§ 30-4-2.1-12 — Order of abatement; other rules governing abatement

Indiana § 30-4-2.1-12

• Jurisdiction: Indiana
• Art. 4: TRUST CODE
• Ch. 2.1: Rules for Interpretation of Trusts

Text

(a) If a trust is terminated or partially
terminated and the available trust property is not sufficient to fully
satisfy the interests of all beneficiaries, the interests must be abated in
the following order:
(1) The interests that would be characterized as residuary devises
if the trust were a will.
(2) The interests that would be characterized as general devises
if the trust were a will.
(3) The interests that would be characterized as specific devises
if the trust were a will.
The amount abated for each beneficiary within each classification
described in subdivisions (1) through (3) must be proportional to the
amount of property that each beneficiary would have received if full
distribution of the trust property had been made in accordance with the
terms of the trust instrument.
(b) If:
(1) a trust instrument expresses an order of abatement that differs
from the order set forth in subsection (a); or
(2) the order of abatement stated in subsection (a) would impair
an express or implied purpose of the trust;
the interests of the beneficiaries must be abated in the manner
determined appropriate to give effect to the settlor's intent.
(c) If, under the terms of a trust that was revocable at the time of the
settlor's death, the subject of a preferred devise is sold or used to pay
debts, expenses, taxes, or other obligations incident to the settlement
of the settlor's affairs, abatement must be achieved by adjustment in, or
contribution from, other interests in the remaining trust property.
(d) Where applicable, the abatement of beneficiary interests in a
trust is subject to IC 32-17-13-4.

Legislative History

As added by P.L.101-2008, SEC.8.