§ 30-4-3-35 — Matrimonial trusts; election; effect of the death of a spouse or the dissolution of the marriage; revocation

Indiana § 30-4-3-35

• Jurisdiction: Indiana
• Art. 4: TRUST CODE
• Ch. 3: Rules Governing the Rights, Powers, Duties, Liabilities,

Text

(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 maintain real estate ownership protections equivalent to those
they would 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
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.
(i) A guardian of a husband or 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 and 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 by
subsections (p) and (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
settlor's existing creditors or new creditors must be determined
according to:
(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.
(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 or trusts; 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.
(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.
(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 the settlor retains the right to use or occupy
matrimonial property held in the settlor's separate trust.
(s) A matrimonial trust ceases to be a matrimonial trust upon the
dissolution of the marriage of the settlors.
(t) A husband and wife may revoke a matrimonial trust by together
executing a writing expressing the revocation.

Legislative History

As added by P.L.6-2010, SEC.18. Amended by P.L.36-2011, SEC.9; P.L.99-2013, SEC.10.