Harold O. Fulp, Jr. v. Nancy A. Gilliland

Summary

The Indiana Supreme Court held that, while a revocable trust remains revocable and the settlor has capacity to revoke it, the trustee’s fiduciary duties are owed exclusively to the settlor and not to remainder beneficiaries. Ruth Fulp therefore could sell trust property below market value without breaching a duty to her children, and the sale did not amend the trust. The court reversed and remanded with instructions to grant Harold Fulp Jr. specific performance of the purchase agreement.

Holdings

1. While a trust is revocable and the settlor has capacity to revoke it, the trustee's duties are owed exclusively to the settlor; the trustee does not owe fiduciary duties to remainder beneficiaries.
2. Ruth did not breach a fiduciary duty by selling the farm for less than fair market value because she owed no fiduciary duty as trustee to her remainder-beneficiary children.
3. The purchase agreement did not amend the trust because no amendment was necessary, Ruth signed it expressly as trustee, and it did not manifest clear and convincing evidence of an intent to change the trust's terms.
4. Harold Jr. was entitled to specific performance of the farm purchase agreement, and the trial court abused its discretion by denying that relief based on the supposed fiduciary-duty breaches.
5. Nancy did not tortiously interfere with the contractual relationship.

Questions Presented

1. Whether the trustee of a fully revocable trust owes fiduciary duties to remainder beneficiaries while the trust remains revocable.
2. Whether Ruth's sale of the farm breached fiduciary duties under the trust or the Indiana Trust Code.
3. Whether the purchase agreement effectively amended the revocable trust.
4. Whether Harold Jr. was entitled to specific performance of the purchase agreement.
5. Whether Nancy tortiously interfered with the contractual relationship.

Disposition

reversed_and_remanded