FILED Sep 20 2023, 8:33 am
CLERK Indiana Supreme Court Court of Appeals and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE Nadine E. McSpadden Katherine A. Rich Sarah C. Jenkins Jessie Cobb-Dennard Taft Stettinius & Hollister LLP The Northside Law Firm Indianapolis, Indiana Westfield, Indiana Amanda R. Blystone Broyles Kight & Ricafort, P.C. Indianapolis, Indiana
IN THE COURT OF APPEALS OF INDIANA
Juliet C. Roberts, September 20, 2023 Appellant-Petitioner, Court of Appeals Case No. 23A-DN-588 v. Appeal from the Marion Superior Court John A. Roberts, Jr., The Honorable Jennifer J. Hubartt, Appellee-Respondent. Magistrate Trial Court Cause No. 49D14-2201-DN-182
Opinion by Judge Brown Judges Crone and Felix concur.
Brown, Judge.
Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 1 of 14 [1] Juliet C. Roberts (“Wife”) appeals the trial court’s denial of her motion for
summary judgment requesting a finding regarding the marital assets subject to
division in this dissolution proceeding. We affirm.
Facts and Procedural History
[2] Wife and John A. Roberts, Jr., (“Husband”) were married in 1962. Harriet
Cain, who was Wife’s mother, created a trust (the “Trust”) in June 1967 and
amended and restated the trust instrument on December 21, 1981. The Trust
instrument, under “ITEM VI,” titled “Trusts for Daughters,” provides:
A. The Trustee shall pay to said daughter all of the net income in convenient installments not less frequently than quarterly.
B. The Trustee shall distribute to said daughter, or to such recipient as she may designate, so much or all of the trust principal as she may, from time to time, direct by an instrument or instruments in writing delivered to the Trustee; provided, however, that such right to withdrawal shall not apply to undivided interests in assets, such as the Settlor’s farm, the distribution of which, in the opinion of the Trustee and the Adviser, would substantially diminish the fair market value of the remaining undivided interests held by the Trustee.
Appellant’s Appendix Volume II at 35-36. Under “ITEM XII,” titled
“Miscellaneous Provisions Applicable To all Trusts Hereunder,” it provides:
E. The interest of each beneficiary in the income or principal of a trust under this instrument shall be free from the control or interference of any creditor of a beneficiary or of any spouse of a married beneficiary and shall not be subject to attachment or susceptible of anticipation or alienation.
Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 2 of 14 Id. at 43-44. Harriet died in November 1985 and was survived by her three
children, Wife, John Frenzel III (“Frenzel”), and Suzanne Baldwin
(“Suzanne”). Husband was appointed as the trustee of the Trust in February
2013. Suzanne died in March 2019 and was survived by her four children,
including Michael Baldwin (“Michael”).
[3] In October 2019, Michael filed a petition for relief under cause number 49D08-
1910-TR-42618 (“Cause No. 618”) alleging that Husband had breached his
duties as trustee and failed to follow terms of the Trust. The petition stated
that, on June 14, 2019, Husband had sent an email to Michael’s attorney
stating: “The trust consists of Farms and oil wells on those farms. (Royalty
interests). The Trust also owns two limited liability Real Estate Partnerships.
The Farms are the Kinney Farm (850.24 acres), the Stum Farm (492.50 acres),
and the Cartwright Farm (75.0 acres).” Id. at 68. The petition also stated that,
on June 19, 2019, Husband sent an email to Michael’s attorney stating:
Yes, I stated that [Michael] will receive all distributable income and assets on a timely basis. The key word is “distributable.” None of the assets in the [Trust] can be distributed[.] You will note in ITEM VI of the trust, paragraph B, that such right of withdrawal shall not apply to undivided interests in assets such as settlor’s farm, the distribution of which, in the opinion of the Trustee and the adviser, would substantially diminish the fair market value of the remaining undivided interests held by the trustee. It is impossible legally to distribute any assets as the these [sic] assets are only 50% owned by the [Trust]. There is another Trust that owns the other 50% undivided interest in the assets. The Baldwins have the right to participate in 44.444% of 50% of undivided interests in the assets. Therefore there is nothing to discuss as these assets cannot be
Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 3 of 14 distributed. The Baldwins will receive all income . . . and if any assets are sold they will receive their shares. . . .
