Indiana Law Review


VII. Decedents' Estates and Trusts

Debra a. Falender*

In a decision that may appeal particularly to will drafters as op-
posed to their clients, the Indiana Supreme Court during the survey
period determined that the statute of limitations applicable in an ac-

tion by a disappointed will beneficiary against the drafting lawyer

for malpractice in drafting a will is a two-year statute that begins to

run at the date of the decedent's death. This decision, and two court

of appeals decisions, one dealing with the doctrine of equitable elec-

tion and the other resolving a variety of estate administration

issues, are discussed in the first three sections of this Survey. Other

significant developments in the decedents' estates area are reviewed

in the following subsections of the fourth section: will contests, con-

tracts affecting the distribution of decedents' estates, other issues

affecting the distribution of decedents' estates, appointment and

removal of the personal representative, the purchase of estate prop-

erty by the personal representative, the dead man's statute, the

common-law presumption of death, and statutory amendments
affecting decedents' estates. The fifth and final section of this
Survey includes significant trust cases involving: lapse and condi-

tions of survival, breach of trust and removal of the trustee, and

constructive trusts. There were no modifications of the trust code
enacted during the survey period.

The decision of the court of appeals in Criss v. Bitzegaio,^ rever-
sing a summary judgment entered in favor of the plaintiff, Bitzegaio,
was vacated when the supreme court granted the plaintiff's petition
to transfer and affirmed the summary judgment.^ Although the
supreme court's decision was rendered after the survey period, a
discussion of it is included here to complete the review of the case

contained in last year's Survey.^ Summary judgment was rendered
in favor of Bitzegaio on the theory that a purchase money resulting
trust arose in his favor as a consequence of an oral agreement

whereby Bitzegaio and two other men (Criss and Swango) were each
to contribute one-third of the purchase price for equal interests in a

parcel of real estate they planned to purchase. Only Criss and

Swango actually paid the purchase money to the seller of the prop-

*Associate Professor of Law, Indiana University School of Law — Indianapolis;
A.B., Mount Holyoke College, 1970; J.D., Indiana University School of Law, 1975.

'402 N.E.2d 1279 (Ind. Ct. App. 1980), vacated, 420 N.E.2d 1221 (Ind. 1981).

'Criss V. Bitzegaio, 420 N.E.2d 1221 (Ind. 1981).

^Falender, 1980 Survey of Recent Developments in Indiana Law, Decedents'
Estates and Trusts, 14 Ind. L. Rev. 291, 308 (1980).

175



176 INDIANA LAW REVIEW [Vol. 15:175

erty on the day of sale, and the deed to the property was made out
only to them. Criss died without having executed a deed conveying

any interest to Bitzegaio, and thereafter Bitzegaio brought an action

to enforce a purchase money resulting trust as to an undivided one-
third interest in the real estate/

In Indiana, when a conveyance is made to one person, but the
consideration for the conveyance is paid by another, a so-called pur-

chase money resulting trust arises in favor of the one who paid the
purchase money if "by agreement, and without any fraudulent in-
tent, the party to whom the conveyance was made . . . was to hold
the land or some interest therein in trust for the party paying the

purchase-money or some part thereof."^ The agreement of the

grantee to hold an interest for the party paying the purchase money
must be made before the grantee acquires title to the property and
must be supported by valuable consideration.^

The trial court in the Criss case found that Bitzegaio's plead-
ings, affidavit, and exhibits established all the elements necessary

for the existence of a purchase money resulting trust: an agreement,
free from fraud, entered into before Criss and Swango acquired ti-
tle, and supported by the consideration of Bitzegaio's promise to pay

one-third of the purchase money.^ In rendering summary judgment
in favor of Bitzegaio, the trial court also found that the defendants

had not raised a genuine issue of material fact regarding the ex-

istence of any of these elements.^ The supreme court agreed that no
factual issue had been raised and affirmed the trial court's judg-

ment, although the court of appeals had reversed and had directed

that summary judgment be entered in favor of the defendants.
The consideration that Bitzegaio alleged in support of the result-

ing trust was his oral promise to pay one-third of the purchase
money. The majority of the court of appeals bad decided that,
because of the Statute of Frauds would have prevented enforcement

of the oral promise, Bitzegaio had not established sufficient con-

sideration to support a resulting trust in his favor .^ The majority of
the supreme court, however, held that the summary judgment in
favor of Bitzegaio should stand because the defendants had pre-

sented "no evidence ... to challenge the existence" of an enforce-

*The defendants in the action were Swango and the heirs and personal
representative of Criss.

^IND. Code § 30-1-9-8 (1976).
M20 N.E.2d at 1224 (citing Auten v. Sevier, 136 Ind. App. 434, 202 N.E.2d 274

(1964)).

M20 N.E.2d at 1224. Thus, as a matter of law, the plaintiff was entitled to the
relief granted.

'Id. at 1224.

M02 N.E.2d at 1281, vacated, 420 N.E.2d 1221 (Ind. 1981).



1982] SURVEY-DECEDENTS' ESTATES 177

able agreement among the three men.^° Neither the defendants, nor
the court of appeals, could properly raise on appeal an issue of fact

that had not been raised at the summary judgment hearing.

A. Malpractice Statute of Limitations

In Shideler v. Dwyer,^^ the five justices of the Indiana Supreme
Court agreed that the statute of limitations applicable in a malprac-

tice action brought against the drafting lawyer by a disappointed

will beneficiary is the two-year statute applicable in actions "[f]or in-

juries to personal property."^^ The justices did not agree, however,
on the issue of when the cause of action accrued and the statute of
limitations began to run.

The decedent died on December 14, 1973, and his will was admit-
ted to probate on December 21, 1973. The will contained a clause
directing a shareholder of a coproration, in which the decedent was
also a shareholder, to " 'cause the Corporation to pay [the plaintiff]

as a retirement benefit the sum of $500 per month.' "^^ The plaintiff
retired October 31, 1974, and after she did not receive payment of
the benefit in November, she asked the probate court to construe
the decedent's will.^^ Although the plaintiff argued that the clause

'"420 N.E.2d at 1223. The defendants had raised the Statute of Frauds defense in
their answer to the plaintiffs complaint. Bitzegaio, however, had filed an affidavit and

other materials establishing the lack of an issue of fact regarding the existence of an

agreement. The court stated that the defendants could "not rest upon [their] pleadings
but must come forth with specific facts showing that there is a genuine issue for trial."

420 N.E.2d at 1223. The defendants had filed a counter-affidavit reciting "some
historical information," but the counter-affidavit included nothing "to challenge the ex-

istence of the agreement among the three men prior to the purchase of the property."
Id.

"417 N.E.2d 281 (Ind. 1981) (superseding 386 N.E.2d 1211 (Ind. Ct. App. 1979)).

The Shideler case is reviewed in Comment, Shideler v. Dwyer: The Beginning of Pro-

tective Malpractice Actions in Indiana, 14 Ind. L. Rev. 927 (1981). A careful reading
of this Comment is recommended. This Survey discussion is intended only to call at-
tention to the decision and to highlight the particular ramifications of the decision

upon lawyers involved in estate planning and probate.

'^The quoted language appears in the first clause of Ind. Code § 34-1-2-2 (1976).
Because the only issue before the court was that of the statute of limitations, the court

expressly declined to render an opinion on the right of the disappointed beneficiary to

maintain a malpractice action against the drafting lawyer. Many states, however,
recognize a cause of action in the disappointed beneficiary. See Annot., 45 A.L.R.3d

1181, 1195 (1972).

'^417 N.E.2d at 284.

'Trior to her retirement, the plaintiff was advised that the drafting lawyer, who
was then serving as the attorney for the decedent's estate, was of the opinion that the

plaintiff would not be entitled to the retirement benefit described in the will unless

she met the qualifications of the corporation's profit-sharing plan. The plaintiff did not
meet these qualifications, but she retired nonetheless, and then sought to have the pro-



178 INDIANA LAW REVIEW [Vol. 15:175

was enforceable, the probate court, on June 30, 1975, held the clause

void and ineffective as precatory.^' On June 29, 1977, the plaintiff filed

the malpractice action against the drafting lawyer, alleging that the

decedent had intended for the plaintiff to receive $500 per month as

a retirement benefit and that the lawyer should have known that

the clause would not effectuate that intent. The plaintiff contended

that the cause of action against the lawyer did not accrue, and the

statute of limitations did not commence to run, until June 30, 1975,

the date when the probate court decreed that the clause was void.

Two justices agreed with the plaintiff, but the majority held that

the cause of action accrued, and the statute began to run, the day

the decedent died, in the case of a plaintiff with no reasonable

grounds for questioning the validity of the clause.'®

The two dissenting justices pointed out the fallacies and un-

fairness inherent in the majority's reasoning and conclusions regard-

ing the time when the statute commenced to run'^ and succinctly ex-
posed the impossibility of the plaintiff's position under the

majority's rule:

Upon probate of the will, [the beneficiary] presumes he is to
benefit under the will, thus he bides his time waiting for the

proper authority to fulfill the bequest. Some time later, he
learns that the administrator of the estate has no intention

of fulfilling the bequest. He still takes the position the be-
quest is valid and institutes proceedings in the Probate

bate court mandate payment to her. A declaratory judgment would have been a safer
course of action.

