In re Riddell Testamentary Tr. - 138 Wash. App. 485, 157 P.3d 888 (2007)

Rule:

Whether equitable relief is appropriate, or whether the trial court should have modified a trust, is a question of law, which an appellate court reviews de novo. But determining the parties' intent in regard to a trust is a factual question. The appellate court reviews findings of fact under a substantial evidence standard, determining whether the evidence was sufficient to persuade a rational fair-minded person the premise is true. If this standard is satisfied, the appellate court will not substitute its judgment for that of the trial court even though the appellate court may resolve a factual dispute differently. The appellate court gives deference to the trial court's factual findings in regard to the trust, but the appellate court reviews the trial court's decision to deny equitable relief and not modify the trust de novo.

Facts:

The trustee of a consolidated trust, Ralph A. Riddell, appeals the trial court's denial of his motion to modify the trust and create a special needs trust on behalf of a trust beneficiary, his daughter, Nancy I. Dexter, who suffers from schizophrenia affective disorder and bipolar disorder. Ralph's deceased father and mother each established a trust. The trusts were consolidated by the court. Upon Ralph's death, the trust will terminate and Nancy will receive payment of her portion of the trust proceeds. Ralph argues that the trial court has the power to modify the trust, that his daughter's disabilities are a changed and unanticipated condition, and that the purpose of the settlor will be preserved through the modification.

Issue:

Did the trial court err in denying the motion to modify the trust and create a special needs trust?

Answer:

Yes.

Conclusion:

The appellate court determined that the trial court properly found that it possessed the power to modify the trust pursuant to the Trust and Dispute Resolution Act, Wash. Rev. Code ch. 11.96A. However, remand was necessary because (1) there was no question that changed circumstances intervened to frustrate the settlors' intent, and (2) the trial court should not have considered any loss to the State in determining whether an equitable deviation was allowed since 42 U.S.C.S. § 1396p(d)(4)(A) invited, rather than discouraged, the creation of special needs trusts in such situations.