ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Alan N. Shovers John Burley Scales
Elizabeth A. Browning Frank R. Hahn
Kevin R. Martin Boonville, Indiana
Evansville, Indiana
______________________________________________________________________________
In the
Indiana Supreme Court
_________________________________
No. 82S04-0510-CV-488
UNIVERSITY OF SOUTHERN INDIANA
FOUNDATION,
Appellant,
v.
RICHARD A. BAKER AND INTEGRA BANK
N.A. TRUST AND INVESTMENT MANAGEMENT
GROUP,
Appellees.
_________________________________
Appeal from the Vanderburgh Superior Court, No. 82D07-0403-TR-00112
The Honorable Terrell R. Maurer, Magistrate
_________________________________
On Petition To Transfer from the Indiana Court of Appeals, No. 82A04-0411-CV-592
_________________________________
March 14, 2006
Boehm, Justice.
We hold that the trust created by Marian Boelson left her tangible personal property and
any interest she retained in her individual retirement accounts to her brother and gave the
remaining assets to the University of Southern Indiana Foundation.
Factual and Procedural History
In 1996 Marian Boelson created an inter vivos trust. Section 7 expressly declined to
make any provision for Boelson’s brother, Richard Baker, or any other potential intestate heirs.
Section 8 provided a bequest of $50,000 to Faye Rucks, a friend of Boelson’s, and Section 9 left
the residue to the University of Southern Indiana Foundation (“USIF”). In August 2001, Boel-
son amended the trust, revoking Sections 7 and 8 and replacing them with new Sections 7 and 8:
7. Upon the death of Trustor, the Trustor’s brother, Richard A. Baker, if liv-
ing, shall receive any and all proceeds and assets that were held in Trustor’s
individual retirement accounts, if any, as well as, all of Trustor’s automobiles,
furnishings and other personal property.
8. After payment of [expenses of trust administration], the Trustee shall dis-
tribute to Trustor’s friend, Faye Rucks, presently residing at 850 Cherokee
Road, Henderson, Kentucky, the sum of Ten Thousand Dollars ($10,000.00),
if living, and if not living, then said funds shall become part of the residue of
the Trust and be distributed according to the terms and conditions set forth in
Section 9 of this Trust Agreement.
No other substantial changes were made and the provision in Section 9 leaving the residue to
USIF remained unchanged. Boelson died on August 29, 2003, leaving a will that poured her as-
sets over into the trust. At death Boelson owned a condominium in Indiana, a one-acre lot in
Florida, bank accounts, certificates of deposit, treasury notes, bonds, and two individual retire-
ment accounts in which her brother was the designated beneficiary. There was also an automo-
bile and tangible personal property (furniture, etc.) in the condominium.
Following Boelson’s death, the trustee petitioned for an interpretation of the amended
trust. No one challenged the $10,000 provision for Rucks, but Baker and USIF disagreed as to
the disposition of the remaining assets. Baker alleged he was the beneficiary of all of the re-
maining personal property, and that USIF was the beneficiary of Boelson’s real property only.
USIF responded that the trust left Boelson’s “personal effects” to Baker but gave all of Boelson’s
real property and all intangible personal property to USIF. USIF moved for summary judgment,
designating the following affidavits and exhibits: (1) the affidavit of Boelson’s attorney stating
that “my understanding [was] that Mrs. Boelson intended for her brother to receive the personal
property located in her residence;” (2) the affidavit of Boelson’s trustee stating that Boelson told
the trustee that Boelson hoped she would live long enough to see the gift to USIF grow to be
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worth one million dollars; (3) the affidavit of Boelson’s companion stating that Boelson had told
him shortly before her death that after her death, USIF would receive almost all of Boelson’s
property, including her stocks; (4) typed instructions given by Boelson to her attorney which
state, “Brother is beneficiary of and to receive two IRA accounts, automobile and any furnish-
ings and personal property in the condo that he would like;” and (5) Boelson’s attorney’s hand-
written notes stating “3. Item 7 – Brother now gets: 1. Both IRAS / 2. Auto / 3. furniture from
residence / 4. other personal property in residence.”