'^The probate court decreed the clause void and precatory because the

shareholder could not cause the corporation to pay the retirement benefit to the plain-

tiff. 417 N.E.2d at 284. This decree was not appealed.
'^The majority, holding that the statute of limitations commences to run when

damage has occurred, concluded that damage occurred to the plaintiff on the date the
decedent died, at which time his will containing the questionable bequest became
operative. The court explained the distinction between damage, in the sense of the ir-
remediable injury that must occur to commence the running of the statute, and
damages as a measure of compensation, which need not be known or ascertained when
the statute commences to run. Id. at 289. Quoting from Schmidt v. Merchants Dispatch
Transp. Co., 270 N.Y. 287, 300, 200 N.E. 824, 827 (1936), the court stated:

"The injury occurs when there is a wrongful invasion of personal or property
rights and then the cause of action accrues. Except in cases of fraud where

the statute expressly provides otherwise, the statutory period of limitations

begins to run from the time when liability for wrong has arisen even though
the injured party may be ignorant of the existence of the wrong or injury.
Consequential damages may flow later from an injury too slight to be noticed
at the time it is inflicted. No new cause of action accrues when such conse-
quential damages arise."

417 N.E.2d at 289.

"417 N.E.2d at 295.



1982] SURVEY-DECEDENTS' ESTATES 179

Court for enforcement of the bequest. At this time his
bridge is still standing, and he is taking the position that it

is sturdy enough to support him in his position. He, of

course, would take the position that the attorney who
drafted the instrument drafted a perfectly valid instrument.

It would be unthinkable for him at that time to bring an ac-

tion against the attorneys for drafting a bad instrument. His

bridge does not collapse until the Probate Court makes a
decision that the bequest in the will is unenforceable, and

that he will take nothing under the terms of the will. Only

then is he in a position to turn his attention to the drafters

of the instrument which has failed him.^^

The dissent thus describes what a reasonable beneficiary would
think and do in the course of asserting the validity of a will or will

clause in his favor. The majority, however, would likely force the
beneficiary to be unreasonable and to do the unthinkable, namely, to

assert the validity of the will or will clause in an action in the pro-

bate court at the same time he is asserting the invalidity of the
clause in an action against the drafter. Perhaps the Shideler deci-
sion will render reasonable the advice that a will beneficiary should

sue the drafting lawyer the day before the expiration of two years
after death in every undistributed estate.

B. Equitable Election

The equitable principle that one who seeks equity must do eq-
uity is the basis of the doctrine of equitable election, which was ex-
plained and applied in Citizens National Bank v. Stasell.^^ Applica-
tion of the doctrine requires the one who asserts a claim to property
under the terms of a will must acknowledge the full operation of
that will and must recognize the equitable rights of others created
by that will.^^

In the Stasell case, Eva Martin and her husband, Charles, owned
a sixty-acre tract of real estate as tenants by the entireties. Eva,

who died in 1952, devised this tract to her husband for life, re-
mainder to her nieces and nephews. Eva also devised the residue of
her estate to her husband, and the husband accepted substantial
benefits pursuant to this residuary clause. After the husband died in

1975, his second spouse and the personal representative of his estate
sued to quiet title to the sixty-acre tract. The trial court, applying
the doctrine of equitable election, held that title should be quieted in

Vd.

'M08 N.E.2d 587 (Ind. Ct. App. 1980).

^°See generally T. Atkinson, Handbook of the Law of Wills § 138 (2d ed. 1953).



180 INDIANA LA W REVIEW [Vol. 15:175

Eva's nieces and nephews. The court of appeals affirmed. All the re-
quirements for application of the doctrine were present: Eva intent-
ionally disposed of the sixty-acre tract; Eva had no testamentary
power over the tract since at her death her surviving spouse

Charles (the surviving tenant by the entireties) owned the entire
fee; Eva's will put Charles on notice of the fact that her disposition

of the sixty-acre tract was contrary to his rights as the sole owner
in fee simple; Charles was a beneficiary under the residuary clause

of Eva's will; and Charles accepted benefits under the residuary

clause. Thus, Charles was bound to acknowledge the full operation

of Eva's will, including the passing of the remainder interest in the

sixty-acre tract to Eva's nieces and nephews.

In the Stasell case, both parties believed that a crucial issue was
of ownership of the sixty-acre tract at the time of execution of Eva's

will. The court of appeals, however, after noting that a will is am-
bulatory and inoperative until the testator's death, stated that

ownership at the time of execution is irrelevant to the question of

whether the doctrine of equitable election applies. The relevant
issue is the intent of the testator to specifically dispose of the prop-

erty of another by the will, and the crucial time for determining

whether the property is property of another is the date of the
testator's death. In Stasell, the former entireties property was own-
ed solely by Eva's husband at the moment of Eva's death.

The message of Stasell to will beneficiaries is obvious: A
beneficiary should carefully read all will provisions before happily

accepting a devise or bequest. The message to drafters is equally
clear: The drafter should carefully inquire about the ownership of all
specifically devised or bequeathed property to be certain either that

the testator owns the property, or if not, that the testator intends
for an election to occur. Furthermore, because of the language in the

Stasell opinion indicating that ownership at the time of execution of

the will is irrelevant, the draftsman should warn the testator of
potential frustration of intent whenever the testator sells or gives
specifically devised property to another will beneficiary after ex-

ecuting the will.

C. The Kingseed S\iqa: Estate Administration Issues

Albert Kingseed died in July, 1969 leaving a will in which he

devised his 160-acre farm and the two houses on it to the children of
his deceased son Robert, $10,000 to his daughter Geneva Wolff,
$5,000 to his granddaughter Marilyn Foland, and the residue of his

estate in three equal shares, one to Robert's four children, one to

Geneva Wolff, and one to Marilyn Foland. The will was admitted to
probate shortly after Kingseed's death, and Joseph Noel was ap-
pointed executor of Kingseed's estate.



1982] SURVEY-DECEDENTS' ESTATES 181

The controversies in In re Estate of Kingseed^^ grew out of the
final account filed by Noel following his resignation as executor in
September 1976. In his final account, Noel reported the distribution
of the 160-acre farm and its income to Robert's children in February
1970, relying on the fact that he had then advised Robert's children
that they could thereafter make their own arrangements for use and
rental of the farm property, which they did.^^ Noel did not, however,
obtain a court order authorizing distribution of the farm,, and
Geneva Wolff, a general and residuary devisee, objected to the
reported "distribution." Noel also reported the payment of $11,850
of attorney and executor fees to himself, again without court ap-
proval, and Wolff challenged the reasonableness of the fees.^^

A special judge was appointed to consider all matters related to
Noel's discharge.^'* Several of the judge's determinations were the
subject of appeal and cross-appeal. The following discussion will con-
sider only the most significant issues resolved on appeal. Because of
its complexity, the Kingseed case is one that should be read in its
entirety.

1. Attorney and Executor Fees. — The judge determined that
Noel should repay to the estate $5,820 plus prejudgment interest^^
because reasonable attorney and executor fees would have been
only $6,030, not the $11,850 which Noel had paid to himself. Noel
contended on appeal that the reduction in requested fees was an
abuse of discretion and contrary to the law and the evidence. Noting
the settled Indiana rule that the determination of fees is within the

sound discretion of the trial court,^^ the court of appeals found

^'413 N.E.2d 917 (Ind. Ct. App. 1981).

^^The farm land was rented under a share-cropping arrangement in 1969, and the

landlord's share of the rent for that year was paid into the estate. After being advised

by Noel in February 1970 to make their own arrangements for the farm operation,
Robert's children, through their mother and guardian Mildred Kingseed, rented the

farm under a cash-rent arrangement and retained the rent for 1970 and all years

thereafter. Furthermore, in 1972 and thereafter, Mildred rented the second house on

the farm and retained the rent for the children.

^^Wolff also claimed that Noel had mismanaged a parcel of Kingseed's real estate

in Amboy, Indiana. The trial judge did not require Noel to account for this alleged
mismanagement, and the court of appeals found no error in the court's failure to re-

quire Noel to account. The evidence of mismanagement was not so clear as to lead only

to the conclusion that Noel was responsible. 413 N.E.2d at 920, 934.

^^The regular judge disqualified himself on his own motion and submitted the
issues involving Noel's final account to the special judge. Id. at 919.

^'The special judge determined that the rate of pre-judgment interest was 6%.
The court of appeals held that the judge should have applied the statutory rate of in-

terest, 8%, to Noel's repayment of fees and also to repayments ordered to be made to
the estate by Kingseed's children. Id. at 934-35.

''The court cited, inter alia, In re Estate of Newman, 369 N.E.2d 427 (Ind. Ct.
App. 1977) for the proposition that attorney and executor fee allowances are left to the



182 INDIANA LA W REVIEW [Vol. 15:175

substantial support for the reduction, especially "Noel's participa-

tion and acquiescence in the unreasonable and unexplained delays in

settling the estate."^^ The message of the Kingseed case to ex-
ecutors and attorneys representing the estate was clearly stated:
"When sanctions in the form of a reduction of fees become necessary
to safeguard and enforce this central policy [to settle estates as ex-

peditiously as possible], we are fully prepared to support them."^^
Although the court discussed other factors which supported the fee

reduction, the court emphasized that delay alone would have been a

sufficient reason to reduce Noel's requested fees.^^

2. Authority of the Special Judge, — The special judge deter-
mined that the general bequests to Wolff and Poland should have
been distributed on March 1, 1971,^° and ordered distribution with
interest from March 1, 1971. Noel and Robert's children appealed
this determination, and the court of appeals held that this portion of

the order exceeded the jurisdiction conferred upon the special

judge. The special judge had been appointed only for the purpose of
hearing Noel's final account and objections to it, and the regular

judge retained jurisdiction over all estate matters not submitted to

the special judge.^^ The Kingseed estate remained open after Noel's
discharge; a successor personal representative had been appointed

and was responsible for the continued administration and distribu-
tion. All matters of administration and distribution apart from the

matter of Noel's discharge remained within the jurisdiction of the

regular judge.^^

3. Retroactive Approval of an Unauthorized Partial Distribu-
tion. —The special judge retroactively approved Noel's partial distri-
bution of the farm property to Robert's children, but determined

that the distribution should have been made on March 1, 1971, in-
stead of February 1970.^^ Consequently, pursuant to Indiana Code

discretion of the trial court and will be reversed on appeal only on a showing of abuse

of discretion. 413 N.E.2d at 932.

