendant (Co-
Defendant B) was involved and that Co-Defendant A wanted to serve as a witness adverse to Co-
Defendant B. Id. Daley, however, failed to read the probable cause affidavit or make any other
efforts to determine Co-Defendant B’s identity. Id. He later, unknowingly, agreed to privately
represent Co-Defendant B and did not learn that he was representing both co-defendants until a
pretrial conference in Co-Defendant B’s case. Id. Although Daley “immediately sought to
withdraw his representation” of both co-defendants, the Court publicly reprimanded him for his
misconduct. Id.
Daley reinforces the concept that it is an attorney’s obligation to investigate the facts of
any new representation in order to identify all potentially adverse parties and witnesses. The best
practice is to include the names of adverse, potentially adverse, and related entities in a conflict
database (or spreadsheet), for easy searchability. Identifying conflicts is an ongoing obligation,
and an attorney’s conflicts database should be updated as new facts and circumstances arise. For
instance, service of non-party discovery is an adverse action, and lawyers should search their client
22036234.v3
database before serving non-party discovery in order to avoid inadvertently serving discovery to a
current client without seeking proper consent.
Material Limitation
“Even where there is no direct adverseness, a conflict of interest exists if there is a

significant risk that a lawyer’s ability to consider, recommend, or carry out an appropriate course
of action for the client will be materially limited as a result of the lawyer’s other responsibilities
or interests.” Rule 1.7, Cmt [8]. Most Indiana cases addressing material limitations consider
instances in which an attorney’s own interest caused the limitation. See, e.g., In re McKinney, 948
N.E.2d 1154 (Ind. 2011); In re Ryan, 824 N.E.2d 687 (Ind. 2005); In re Tsoutsouris, 748 N.E.2d
856 (Ind. 2001); In re Humphrey, 725 N.E.2d 70 (Ind. 2000); Matter of Hoffman¸700 N.E.2d 1138
(Ind. 1998); Matter of Hawkins, 695 N.E.2d 109 (Ind. 1998); Matter of Taylor, 693 N.E.2d 526
(Ind. 1998); Matter of Reed, 599 N.E.2d 601 (Ind. 1992).
Many courts frame the issue around the attorney’s duty of loyalty and consider whether an
attorney would be tempted to diminish the vigor of one representation in order to promote the
interests of another client. See, e.g., State ex rel. Verizon West Virginia, Inc. v. Matish, 740 S.E.2d
84, 93 (W. Va. 2013) (“An attorney should not put himself in a position where, even
unconsciously, he will be tempted to ‘soft pedal’ his zeal in furthering the interests of one client
in order to avoid an obvious clash with those of another.”) (emphasis added); Pekin v. Scagliotti,
2013 WL 2697583, *5 (Cal. Ct. App. 2013) (“the purpose of the rules against representing
conflicting interests is not only to prevent dishonest conduct, but also to avoid placing the honest
practitioner in a position where he may be required to choose between conflicting duties or attempt
to reconcile conflicting interests.”); Seresky v. Warden, 31 Conn. L. Rptr. 228, 2001 WL 1868842,
*5 (Conn. Super. Ct. 2001) (“[l]oyalty to a client is impaired when an attorney is burdened with
conflicting interests or responsibilities that prevent a lawyer from considering, recommending, or
carrying out an appropriate course of action for the client.”).
Consider an attorney who learns confidential information in the course of representing

Client A that could be used to further Client B’s legal objectives. That attorney is materially limited
because she cannot use the information on Client B’s behalf unless she violates her duty of
confidentiality to Client A. Another frequent situation is representation of two seemingly aligned
parties to litigation or a transactional negotiation. While the clients’ interests may be aligned at the
outset, as facts and circumstances develop, their interests may diverge. Any time a lawyer cannot
recommend a course of action or use information in her possession to further a client’s legal
objectives, the lawyer is materially limited.
While it is possible in every representation that client objectives will evolve or new facts
will arise, not every representation requires consent to material limitation at the outset. Comment
[8] helpfully explains,
The mere possibility of subsequent harm does not itself require disclosure and
consent. The critical questions are the likelihood that a difference in interests
will eventuate and, if it does, whether it will materially interfere with the
lawyer’s independent professional judgment in considering alternatives or
22036234.v3
foreclose courses of action that reasonably should be pursued on behalf of a

client.
(emphasis added). Accordingly, it lies within a lawyer’s own province to determine whether a
representation is materially limited, as the lawyer is in the best position to assess whether a
“difference in interests will eventuate” and how it may impact the lawyer’s independent
professional judgment. Importantly, Comment [8] also guides that it is not a conflict barring
representation if a lawyer would be prevented from pursuing an unreasonable course of action,
such as flinging false accusations at third parties in an attempt to exonerate the client’s own
conduct.
The Southern District of Indiana has also acknowledged that Rule 1.7(a)(2) does not
impose a per se rule. “It instead requires a close look at the nature of the conflicting interests, the
issues in the underlying litigation, and the risk that the attorney’s relationship with the insurer will
materially limit his representation of the insured.” Armstrong Cleaners, Inc. v. Erie Ins. Exchange,
364 F. Supp.2d 797, 816 (S.D. Ind. 2005). “That evaluation of risk must be done in advance, before
the court or the parties can know for certain the course of the underlying litigation.” Id. Indiana
lawyers can take solace knowing that as long as they act with reasonable diligence to update their
conflict searches, they should not be disciplined for changing circumstances that result in a
conflict. This is consistent with the Preamble to the Rules of Professional Conduct, which
acknowledges that a lawyer “often has to act upon uncertain or incomplete evidence of the
situation.” See Preamble, [19].
Navigating conflicts of interest between potentially adverse parties is a significant, but