Based on USIF’s affidavits and exhibits, the probate court concluded that Boelson’s in-
tention was to give the bulk of her personal property to USIF and to limit Baker to the IRAs, the
automobile, and the household furnishings and personal effects in Boelson’s condominium.
However, the probate court concluded that because the language of the trust unambiguously de-
vised “personal property” to Baker without limitation, it could not give effect to that intention.
Specifically, the probate court held that the term “personal property” unambiguously encom-
passed all of Boelson’s tangible and intangible personal property. The probate court therefore
granted Baker’s motion to strike USIF’s designated evidence on the ground that the proffered
evidence and exhibits were inadmissible parol evidence. The trustee was instructed to pay trust
administration costs and to distribute $10,000 to Rucks, all remaining tangible and intangible
personal property to Baker, and the real property to USIF. USIF appealed and the Court of Ap-
peals affirmed. Boelson v. Baker (In re Boelson Trust), 830 N.E.2d 37, 45 (Ind. Ct. App. 2005).
We granted transfer. Boelson v. Baker (In re Boelson Trust), 2005 Ind. LEXIS 981 (Ind. Oct.
20, 2005).
I. Standard of Review
The interpretation of a will or trust is a question of law for the court. Merrill v. Wimmer,
481 N.E.2d 1294, 1297 (Ind. 1985). To the extent the evidence the parties offered is admissible,
it is documentary. When reviewing a grant or denial of summary judgment, our standard of re-
view is de novo. Freidline v. Shelby Ins. Co., 774 N.E.2d 37, 39 (Ind. 2002). Summary judg-
ment should be granted only if the evidence authorized by Indiana Trial Rule 56(C) shows that
there is no genuine issue of material fact and the moving party deserves judgment as a matter of
law. Id.
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II. Interpretation of Boelson’s Amended Trust
The primary purpose of the court in construing a trust instrument is to ascertain and give
effect to the settlor’s intention. Hauck v. Second Nat’l Bank of Richmond, 153 Ind. App. 245,
259, 286 N.E.2d 852, 861 (1972), trans. denied. Indiana follows “the four corners rule” that “ex-
trinsic evidence is not admissible to add to, vary or explain the terms of a written instrument if
the terms of the instrument are susceptible of a clear and unambiguous construction.” Hauck,
153 Ind. App. at 260, 286 N.E.2d at 861. Accordingly, where a trust is capable of clear and un-
ambiguous construction, under this doctrine, the court must give effect to the trust’s clear mean-
ing without resort to extrinsic evidence. Baker argues that the trial court and the Court of Ap-
peals correctly ruled that the trust unambiguously devises all personal property to him and there-
fore all property except the realty was properly distributed to him. USIF argues that the trust un-
ambiguously devises only “personal effects” to Baker. We disagree with both Baker and USIF
and conclude that the term “personal property” is ambiguous in the context of this trust instru-
ment.
A document is not ambiguous merely because parties disagree about a term’s meaning.
Kelly v. Estate of Johnson, 788 N.E.2d 933, 935 (Ind. Ct. App. 2003). Rather, language is am-
biguous only if reasonable people could come to different conclusions as to its meaning. Id.
Baker argues that the trust contains no ambiguity. He is correct that the term “personal property”
means “Any movable or intangible thing that is subject to ownership and not classified as real
property.” See Black’s Law Dictionary 1254 (8th ed. 2004); accord Skinner v. Spann, 175 Ind.
672, 697, 93 N.E. 1061, 1070 (1911), reh’g denied, 175 Ind. 698, 95 N.E. 293 (1911) (conclud-
ing that the language “all personal property” included both tangible and intangible personal prop-
erty). Baker cites the rule of construction that, particularly where an attorney familiar with
technical terms has drafted an instrument, courts will give terms their technical meaning. Piersol
v. Hays, 113 Ind. App. 214, 229, 47 N.E.2d 838, 844 (1943); Restatement Third of Property:
Wills & Other Donative Transfers § 10.2 cmt. e (2003).