^M13 N.E.2d at 932. Noel represented the estate for nearly seven years. For a

period of more than four years, between April of 1970 and August of 1974, "Noel failed

to take any court action in any matter concerning the estate . . . ." Id. at 931 (emphasiz-

ed in original). In August of 1974, the trial court on its own motion ordered a hearing
regarding a trial of claims continued in April of 1970. Id. at 931-32.

^^Id. at 932. The court of appeals, citing Indiana Code section 29-1-16-2, referred
to "the clear policy of our Probate Code to settle estates as speedily as possible for the

protection and in the interest of creditors and heirs alike." Id.

''Id.

''Id. at 928.

''See Zaring v. Zaring, 219 Ind. 514, 39 N.E.2d 734 (1942), quoted in 413 N.E.2d at

929.

^M13 N.E.2d at 929.

''Id. at 928. See id. at 924 n.8 for a discussion of how the court arrived at the
date of March 1, 1971.



1982] SUR VEY-DECEDENTS' ESTA TES 183

section 29-1-17-7,^" the judge ordered Robert's children to repay to
the estate the income they received from rental of the farm land in
1970, along with prejudgment interest.^^ Robert's children appealed
the portion of the order requiring repayment. Wolff contended that
Noel or Robert's children should also have been required to account
to the estate for the fair rental value of the houses on the farm
property from the date of Kingseed's death to the court-approved
distribution date of March 1, 1971. The appellate court's determina-
tions regarding these issues are the most significant determinations
in the Kingseed case. Another message, this time to will draftsmen,
comes through loud and clear.

The court of appeals affirmed the trial judge's retroactive ap-
proval of the partial distribution of the farm to Robert's children.
First, the court held that because Noel reported the distribution of

the farm in his final account, the special judge had jurisdiction to ap-
prove or disapprove the distribution as part of his mandate to con-
sider all matters related to Noel's final account and discharge.^^
Secondly, the court of appeals held that retroactive approval of a
distribution was within the judge's authority .^^ An unauthorized pay-
ment or distribution, made in good faith, may be subsequently ap-
proved "if another's rights are not affected . . . and the result is that
which the law would have accomplished .... "^^ In the Kingseed

'*lNB. Code § 29-1-17-7 (1976) provides:

Unless the decedent's will provides otherwise, all income received by

the personal representative during the administration of the estate shall con-

stitute an asset of the estate the same as any other asset and the personal

representative shall disburse, distribute, account for and administer said in-

come as a part of the corpus of the estate.

^^See note 25 supra regarding the proper rate of interest.

^*In fact, if the special judge had not expressly considered the propriety of the

distribution, an order discharging Noel would have worked as an implied approval of

the reported distribution. See In re Estate of Saltzman, 145 Ind. App. 488, 251 N.E.2d

595 (1969) (the trial court's approval of an executor's current report was in effect a

ratification of a prior unapproved disposition of property not included in that account).

The special judge, therefore, necessarily had to resolve the issue of the unauthorized

distribution in order to resolve the issues directly related to the approval of Noel's

final account and discharge.

^^Wolff and Poland argued, in essence, that the unauthorized distribution was

void and could not be retroactively validated. In support of their position that a court

is without authority to render a retroactive approval, they cited Indiana Code section

29-1-13-1, which mandates the personal representative to take possession of the dece-

dent's property and collect rents, and section 29-1-17-1, which provides the procedures

for effectuating a partial distribution and thereby terminating the personal represent-

ative's statutory duties with respect to the distributed property. Wolff and Poland

argued that they were prejudiced by the retroactive approval since they were thereby

deprived of income that would have been distributable, in part, to them (as residuary
devisees) pursuant to Indiana Code section 29-1-17-7. 413 N.E.2d at 922.

^'413 N.E.2d at 923.



184 INDIANA LAW REVIEW [Vol. 15:175

case, the unauthorized partial distribution of the farm property to

Robert's children was made in good faith to the proper distributees,^®
and the rights of the complaining residuary devisees to income from

the property during administration of the estate was not sufficient

to warrant disapproval of the distribution/"

Finally, the court of appeals reasoned that if the trial court had

the authority to render retroactive approval of an unauthorized dis-

tribution, it also had the authority to retroactively disapprove a

part of the distribution/^ Thus, the court upheld the judge's author-

ity to approve the distribution as of March 1, 1971, instead of the

reported date of February 1970. Because this order in effect disap-

proved the children's receipt of income prior to March 1, 1971, the
court of appeals held that the trial judge necessarily had to require

the children to return to the estate the income they had collected

prior to the court-approved date of distribution.''^

^^There was no showing of lack of good faith, and the children were the ones en-

titled to the farm.

"•"The court of appeals said:

[0]ur Probate Code does not sanction extensive delay by residuary legatees

to increase their share of the estate. "If the closing of the estate is long

delayed as by the determination of the estate tax, justice would indicate a

partial distribution to enable the distributee to obtain the yield from the

property which might otherwise, under IC 29-1-17-7, go to the residuary

legatee under the will." J. Grimes, 2A Henry's Probate Law & Practice, ch.

25, § 2 at 51 (7th ed. 1979).

413 N.E.2d at 923-24.

^^413 N.E.2d at 926.

^^Id. The children were ordered to return all money collected from rental of the
farm land in 1970.

This part of the Kingseed decision, affirming the order requiring return of the

1970 farm income to the estate, was based in part on the trial court's specific statutory

authority to require the return of any property distributed by court order if the

return is ordered before the decree of final distribution, and if the return "is for the

best interest of the estate." Ind. Code § 29-l-17-l(a) (1976). The phrase "best interest of
the estate" has been held to mean "when necessary for the payment of debts, legacies
or claims." Smith v. Smith, 76 Ind. 236, 239 (1881), overruled on other grounds, Cupp v.
Ayers, 89 Ind. 60, 63 (1883). In the Kingseed case, there was no showing that the in-

come for the year 1970 was needed to pay debts, legacies, or claims. The use of section
29-l-17-l(a) as support for the order of return was therefore either misplaced, or an in-

dication that "best interest of the estate" may include interests other than the pay-
ment of debts, legacies, or claims.

While the authority of the special judge may have extended to approval in part
and disapproval in part of the unauthorized partial distribution, the judge's authority

need not have extended to an order of return of the income to the estate because the

issue of the propriety of that distribution was necessarily raised by Noel's final ac-

count. The children were not only devisees of the farm property, but also were
residuary devisees who would share with Wolff and Poland any income earned during
administration of the estate. The issue of the return of one year's income, when the
cash was not required to pay debts, legacies, or claims, is an issue that might have



1982] SURVEY-DECEDENTS' ESTATES 185

The court of appeals also remanded the case for a determination
of whether Noel should account for his failure to collect rent for

both farm houses prior to the authorized distribution date."'^ The
court held that an executor "may be held accountable for failure to
lease the property and collect the rents if it would have been in the

best interest of the estate for him to do so.""" The Kingseed holding,
imposing upon the executor a duty of management and productivity
akin to the duty imposed upon a trustee/^ is the first explicit

holding to that effect in an Indiana case. The imposition of a duty to
manage and make estate assets productive is well-placed: It would
be unreasonable, imprudent, and wasteful for an executor to let

estate assets remain idle for a year or more of administration. Yet,
the executor is placed in a delicate position. The primary duty of the
executor, after collection of assets and payment of debts and taxes,
is to distribute estate assets in kind as speedily as possible to the in-

tended beneficiaries."^ Therefore, when administration commences,
the executor must evaluate the administrative complications that
may delay partial and final distribution of estate assets to determine
whether and on what terms to lease or otherwise invest estate

been left to be resolved on final distribution by the regular judge. Administrative sav-

ings to the estate resulting from the children's management of the farm property may
well have occurred, and these savings should have been taken into account before the

entire amount of income received was ordered returned to the estate.

Another possibility, not ostensibly considered by the Kingseed court, is that the

executor should be the one liable to the residuary legatees for loss to them due to his

premature unauthorized distribution. Certainly the children, in collecting the income,

acted more in good faith than Noel acted when he turned the management over to
them. Who should ultimately be responsible for the executor's neglect of duty in fail-
ing to obtain proper court authority for the distribution of the farm to the children?

The children relied on the executor's advice that they could begin to collect the farm

income in 1970. Wolff and Foland might properly recoup their losses from Noel, rather

than from the children.

^^Robert's children had occupied the larger farmhouse during this period, and the

smaller house remained vacant.

'M13 N.E.2d at 928 (citing 33 C.J.S. Executors and Administrators § 259(c)(1)

(1942) and Ind. Code §§ 29-l-16-l(c), -15-3 (1976)). The court noted that this is the law in

jurisdictions where the personal representative is charged with possession of the real

estate during administration of the estate, as he is under Indiana Code section
29-1-13-1. Contra, e.g., Riling v. Cain, 199 Kan. 259, 428 P.2d 789 (1967); In re Estate of

Reiman, 272 Wis. 378, 75 N.W.2d 564 (1956) (where executor is not charged with
possession of real property).

