Title: Fulp v. Gilliland
Citation: N/A
Docket Number: 41S01-1306-TR-426
State: Indiana
Issuer: Indiana Supreme Court
Date: November 22, 2013

ATTORNEY FOR APPELLANT  
ATTORNEYS FOR APPELLEE  
Robert M. Hamlett 
Thomas W. Vander Luitgaren 
Indianapolis, Indiana  
Matthew S. Schoettmer  
 
Greenwood, Indiana 
 
_____________________________________________________________________________  
 
In the 
Indiana Supreme Court 
_________________________________ 
 
No. 41S01-1306-TR-426 
 
HAROLD O. FULP, JR. 
 
Appellant (Plaintiff below),  
 
V. 
 
NANCY A. GILLILAND, 
 
Appellee (Defendant below).  
_________________________________ 
 
Appeal from the Johnson Superior Court, No. 41D01-1011-TR-299 
The Honorable Kevin M. Barton 
_________________________________ 
 
On Petition to Transfer from the Indiana Court of Appeals, No. 41A01-1111-TR-530 
November 22, 2013 
Rush, Justice. 
 
Revocable trusts are popular substitutes for wills, intended to provide non-probate distri-
bution of people’s estates after their deaths, allowing them to retain control and use of their 
assets during their lifetimes. Here, Ruth Fulp placed her family farm in a revocable trust, 
reserving the right to revoke or amend the trust and to use its assets—with any remaining trust 
assets going to her three children upon her death. A few years later, she decided to sell the farm 
to her son Harold Jr. for a low price, to pay for her retirement-home care and keep the farm in the 
family. Ruth’s daughter, Nancy Gilliland, argued that a bargain sale would breach Ruth’s 
fiduciary duty to her children and deprive Nancy of “her share” of the trust.  
We granted transfer to address an issue of first impression in Indiana: while a revocable 
trust is revocable, whom does the trustee serve? Of course, Ruth as trustee owed a duty to herself 
Nov 22 2013, 12:10 pm
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as the trust’s settlor and primary beneficiary. But the trial court found Ruth also owed that same 
fiduciary duty to her children as remainder beneficiaries. We conclude, though, that neither the 
terms of Ruth’s trust nor the Indiana Trust Code require her to serve two masters—her duty as 
trustee was only to herself. Holding that trustees also owe a duty to remainder beneficiaries would 
create conflicting rights and duties for trustees and essentially render revocable trusts irrevocable. 
Ruth was free to sell her farm as trustee for whatever price she desired, without breaching a duty 
to her children.  
Facts 
Soon after Ruth and Harold Fulp Sr. married, they moved to the family farm, where they 
raised their three children—Harold Jr., Nancy, and Terry. Harold Sr. farmed the land; Junior later 
joined him, then took over after Senior’s death.  A few years later, Ruth placed the farm into the 
Ruth E. Fulp Revocable Trust. As the Trust’s primary beneficiary, Ruth could use its assets; as 
trustee, she could sell them; and as settlor, she could “alter, amend or revoke” the Trust “in any 
respect.” In addition, the Trust required the trustee—unless another term of the trust provided 
otherwise—to “administer the trust solely in the interest of the beneficiaries,” “treat multiple 
beneficiaries impartially,” and “preserve the trust property.” Upon Ruth’s death, the trust would 
become irrevocable, and the successor trustee would distribute any remaining assets to the children.  
As Ruth got older, she moved to the Indiana Masonic Home and decided to sell the farm to 
pay for her living expenses there. But she wanted to keep the farm in the family, so she approached 
Harold Jr., who was interested in buying it. He offered her a discounted price per acre—the same 
price Nancy’s daughter had previously paid Ruth for another portion of the farm. Ruth agreed and 
said “what I did for one I can do for the other.” But Harold Jr. cautioned her that the farm was 
worth more than the $450,252 he was offering. Indeed, an appraisal later showed it was worth 
more than $1 million.  
Harold Jr.’s lender, Farm Credit, drew up the purchase agreement, and Ruth signed it. 
When Nancy found out, she objected because she “wanted her share.” Before the sale closed, Ruth 
resigned as trustee. Nancy then became successor trustee and refused to proceed with the sale, 
and Harold Jr. sought specific performance of the purchase agreement. He also argued that 
Nancy tortiously interfered with the agreement.  
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After a bench trial, the trial court found that Ruth was competent to sell the farm, the 
price paid for the farm was adequate, and Harold Jr. exerted no undue influence. Still, the court 
denied specific performance because it found that Ruth breached her fiduciary duty to the children 
by selling the farm at a low price, and Harold Jr. breached his fiduciary duty as a beneficiary by 
participating in the sale.   
Harold Jr. appealed. The Court of Appeals agreed with the trial court that if Ruth had sold 
the farm as trustee, she would have breached a fiduciary duty to her children. Fulp v. Gilliland, 
972 N.E.2d 955, 964 (Ind. Ct. App. 2012), trans. granted, 988 N.E.2d 797. But it also recognized 
that if Ruth had such a duty, her conflicting rights and duties as trustee would essentially render 
the Trust irrevocable. To avoid that untenable result, the court instead concluded that Ruth sold 
the farm as settlor, so that the purchase agreement “in effect” amended the Trust. The Court of 
Appeals also concluded that Nancy had not tortiously interfered with the contract.  
Nancy sought transfer, asking us to decide whether the trustee of a revocable trust owes a 
duty to the settlor alone or also to the remainder beneficiaries. We granted transfer to address 
that issue, and we conclude that while a revocable trust is revocable, the trustee only owes a duty 
to the settlor. Therefore, Ruth was free to sell the farm as trustee, as the purchase agreement 
reflected, without breaching any fiduciary duty. And since Ruth owed her children no duty as 
trustee, she had no need to sell the farm as settlor, as the Court of Appeals concluded—nor 
would the facts in this case support any intent to amend the Trust. Finally, we expressly adopt 
the Court of Appeals’ conclusion that Nancy did not tortiously interfere with a contractual 
relationship. Ind. Appellate Rule 58(A).   
Standard of Review 
This case requires us to determine Ruth’s duties under the terms of the Trust and the 
Indiana Trust Code. The interpretation of trusts and statutes is a question of law, which we 
review de novo. Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 531 (Ind. 2006); Kaser v. 
Barker, 811 N.E.2d 930, 932 (Ind. Ct. App. 2004), trans. denied.  
 
