COA: Trust invalid due to unclear beneficiaries

A man serving as personal representative of his brother’s estate has failed to convince the Court of Appeals of Indiana that the language in a will left by his deceased brother created a valid trust in his name.

Terrel Wilson Sr. executed his will, which included five articles, in October 2018. In Article 4, the focus of the appeal, Wilson Sr. “g[a]ve all of the residue of [his] estate to [his] brother, [Kevin Wilson], as Trustee, IN TRUST, to be distributed to [Terrel, Sr.’s] family and others as per [his] instructions to [Wilson].”

Wilson Sr. appointed Kevin as the personal representative of the estate and authorized the unsupervised administration of the estate in Article 5.

Wilson Sr. died in February. Three weeks later, Kevin filed a petition, which was granted, to probate the will without court supervision.

Then in April, Terrel Wilson Jr. filed a petition asking the Hendricks Superior Court to require Kevin to produce the trust referred to in Article 4 of the will.  Shortly thereafter, Wilson Jr. filed a petition to revoke the unsupervised administration of his father’s estate, arguing the trust was invalid because it failed to identify the beneficiaries with reasonable certainty as required by Indiana Code § 30-4-2-1.

Wilson Jr. asked the trial court to issue an order requiring supervision of the estate, require Kevin to post a bond, order an accounting of Kevin’s actions and order the residuary of the estate to be distributed, pursuant to I.C. 29-1-2-4, under the law of intestate succession. The trial court granted Wilson Jr.’s petition without a hearing.

In its order, the trial court concluded the trust had failed to identify the beneficiaries with reasonable certainty as required by I.C. 30-4-2-1. The court held that “[b]ecause no trust can exist, the disposition of the residuary of the Estate through Article 4 is ineffective. As such, [pursuant to INDIANA CODE § 29-1-2-4,] the residuary assets of the Estate must be distributed according to the laws of intestate succession.”

Two weeks later, Kevin filed a motion to correct error, arguing “[t]he beneficiaries [had been] sufficiently identified from the language ‘to my family and others as per my instructions to him.’” The trial court denied his motion.

Kevin renewed that argument on appeal, but the COA disagreed.

“Although the trust’s settlor need not identify a beneficiary with exact precision, the settlor must give the trustee the ability to determine an intended beneficiary,” Judge Rudolph Pyle wrote, pointing to Doll v. Post, 132 N.E.3d 34, 39 (Ind. Ct. App. 2019). “Specifically, INDIANA CODE § 30-4-2-1(c) directs the settlor to identify a beneficiary with ‘reasonable certainty.’ … Nothing close to such an identification exists here, where the designated beneficiaries are ‘my family and others.’

“… Because the generalization ‘my family and others” does not satisfy the statutory requirement that beneficiaries be identified with reasonable certainty, the Trust in the Will is invalid.”

In two footnotes, the COA expanded on its ruling.

“We further note that INDIANA CODE § 29-1-2-4 provides that ‘[i]f part but not all of the estate of a decedent is validly disposed of by will, the part not disposed of by will shall be distributed as provided herein for intestate estates,” Pyle wrote in the first footnote. “Thus, after invalidating the Trust, the trial court properly ordered the distribution of the residuary assets of the Estate according to the laws of intestate succession.

“… Lastly, Wilson argues that the trial court’s order denying Wilson’s motion to correct error ‘result[ed] in an impermissible attack on the validity of the Will,’” Pyle continued in the second footnote. “However, our review of the trial court’s order reveals that the trial court invalidated only the Trust. The trial court neither attacked the validity of the Will nor invalidated it.”

The case is In Re: The Supervised Estate, Kevin J. Wilson v. Terrel B. Wilson, Jr., 21A-ES-1406.