Id. at 70. A settlement agreement was entered in Cause No. 618 in May 2020.
[4] On January 7, 2022, Wife filed a petition for dissolution of marriage in the
Marion Superior Court under cause number 49D14-2201-DN-182 (“Cause
No. 182”). On January 11, 2022, the Marion Superior Court issued an
order under cause number 49D08-2201-TR-870 relating to the Trust which
removed Husband and appointed Borkowski Legal Services LLC d/b/a/
Arrow Fiduciary Services as trustee. In April 2022, Wife filed a motion
for summary judgment under Cause No. 182 requesting a finding that her
interest in the Trust is not a marital asset. In her memorandum, Wife
argued the Trust met the requirements of a spendthrift trust. She further
argued that she “has no present pecuniary interest divisible in the
dissolution action because, pursuant to the terms of the [Trust], she does
not have a right to withdraw any principal from the [Trust] and, therefore,
there are no assets divisible in the dissolution action related to the
[Trust].” Id. at 24.
[5] Husband filed a response arguing that “[b]oth parties to this action are
elderly and the trust distributions have served as the lion’s share of their
monthly income for some time,” Wife “receives monthly distributions
from the Trust,” and “[t]hose distributions are occurring currently, are not
remote, and are subject to division as a marital asset.” Id. at 72. He
argued “[t]hose funds are also subject to a claim from [him] for spousal Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 4 of 14 maintenance,” he “will be claiming that the increased distributions from
the Trust are due in part to his actions on behalf of the Trust,” and he will
be “arguing for an unequal division of the assets in his favor given that the
economic circumstances of [Wife] are greater than his economic
circumstances.” Id. at 72-73.
[6] On November 23, 2022, the court held a hearing. Wife called Rebecca Geyer, a
board-certified trust and estate specialist in Indiana, who testified the Trust
instrument contains a spendthrift provision. Wife’s counsel referred to a
document with a date ending October 31, 2022, and Geyer indicated the
document was an accounting showing the inventory or assets held by the Trust.
When asked “are all of the assets owned by the trust, what would be considered
undivided interests and assets,” she testified:
From my review, the answer to that is yes with, I don’t know what uh specifically is in the fifth third account,[1] but it looks like that’s just a clearing account that holds the income like farm income from cash rent and things that is received as well as the oil royalty interest before they’re distributed out to the beneficiaries. But everything else contains undivided interests in real estate holdings and those are owned [in] part by this trust, and it’s my understanding they’re owned in part by another trust as well.
1 Under a heading for beginning inventory, the accounting includes a line for a Fifth Third account with a value of $8.43. The accounting also indicates there were proceeds from the sale of a building of $11,516.24 and there was an ending inventory of $2,000 attributable to income and $1,988.50 attributable to principal.
Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 5 of 14 Transcript Volume II at 13-14. When asked about the sources of the Trust’s
income, Geyer testified “there may be a little bit of bank interest” which was
“pretty minimal” and the primary income sources included rents associated
with the farms and royalties associated with approximately twenty wells. Id. at
18-19. She indicated that, to her knowledge, there was no written agreement
with the tenant who farmed the property. She stated that a well can stop
producing, which happens frequently, leading to the termination of the
associated royalty. When asked if it was possible to determine the income from
the mineral rights in the future, she indicated she could look at tax returns to
determine the royalties previously received but she did not have any idea how
to anticipate the future royalties.