 
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Revocable Trusts 
Ruth held the farm in a revocable trust. Revocable trusts have become popular estate 
planning tools and substitutes for wills because they allow settlors to avoid probate and 
guardianship, to have greater privacy, and to manage their assets. John J. Barnosky, The 
Incredible Revocable Living Trust, 10 J. Suffolk Acad. L. 1, 1–15 (1995). Like other trusts, a 
revocable 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.” See Ind. Code § 30-4-1-1(a) (2004). 
A settlor creates a revocable trust by executing the trust agreement, at which time the trustee takes 
legal title to the property, and the beneficiary takes equitable title.  Breeze v. Breeze, 428 N.E.2d 
286, 287 (Ind. Ct. App. 1981); see I.C. § 30-4-1-1(a). But unlike other trusts, settlors of 
revocable trusts continue using the trust property during their lives and retain the power to 
revoke or amend the trust at any time. Kesling v. Kesling, 967 N.E.2d 66, 80, 86 (Ind. Ct. App. 
2012), trans. denied.  And unlike a will, upon the settlor’s death, the “trust property is not in the 
decedent-settlor’s estate.”  In re Walz, 423 N.E.2d 729, 732 (Ind. Ct. App. 1981).  When Ruth 
agreed to sell the farm, her Trust was fully revocable, and she was its settlor, trustee, and primary 
beneficiary. 
Interpreting Ruth’s Trust 
We must interpret the terms of the Trust to determine the duties it imposed upon Ruth as 
trustee, and to determine whether the sale of the farm breached any of those duties. Our primary 
purpose “in construing a trust instrument is to ascertain and give effect to the settlor’s intention.” 
Univ. of S. Ind. Found., 843 N.E.2d at 532. We look at the trust as a whole and cannot take 
“individual clauses out of context.” Walz, 423 N.E.2d at 733 (quoting Hauck v. Second Nat. 
Bank of Richmond, 153 Ind. App. 245, 259-60, 286 N.E.2d 852, 861 (1972)). If the “trust is 
capable of clear and unambiguous construction,” we “must give effect to the trust’s clear 
meaning.” Univ. of S. Ind. Found., 843 N.E.2d at 532. Finally, after interpreting the terms of the 
Trust, we must ensure that its application does not violate the Trust Code. See I.C. § 30-4-1-3 
(2004). 
Ruth’s Fiduciary Duties 
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Nancy argues that Ruth as trustee breached a fiduciary duty to the remainder beneficiaries 
by selling the farm for below market value. A trustee breaches his or her fiduciary duties by 
violating any duty owed to the settlor or beneficiary. I.C. § 30-4-1-2(4) (2004). Ruth’s Trust 
provided that she, as trustee, owed a fiduciary duty to herself as settlor and primary beneficiary. We 
disagree with Nancy’s argument that the Trust imposed on Ruth an additional duty to her own 
children.   
I. Trust Law Generally. 
Whether the trustee of a revocable trust owes a duty to remainder or contingent 
beneficiaries while the trust is revocable is an issue of first impression in Indiana, but other states 
have concluded that trustees owe no such duty while a trust is revocable. We find Justice Guzman’s 
concurrence in Moon v. Lesikar, 230 S.W.3d 800, 806 (Tex. App. 2007), persuasive. There, a 
contingent beneficiary of a revocable trust argued that her rights were violated when the settlor/
trustee of a revocable trust sold trust property for well below fair market value. Id. at 802, 809.  
Justice Guzman concluded that if the settlor/trustee of a revocable trust owed the contingent 
beneficiaries a duty, the settlor/trustee’s rights and duties would conflict because “the settlor, in 
his capacity as trustee, would have a duty to prevent himself, in his capacity as settlor, from 
revoking the trust.” Id. at 809. Because this illogical conclusion would render the trust “no longer 
. . . freely revocable,” Justice Guzman concluded that the trustee’s duty was to the settlor not the 
contingent beneficiaries, while the trust was still revocable. Id. at 809-10. And the Florida Court 
of Appeals reached a similar conclusion in Brundage v. Bank of Am., 996 So.2d 877, 882 (Fl. 
Dist. Ct. App. 2008): “during the settlor/beneficiary’s lifetime, a trustee owes a fiduciary duty to 
the settlor/beneficiary and not the remainder beneficiaries, who not only have no vested interest 
but whose contingent interest may be divested by the settlor prior to her death.”   
Finally, the Uniform Trust Code takes a similar position: “While a trust is revocable . . . , 
rights of the beneficiaries are subject to the control of, and the duties of the trustee are owed exclu-
sively to, the settlor.”  Unif. Trust Code § 603(a) (amended 2010).  Courts in states that have 
enacted the Uniform Trust Code have easily concluded that trustees exclusively owe a duty to 
settlors—and indeed, we can find no jurisdiction that holds otherwise.  E.g., In re Stephen M. 
Gunther Revocable Living Trust, 350 S.W.3d 44, 47 (Mo. Ct. App. 2011) (finding “[t]he trustee 
6 
 