*^See, e.g., Ind. Code § 30-4-3-6 (1976), expressing the trustee's duty to manage
and invest trust assets as a reasonable man would do, with a view to the productivity
as well as the safety of the trust corpus. Although the Kingseed holding is limited to

the decision that an executor has a duty to lease real property if the leasing is in the

best interest of the estate, it is probably correct to assume that the courts will impose

upon executors a general duty to make personal property in an estate productive if
that would be in the best interest of the estate.

^''IND. Code § 29-1-17-2 (1976).



186 INDIANA LA W REVIEW [Vol. 15:175

assets. To protect himself from later claims of mismanagement, the
executor should keep a record of the factors that influenced his deci-

sion to invest or not.

The Kingseed court gives some guidance as to the factors to be
evaluated by the executor in deciding whether to lease or otherwise

invest estate property. When the court remanded the case for a
determination of Noel's liability to be surcharged for the rental

value of the smaller house on the farm property, and for a deter-

mination of the liability of Robert's children for their use and occu-

pancy of the larger house, the court cautioned that "the interests of

all potential beneficiaries of the estate warrant consideration."*^ The
court stated that "it may well have been a proper exercise of discre-
tion for Noel to permit Mildred and the Kingseed children to occupy

the larger house in return for maintenance and upkeep.'"*^ Thus,

although the executor may consider the interests and well-being of
intended estate beneficiaries, the court intimates that the executor's

discretion must be exercised with a view to the pecuniary soundness
of the investment decision. The executor, it seems, cannot, without
authority in the will, decide not to lease or otherwise invest estate

property, or decide to allow the intended beneficiaries to enjoy

possession of the property, without some quid pro quo benefitting
the estate.

Here lies a message to drafters. If it is contemplated that
devisees may desire to occupy real estate specifically devised to
them, the drafters should propose a will provision authorizing the

devisees to occupy rent-free during the period of administration.'^^

The drafter might also consider a provision expressly authorizing
the devisee to manage the property and collect the income during
administration. Such provisions, of course, would not be operative to

defeat the rights of creditors of the estate, but the abatement status

of the rental income or fair rental value could be clarified in the

will.^° Furthermore, the liability of the specific devisee who is
authorized to occupy or manage the property for mortgage pay-
ments, taxes, insurance, and maintenance should be established in

the will.

'^413 N.E.2d at 928.

''Id.

^^"
'It certainly is but a simple matter for a testator to avoid the application of

[Indiana Code section 29-1-17-7] if he so wishes, by the addition of the appropriate

language to the will.' " 413 N.E.2d at 925 (quoting In re Estate of Darby, 154 Ind. App.

238, 241, 289 N.E.2d 542, 544 (1972)).

^"A specific devise abates last, unless otherwise provided in the will. Ind. Code §
29-1-17-3 (1976). The will should clarify whether or not the rent-free occupancy is to

have the same abatement status as the specific devise itself.



1982] SURVEY-DECEDENTS' ESTATES 187

D. Other Decedents' Estates Developments

1. Will Contests. — Indiana. Code section 29-1-7-17 provides that
''fajny interested person may contest the validity of any will . . . ;
and the executor and all other persons beneficially interested

therein shall be made defendants" in the will contest action. ^^ In
Cook V. Loftus,^^ the court discussed and distinguished the interest
required to establish the contestant's standing to contest a will, and

the interest that renders a person a necessary party-defendant in a

will contest action. The court in Cook held, in a decision of first im-
pression on the issue, that heirs-at-law are not necessary parties-

defendant to a will contest. The phrase describing necessary parties,
"persons beneficially interested therein," refers to persons bene-

ficially interested in the will being contested, and heirs-at-law are not

interested in the will being contested "unless they take some
beneficial interest under the will."^^

2. Contracts Affecting Distribution of Estates. — In Estate of
Gillilan v. Estate of Gillilan,^'^ Charles and Mae had entered into an
antenuptial agreement which provided that if Charles predeceased
Mae, Mae would receive " 'the entire net income from his estate for
and during the term of her natural life,' " in full satisfaction of all
dower and homestead rights and all other claims that Mae might
assert as his widow or heir.^^ Charles and Mae were subsequently

5'lND. Code § 29-1-7-17 (1976).
'^414 N.E.2d 581 (Ind. Ct. App. 1981).

^^Id. at 587, quoting from 2A Henry's Probate Law and Practice 781 (7th ed. J.
Grimes 1979) as follows:

"I.e. 29-1-7-17 would appear to differentiate between those who may contest
a will and those who are necessary parties to a will contest. As seen
heretofore all heirs may contest unlesss disinherited under a previous will. But
only those 'beneficially interested therein' need be made parties. This would
seem to indicate that only the executor, the legatees, and the devisees are

necessary parties. Other heirs are not unless they take some beneficial in-

terest under the will,"

The Cook court also reiterated the requirements for establishing an interest to

contest a will when that interest arises under a prior will. The devisee under a prior
will is an interested party, with standing to contest under section 29-1-7-17, if that

devisee establishes facts which would authorize the probate of the prior will under

which he or she claims. 414 N.E.2d at 585. It is not sufficient that the devisee under

the prior will merely prove that an instrument exists purporting to be a prior will of

the testator.

Because the issue was not raised, the court did not determine whether devisees

under a prior will are necessary parties to the will contest action. Applying the logic of

the decision, it seems that for the purpose of a will contest action, the devisees under

a prior will are in the same position as the heirs, and are not necessary parties to the
will contest action.

^M06 N.E.2d 981 (Ind. Ct. App. 1980).

^^Id. at 983. The agreement also provided that Charles would provide a home for
and support Mae during their marriage and that if Mae survived Charles, Charles
would not make any claims to any part of Mae's estate.



188 INDIANA LA W REVIEW [Vol. 15:175

married, and Charles predeceased Mae,^^ leaving a will which made
substantial provision for Mae, but which did not literally comply

with the antenuptial agreement.^^ Mae filed a timely election to take
against the will, asserting that Charles's execution of the non-

complying will could be treated as an offer to rescind the antenup-

tial agreement.''® The executor of Charles's estate contended that the
antenuptial agreement was enforceable and not rescinded. The trial
court rendered summary judgment ordering that the agreement be
enforced by its terms, and the court of appeals affirmed this judge-

ment.

Early in the opinion, the Gillilan court suggested that an

antenuptial contract cannot be rescinded, absent mutual agreement,

after the marriage of the parties, because the parties cannot be

restored to the status quo once the contract is partially performed

by consummation of the marriage.^^ Later in the opinion, however,

the court recited the traditional contract law principle that a mater-

ial breach of a contract may justify rescission at the instance of the
non-breaching party. '^'^ In other words, the non-breaching party to an

antenuptial contract may consider his obligation to perform ter-
minated upon material breach of contract by the other party. A
material breach was described as a breach that substantially defeats

the purpose of the contract, or a breach whereby the breaching

party puts it " 'beyond his power to carry out his contract.'
"^^

Under the Gillilan facts, the court of appeals determined that
the provisions of Charles's will substantially accomplished the pur-

pose of the antenuptial agreement and his minor breach was easily

remedied by allowing Mae the entire net income pursuant to the
contract. Because Charles substantially performed his part of the

contract, Mae could not consider her obligation under the contract

'"Charles died on May 28, 1975, and Mae died on October 27, 1975.
"In his will, Charles created several trusts. A substantial part of the income from

these trusts was payable to Mae during her life. It is not clear whether Mae was given
the equivalent of the entire net income from the estate. The court of appeals noted
that "Mae's Estate presents no evidence to show that she would have been better off
under the antenuptial agreement." 406 N.E.2d at 991.

'*Mae sought to establish rescission of the contract in order to be free to assert

her statutory elective share of one-third of Charles's net real and personal estate. See

Ind. Code § 29-1-3-1 (1976). (Mae was a second spouse, but it appears that Charles left
no surviving descendents. Thus, Mae's elective share of the real estate was not limited
to a life estate in one-third of that real estate. See id.) Mae sought to be free from per-
formance of her promise to accept the benefits described in the antenuptial agreement

in lieu of her elective share.

'^406 N.E.2d at 987.

''Id. at 990.

''Id. at 989 (quoting Mallow v. Eastes, 179 Ind. 267, 273, 100 N.E. 836, 838 (1913)).



1982] SURVEY-DECEDENTS' ESTATES 189

excused, and she was bound to perform her agreement to take the
income in lieu of all other interest in Charles' estate.

If Charles had left Mae nothing in his will, however, it is likely
that the court still would have found the contract enforceable.

Charles had agreed to give his wife all the net income from his

estate. The fact that Charles failed to leave a will giving his wife all
the net income does not mean that he put it " 'beyond his power to
carry out his contract.' "^^ Even if there is no actual "performance"
of the contract by the breaching spouse, if it is possible to mandate
performance, the other spouse will not be permitted to overthrow

the entire contract and "work a fraud upon the marriage" consum-

mated in partial performance of the agreement.^^ Thus, whenever
the only performance required of the surviving spouse is the accept-

ance of limited benefits from the estate of the deceased spouse, if

those benefits can be provided from the estate of the deceased

spouse, the surviving spouse will not be excused from performance

of his or her agreement to accept only the limited benefits.

