Indiana § 30-4-8-9 Creditor's claims

Indiana Statutes

§ 30-4-8-9 — Creditor's claims

Indiana § 30-4-8-9

Art. 4TRUST CODE

Ch. 8Legacy Trusts

This text of Indiana § 30-4-8-9 (Creditor's claims) is published on Counsel Stack Legal Research, covering Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Ind. Code § 30-4-8-9 (2026).

Text

(a)If a creditor's claim is allowed under section 8 of this chapter, the transferor's qualified disposition to a legacy trust is subject to the claim only to the extent necessary to satisfy the transferor's debt to the creditor making the allowed claim.

(b)In the event the trustee participates in litigation brought by a lender to enforce its rights under section 1(b) of this chapter, the trustee may recover the fees and costs incurred in such litigation from the trust only after the lender has been paid in full.

(c)If a creditor's claim is allowed under section 8 of this chapter and the creditor has not sought to enforce its rights under section 1(b) of this chapter, the claim is limited as follows:

(1)If the court is satisfied that a qualified trustee has not acted in bad faith in acc

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(a) If a creditor's claim is allowed under section
8 of this chapter, the transferor's qualified disposition to a legacy trust
is subject to the claim only to the extent necessary to satisfy the
transferor's debt to the creditor making the allowed claim.
(b) In the event the trustee participates in litigation brought by a
lender to enforce its rights under section 1(b) of this chapter, the trustee
may recover the fees and costs incurred in such litigation from the trust
only after the lender has been paid in full.
(c) If a creditor's claim is allowed under section 8 of this chapter and
the creditor has not sought to enforce its rights under section 1(b) of
this chapter, the claim is limited as follows:
(1) If the court is satisfied that a qualified trustee has not acted in
bad faith in accepting or administering the property that is the
subject of the qualified disposition:
(A) the qualified trustee has a first and paramount lien against
the property that is the subject of the qualified disposition in an
amount equal to the entire cost, including attorney's fees,
properly incurred by the qualified trustee in the defense of the
action or proceedings filed by the creditor;
(B) the creditor's claim shall be allowed subject to the proper
fees, costs, preexisting rights, claims, and interests of the
qualified trustee and of any predecessor qualified trustee that
has not acted in bad faith; and
(C) it is presumed that the qualified trustee did not act in bad
faith merely by accepting the property that is the subject of the
qualified disposition.
(2) If the court is satisfied that a beneficiary of a legacy trust has
not acted in bad faith, and the distribution was made to the
beneficiary before the creditor made the trustee aware of its claim
or commenced an action to enforce its claim, the creditor's claim
is subject to the right of the beneficiary to retain any distribution
made upon the exercise of a trust power or the discretion vested
in the qualified trustee that was properly exercised before the
trustee was made aware of the claim or an action was commenced
to enforce the claim.