owed no duty to the beneficiaries prior to the settlor’s death”); Ex Parte Synovus Trust Co., 41 
So.3d 70, 74 (Ala. 2009) (finding the trustee owed a duty only to the settlors, so the beneficiaries’ 
“causes of action for breach of fiduciary duty do not seek redress for legally protected rights”). 
II. Terms of Ruth’s Trust. 
With those general trust law principles in mind, we turn to Ruth’s duties under her Trust. 
Our primary purpose in interpreting the Trust is to implement her intent as settlor, Univ. of S. 
Ind. Found., 843 N.E.2d at 532, and two provisions of Ruth’s Trust show she intended to owe a 
duty only to herself. First, Article I provides that Ruth could revoke the Trust for any reason at 
any time, which shows that she intended to control the farm and treat it as her own property. See 
Marshall Cnty. Tax Awareness Comm. v. Quivey, 780 N.E.2d 380, 383, 385 (Ind. 2002) (finding 
that settlor/trustee/primary beneficiary of property was still its “beneficial owner,” even though he 
had previously transferred title to the trustee); Kesling, 967 N.E.2d at 83 (finding settlor of trust 
could vote shares of stock held by the trust because he was the stock’s beneficial and record 
owner); see also 26 U.S.C. § 677(a) (2006) (taxing income from revocable trust property as if it 
was the settlor’s property because the settlor has control of the property). Second, Article II 
provides that the Trust is for Ruth’s “use and benefit”—including the right to use all Trust assets. 
The children’s interest in the Trust is purely secondary and arises only if Ruth chooses not to divest 
them and if she chooses not to use all of the assets. So as trustee, Ruth’s fiduciary duty was to 
herself, as settlor and primary beneficiary. Stated differently, Ruth was her own master.  
But Nancy argues that Ruth’s duty as trustee also extends to her remainder beneficiary 
children. To find that Ruth owed such a duty, however, would bring her rights and duties into 
conflict—she would have to serve two masters. As discussed above, such conflicting duties would 
essentially make her Trust irrevocable, because complying as trustee with her own wishes to revoke 
the Trust would breach her purported duty to the remainder beneficiaries by placing her own 
interests above theirs. Moon, 230 S.W.3d at 809. In sum, Nancy’s argument fails because it would 
defeat, rather than implement, the settlor’s intent. Univ. of S. Ind. Found., 843 N.E.2d at 532. 
Nancy nevertheless argues that the terms of Article V of the Trust compel the counter-
intuitive conclusion that Ruth’s duty as trustee also extended to her children. That provision, titled 
Trustee’s Duties, states: “Unless the terms of the trust provide otherwise, the Trustee also has a 
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duty: 1. to administer the trust solely in the interest of the beneficiaries; 2. to treat multiple 
beneficiaries impartially; . . . [and] 4. to preserve the trust property” (emphasis added). Here, 
though, Article V would conflict with other rights and duties given to Ruth while the Trust is 
revocable and she is still primary beneficiary. For instance, Ruth cannot have a duty to 
administer the Trust solely in the interest of the beneficiaries, when Article I lets her remove any 
beneficiary anytime. And she cannot have any duty to preserve the Trust’s assets, when Article II 
gives her the right to consume them. By contrast, no such conflict exists in applying Article V to 
a successor trustee once the Trust has become irrevocable and Ruth is no longer primary 
beneficiary—at that time, the successor trustee can readily administer the trust for the 
beneficiaries, treat them impartially, and preserve the Trust property. But until then, Article V by 
its terms must yield to Ruth’s own powers as settlor, trustee, and primary beneficiary. 
Accordingly, Ruth as trustee owed a duty only to herself. As primary beneficiary, she 
was entitled to use the Trust assets for her own benefit—and here, selling the farm benefitted her 