Two cases were decided during the survey period involving con-
tracts allegedly arising out of joint, as opposed to mutual but

separate, wills.^* In each case, the joint will gave rise to an argu-

ment that the will was executed pursuant to a contract not to
revoke it.^^ In each case, the trial court had determined that the

evidence was not sufficient to establish clearly and unequivocally
the existence of such a contract, and, in each case, the court of ap-

peals affirmed the trial court's judgment.

These two cases illustrate why no sensible drafter should ever
consider the execution of a joint will. As is apparent from the fact
that in both cases the only evidence offered of the existence of a

contract not to revoke was the will itself, unless the existence of a
contract is specifically and carefully negated in the will, a contrac-

tual argument is nearly always plausible when a joint will has been
used. Furthermore, at the time of death of the first to die, when the
joint will is first probated, those who are to become beneficiaries
upon the death of the survivor are made aware of the provisions in
their favor in the survivor's will. The survivor's will is not private,

'^406 N.E.2d at 989.

'H06 N.E.2d at 991 (quoting Cantor v. Cantor, 174 N.E.2d 304, 315 (Ohio P. Ct.

1959)).

'"Moore v. Harvey, 406 N.E.2d 354 (Ind. Ct. App. 1980); Wisler v. McCormack,
406 N.E.2d 361 (Ind. Ct. App. 1980).

'^In each case, the attempted revocation occurred after the death of the first to

die and after the acceptance by the survivor of benefits conferred by the joint will.

While the revocation in Wisler was occasioned by the surviving spouse's execution of a
subsequent will, the revocation in Moore occurred because of the surviving spouse's inter
vivos transfer of the subject matter of a devise.



190 INDIANA LA W REVIEW [Vol. 15:175

and if the survivor revokes it, the beneficiaries, who know that their
hopes have been dashed, will be tempted to litigate the contractual

issue. Reciprocal and identical provisions may be accomplished in
separate, mutual wills, and the privacy of each testator's will may
be better assured. In any event, each separate, mutual will should

contain a specific provision indicating whether or not the will is

revocable or executed pursuant to a contract not to revoke.

3. Distribution of Estates. — In Key v. Sneed,^^ the testator be-
queathed one-half of his personal property and a life estate in one-
third of his real estate to his wife, and the rest and residue of his
estate to a trustee to pay the income from the trust property to the
testator's daughter.^^ In the decree of final distribution, the income
earned by the estate during administration was to be distributed to
the trustee. The testator's wife contended that she should receive a
share of that income, and the court of appeals agreed. The bequest
to the wife was "expressed in terms of [a] fractional interest in the
entire estate,"^^ namely, one-half of the testator's personal property

and, therefore, was a bequest of that fractional share of the prop-
erty available for distribution.^^ The court of appeals referred to and

««408 N.E.2d 1305 (Ind. Ct. App. 1980).

^Ud. The dispositive clause describing the wife's share read as follows: " 'It is my
will and I do hereby give and bequeath to my beloved wife . . . one-half (V2) of my per-
sonal property and a life estate in one-third (Va) of my real estate.' " Id. at 1305-06. The
devise of the residue to the trust was in the article following the devise to the wife

and read in part as follows: " 'It is my will and I do hereby give, devise and bequeath
all the rest and residue of my estate, both real and personal, unto the [trustee] ... in
trust.' " Id. at 1306.

''Id. at 1307.

'^Id. at 1308. The court stated:
The proper analysis involves the method by which the amount of the bequest
is determined. If a bequest is for a sum certain, even if a general bequest,
the legatee gets that amount, and no more. Likewise, if the bequest is

specific, such as an identifiable object, property, or fund, the legatee gets

that object, property, or fund, and no more. On the other hand, where the be-
quest is expressed in terms of a fractional interest in the entire estate, as we
have here, and the amount of the bequest can be ascertained only by

reference to all of the assets of the estate and all of the liabilities, then all of

the estate assets must be considered. The question then is whether income is

a distributable asset in this context.

Id. at 1307. The court then decided that: "Inasmuch as Ind. Code 29-1-17-7 assigns to

income earned during administration the role of an asset of the estate and orders it

distributed as a part of the corpus of the estate, it necessarily follows that [the wife]

should receive her portion of the income." Id. at 1308. (Section 29-1-17-7 is reprinted in

full at note 34 supra.) Thus, the wife was entitled to one-half of the personal property

available for distribution and the trust was entitled to the other half of the personal

property available for distribution. The court distinguished In re Estate of Darby, 154

Ind. App. 238, 289 N.E.2d 542 (1972) (bequest of a sum certain) and In re Estate of
Brown, 145 Ind. App. 591, 252 N.E.2d 142 (1969), overruled on other grounds, Pepka v.



1982] SURVEY-DECEDENTS' ESTATES 191

relied upon a previous appellate decision regarding this same estate,
in which case the court had decided that the wife's fractional share

of the estate was required to bear a "proportionate share of the
debts and expenses" of the estate.^"

In Diaz v. Duncani'^ the court of appeals affirmed the applicabil-

ity of the anti-lapse statute to a lapsed residuary devise where the
deceased devisee was a descendant of the decedent and left surviv-
ing descendants.^^ An interesting aspect of the opinion is the court's
commitment, in dicta, to adhere to decisions under the former law^^

that held that the other residuary devisees take the deceased resi-

duary devisee's lapsed share when the anti-lapse provisions do not
operate to save the lapsed share for descendants of the deceased

devisee/"* Thus, even though Indiana Code section 29-l-6-l(g) is
capable of the construction that a lapsed residuary devise passes by

intestacy and does not pass to other residuary devisees,^^ the well-

established former law, passing lapsed residuary devises to the

other residuary devisees, may be adhered to in the future.^^
Another issue addressed by the court involved the effect of the

failure of an interested party to file specific written objections to

the administrator's final account and proposed distribution prior to

the date of the hearing on the account and distribution. The trial
court had continued the hearing to allow the objectors to file their

Branch, 155 Ind. App. 637, 294 N.E.2d 141 (1973) (specific bequest of an identifiable

fund).

^"408 N.E.2d at 1307. Judge Buchanan had rendered a decision in a prior appeal

involving the estate, American Fletcher Nat'l Bank & Trust Co. v. American Fletcher
Nat'l Bank & Trust Co., 161 Ind. App. 166, 314 N.E.2d 810 (1974), in which the court
held that the wife's "interest was a fractional bequest, in that it was expressed in

terms of a fractional share of the entire estate, and that under the law . . . her interest

was required to bear its proportinate share of the debts and expenses." 408 N.E.2d at

1307. The Key court considered itself bound by Judge Buchanan's prior ruling that the
wife's one-half interest "should be computed on the basis of the net estate available for

distribution." Id.

"406 N.E.2d 991 (Ind. Ct. App. 1980).

'^See Ind. Code § 29-l-6-l(g)(2) (1976).
"406 N.E.2d at 998-99.

''E.g., West v. West, 89 Ind. 529 (1883); Carey v. White, 126 Ind. App. 418, 126

N.E.2d 255 (1955).

"The language supporting this construction is the following language in Ind.

Code § 29-l-6-l(g)(l) (1976) (emphasis added): "If a devise of real or personal property,

not included in the residuary clause of the will, is void, is revoked, or lapses, it shall

become a part of the residue, and shall pass to the residuary devisee."

"Of course, if the residuary devise is to a class, and one of the class members
predeceases the testator, the remaining surviving class members share the residuary
devise unless the anti-lapse statute saves the lapsed devise for descendents of the

deceased devisee. Compare Robbins v. Springer, 119 Ind. App. 560, 88 N.E.2d 573

(1979) with T. Atkinson, Handbook of the Law of Wills § 140 at 782-83 (2d ed. 1953).



192 INDIANA LAW REVIEW [Vol. 15:175

specific objections in writing.^^ The administrator contended that the
continuance was improper because the probate judge had no "juris-
diction to distribute the proceeds of an estate in a manner other
than suggested by the administrator if, on the date set for hearing

on said proposed distribution, no specific objections have been

filed."^^ The court of appeals stated that the trial judge has the right

to modify a proposed distribution even if no objections are filed.^^ The
court concluded that, under Indiana Code section 29-1-1-7, the trial

judge, in ordering the continuance, formulated "an appropriate rule

of procedure for the particular case before him."^°

•4. Appointment and Removal of Personal Representatives. — In
two cases decided during the survey period, the court of appeals
reviewed probate court judgments rendered on matters of appoint-

ment and removal of personal representatives.^^ In each case, the
court of appeals emphasized the considerable discretion of the pro-

bate court in such matters.®^ In reviewing for an abuse of discretion,

each court examined the reasons given to justify the manner in
which the trial court exercised its discretion.^^ In one case. In re

Estate of Sandefur,^"^ the court of appeals found an abuse of discre-

tion, but in the other case, In re Estate of Baird,^^ the court found

no abuse.

In Sandefur, the trial court abused its discretion when it
ordered removal of an executrix on a finding that the executrix
" 'refuses to carry out the provisions of the last will and testament

^^406 N.E.2d at 1001. The situation in the case was unusual in that the objectors
had filed objections earlier in the proceeding, but the trial judge had ruled that the ob-

jections were filed prematurely. At the hearing on the final account, the objectors orally
moved to reinstate the prior objections. The trial court denied the motion because the
objections were not sufficiently specific, but continued the hearing to allow the objec-

tors time to file more specific written objections.

''^Id. The administrator cited Indiana Code sections 29-1-1-10 and 29-1-16-7 in sup-
port of his position.