USIF also claims that the trust is unambiguous, but that “personal property” means “per-
sonal effects” and does not include cash, certificates of deposit or bonds. USIF cites authority
for the view that courts should interpret terms in the context of the entire instrument and should
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not give terms their technical meaning where it clearly appears that the testator did not intend to
employ the terms in their technical sense. See Grise v. Weiss, 213 Ind. 3, 9, 11 N.E.2d 146, 149
(1937). USIF notes that the provision for Baker lists individual retirement accounts as well as
Boelson’s “automobiles, furnishings and other personal property” and argues that specific men-
tion of the IRAs would be superfluous if Boelson intended “personal property” to include intan-
gible property. We do not find that last point conclusive because Baker, not the trust, was the
designated beneficiary of Boelson’s IRAs. Presumably that beneficiary designation governs the
disposition of the IRAs, whatever Boelson provided in her will or the trust. If so, the reference
to the IRAs in the 2001 amendment to the trust can be viewed as similar to the 1996 provision
that acknowledged Baker’s existence but declined to make any provision for him.
USIF also argues that extrinsic evidence of the surrounding circumstances existing at the
time the trust was amended, and known to Boelson, shows that Boelson intended to give only the
individual retirement accounts, automobiles, furnishings, and other personal effects in her con-
dominium to Baker. Indiana has long recognized that extrinsic evidence of the facts and circum-
stances known to the settlor and existing at the time of execution may be considered by a court
when construing an instrument. Daugherty v. Rogers, 119 Ind. 254, 260, 20 N.E. 779, 781
(1889); accord Restatement Third of Property: Wills & Other Donative Transfers § 10.2 cmt. d.
The rationale for admission of this evidence is that it is not offered for the purpose of contradict-
ing the meaning of a written instrument, but is offered to “connect the instrument with the extrin-
sic facts therein referred to, and to place the court, as nearly as may be, in the situation occupied
by the testator, so that his intention may be determined from the language of the instrument, as it
is explained by the extrinsic facts and circumstances.” Daugherty, 119 Ind. at 260, 20 N.E. at
781; see also Ragsdale v. Robinson, 219 Ind. 335, 341, 38 N.E.2d 570, 572 (1942); Hertford v.
Harned, 185 Ind. 213, 219, 113 N.E. 727, 729 (1916).
Citing this doctrine, USIF points to the fact that the trust contained only intangible per-
sonal property at the time it was amended in 2001. USIF claims that Boelson did not transfer her
Indiana condominium (or the tangible personal property it contained) into the trust until ap-
proximately one month after the trust was amended. Her Florida property was not conveyed to
the trust until her death triggered the pourover provision in her will. According to USIF, if
Baker is entitled to all of Boelson’s intangible personal property, the gifts to USIF and Rucks
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would have failed because, at the time the trust was amended, the only source of funds for the
gifts to Rucks and USIF was Boelson’s intangible personal property. USIF argues we should not
adopt a construction of the trust that would defeat the gifts to Rucks and USIF. See In re Estate
of Cashen v. Cashen, 715 N.E.2d 922, 925 (Ind. Ct. App. 1999) (“court[s] will consider and give
effect to every provision, clause, term and word of [a] will when determining the testator’s in-
tent”). Assuming this evidence is admissible, it does not establish what USIF claims. The gifts
to Baker, USIF, and Rucks were to be effective at Boelson’s death, not at the time the trust was
originally executed or the time it was amended. At Boelson’s death, her will operated to transfer
all her remaining property into the trust. The value of Boelson’s real property exceeded
$100,000. Accordingly, at the time she amended the trust, Boelson could expect that at her death
the trust would contain real property from which gifts to USIF, Rucks, and Baker could be
funded. In short, USIF is not correct that Baker’s construction of the gift to him would neces-
sarily frustrate other provisions in the trust. To the contrary, all of Boelson’s tangible and intan-
gible personal property could have been distributed to Baker and still leave Boelson’s real prop-
erty to fund the gifts to Rucks and USIF.
