Justices: Mineral-rich property transfers improper in trust case

A bitter dispute between stepsiblings — including a woman who was written out of her inheritance of mineral-rich property — has resulted in the Indiana Supreme Court ruling that a decades-old transfer of the land to her stepbrother was improper.

“Sibling squabbles are commonplace and can be mild. But when disagreements arise over property after parents’ deaths, rifts may become serious, with lengthy litigation separating family members. That is the case for stepsiblings Brenda Sue Gittings and William Deal,” Chief Justice Loretta Rush wrote at the opening of a 21-page Spencer County trust decision with potentially multi-million-dollar ramifications for the parties involved.

A unanimous Indiana Supreme Court ruled in Brenda Sue Gittings and Marc Richmond Gittings v. William H. Deal, 18S-TR-231, that transfers of mineral-rich land to William Deal in the 1990s were improper, and he is therefore not entitled to court approval of those transfers. The court also found his stepsister, Brenda Sue Gittings, and her son Marc Gettings’ claims were not tolled by fraudulent concealment, and that their claims are subject to statutes of limitations to the extent they seek affirmative relief, but not to the extent they diminish or defeat Deal’s request for declaratory relief.

The suit arises from trusts established by Brenda Gittings’ father, Nile Richmond, and Deal’s mother, Georgia Richmond, after they married in 1985. Each parent established trusts in their own names that mirrored each other. After Nile died in 1995, Georgia had Brenda sign deeds and assignments that purported to convey her one-half interest in the real property from her father’s trust to Georgia’s. But Georgia had not disclosed that she had removed Brenda, who since had become mother to Marc, as an heir to her established trust.

After Georgia died, Brenda and William each received almost $91,000 apiece from the distribution of the remainder of Niles’ trust, and Marc received $22,710, but Brenda sued after she received no benefit from the property that by 2010 “began producing significant income — hundreds of thousands of dollars annually — from oil and gas leases,” Rush wrote.

While the justices affirmed the Spencer Circuit Court findings that fraudulent concealment had not tolled the statute of limitations, it found the Gittings’ claims are subject to statutory time limits to the extent that they seek affirmative relief, but not to the extent they function as defenses.

Further, Rush wrote for the unanimous court, “We agree with the trial court that (Nile’s) Trust Agreement and (Georgia’s) Trust Agreement did not create a single, implied trust and that Georgia’s amendment of (her) Trust Agreement — removing Brenda and Marc as beneficiaries — did not violate the terms of either trust agreement. But based on our de novo review of the trust terms and Indiana statutes, we disagree with the trial court that the transfers of property … were proper. So (Deal) is not entitled to court approval.”

The Indiana Court of Appeals had previously affirmed the trial court, despite Judge Michael Barnes writing that the panel had “significant concerns” about the conduct of the trustees.

So did the justices, for whom Rush concluded, “Here, the transfer was not defensible on grounds of consent: Georgia had an adverse interest in the transaction, and Brenda lacked material information about her rights when she signed the deeds.

“In sum, the transfers of property … required court authorization and took place without all material facts disclosed to Brenda, a trustee and beneficiary under (Nile’s) Trust Agreement. William is therefore not entitled to a court order approving those transfers.”

The case is remanded to the courthouse in Rockport for proceedings.