In Rotert v. Stiles, an October 8, 2021 decision from the Indiana Supreme Court, the Court held that the Indiana Probate Code’s bar against restraints on marriage does not apply to trusts or gifts to children.
The Facts Of Rotert v. Stiles
In 2009, Marcille Borcherding executed a revocable living trust that divided her property between her son, Roger Rotert; her daughter, Connie Stiles; and her four stepchildren. The trust contained a subtrust for Rotert’s share (which included cash assets and real property) and appointed Stiles as trustee. The trust contained the following provision:
In the event that [Rotert] is unmarried at the time of my death, I give, devise and bequeath his share of my estate to him outright and the provisions of this trust shall have no effect. However, in the event that he is married at the time of my death, this trust shall become effective, as set out below.
Rotert had been married to his third wife, Donna, for at least eight years when Borcherding executed the trust. But before the trust’s execution, Donna had filed for divorce. The couple later reconciled and were married when Borcherding died in 2016.
After Borcherding’s death, Stiles and Rotert disagreed about whether his interests must be held in trust. Rotert sued, alleging the challenged provision in the revocable trust is a void restraint against marriage.
Rotert and Stiles moved for summary judgment. The trial court found that the trust’s terms were not void for public policy and denied Rotert’s motion for summary judgment and granted Stiles’s motion.
Rotert appealed and argued, among other issues, that the challenged trust provision is void as a restraint against marriage. The court of appeals agreed and held that the challenged provision is an impermissible restraint against marriage and found in Rotert’s favor, Rotert v. Stiles, 159 N.E.3d 46, 53 (Ind. Ct. App. 2020).
The Indiana Supreme Court granted transfer, and vacated the appellate decision.
Indiana Probate Code –Condition In a Will In Restraint of Marriage In Devise To Spouse Is Void
The Indiana Supreme Court began its analysis with a review of Indiana law on restraints on marriage in the probate code, stating:
First, the Indiana Probate Code says that “[a] devise to a spouse with a condition in restraint of marriage shall stand, but the condition shall be void.” Ind. Code § 29-1-6-3. Thus, our probate code prohibits restraints against marriage only if the restraint is in a “devise to a spouse”.
Subsection 29-1-1-3(a) sets out the definitions that “apply throughout this article”, referring to the probate code. When used as a noun in the probate code, “devise” means “a testamentary disposition of either real or personal property or both.” Id. § 29-1-1-3(a)(6).
And a “testamentary disposition”, though not defined by subsection 29-1-1-3(a), is something our Court has long considered the distinguishing feature of a will. See, e.g., Castor v. Jones, 86 Ind. 289, 290–91 (1882) (finding that an instrument, regardless of its form, was a will because its author intended to make a “testamentary disposition”).
In other words, “the essence of a testamentary disposition” is “that it be purely posthumous in operation”. Heaston v. Kreig, 167 Ind. 101, 111, 77 N.E. 805, 807 (1906). We therefore consider wills as “tak[ing] effect after . . . death”, ibid., while recognizing that revocable trusts “are popular substitutes for wills” that allow settlors “to retain control and use of their assets during their lifetimes”, Fulp v. Gilliland, 998 N.E.2d 204, 205 (Ind. 2013). Thus, the legislature’s use of “devise” as a noun under subsection 29-1-1-3(a)(6) is consistent with its use as a verb under subsection 29-1-1-3(a)(7): “‘devise’ . . . means to dispose of either real or personal property or both by will.”
Thus, under the Indiana Probate Code, the prohibition against restraints on marriages applies only to devises made by will, and only applies to devises made to a spouse. In this case, there was neither a testamentary devise nor a devise to a spouse, but instead a disposition by a revocable trust to a child. Therefore, the Indiana Supreme Court determined that the statutory prohibition under the Indiana Probate Code does not apply.
Indiana Trust Code – No Prohibitions On Conditions In Restraint Of Marriage
The Indiana Supreme Court next turned to the Indiana Trust Code, and found that, like the probate code, nothing in the Indiana Trust Code prohibited the challenged provision and, in fact, the Indiana Trust Code does not prohibit conditions in restraint of marriage at all.
Instead of prohibiting conditions in restraint of marriage, the Indiana Trust Code prohibits ignoring the settlor’s intent. The Indiana Supreme Court stated:
According to the statute: “The rules of law contained in this article”––referring to the trust code––“shall be interpreted and applied to the terms of the trust so as to implement the intent of the settlor and the purposes of the trust.” Id. § 30-4-1-3. As a result, the section continues, “[i]f the rules of law and the terms of the trust conflict, the terms of the trust shall control unless the rules of law clearly prohibit or restrict the article which the terms of the trust purport to authorize.” Ibid. Thus, a court must implement the settlor’s manifested intent unless doing so would clearly violate the “rules of law contained in [the trust code]”. Ibid.; accord Fulp, 998 N.E.2d at 207 (explaining a court’s “primary purpose in construing a trust instrument is to ascertain and give effect to the settlor’s intention” as long as applying the trust’s terms does not violate the trust code) (cleaned up). Here, Rotert points to nothing in the trust code that “clearly prohibit[s] or restrict[s]” the challenged provision, and we know of none. Given this section’s mandate to honor Borcherding’s intent, we decline to invalidate the challenged provision or to restrict what the legislature does not forbid.
The Indiana Supreme Court acknowledged that its holding was contrary to that of an appellate decision, In re Estate of Robertson, 859 N.E.2d 772 (Ind. Ct. App. 2007). The Indiana Supreme Court expressly rejected Robertson, stating:
There, the court of appeals applied the probate code’s restraint-against-marriage prohibition to a trust, although this prohibition is not in the trust code. Id. at 776. disapprove of Robertson. Absent a clear indication from the legislature that trusts are subject to a general prohibition against restraints of marriage, we reject such a view.
Can a Trust Provision To a Child Be an Impermissible Restraint On Marriage Under Indiana Law?
No. According the Indiana Supreme Court, a trust provision to a child is not an impermissible restraint on marriage. The statutory prohibition of restraints against marriage applies only to dispositions to a spouse by will and not to dispositions by trust.
The Indiana Supreme Court concluded that because the probate code’s bar against restraints on marriage does not apply to trusts or gifts to children, Borcherding’s disposition by a revocable trust to her son was valid. A separate concurrence argued that the Indiana Trust Code does indeed prohibit conditions in restraint of marriage as a violation of public policy, and is worth a read.