USIF makes a final argument that we find more persuasive. USIF points to the internal
structure of the trust. USIF contends that the syntax of the provision for Baker limits the scope
of property conveyed. Specifically, USIF argues that because “other personal property” appears
as a more general item at the end of a list of specific tangible items (automobiles and furnish-
ings), it should be interpreted to include only personal effects of like kind to the automobiles and
furnishings. USIF points out that if “automobiles, furnishings and other personal property”
means, as Baker contends, “all personal property,” there is no need to name any single item.
Moreover, the trust as amended called for the “personal property” to go to Baker under Section
7. Section 8 follows, calling for a gift of $10,000 to Rucks to be paid after the payment of the
expenses of the trust, but not mentioning any antecedent provision for Baker. This fairly plainly
contemplates that the earlier provision for Baker was not thought to have a higher call on avail-
able cash than the gift to Rucks, which was subordinate only to payment of administrative ex-
penses. Though it is conceivable that a trust could be set up to give all intangible property to one
beneficiary, and then provide for a specific cash devise to another to be funded by sale or bor-
rowing against real property, if that were Boelson’s intent, we think it highly probable it would
have been spelled out in a far less oblique manner than the language of this trust. It seems at
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least as likely that “other personal property” meant other tangible property, and the cash bequest
to Rucks, establishes an assumption that intangible property would be available to fund the pay-
ment for Rucks of $10,000.
We conclude that the meaning of “personal property” in the trust is ambiguous and rea-
sonable persons could come to different conclusions as to its meaning in this instrument. We
agree that the term has the technical legal meaning Baker urges but find that the document as a
whole creates substantial doubt that Boelson intended this technical meaning. Accordingly, we
find the trust ambiguous and must address whether USIF’s proffered exhibits and affidavits may
be admitted to resolve the ambiguity. USIF argues that its exhibits and affidavits that bear di-
rectly on Boelson’s intentions are admissible and resolve any ambiguity in its favor. Baker re-
sponds that we may not consider USIF’s proffered extrinsic evidence because any ambiguity in
the Boelson trust is “patent,” not “latent,” and under existing Indiana law, extrinsic evidence of
the settlor’s intent is not admissible to resolve a patent ambiguity. Earlier decisions of this Court
drew the distinction Baker urges between patent and latent ambiguities. 1 See Daugherty, 119
Ind. at 258-60, 20 N.E.2d at 781; Skinner v. Harrison Twp., 116 Ind. 139, 141-42, 18 N.E.2d
529, 531 (1888). A patent ambiguity is an uncertainty created by the text of the donative instru-
ment. A patent ambiguity can arise in a variety of settings, for example, where two portions of a
document conflict with one another; or where it is unclear to which portion of a document a pro-
vision applies; or where a word has more than one dictionary meaning. McConnell v. Robbins,
193 Ind. 359, 365, 140 N.E. 59, 61 (1923); Restatement Third of Property: Wills & Other Dona-
tive Transfers § 11.1 cmt. b. A latent ambiguity is not apparent from reading the text of the do-
native document but is established by extrinsic evidence other than direct evidence of the
settlor’s intention. Restatement Third of Property: Wills & Other Donative Transfers § 11.1
cmt. c. As an example, a will devising property “to my cousin John” has a latent ambiguity if
extrinsic evidence reveals that the testator had no cousin named John but did have a nephew
named John and a cousin named James. Id. In Indiana, extrinsic evidence—both circumstantial
and direct evidence of intention—has been held admissible to establish the existence of a latent
1
More recent decisions of the Court of Appeals have followed this precedent. See, e.g., Nobbe v. Nobbe,
831 N.E.2d 835, 840 (Ind. Ct. App. 2005), reh’g denied, 2005 Ind. App. LEXIS 1901 (Ind. Ct. App. Oct.
6, 2005); Berry v. Ford, 829 N.E.2d 1052, 1054 (Ind. Ct. App. 2005); East v. Estate of East, 785 N.E.2d
597, 601 (Ind. Ct. App. 2003).