'M06 N.E.2d at 1001. Pursuant to Indiana Code section 29-l-17-2(b), the court has

the final responsibility to determine how an estate should be distributed.
*''406 N.E.2d at 1003. A procedure that "aid[s] the judge in distribution of the

estate pursuant to the law and according to the wishes of the testator" is "not

unlawful but, rather, commendable." Id. at 1002, 1003.

*^Recent cases dealing with the removal of trustees are reviewed in the text

accompanying notes 158-68 infra.

''See, e.g., Hauck v. Second Nat'l Bank of Richmond, 153 Ind. App. 245, 286
N.E.2d 852 (1972); Helm v. Odle, 129 Ind. App. 478, 157 N.E.2d 584 (1959).

*^The standard of review for an abuse of discretion "requires that a reason stated

by the trial court justify the manner in which it exercised its discretion." In re Estate
of Baird, 408 N.E.2d 1323, 1328 (Ind. Ct^ App. 1980) (citing City of Elkhart v. Middleton,

265 Ind. 514, 356 N.E.2d 207 (1976)).

"413 N.E.2d 309 (Ind. Ct. App. 1980).
«^408 N.E.2d 1323 (Ind. Ct. App. 1980).



1982] SURVEY-DECEDENTS' ESTATES 193

of the decedent.' "*^ On the same day that he executed his will, the
decedent executed a deed conveying a parcel of real estate to him-

self and his mother as joint tenants with right of survivorship. In

his will, the decedent stated that it was his intent not to dispose of
this real estate through the will unless at the time of his death his

mother had predeceased him, leaving him as the surviving joint

tenant. Although the decedent in fact predeceased his mother, the

executrix of the decedent's estate filed an action against the mother

to recover the real estate, alleging that the joint tenancy was
created as security for a loan to the decedent. The mother respond-

ed to this action by filing a petition requesting the removal of the

executrix on the grounds that the executrix had refused to carry

out the provision of the will in which the decedent expressed his in-

tent not to include the real estate in his estate if his mother surviv-

ed him. The court of appeals concluded that the executrix's actions
could not "be classified as an attack upon the will itself or a refusal

to carry out the terms of the will."^^ The court noted that the ex-
ecutrix had obtained prior court approval before bringing the action

to recover the real estate and further noted that the executrix had a

duty to seek to recover the real estate "if she in good faith believed

the real estate was properly an asset of the estate," in spite of
language to the contrary in the will.^^ Clearly, then, the probate

court abused its discretion in ordering the removal of the executrix.

The executrix initially had moved to dismiss the removal peti-
tion on the grounds that the mother was not an "interested person"
within the meaning of the removal statute.^^ The probate court did
not dismiss the mother's petition, but instead ordered the executrix

to appear and show cause why she should not be removed. Although
the mother was not an "interested person" within the meaning of
the removal statute,^" the probate court did not commit error in fail-
ing to dismiss the petition on the ground of the mother's lack of in-

terest, because the removal statute authorizes the court on its own
motion to order the personal representative "to appear and show
cause why he should not be removed."^^

«M13 N.E.2d at 310.

«7d. at 311.

''Id.

«'lND. Code § 29-l-10-6(a) (1976).
^"413 N.E.2d at 310. Because the decedent gave nothing to his mother in his will,

the mother did not have a present interest in the estate sufficient to authorize her to
petition for removal of the executor. See, e.g., Fowler v. Ball, 82 Ind. App. 167, 141
N.E. 64 (1923) (an heir at law given nothing in the testator's will does not have a suffi-
cient interest to petition for removal).

"•Ind. Code § 29-l-10-6(a) (1976).



194 INDIANA LA W REVIEW [Vol. 15:175

In In re Estate of Baird, the court of appeals affirmed the trial

court's conclusion that a nominated co-executor was unsuitable to
serve.^^ The trial court had determined that the named co-executor
"was a legatee under the will, that he had a prospective claim

against the estate, and that antagonism and animosity existed be-

tween" the two named co-executors.^^ The court of appeals held that
neither the executor's interest as a beneficiary nor his interest as a

potential claimant rendered him unsuitable to serve as executor.

The court of appeals also held, however, that the hostility existing
between the nominated co-executors was sufficient to render the ex-
ecutor unsuitable, since the trial court could have reasonably con-

cluded that this hositility would interfere with the orderly and effi-

cient administration of the estate.^''

5. Purchase of Estate Property by the Personal Representa-

tive,— In Hensley v. Hensley,^^ the testator's will provided, in the

pertinent part, that the testator's son " 'will have first refusal of the

farm known as "the home place" at the estate appraisal.' "^® The son,
who was also the executor of the estate, had the property appraised
and purchased it for the appraised value without giving notice to

the heirs and devisees. The son notified the trial court of the sale
and the trial court approved it, but when the residuary devisees
challenged the sale on the grounds of lack of notice,^^ the trial court

set it aside.

Indiana Code section 29-1-15-2 provides that a personal repre-

sentative who acts under authority given in the will may proceed to
sell property without first obtaining a court order and, consequent-

ly, without complying with the provisions of Indiana Code section
29-1-15-11 requiring prior notice to heirs and devisees.^^ The trial
court concluded that the son had not acted pursuant to a power

^M08 N.E.2d at 1329. Unsuitability is a ground for finding that a personal

representative does not qualify for appointment, Ind. Code § 29-l-10-l(b)(6) (1976), or
should be removed, id. § 29-1-10-6.

^'408 N.E.2d at 1328.

'"/d. at 1329. The court, quoting Comstock v. Bowles, 295 Mass. 250, 260, 3 N.E.2d
817, 822-23 (1936), stated that unsuitability is " 'not restricted to instances of absolute

unfitness but [includes] an unfitness arising out of the situation of the person in con-

nection with the estate.' " 408 N.E.2d at 1328; cf. Massey v. St. Joseph Bank & Trust
Co., 411 N.E.2d 751, 758 (Ind. Ct. App. 1980) ("hostility between the trustee and the

beneficiaries is not a per se ground for removal of the trustee").

'M13 N.E.2d 315 (Ind. Ct. App. 1980).

''Id. at 316.

'^The devisees also alleged improper valuation, but there was no evidence in-
dicating that the farm was improperly appraised. Id. at 318 n.l.

^®The executor acting under a power granted in the will need not comply with §
29-1-15-3 (court order) or § 29-1-15-11 (notice) of the Indiana Code. Ind. Code § 29-1-15-2

(1976).



1982] SURVEY-DECEDENTS' ESTATES 195

granted in the will and, therefore, was not excused from complying
with the notice requirements of the probate code. The trial court
concluded that a first refusal sale requires a third party bid, which

the son had not obtained. The court of appeals, however, found that
the language regarding the appraisal was sufficient to allow the son
to exercise his "first refusal" without a third party bid.^^ Thus, the

court held that the son had specific authority in the will to purchase

the estate property at its appraised value and was not required to
comply with the notice provisions of the probate code.^°°

The residuary devisees argued that "the sale of estate property

by an executor to himself, as an individual, is prohibited under any

circumstances by Indiana law."^^^ The devisees relied on In re Estate

of Garwood,^^^ in which the Indiana Supreme Court held that a sale
of estate property by an executor to himself will be set aside with-

out a showing of fraud or unfairness, and in spite of a showing that

the sale was in good faith or was beneficial to the estate. ^°^ In Gar-
wood, however, the supreme court had intimated that the testator
may empower an executor to purchase estate property,^"'' and the
Hensley court concluded that the testator's language regarding first

refusal at the estate appraisal was clearly the sort of authority that
the Garwood court had anticipated.^''^

6. The Dead Man's Statute. — In Summerlot v. Summerlot,^^^
the court of appeals held that the dead man's statute, Indiana Code
section 34-1-14-7,^°^ does not apply in a suit against a surviving ten-

ant by the entireties to enforce a contract for sale of the entireties

«M13 N.E.2d at 317.

'''Id. at 318.

'"MOO N.E.2d 758 (Ind. 1980), noted in Falender, 1980 Survey, supra note 3, at

303-04.

'"^00 N.E.2d at 764.

'''Id at 767.

•"^13 N.E.2d at 318.

'"M08 N.E.2d 820 (Ind. Ct. App. 1980).

'"iND. Code § 34-1-14-7 (1976) provides:
In all suits by or against heirs or devisees, founded on a contract with

or demand against the ancestor, to obtain title to, or possession of property,
real or personal, of, or in right of, such ancestor, or to affect the same in any
manner, neither party to such suit shall be a competent witness as to any
matter which occurred prior to the death of the ancestor.

The court stated that the companion statute, Indiana Code section 34-1-14-6, which
applies in all suits in which a personal representative is a party, is plainly intended "to
protect the decedent's estate while it is represented by an executor or administrator,
but unfortunately affords no protection thereafter if the executor or administrator

assigns claims to an heir or legatee." 408 N.E.2d at 826. Indiana Code section 34-1-14-7
was "ostensibly enacted" to protect the estate in the event the executor or administra-
tor had assigned claims to an heir or devisee. 408 N.E.2d at 826.