[7] On cross-examination, Geyer indicated the accounting for the period of July 18,
2022, through October 31, 2022, showed that Wife received a little over
$130,000 during that period. She indicated the Trust instrument referred to the
settlor’s farm as an example of an undivided interest but did not specifically
reference oil or mineral rights. She indicated Wife was receiving distributions
from the Trust at least quarterly, and when asked “at least by reviewing the tax
returns, it looks like that has increased over the last couple of years,” she
answered affirmatively. Id. at 29. When asked “we don’t know as we sit here
today, if the trustee would determine any distribution of assets to be quote,
substantially diminishing the fair market value of the remaining assets,” she
answered “[c]orrect.” Id. at 34.
Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 6 of 14 [8] Wife’s counsel argued there was no dispute regarding the assets held by the
Trust. She asserted that Wife’s interest in the Trust is too remote to be divided
in the dissolution and that Wife “doesn’t have the ability to sell a portion of her
interest” and “can’t force the trust to sell any assets.” Id. at 38. She argued the
income from the farms and wells varied and was not guaranteed. She also
argued that, while the court could consider Wife’s future income in determining
whether to deviate from an equal division and in considering a request by
Husband for spousal maintenance, the court could not consider the future
income to be a marital asset to be divided. Husband’s counsel argued Wife has
the ability to request distributions of the corpus of the trust and “[t]his court has
no idea, if [Wife] were . . . to request a distribution of certain trust assets, what
the value of those would be versus the other assets.” Id. at 41. His counsel also
argued a spendthrift trust was not created because Wife had the ability to
request distributions.
[9] On December 19, 2022, the trial court issued an order denying Wife’s motion
for summary judgment and providing:
4. The [Trust] consists primarily of farms, oil wells on those farms, and limited liability real estate partnerships. The primary income distributed to the beneficiaries is a result of royalties from the oil wells.
*****
7. Trial Rule 56 provides that Summary Judgement may be granted regarding one or all issues in a matter, provided there is no genuine issue of material fact. Here, [Husband] has raised a genuine issue of material fact regarding the meaning and effect
Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 7 of 14 of the Trust language in Section VI. B. of the instrument. While the Court may determine, after final hearing and the consideration of facts, testimony, and evidence, that the [Trust] should not be considered a marital asset, the Court does not determine the same as a matter of law.
Appellant’s Appendix Volume II at 13-14. Upon Wife’s request, the trial court
certified its interlocutory order for appeal and this Court accepted jurisdiction.
Discussion
[10] We review an order for summary judgment de novo, applying the same standard
as the trial court. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). The
moving party bears the initial burden of making a prima facie showing that there
are no genuine issues of material fact and that it is entitled to judgment as a
matter of law. Manley v. Sherer, 992 N.E.2d 670, 673 (Ind. 2013). If the moving
party succeeds, then the nonmoving party must come forward with evidence
establishing the existence of a genuine issue of material fact. Id.
[11] Wife maintains that her interest in the Trust does not constitute marital
property to be divided in the dissolution. She argues that “[a]ll the assets held
by the Trust are indivisible,” “the Trust owns only 50% of those assets,” and
she has “no current right to demand distribution of the Trust principal.”
Appellant’s Brief at 13. She argues the spendthrift provision applies to her
interest in the Trust income and principal. She contends her interest in the
Trust is too remote to be included in the marital pot and that she has no right to
demand a distribution of Trust assets. She also argues the Trust’s future income
is uncertain and does not constitute a marital asset. Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 8 of 14 [12] Husband argues there is a question as to whether the Trust is a spendthrift trust
and that the Trust provisions “allow for distribution of assets should the Trustee
and the Adviser not find the same would substantially diminish the fair market
value of the remaining undivided interests held by the Trustee.” Appellee’s
Brief at 8. He argues Wife’s expert indicated that “the distributions [Wife] had
been receiving had increased over the last couple of years” and “did not testify
that the farmland or oil wells could not be distributed to [Wife] without
substantially diminishing the fair market value of the remaining undivided
interests held by the trustee.” Id. at 9.
[13] To the extent we must interpret the Trust instrument, the interpretation of a
trust is a question of law. Fulp v. Gilliland, 998 N.E.2d 204, 207 (Ind. 2013).