by providing her with money for her care while keeping the farm in the family. The sale did not 
breach any duty to Ruth’s remainder beneficiaries because she owed them no duty. Since Ruth 
complied with the terms of the Trust, we must next determine whether its terms comply with the 
Indiana Trust Code.   
III. 
 Indiana’s Adoption of Uniform Trust Code Section 603.  
In 2013, the Legislature amended the Trust Code to declare the same rule we announce 
today—that while a trust is revocable, the trustee’s duty is only to the settlor: “While a trust is 
revocable and the settlor has the capacity to revoke the trust: . . . (2) the duties of the trustee are 
owed exclusively to . . . the settlor.” I.C. § 30-4-3-1.3(a) (Supp. 2013), Act of Apr. 29, 2013, P.L. 
99-2013, § 9, 2013 Ind. Acts 745. That provision is materially identical to Uniform Trust Code 
section 603, discussed above—and though this amendment took effect after Ruth executed the 
Trust, Trust Code amendments apply retroactively unless they would “adversely affect a right 
given to any beneficiary . . . [or] relieve any person from any duty or liability imposed by the 
terms of the trust or under prior law.” I.C. § 30-4-1-4(b) (Supp. 2013). As detailed above, this 
statute captures Ruth’s intent, and does not adversely affect the rights of any of the beneficiary 
children because their rights were subject to Ruth’s right as settlor to revoke the Trust. Similarly, 
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the law does not relieve any person of a duty because while the Trust was revocable, Ruth owed 
a duty only to herself. Therefore, under both the terms of the Trust and under Indiana law, Ruth 
owed no duty to her remainder beneficiary children.   
The Court of Appeals Decision and Amending a Revocable Trust 
The Court of Appeals also concluded that Ruth could sell the farm for below fair market 
value, but for a different reason. It recognized that without some power to freely sell the farm, 
Ruth’s revocable Trust would essentially become irrevocable. But the Court of Appeals believed 
that “viewing Ruth as trustee” would cause the sale to breach a fiduciary duty to the remainder 
beneficiaries—so that instead, Ruth must have intended to sell the farm as settlor, “in effect 
partially amending the Trust.” Since Ruth’s Trust is silent about how to amend it, the Trust Code 
requires any purported amendment to be in writing and “manifest[] clear and convincing 
evidence of the settlor’s intent” to amend the trust. I.C. § 30-4-3-1.5(c)(2)(B) (Supp. 2013). The 
Court of Appeals concluded that the signed purchase agreement between Ruth and Harold Jr. 
was a sufficient written manifestation of intent to amend.  
We respectfully disagree with our colleagues’ conclusion for three reasons. First, as 
discussed above, Ruth as trustee owed no duty to her children while her trust was revocable, so 
no amendment was necessary for her to carry out her intent to sell the farm. Second, she held 
title to the farm as trustee and signed the purchase agreement in that express capacity. And third, 
the agreement did not purport to change the Trust, because nothing about the sale would change 
the Trust’s terms, but only convert its primary asset from illiquid real estate to liquid cash. 
Because of these facts, we find that the purchase agreement did not manifest clear and 
convincing evidence that Ruth intended to amend the Trust.   
Is Harold Jr. Entitled to Specific Performance? 
Harold Jr. sought specific performance of the purchase agreement, which the trial court 
denied because it found that Ruth and Harold Jr. breached their respective fiduciary duties. We 
review a trial court’s decision to grant or deny specific performance for an abuse of discretion, 
Kesler v. Marshall, 792 N.E.2d 893, 896 (Ind. Ct. App. 2003), trans. denied—that is, for whether 
the decision is “clearly against the logic and effect of the facts and circumstances before the court 
9 
 
