October 23, 2014
Authored by: Luke Lantta
Trustors frequently build into their trust instrument a provision through which they can dispose of property through a list, drafted later, but attached to the trust instrument. Such a list can provide a simple way of distributing tangible personal property without the need to modify or amend the entire trust every time the trustor acquires new personal property or changes her mind about who should get what. But such a list has its limits. As the Indiana Court of Appeals explained in Turner v. Kent, under Indiana law a list cannot dispose of real property.
Alexander and Selma Kazlauski established a trust that provided that:
We may from time to time indicate our desire that specific gifts be made from this living trust upon the death of the survivor of us. If we make known our desire in writing referring to or attached to this trust agreement, upon the death of the survivor of us, the trustee(s) shall distribute the specific gifts as if the specific gifts had been made in this trust agreement itself. In dating the specific gift document, it is not our intention to redate the entire trust agreement.
After Alexander died, Selma created a list that provided that:
Pursuant to the provisions of our revocable living trust which incorporates this specific gifts form by reference, we instruct the trustee(s) to distribute the following gifts: . . .
The list went on to list, among other things, gifts of “cash money” and real estate.
The problem for Selma and her intentions was that Indiana Code section 30-4-2.1-11, which permits a revocable trust’s incorporation by reference of a written statement or list disposing of items of tangible personal property, while not specifically prohibiting gifts of real property through a written statement or a list, does not expressly permit specific gifts of real property either. Accordingly, the Indiana appellate court determined that they are prohibited. Thus, in Indiana, a trust’s incorporation by reference of specific gifts on a list is limited to tangible personal property.