196 INDIANA LA W REVIEW [Vol. 15:175

property allegedly entered into while both entireties owners were
alive. The statute does not preclude the admission of testimony
regarding conversations between the plaintiff and the deceased en-
tireties owner, because neither the plaintiff nor the surviving entire-

ties tenant is an "heir" within the sense that the term "heir" is used
in the statute. ^°® Furthermore, the statute is not intended to apply if

the estate of a decedent is not affected by the outcome of the law-
suit. ^°^ A suit seeking to obtain title to or possession of the entire-
ties property will not affect the estate of the decedent cotenant,

because entireties property never becomes part of the deceased
cotenant's estate."*^

7. Presumptions of Death. — \r\ Roberts v. Wabash Life Insur-
ance Co.,^^^ a case involving claims by life insurance beneficiaries for

payment of policy proceeds, the court of appeals discussed the
common-law presumption of death after a seven-year unexplained,
continuous absence. ^^^ The court held that the presumption is a re-
buttable presumption, which is "not evidence of the ultimate fact" of

death, and which serves no purpose in the case once the opponent

introduces rebuttal evidence. ^^^ The court also held that Indiana
Code section 29-2-7-1,"* which provides that the presumption of
death of Indiana Code section 29-2-5-1"^ after a five-year unexplain-

'"^The surviving spouse is, of course, an heir of his or her deceased spouse, but

the surviving spouse is not an heir as to the entireties property. Both tenants by the

entireties own the whole estate during their lives, and the surviving entireties owner

acquires nothing new by virtue of his survivorship. 408 N.E.2d at 825 (quoting

Spurgeon v. Olinger, 64 Ind. App. 176, 115 N.E. 680 (1917)). Technically, then, the ac-

tion to enforce the contract was not an action brought by or against an heir or devisee

in respect of the property at issue in the lawsuit.

^"'The court stated:

[T]he only purpose of the dead man's statutes is to preserve decedents'

estates from spurious claims or defenses. If the estate of the decedent is not

affected, either directly or indirectly, the statute is not intended to apply. It

is elementary, of course, that entireties property does not become part of the

decedent's estate.

408 N.E.2d at 827 (emphasis in original). See also, e.g., Durham v. Shannon, 116 Ind.
403, 19 N.E. 190 (1888); Sloan v. Sloan, 21 Ind. App. 315, 52 N.E. 413 (1898).

""408 N.E.2d at 827.

"^410 N.E.2d at 1377 (Ind. Ct. App. 1980).

"^The court described the common-law presumption of death as follows: "When a
person is inexplicably absent from home for a continuous period of seven years, fails to
communicate with those persons who would be most likely to hear from him, and can-
not be found despite diligent inquiry and search, that person is presumed to be dead."

Id. at 1382 (citing Equitable Life Assurance Society v. James, 73 Ind. App. 186, 127

N.E. 11 (1920); Metropolitan Life Insurance Co. v. Lyons, 50 Ind. App. 534, 98 N.E. 824

(1912)).

"^410 N.E.2d at 1383 (citing Sumpter v. State, 261 Ind. 471, 306 N.E.2d 95 (1974);

Kaiser v. Happel, 219 Ind. 28, 36 N.E.2d 784 (1941)).

"'Ind. Code § 29-2-7-1 (1976).

"^M § 29-2-5-1.



1982) SURVEY-DECEDENTS' ESTATES 197

ed, continuous absence relates back to the day of disappearance,

'^relates only to the settlement of estates of absentees and has no

application independently in determining rights under insurance

contracts."'^^

8. Statutory Developments. —The 1981 legislature has afforded
a new method of establishing a custodianship for a minor."^ The
Indiana Uniform Gift to Minors Act"^ was amended by adding a new
section, ^'^ allowing a testator or settlor to devise or transfer property

to a person designated in the will or trust as custodian for a minor^^'^

and allowing a personal representative or trustee to distribute, with

court approval, a minor's property to a custodian if "the court finds

that the distribution is in the best interest of the minor . . . [and] the

applicable will, if any, or trust instrument authorizes such a trans-

fer."^^^ The section describes the persons who may serve as custo-
dian, ^^^ the type of property that may be distributed to a
custodian, ^^^ and the effect of such a devise or transfer to a custo-

dian. ^^^ A testator or settlor who contemplates a devise or transfer
of money, securities, an insurance policy, or an annuity contract to a
minor should consider a will or trust provision either designating a

custodian or authorizing a transfer to a custodian to avoid the more
cumbersome guardianship proceedings and accountings. In fact, such
a custodianship may be desirable in small estates in lieu of a testa-
mentary trust for minor children.

The legislature also amended Indiana Code sections 6-4.1-8-4 and
-4.5 to allow the transfer of money held in a joint checking account
without the written consent of the county assessor or department of

state revenue. ^^^ The person in possession of the account must, how-
ever, notify the department when the money is transferred to the

"MIO N.E.2d at 1384.

"^Ind. Code § 30-2-8-2.5 (Supp. 1981). Minor housekeeping amendments were made
to Indiana Code sections 29-1-7.5-3 (reference to 2(b) changed to 2(c)); 29-1-17-3, -4

(reference to "widow's or family allowance" changed to "the allowance provided by IC

29-1-4-1"); 29-1-18-43 (reference to code sections clarified); 30-2-1.5-2 (minor clarification).

"«IND. Code §§ 30-2-8-1 to -10 (1976 & Supp. 1981).
"'IND. Code § 30-2-8-2.5 (Supp. 1981).
'''Id. § 30-2-8-2.5(a).

'''Id. § 30-2-8-2.5(b).

'''Id. § 30-2-8-2. 5(c) limits the persons who may serve as custodians to adult
members of the minor's family, a guardian of the minor, or a trust company,

"^Id. § 30-2-8-2. 5(d) limits the type of property that may be transferred to this
custodianship to money, securities, life or endowment policies, or annuity contracts.
The property is to be transferred or distributed to the custodian in the same manner
as it is transferred to a custodian under id. § 30-2-8-2.

'"Id. § 30-2-8-2.5(e), (f).

"^Id. § 6-4.1-8-4. This follows last year's amendment of the same section, which
allowed transfers of jointly owned personal property to a surviving spouse without the
written consent of the department of revenue or county assessor.



198 INDIANA LA W REVIEW [Vol. 15:175

surviving joint tenant. ^^^ Thus, institutions that offer checking ac-

counts may allow immediate withdrawal of funds by a surviving
joint tenant without any delay in arranging for an appointment with

department of revenue officials. The amendment should obviate the
need for a separate account in the joint owner's name to assure the
availability of funds for the survivor immediately after the death of

a joint checking account owner.

E. Trust Developments

1. Lapse and Conditions of Survival. — In Hinds v. McNair,^^'^
the court of appeals discussed, inter alia, the issue of lapse of a

beneficial interest in a trust and the circumstances in which a condi-

tion of survival may be attached by implication to the trust benefi-
ciary's interest. McNair and his wife created an oral irrevocable in-
ter vivos trust in 1931, and this trust was recognized as existing and
valid by the Indiana Supreme Court in 1955.^^^ McNair was the sole
trustee until his death in 1969, at which time the trust property was

to be divided equally between his son and daughter. ^^^

McNair's daughter died in 1962, prior to the time for distribu-

tion of the trust corpus, and McNair's son argued that the

daughter's interest in the trust proerty lapsed upon her death and
passed by way of resulting trust to the settlor, McNair. ^^° The court
of appeals noted that a trust beneficiary's interest might lapse if the

beneficiary predeceased the creation of the trust;'^^ however, in the

^^^Id. § 6-4. 1-6-4.5(d). Problems may arise over the definition of a checking account.
^"413 N.E.2d 586 (Ind. Ct. App. 1980).

'''Hinds V. McNair, 235 Ind. 34, 129 N.E.2d 553 (1955). The trust corpus was stock,
and the trust's creation predated the enactment of Indiana Code section 30-4-2-1, which

first established the requirement of a writing to create an enforceable trust of per-

sonal property. The terms of the oral trust were described by the settlor, McNair,
when he testified in the prior action in response to questions apparently requiring him
to "articulate 'each and every term' of the trust." 413 N.E.2d at 600 n.ll. When the
settlor articulated the terms of the trust, he did not mention a reserved power to
revoke. Id. at 595. The Hinds court in the present action concluded that the presump-
tion of irrevocability was not overcome by evidence that the settlor had reserved a
power to revoke or modify. Id. at 596. Herein the settlor, McNair, Sr., is referred to as
McNair, and the son, McNair, Jr., is referred to as the son.

'^^The cosettlors were divorced in 1948, and the wife then relinquished all her in-

terest in the stock forming the trust corpus. Thus, the time for division of the corpus

was the time of death of McNair in 1969. 413 N.E.2d at 592.
'^"M at 596. There was no gift over in the event of the death of the son or

daughter. Thus, if one of their interests failed, that interest would return to the

settlor by way of resulting trust. See note 149 infra.
^^Id. at 597. The court noted that the Restatement (Second) of Trusts § 112,

Comment f, relied upon by the son, was inapplicable because the daughter survived
the creation of the trust. 413 N.E.2d at 596-97. The Restatement indicates that:

A person who has died prior to the creation of a trust can not be a



1982] SURVEY-DECEDENTS' ESTATES 199

Hinds case, the daughter was alive in 1931 when the trust was
created, and her interest did not lapse upon her death in 1962. In-
stead, whatever interest the daughter owned at her death passed in-
tact to her heirs/^^

The court's discussion of the lapse issue could have been clearer.
The court's repeated statements emphasizing that the daughter's in-
terest was vested might lead the casual reader to conclude that a
crucial factor in the resolution of the lapse issue was the determina-
tion that the daughter's interest was vested as opposed to contin-
gent. ^^^ Actually, the only relevant factor for lapse purposes was
whether the daughter survived the creation of her beneficial inter-
est.