or if the court has misinterpreted the law.” State v. Willits, 773 N.E.2d 808, 811 (Ind. 2002). 
Because real estate is unique, courts routinely grant specific performance of purchase agreements. 
Kesler, 792 N.E.2d at 896.  Here, the trial court misinterpreted the Trust and the law by 
determining that Ruth had a duty to her children that she breached and that Harold Jr. aided in 
that breach. Therefore, its denial of specific performance was an abuse of discretion.   
Nancy’s Equitable Defenses 
Finally, Nancy argues that Harold Jr. should not be granted specific performance because 
the agreement is unfair, harsh, and inequitable, based on the disparity between the farm’s value 
and the sale price. But the trial court specifically found that the sale price was adequate, 
considering that Ruth offered Harold Jr. the same discounted price that she had previously 
offered Nancy’s daughter and wanted to keep the farm in the family. And we will not set aside 
the trial court’s findings or judgment unless they are clearly erroneous. Marion Cnty. Auditor v. 
Sawmill Creek, LLC, 964 N.E.2d 213, 216 (Ind. 2012) (quoting Ind. Trial Rule 52(A)). Nancy 
has failed to show that the trial court erred.  Id.  
Conclusion 
We conclude that under the terms of the Trust and the Trust Code Ruth owed her children 
no fiduciary duties and was free to sell her farm at less than fair market value; and that Harold Jr. 
is therefore entitled to specific performance. We also conclude that Ruth did not effectively 
amend the Trust by selling the farm. The judgment of the trial court is therefore reversed and 
remanded, with instructions to grant specific performance of the purchase agreement.  
Dickson, C.J., and Rucker, David, and Massa, JJ., concur.