Sec. 35. (a) This section is intended to ensure that if real property is transferred to one (1) or more revocable trusts created by a husband and wife for estate planning purposes, the husband and wife will maintain real estate ownership protections equivalent to those they would have if they owned that real property in an estate by the entireties including an estate by the entireties created under IC 32-17-3-1.

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Terms Used In Indiana Code 30-4-3-35

  • Attorney: includes a counselor or other person authorized to appear and represent a party in an action or special proceeding. See Indiana Code 1-1-4-5
  • Court: means a court having jurisdiction over trust matters. See Indiana Code 30-4-1-2
  • Decedent: A deceased person.
  • Gross estate: The total fair market value of all property and property interests, real and personal, tangible and intangible, of which a decedent had beneficial ownership at the time of death before subtractions for deductions, debts, administrative expenses, and casualty losses suffered during estate administration.
  • Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
  • in writing: include printing, lithographing, or other mode of representing words and letters. See Indiana Code 1-1-4-5
  • Income: except as otherwise stated in a trust agreement, has the meaning set forth in IC 30-2-14-4. See Indiana Code 30-4-1-2
  • Inter vivos: Transfer of property from one living person to another living person.
  • Judgment: means all final orders, decrees, and determinations in an action and all orders upon which executions may issue. See Indiana Code 1-1-4-5
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Life estate: A property interest limited in duration to the life of the individual holding the interest (life tenant).
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Power of attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Source: OCC
  • Property: includes personal and real property. See Indiana Code 1-1-4-5
  • Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
  • real property: include lands, tenements, and hereditaments. See Indiana Code 1-1-4-5
  • Settlor: means a person who establishes a trust including the testator of a will under which a trust is created. See Indiana Code 30-4-1-2
     (b) As used in this section, “joint matrimonial trust” means a single inter vivos trust established under this section by settlors who are husband and wife.

     (c) As used in this section, “matrimonial property” means real property that:

(1) is subject to a written election to treat the property as matrimonial property under this section; and

(2) is owned by a matrimonial trust.

     (d) As used in this section, “matrimonial trust” means a trust established under this section to own matrimonial property.

     (e) As used in this section, “separate matrimonial trust” means a separate trust that is also a matrimonial trust.

     (f) As used in this section, “separate trust” means a trust established by one (1) individual.

     (g) A matrimonial trust may be established:

(1) jointly by a husband and wife; or

(2) in two (2) or more separate trusts.

     (h) A husband and wife may elect to treat real property as matrimonial property with a written statement of the election:

(1) in an instrument or instruments conveying the real property to a matrimonial trust or trusts; or

(2) in a separate writing that must be recorded in the county where the real property is situated and indexed in the records of the county recorder’s office to the instrument or instruments that convey the real property to a matrimonial trust or trusts.

     (i) A guardian of a husband or wife may make an election under this section:

(1) without the approval of the court if the guardian has unlimited powers under IC 29-3-8-4; and

(2) with the approval of the court in all other cases.

     (j) An attorney in fact of a husband and wife may join in the making of an election under this section under the powers conferred upon the attorney in fact by IC 30-5-5-2 if the power of attorney is recorded in the county where the real property is situated and indexed in the records of the county recorder’s office to the instrument or instruments that convey the real property to a matrimonial trust or trusts.

     (k) The terms of a separate matrimonial trust or a joint matrimonial trust may (but are not required to) restrict the sale or transfer of the matrimonial property for:

(1) the lifetime of the settlor who dies first;

(2) the lifetime of the surviving settlor; or

(3) another defined time period.

     (l) An interest in matrimonial property is not severable during the marriage of the husband and wife unless:

(1) both the husband and wife join in the severance in writing; or

(2) a third party owns and forecloses a mortgage or other lien against the interests of both the husband and wife in the matrimonial property.

     (m) Notwithstanding any other provision of this section, the legal rights of a lienholder that exist at the time of an election to treat the real property subject to the lien as matrimonial property may not be subject to a severance described in subsection (l) without the lienholder’s written consent.

     (n) To the extent that a matrimonial trust continues to be a matrimonial trust after the death of a settlor (as provided by subsections (p) and (r));

(1) real property held or owned in a separate trust and for which an earlier election was made under this section continues to be matrimonial property; and

(2) an unsecured creditor or judgment lien creditor who has a claim only against the deceased settlor but not against the surviving settlor cannot enforce that claim against the deceased settlor’s interest or the surviving settlor’s interest in the matrimonial property.

     (o) After the death of a settlor of a matrimonial trust (whether separate or joint), the issue of whether the surviving settlor’s interest in the matrimonial property will be exposed to the claims of the surviving settlor’s existing creditors or new creditors must be determined according to:

(1) the nature and extent of the surviving settlor’s interest in the matrimonial property under the terms of the deceased settlor’s separate trust or the joint trust;

(2) all other relevant facts and circumstances; and

(3) pertinent principles of nontrust law outside this article.

     (p) Matrimonial property held in a separate matrimonial trust or in a joint matrimonial trust continues to be matrimonial property after the death of one (1) settlor:

(1) if the settlors reserved a life estate in the matrimonial property for each settlor when they conveyed the matrimonial property to the matrimonial trust or trusts; or

(2) if the deceased settlor’s separate trust provides to the surviving settlor:

(A) a life estate;

(B) an interest that qualifies for a deduction from the gross estate of the decedent under Section 2056 of the Internal Revenue Code regardless of whether an election is made to qualify the interest for the deduction; or

(C) in some respect the current right to occupy or receive rent, royalties, or other kinds of income with respect to the matrimonial property.

     (q) A separate matrimonial trust established by a deceased settlor ceases to be a matrimonial trust upon the termination of payments to the surviving settlor as a result of the surviving settlor’s death or as a result of the surviving settlor’s valid disclaimer of all interests in the matrimonial property held in the deceased settlor’s trust.

     (r) A separate matrimonial trust established by a settlor who remains alive continues to be a matrimonial trust during that settlor’s remaining lifetime, so long as the settlor retains the right to use or occupy matrimonial property held in the settlor’s separate trust.

     (s) A matrimonial trust ceases to be a matrimonial trust upon the dissolution of the marriage of the settlors.

     (t) A husband and wife may revoke a matrimonial trust by together executing a writing expressing the revocation.

As added by P.L.6-2010, SEC.18. Amended by P.L.36-2011, SEC.9; P.L.99-2013, SEC.10.

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