Trusts & Estates

Top state court upholds trust provision requiring beneficiary to be unmarried

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The Indiana Supreme Court has upheld a trust provision that made distribution of an inheritance contingent on the beneficiary being unmarried.

The state supreme court ruled Oct. 8 that the provision is not an unlawful restraint on marriage. and the Indiana Lawyer have coverage.

The court ruled on the provision of a revocable trust that resulted in the estate of Marcille Borcherding to her son, daughter and four stepchildren after her death. The trust contained a subtrust for the share of the son, Roger Rotert, and appointed the daughter, Connie Stiles, as trustee.

The trust said Rotert would get his share of the estate outright if he was unmarried at the time of her death. If he was married, the assets would remain in the subtrust.

Rotert’s third wife had filed for divorce before Borcherding executed the trust. The couple reconciled and were still married when Borcherding died in 2016. In a compromise, Stiles distributed the subtrust’s cash assets to Rotert, and Rotert agreed to keep the real property in the trust. He later sued.

The Indiana Supreme Court said Indiana law voids will provisions that condition a spouse’s inheritance on remaining unmarried. But the law doesn’t apply to trusts, which can set marriage conditions on spouses and others.

“The trust code does not prohibit conditions in restraint of marriage at all,” the Indiana Supreme Court said. “What it prohibits is ignoring the settlor’s intent (and where relevant, the trust’s purpose) as manifested in the trust’s plain terms.”

Rotert and a concurring judge had argued that the trust provision at issue was void on public policy grounds. The Indiana Supreme Court rejected the argument, saying the legislature could have written the state’s trust law to bar trust provisions that are against public policy.

“But it did not, and we will not rewrite its enactment,” the state supreme court said.

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