January 21, 2000
HOUSE BILL No. 1125
DIGEST OF HB 1125
(Updated January 20, 2000 10:03 AM - DI 69)
Citations Affected: IC 30-4.
Synopsis: Charitable trusts. Provides that the trust code applies to
charitable trusts. Defines "charitable trust". Defines "trust for a
benevolent public purpose". Requires the trustee of a trust for a
benevolent public purpose to certify to the attorney general that a
written statement of accounts has been prepared and is available to the
attorney general and the general public upon request. (The introduced
version of this bill was prepared by the probate code study
Effective: July 1, 2000.
January 10, 2000, read first time and referred to Committee on Judiciary.
January 20, 2000, reported _ Do Pass.
January 21, 2000
Second Regular Session 111th General Assembly (2000)
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HOUSE BILL No. 1125
A BILL FOR AN ACT to amend the Indiana Code concerning
trusts and fiduciaries.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 30-4-1-1; (00)HB1125.1.1. -->
IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2000]: Sec. 1. (a) A trust is a fiduciary
relationship between a person who, as trustee, holds title to property
and another person for whom, as beneficiary, the title is held.
(b) Subject to
, the same person may be both the trustee
and a beneficiary.
(c) The rules of law contained in this article do not apply to:
(1) trusts created by operation of law;
(2) business trusts (as defined in
(3) security instruments and creditor arrangements;
(4) voting trusts;
religious, educational, and cultural institutions, created in
other than trust form,
except with respect to
those sections relate
to the maintenance of federal income tax
exemption privileges to which an institution is entitled;
nonprofit charitable foundations,
corporations and other
associations entities governed by IC 23-17, except with respect
IC 30-4-5-18 through
as it relates
those sections relate to the maintenance of federal income tax
exemption privileges to which a corporation or other entity is
(7) prepaid funeral plans;
(8) trusts for the care and upkeep of cemeteries;
(9) agreements to furnish funeral services; and
(10) trusts created or authorized by statute other than this article.
(a) applies to an employee benefit trust that meets
the requirements set forth in
(c). However, no other
provision of this article applies to an employee benefit trust.
SOURCE: IC 30-4-1-2; (00)HB1125.1.2. -->
IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2000]: Sec. 2. As used in this article:
(1) "Adult" means any person eighteen (18) years of age or older.
(2) "Affiliate" means a parent, descendant, spouse, spouse of a
descendant, brother, sister, spouse of a brother or sister,
employee, director, officer, partner, joint venturer, a corporation
subject to common control with the trustee, a shareholder, or
corporation who controls the trustee or a corporation controlled
by the trustee other than as a fiduciary.
(3) "Beneficiary" means any cestui que trust or person named or
a member of the class designated in the terms of the trust to be
any person or class of persons for whose benefit the title to the
trust property is held and for whom the trust is to be administered.
(4) "Breach of trust" means a violation by the trustee of any duty
which is owed to the settlor or beneficiary.
(5) "Charitable trust" means a trust in which all the
beneficiaries are the general public or organizations,
including trusts, corporations, and associations, and that is
organized and operated wholly for religious, charitable,
scientific, public safety testing, literary, or educational
purposes. The term does not include charitable remainder
trusts, charitable lead trusts, pooled income funds, or any
other form of split-interest charitable trust that has at least
one (1) noncharitable beneficiary.
"Court" means a court having jurisdiction over trust matters.
"Income beneficiary" means a beneficiary to whom income
is presently payable or for whom it is accumulated for distribution
"Inventory value" means the cost of property to the settlor
or the trustee at the time of acquisition or the market value of the
property at the time it is delivered to the trustee, or the value of
the property as finally determined for purposes of an estate or
(8) (9) "Minor" means any person under the age of eighteen (18)
(9) (10) "Person" means a natural person, corporation, or a unit,
agency, or other subdivision of national, state, or local
(10) (11) "Personal representative" means an executor or
administrator of a decedent's or absentee's estate, guardian of the
person or estate, guardian ad litem or other court appointed
representative, next friend, parent or custodian of a minor,
attorney in fact, or custodian of an incapacitated person (as
(11) (12) "Remainderman" means a beneficiary entitled to
principal, including income which has been accumulated and
added to the principal.
(12) (13) "Settlor" means a person who establishes a trust
including the testator of a will under which a trust is created.
(13) (14) "Trust estate" means the trust property and the income
derived from its use.
(15) "Trust for a benevolent public purpose" means a
charitable trust (as defined in subdivision (5)) a split-interest
trust as defined in Section 4947 of the Internal Revenue Code,
and any other form of split-interest charitable trust that has
both charitable and noncharitable beneficiaries, including but
not limited to charitable remainder trusts, charitable lead
trusts, and charitable pooled income funds.
(14) (16) "Trust property" means property either placed in trust or
purchased or otherwise acquired by the trustee for the trust
regardless of whether the trust property is titled in the name of the
trustee or the name of the trust.
(15) (17) "Trustee" means the person who is charged with the
responsibility of administering the trust and includes a successor
or added trustee.
SOURCE: IC 30-4-3-27; (00)HB1125.1.3. -->
IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2000]: Sec. 27. (Cy Pres Doctrine)
If property is given
in to a
trust for a benevolent public purpose
and the property is
to be applied to a particular charitable purpose,
and it is or becomes impossible, impracticable, or illegal to carry out
the particular purpose, and if the settlor manifested a more general
intention to devote the property to charitable purposes, the trust need
not fail, but the court may direct the application of the property to some
charitable purpose which falls within the general charitable intention
of the settlor.