The primary purpose in construing a trust instrument is to ascertain and give
effect to the settlor’s intention. Id. If the trust is capable of clear and
unambiguous construction, we give effect to the trust’s clear meaning. Id.
[14] Ind. Code § 31-15-7-4 governs the division of property in dissolution actions
and requires that the trial court divide the property in a just and reasonable
manner. The court shall presume that an equal division of marital property
between the parties is just and reasonable, and the trial court may deviate from
an equal division when that presumption is rebutted. Ind. Code § 31-15-7-5. It
is well-established that all marital property goes into the marital pot for
division, whether it was owned by either spouse before the marriage, acquired
by either spouse after the marriage and before final separation of the parties, or
acquired by their joint efforts. Campbell v. Campbell, 993 N.E.2d 205, 213 (Ind.
Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 9 of 14 Ct. App. 2013). “Property” means “all the assets of either party or both
parties” 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 . . . but that are
payable after the dissolution of marriage; and (3) the right to receive disposable
retired or retainer pay . . . acquired during the marriage that is or may be
payable after the dissolution of marriage.” Ind. Code § 31-9-2-98. The Indiana
Supreme Court has held that “[t]he phrase ‘all assets’ is broadly inclusive and is
not limited to the list of examples that follows it.” Bingley v. Bingley, 935 N.E.2d
152, 155 (Ind. 2010). The “one pot” theory specifically prohibits the exclusion
of any asset from the scope of the court’s power to divide and award. Kendrick
v. Kendrick, 44 N.E.3d 721, 728 (Ind. Ct. App. 2015), trans. denied. While the
court may ultimately determine a particular asset should be awarded to one
spouse, it must first include the asset in its consideration as to how the marital
estate should be divided. Id.
[15] Further, this Court has observed that a right to receive future payments can be
considered property. Helm v. Helm, 873 N.E.2d 83, 87-88 (Ind. Ct. App. 2007)
(the right to certain retirement benefits, matured stock options, and structured
settlement payments may constitute marital property). The common
denominator is whether the interest in the future payment is vested. Id. at 88.
“The word ‘vest’ generally means either vesting in possession or vesting in
interest. Vesting in possession connotes an immediate existing right of present
enjoyment, while vesting in interest implies a presently fixed right to future
Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 10 of 14 enjoyment.” Id. (citations omitted). See also Vadas v. Vadas, 762 N.E.2d 1234,
1235-1236 (Ind. 2002) (property with a vested interest at the time of dissolution
may be divided as a marital asset). On the other hand, some property interests
are considered too remote or speculative to constitute assets capable of division.
See Harrison v. Harrison, 88 N.E.3d 232, 235-236 (Ind. Ct. App. 2017) (noting
the wife’s interests in certain trusts were subject to complete defeasance because
she would take nothing if she predeceased her parents and would receive
nothing during her lifetime unless a majority of the trustees elected to make a
disbursement, and concluding the wife was not presently possessed of any
pecuniary value which could have been before the court for disposition) (citing
Loeb v. Loeb, 261 Ind. 193, 301 N.E.2d 349, 353 (1973) (holding the husband’s
interest in a trust was subject to complete defeasance because he would take
nothing under the trust if he predeceased his mother and thus he was “not
presently possessed of any pecuniary value which could have been before the
court for disposition”)), trans. denied.
[16] The record reveals that, pursuant to the terms of the Trust, Wife began
receiving payments from the net income of the Trust during her marriage to
Husband and is receiving payments from the Trust at least quarterly. The Trust
instrument requires the trustee to pay Wife her share of “all of the net income in
convenient installments not less frequently than quarterly.” Appellant’s
Appendix Volume II at 35. The Trust holds a fifty percent interest in three
farms containing more than 1,400 acres, approximately twenty active oil wells,
and two limited liability real estate partnerships. Geyer testified the Trust’s
Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 11 of 14 primary sources of income include the rents associated with the farm property
and the royalties associated with the oil wells. She further testified that the
accounting for the period beginning July 18, 2022 and ending October 31, 2022,
showed Wife received a little over $130,000 and that the payments to Wife had
increased over the previous couple of years. Unlike in Harrison and Loeb, Wife’s
interest in the Trust is not subject to complete defeasance—indeed, she is
receiving payments from the Trust. In light of the Trust’s assets, sources of
income, and ongoing mandatory payments, we cannot say that Wife’s interest
is too remote or speculative to be capable of division or that she does not have a
presently fixed right to future enjoyment. Given the broad language in
Indiana’s statutes governing the division of marital property and our caselaw
that all marital property goes into the marital pot for division, we cannot say the
trial court erred in denying Wife’s motion for summary judgment.