necessary, administrative undertaking for all attorneys. Proactive and diligent tracking of new
clients, and updating a conflict database as adversity arises is the best course for minimizing
liability for a Rule 1.7 violation. Of course, clients may consent to directly adverse representations
or material limitations on representation subject to the requirements of Rule 1.7(b). Obtaining
consent to potential conflicts is the best practice to minimize interruption of ongoing matters and
angry clients.
Practice Tips:
• Learn the names of all parties and material witnesses at the outset of representation
• Maintain a robust database of all clients, adverse parties, and potentially adverse
parties
• Update and check your conflict database when amending a pleading to add new
parties or when serving non-party discovery
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Notre Dame Law School

Asset Protection Planning_ Tips, Techniques & Tools

Follow this and additional works at: https://scholarship.law.nd.edu/iclef_2022

Indiana Continuing Legal Education Forum (ICLEF)

HON. ANDREW R. BLOCH

8:55 A.M. Welcome and Introductions

10:00 A.M. Coffee Break

10:10 A.M. Protecting Assets with Legacy Trusts

11:10 A.M. Coffee Break

11:15 A.M. Asset Protection in Bankruptcy – Creditor and Debtor Perspectives

12:00 P.M. Lunch Break (on your own)

1:00 P.M. Asset Protection in Divorce – What Works and…

2:45 P.M. Refreshment Break

3:00 P.M. Creditors’ Claim Enforcement Against Decedents’ Property

3:45 P.M. Asset Protection Planning Ethics

4:30 P.M. Adjourn

April 27, 2022

Ms. Deborah J. Caruso Ms. Kendra G. Gjerdingen

Indiana Specialty Certification:

Pamphlets & Chart Publications:

• Individual and Business Bankruptcy under Chapters 7, 13 and 11

PROFESSIONAL ASSOCIATIONS AND AFFLIATIONS

• Indiana University Law School, Indianapolis, Indiana, JD (cum laude) -

Her focus includes:

Bob Fechtman is a life-long resident of Indiana. He graduated from Northwestern

He is a member of the National Academy of Elder Law Attorneys, and he is a two-time

Kolb Roellgen & Kirchoff LLP

Mark S. Zuckerberg is one of only twelve Board Certified Consumer

ASSET PROTECTION “LITE”: TECHNIQUES

(1) An Easier Task: Protecting Beneficiaries and Power-Holders Under Non-Self-

(2) Ten General Principles to Remember for Self-Settled Planning

“Actual intent to 32-18-2-14(a)(1)  Don’t create evidence Later of 4 years

Transfers made or 32-18-2-15(a)  Plan and carry out

(7) Tenancy by the Entireties Real Estate –Already Well-Protected

(8) Use of a “Matrimonial Trust(s)” to Hold Real Property

(9) Federal and State Exemptions for Non-Inherited Retirement Accounts

(11) State Statutory Exemption for Annuities Payable to Non-Purchasers

(12) “Exemption Planning”: Increasing Holdings of Assets Exempt from Creditors

(A) Reported Court Decisions Involving “Exemption Planning”

(B) Protections Added to I.C. 30-4-2.1 in 2010-11: Is there a back-door method

(15) Structuring a DAPT or Other Self-Settled Spendthrift Trust as a “Grantor

Indiana Trust Code provisions enacted as part of P.L. 6-2010 (SEA

(2) The settlor or beneficiary holds an unrestricted power to remove or

As added by P.L.6-2010, SEC.16.

NOTE: Subsection (a) of the matrimonial trusts statute, as a statement of legislative

Asset Protection “Lite”: Techniques

• Techniques that do NOT involve creating

• Can Indiana LLCs be used as stand-alone vehicles to

This first segment will NOT cover:

• Under the Indiana state exemption statute (§34-55-

• This practice is generally legal

1. If your client is already insolvent in a balance-sheet

Kolb Roellgen & Traylor LLP

a transfer of the asset to a third party.

still subject to claims of the settlor's creditors. 13

the Indiana Legacy Trnst self-settled provisions.

There are many specific requirements to create an Indiana Legacy Trnst.

1. The trust must be in writing signed by the Transferor. 20

3 .1. The appointment and acceptance of a Qualified Trustee which is either an

5. If Transferor is a trustee of another existing trust, a Qualified Affidavit must be

6. If the Transferor is a mall'ied individual when the Qualified Affidavit is signed, a

the Legacy Trust.

3. PROTECTION FROM CREDITORS

the discretion of the Trustee or Distribution Director.

Asset Protection Planning Tips Techniques & Tools

Asset Protection Planning Tips Techniques & Tools