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ambiguity and also to resolve it. See, e.g., Grimes’ Ex’rs v. Harmon, 35 Ind. 198, 208 (1871);
Judy v. Williams, 2 Ind. 449, 450 (1851). Indiana courts have traditionally refused to admit ex-
trinsic evidence to aid in the resolution of a patent ambiguity on the ground that the language
used conveys either no definite meaning or a confused meaning and the courts should not engage
in conjecture and rewrite a donative instrument where the settlor has failed to adequately express
his or her intent. Grimes’ Ex’rs, 35 Ind. at 208-09.
We agree with Baker that the ambiguity in the Boelson trust arises from the text of the
document and therefore is patent under these authorities. See Restatement Third of Property:
Wills & Other Donative Transfers § 11.1 cmt. b. We agree with USIF, however, that the distinc-
tion between patent and latent ambiguities is not useful, and it is proper to admit extrinsic evi-
dence to resolve any ambiguity. USIF notes that the current version of the Restatement of Prop-
erty allows for admission of all extrinsic evidence—both direct and circumstantial—relevant to
determining a settlor’s intent. See Id. at § 10.2. Consistent with this view, several jurisdictions
have abandoned the latent/patent distinction. See, e.g., In re Torregano, 352 P.2d 505, 512 (Cal.
1960); Weir v. Leafgreen, 186 N.E.2d 293, 296 (Ill. 1962); In re Estate of Martin, 549 N.Y.S.2d
592, 594 (N.Y. Sur. Ct. 1989); In re Estate of Cohorn, 622 S.W.2d 486, 487-88 (Tex. App.
1981). Under this approach, whether an ambiguity is deemed patent or latent has no signifi-
cance. Restatement Third of Property: Wills & Other Donative Transfers §§ 10.2, 11.1. We
agree with USIF and these authorities that the latent/patent distinction has not been consistently
applied and no longer serves any useful purpose. Accordingly, we conclude that where an in-
strument is ambiguous, all relevant extrinsic evidence may properly be considered in resolving
the ambiguity. 2
The extrinsic evidence offered by USIF establishes unequivocally that Boelson’s inten-
tion was to give the majority of her property to USIF. Indeed, the trial court so found, but re-
garded itself bound by earlier precedent to disregard the evidence. Boelson’s own notes indicate
“Brother is beneficiary of and to receive two IRA accounts, automobile and any furnishings and
personal property in the condo that he would like.” Boelson’s attorney’s affidavit and her notes
2
The Restatement Third rejects the four corners rule altogether and proposes admitting extrinsic evidence
to determine intent even absent an ambiguity. Because we find ambiguity in the contested term in Boel-
son’s trust, we see no need to take that step.
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of her meeting with Boelson reflect the attorney’s understanding that Boelson wanted the gift to
Baker to be the IRAs and the tangible personal property in Boelson’s condominium and nothing
more. Further proof of Boelson’s intent is found in the affidavits of the trust officer and Boel-
son’s companion. Both state that Boelson expressed to them her intention to give the bulk of her
estate to USIF. There is no conflicting extrinsic evidence of Boelson’s intent. There is therefore
no genuine issue of material fact. We conclude that Boelson intended to limit her brother’s share
of her estate to IRAs, automobiles, and furnishings and other personal effects contained in her
condominium. Baker offers nothing to contradict any of these affidavits, so the issue is resolv-
able on summary judgment. Oelling v. Rao, 593 N.E.2d 189, 190 (Ind. 1992).
Conclusion
The probate court’s order directing the trustee to distribute all of Boelson’s personal
property to Baker and the real property to USIF is reversed. This case is remanded with instruc-
tions to order the trustee to pay the trust’s administrative expenses, to distribute $10,000 to
Rucks, to distribute Boelson’s IRAs and any asset that passes under Boelson’s will and all auto-
mobiles, furnishings and the other personal property contained in Boelson’s condominium to
Baker, and to distribute the trust’s remaining real and personal property to USIF.
Shepard, C.J., and Dickson, Sullivan, and Rucker, JJ., concur.
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