[17] To the extent Wife asserts the Trust contained spendthrift provisions, “[a]
spendthrift trust is one in which the beneficiary is unable to transfer, assign, or
alienate his right to future payments of income or principal, and which provides
the beneficiary’s creditors are unable to subject the beneficiary’s interest to the
payment of their claim while in the hands of the trustee.” United States v.
Grimm, 865 F. Supp. 1303, 1311 (N.D. Ind. 1994) (citing Brosamer v. Mark, 540
N.E.2d 652 (Ind. Ct. App. 1989), aff’d, 561 N.E.2d 767 (Ind. 1990); Ind. Code §
30-4-3-2(a)). “There are three requirements for a trust to be a spendthrift trust.
First, the settlor may not be a beneficiary of the trust. Second, the beneficiary
must not have any present dominion or control over the plan corpus. Third, the
Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 12 of 14 trust must contain an anti-alienation clause which prevents the beneficiary from
voluntarily or involuntarily transferring his interest in the trust.” Id. (citing
Matter of Jones, 43 B.R. 1002 (N.D. Ind. 1984)). The Trust expressly provides
the trustee “shall distribute . . . so much or all of the trust principal as [Wife]
may, from time to time, direct.” Appellant’s Appendix Volume II at 36. The
Trust also states this right does not apply “to undivided interests in assets . . .
the distribution of which, in the opinion of the Trustee and the Adviser, would
substantially diminish the fair market value of the remaining undivided interests
held by the Trustee.” Id. The designated evidence does not establish as a
matter of law that the Trust does not hold any assets which may be distributed
pursuant to these terms. We cannot say the trial court was required to grant
Wife’s motion for summary judgment on this basis.
[18] With that said, we express no opinion as to whether the trial court should
ultimately determine that Wife’s interest in the Trust should be awarded to her
or the appropriate method of valuing or awarding a portion of Wife’s interest in
future distributions from the Trust. See 146 AM. JUR. PROOF OF FACTS 3D 197,
Proof of Equitable Distribution of Oil or Mineral Rights in Divorce (2015) (“[W]here
the interest is too speculative to obtain a definite valuation, the court may
award a percentage interest in the mineral or oil rights in the equitable
distribution of the marital estate. . . . Where a trust is involved, the interest may
become more speculative because the trustee may not allow a distribution to the
Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 13 of 14 beneficiary and thus this consideration must be taken into account when
analyzing its valuation.”) (footnotes omitted). 2
[19] For the foregoing reasons, we affirm the trial court.
[20] Affirmed.
Crone, J., and Felix, J., concur.
2 “For example, in [Holte v. Holte, 837 N.W.2d 894 (N.D. 2013)], [the] court held that a husband had a present property interest in a trust that generated income from mineral interests, such that proceeds from [the] trust were properly included in [the] marital estate when distributing property in divorce proceeding. [T]he husband had received income from the trust, and the trust was irrevocable. The husband’s income from the trust that generated the income from the mineral interests was too speculative to value, and therefore, the wife was entitled to a percentage of the future income from the trust in a property division in a divorce proceeding where, although the husband had a fixed one-fourth interest in all royalties and other income from the trust, mineral production levels, mineral values, and other factors that were subject to fluctuation affected the income from the trust.” 146 AM. JUR. PROOF OF FACTS 3D 197 (footnote omitted).
Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023 Page 14 of 14