SOURCE: IC 30-4-3-31; (00)HB1125.1.4. -->
IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2000]: Sec. 31. (a) This section is
enacted for the purpose of confirming the power of Indiana courts to
charitable trusts for a benevolent public purpose, and
transfers not in trust as described in Section 170(f)(3)(A) of the Internal
Revenue Code, to effect compliance with Sections 170, 664, 2055,
2106, and 2522 of the Internal Revenue Code so that these trusts and
transfers may obtain the income tax exemption afforded by Section 664
of the Internal Revenue Code and donors or other contributors of gifts
or contributions to these trusts and transfers may secure the income,
estate, and gift tax charitable deductions granted by Sections 170,
2055, 2106, and 2522 of the Internal Revenue Code.
(b) Upon petition, any court of general or probate jurisdiction in
Indiana may, in its discretion, modify the instrument of an inter vivos
charitable trust for a benevolent public purpose, or
transfer not in trust as described in Section 170(f)(3)(A) of the Internal
Revenue Code, so that the trust or transfer complies with and conforms
to the provisions of Sections 170, 664, 2055, 2106, and 2522 of the
Internal Revenue Code and regulations thereunder from the date of the
trust's or transfer's creation, if consent to the modification is given by:
(1) all beneficiaries of the trust or transfer; and
(2) the settlor of the trust or transfer if the settlor is living at the
date of modification.
SOURCE: IC 30-4-5-12; (00)HB1125.1.5. -->
IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2000]: Sec. 12. (Accounting by
(a) Unless the terms of the trust provide otherwise or unless waived
in writing by an adult, competent beneficiary, the trustee shall deliver
a written statement of accounts to each income beneficiary or his
personal representative annually. The statement shall contain at least:
(1) all receipts and disbursements since the last statement; and
(2) all items of trust property held by the trustee on the date of the
statement at their inventory value.
If property or money is devised or bequeathed or donated for a
benevolent public purpose, the trustee shall file a verified written
statement annually with the court of the county in which the venue lies
under 30-4-6-3 showing at least the items listed in 30-4-5-13(a). The
trustee of a charitable trust shall annually file a verified written
certification with the attorney general stating that a written
statement of accounts has been prepared showing at least the items
listed in section 13(a) of this chapter. The certification must state
that the statement of accounts is available to the attorney general
and any member of the general public upon request. A charitable
trust may not be exempted from this requirement by a provision in
a will, trust agreement, indenture, or other governing instrument.
This subsection does not prevent a trustee from docketing a
charitable trust to finalize a written statement of account or any
other lawful purpose in the manner provided in this article.
However, this subsection does not apply to an organization that is
not required to file a federal information return under Section
6033(a)(2)(A)(i) or Section 6033(a)(2)(A)(ii) of the Internal
(c) Upon petition by the settlor, a beneficiary or his personal
representative, a person designated by the settlor to have advisory or
supervisory powers over the trust, or any other person having an
interest in the administration or the benefits of the trust, including the
attorney general in the case of a trust for a benevolent public purpose,
the court may direct the trustee to file a verified written statement of
accounts showing the items listed in
30-4-5-13(a). section 13(a) of this
chapter. The petition may be filed at any time, provided, however, that
the court will not, in the absence of good cause shown, require the
trustee to file a statement more than once a year.
(d) If the court's jurisdiction is of a continuing nature as provided in
IC 30-4-6-2, the trustee shall file a verified written statement of
accounts containing the items shown in
30-4-5-13(a) section 13(a) of
this chapter with the court biennially, and the court may, on its own
motion, require the trustee to file such a statement at any other time
provided there is good cause for requiring a statement to be filed.
SOURCE: IC 30-4-5-21; (00)HB1125.1.6. -->
IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2000]: Sec. 21. Subject to the
provisions of this section and of section 23 of this chapter, every trust
subject to the laws of this state which is a private foundation as defined
in Section 509(a) of the Internal Revenue Code, a charitable trust
treated as a private foundation under Section 4947(a)(1) of the Internal
Revenue Code, or a split-interest trust as defined in Section 4947(a)(2)
of the Internal Revenue Code for a benevolent public purpose that
is subject to the provisions of Subchapter A of Chapter 42 of
Subtitle D of the Internal Revenue Code
distribute each taxable year amounts sufficient for such
trust to avoid liability for the tax imposed by Section 4942 of the
Internal Revenue Code, except that this subdivision shall not
apply to split-interest trusts;
(b) (2) not engage in any act of self-dealing (as defined in Section
4941(d) of the Internal Revenue Code) which would subject such
trust to liability for the taxes imposed by Section 4941 of the
Internal Revenue Code;
(c) (3) not retain any excess business holding (as defined in
Section 4943(c) of the Internal Revenue Code) which would
subject such trust to liability for the taxes imposed by Section
4943 of the Internal Revenue Code;
(d) (4) not make any investment which would jeopardize the
carrying out of any of such trust's exempt purposes (within the
meaning of Section 4944 of the Internal Revenue Code) and
which would subject such trust to liability for the taxes imposed
by Section 4944 of the Internal Revenue Code; and
(e) (5) not make any taxable expenditure (as defined in Section
4945(d) of the Internal Revenue Code) which would subject such
trust to liability for the taxes imposed by Section 4945 of the
Internal Revenue Code.
The provisions of this section shall not apply to split-interest trusts or
amounts thereof to the extent that such split-interest trusts and amounts
are not, under Section 4947 of the Internal Revenue Code, subject to
the prohibitions applicable to private foundations.