The son also argued that the daughter's interest terminated on
her death because it was subject to a condition that she survive
until the time for distribution. Although there was no express condi-
tion of survival attached to the daughter's interest, the son argued
that a condition of survival should be implied. ^^* The court of ap-
peals, relying extensively on treatise authority, '^^ carefully and ex-
haustively listed the factors tending to establish a condition of sur-
vival and the factors tending to negate the existence of such a condi-
tion. ^^^ Regarding the application of these factors in the analysis of a

beneficiary of the trust. Thus, if property is transferred inter vivos in trust

for a named person who is dead at the time of the transfer, no trust is
created. In such a case the transferee ordinarily holds upon a resulting trust

for the transferor. [I]f a testator devises property in trust for a person who
predeceases him, the devise of the beneficial interest lapses, and the person

named as trustee ordinarily holds the property upon a resulting trust for the

estate of the testator.

'^^Restatement (Second) of Trusts § 112, Comment f (1959) (references omitted).
413 N.E.2d at 599. The heirs take subject to the same conditions to which the

beneficiary's interest was subject. Of course, if the interest of the beneficiary was sub-

ject to a condition of survival to a certain time, the interest ceases if the beneficiary

fails to survive to that time. See 2 A. Scott, The Law of Trusts § 128.8 (3d ed. 1967),
quoted in 413 N.E.2d at 600.

'^^The daughter's future interest in the trust corpus was technically a vested in-

terest because it was in favor of an ascertainable person and was not subject to a con-

dition precedent. See generally Heilman v. Heilman, 129 Ind. 59, 28 N.E. 310 (1891).

"*The court had concluded that rules of construction applicable to written instru-

ments could be applied, especially since the settlor's intent had been memorialized in

testimony. 413 N.E.2d at 600 n.ll.

'^'Restatement of Property §§ 249, 250, 252, 254 (1940); R. Powell & P. Rohan,
2A The Law of Real Property fl 327-331 (2d ed. 1977).

'^®These positive factors include: (1) the description of the beneficiary by the use

of a term connoting survival, such as "heirs" or "next of kin;" (2) a word or phrase

describing the beneficiary as one who survives to a later date, such as "if living" or
"surviving children;" (3) an alternative limitation using the word "or," such as "to the

beneficiary or his children;" or (4) a supplanting limitation containing a gift to the

beneficiary and a secondary gift separated by words such as "but if" or "in case." 413



200 INDIANA LA W REVIEW [Vol. 15:175

particular limitation, the court quoted from the Powell treatise:

"[T]he persuasive value of each [negative] factor increases as it joins

forces with another. The [negative] factors themselves vary con-
siderably in persuasive force. Furthermore, these factors are weakened
and often overcome by the presence of the postive factors . . . ."^^^

The court affirmed the trial court's conclusion that a condition of
survival was not attached to the daughter's interest in the trust.^^®

Drafters, of course, should expressly include a condition of sur-

vival if one is intended and carefully negate the condition if it is not

intended. The factors enumerated in the Hinds cJase should be
reviewed by all will and trust drafters, in order to avoid the inad-

vertent use of language that does not clearly express the settlor's or

testator's intent regarding a requirement of survival.

2. Breach of Trust and Removal of Trustees. — In two cases
decided during the survey period, the court of appeals affirmed the

trial courts' conclusions regarding the occurrence of, and liability

for, a breach of trust and regarding the sought-for removal of the

trustees. The issues of breach and removal are joined in this survey
discussion because the issues were joined in the cases. Breach of
trust is ordinarily a sufficient justification for removal of a

trustee.
^^^

In Forth v. Forth,^^^ the court of appeals held that the trustees

had not breached their duty of non-delegation when they gave prox-
ies to vote shares of corporate stock forming the corpus of the

trust. ^'^^ The cotrustees also did not breach the precatory trust

N.E.2d at 600-01. The negative factors include: "(1) the absence of both an alternative

and a supplanting limitation; (2) identification of the intended takers; (3) language of

present gift; and (4) the gift to the future interest holder himself of the income from

the subject matter of the gift for the period during which possession is denied to him."

413 N.E.2d at 601 (quoting 2A R. Powell, supra note 153, 1 331 at 780) (emphasis in

original).

'^'2A R. Powell, supra note 153, 1 331 at 780.
'^^413 N.E.2d at 600 n.ll. Each one of the negative factors was present: there was

no limiting language; there was no alternative limitation; the daughter was an iden-

tified taker; the settlor used language of present gift in describing his intent that at

his death the children would get the stock; and the settlor made a discretionary gift of
income to the daughter during the time when possession was denied her. Id. at 601.

'^^Ind. Code § 30-4-3-22 (1976) provides that one of the remedies available for

breach of trust is removal of the trustee.
•^"409 N.E.2d 1107 (Ind. Ct. App. 1980).

'''Id. at 1115 (citing Ind. Code § 30-4-3-3(a)(15) (1976), which gives specific statutory

authority to vote securities by proxy and overrides the general duty of non-delegation

stated in id. § 30-4-3-6(b)(ll)).

The testator's three children and his wife were successor cotrustees of the trust.
The action was brought to set aside an election of directors of the corporation which
shares formed the corpus of the trust, in which election the complaining cotrustee and

her husband were voted off the board, and to instruct the cotrustees to vote the



1982] SURVEY-DECEDENTS ' ESTA TES 201

terms, which expressed the settlor's "desire that there be no change

in management so long as the corporation is operated profitably,"'*^

when they failed to vote the shares to reelect the complaining co-

trustee to the corporate board of directors.''^ Furthermore, the trial

court did not abuse its discretion when it refused to award attorney

fees to the unsuccessful complaining cotrustee.
'''''

In Donahue v. Watson,^^^ the court of appeals held that the

trustee's allocation of capital gains from the sale of trust property

to the income beneficiaries was a breach of trust/*^ The trustee was

liable to restore the trust principal to the trust,
'^^ and the trustee

was also liable for attorney fees incurred by the beneficiaries in

bringing the action for breach of trust/"^ The trustee's breach of

trust was sufficient justification for her removal,''^ although her

shares in a manner which would insure the complaining cotrustee a seat on the board.

The complaining cotrustee also sought to remove the cotrustees and to recover at-
torney fees. 409 N.E.2d at 110.

"^409 N.E.2d at 1113.

^^Ud. at 1113-14, applying well-settled rules of construction.

^^Vd at 1116. The court offered the following analysis:
"The right to compensation at the cost of the estate should not depend

upon the result of the litigation but rather upon the reasonable necessity for

such litigation. And on that subject a court passing on the question of
allowances ought to consider not merely the result, but whether the trustees

are acting reasonably and in good faith, whether the issue on which they are

divided is of little or momentous consequence to the estate or its
beneficiaries, whether the facts are undisputed or are so controversial as to

require an adversary proceeding for their determination, whether the legal

questions are simple or complex, settled by precedents or open to serious

debate, and any other matters that bear upon the reasonableness or the

necessity for the litigation and the multiple employment of attorneys

therein."

Id. (quoting Zaring v. Zaring, 219 Ind. 514, 523, 39 N.E.2d 734, 737 (1942)).
'^^411 N.E.2d 741 (Ind. Ct. App. 1980).

'**/rf. at 747-48. The trustee was one of the income beneficiaries. The court of ap-
peals held that the following clause did not give the trustee unfettered discretion in

the allocation of income and principal:

If there be any uncertainty or question as to whether any part of said trust

estate be principal or income, or as to whether any cost, charge, expense, tax

or assessment thereon should be charged against principal or income, said

trustees shall have power, in their discretion, to settle and determine such

question.

Id. at 747.

'^7d. at 748 nn.l & 2.
'*«Donahue v. Watson, 413 N.E.2d 974 (Ind. Ct. App. 1980) (citing Ind. Code §§

30-4-3-1 1(b)(4), -22(a) (1976)).

'*M11 N.E.2d at 747-48. The trustee argued that the trial court was not properly

presented with the issue of her removal, because objections were not properly filed by

the complainants. The court of appeals, citing Indiana Code section 30-4-3-29 and

Restatement (Second) of Trusts § 107, stated: "In any event, it is not clear that the



202 INDIANA LA W REVIEW [Vol. 15:175

nonresidence alone would not have been sufficient/^"

3. Constructive Trusts. — In Forth v. Forth,^^^ the court of ap-
peals held that an action to establish a constructive trust was barred
by the six-year statute of limitations applicable in fraud actions. '^^

The court concluded that the limitations period began to run at the
time the alleged fraud was perpetrated and that the discovery rule,
tolling the statute until the fraud was or should have been dis-
covered, was inapplicable because there was no allegation of active
and intentional concealment. ^^^ Neither repudiation by the alleged

trustee nor an unsuccessful demand by the beneficiary is necessary
to commence the running of the statutory period. ^^'^ The limitations
period begins to run when the conduct giving rise to the construc-
tive trust remedy occurs. ^^^

civil court could not remove the trustee sua sponte upon finding sufficient grounds."

411 N.E.2d at 747.

'^Mll N.E.2d at 747.
'^'409 N.E.2d 641 (Ind. Ct. App. 1980).

'^'IND. Code § 34-1-2-1 (1976).
'^^409 N.E.2d at 644-45.

*^Vd at 644. The court contrasted this rule with that of the time of commence-

ment of a cause of action for breach of express trust, where an open repudiation by

the trustee or an unsuccessful demand for trust property by the trust beneficiary is re-

quired to commence the running of the statute of limitations. Id.

'''Id.