## Facts

- Elmer Cook created the Elmer J. Cook Living Trust in 1995 to provide for his care during his lifetime, naming himself and his daughter, A. Diane Brateng, as cotrustees.
- The trust directed the trustee to use trust income and principal, in the trustee’s discretion, as necessary or advisable for Elmer’s health, support, maintenance, and general welfare once he became incapacitated.
- The trust also required the trustee to report at least twice per year to beneficiaries then eligible to receive mandatory or discretionary net-income distributions, listing receipts, disbursements, distributions, and a complete statement of trust property.
- In 1997, Elmer was declared incompetent, and Brateng became the sole trustee.
- During Elmer’s life, the trust’s primary asset was Elmer’s residence; after his death the trust held the house and about $16,500 in cash.
- On Elmer’s death, the remainder of the trust was to be divided mainly between Brateng and Elmer’s son, John E. Cook, with smaller shares to two charities.
- For a time, Elmer received care from a nurse-caregiver, but Brateng later became Elmer’s full-time caregiver and eventually moved him into her home, caring for him there for several years until his death.
- While providing care, Brateng also maintained and worked on Elmer’s house, and she kept detailed records of her time and expenses.
- During Elmer’s lifetime, John did not request an accounting or otherwise ask Brateng for information about the trust’s finances.
- After Elmer died, Brateng submitted a claim to the trust for roughly $142,000 for unpaid caregiving services and related expenses.
- John sued, arguing Brateng breached fiduciary duties by not informing him earlier that she intended to seek compensation after Elmer’s death and by not encumbering (mortgaging) the house to fund paid caregiving.
- After a bench trial, the trial court found a breach of the duty to inform and, as a remedy, disallowed Brateng’s caregiving compensation claim; it also entered orders affecting distribution of the estate and attorney’s fees.

## Issues

1. Whether the trustee breached fiduciary duties by failing to tell a remainder beneficiary, during the settlor’s lifetime, that she intended to claim and defer compensation for caregiving services and by deciding not to encumber the trust residence to pay for outside care.
2. Whether the trustee was entitled to reasonable compensation from the trust for the caregiving services she provided to the incapacitated settlor.
3. Whether the trustee was entitled to reimbursement for funds spent repairing and remodeling part of the trust residence, and whether the trial court used an acceptable valuation for the home.
4. Whether the trial court’s attorney-fee awards should stand given the outcome on appeal.

## Decision

- The Court of Appeals of Washington, Division Two, reversed the trial court’s finding that Brateng breached fiduciary duties by (1) not informing John that she planned to claim and defer caregiving charges against the trust/estate and (2) choosing not to encumber Elmer’s house to pay for his care.
- The court held Brateng was entitled to reasonable compensation for providing Elmer’s care and remanded for the trial court to determine the amount and to redistribute trust property accordingly.
- The court held Brateng was entitled to reimbursement for funds she spent to repair and remodel a portion of Elmer’s home.
- The court left undisturbed the trial court’s use of a 2007 appraisal to value the home.
- The court vacated John’s attorney-fee award and remanded for an award of Brateng’s reasonable attorney’s fees for both trial and appeal.

## Legal Principles

- A trustee’s duty to inform and report is measured by the trust terms and the circumstances; a reporting clause requiring periodic disclosure of receipts, disbursements, distributions, and trust property did not, on these facts, require advance notice to a remainder beneficiary of a future plan to seek deferred caregiving compensation.
- When a trust gives the trustee discretion to use income and principal for an incapacitated settlor’s welfare, the trustee may choose a care arrangement (including personally providing care) and the timing of payment, so long as the choice is consistent with the trust’s purpose and fiduciary duties.
- A trustee may receive reasonable compensation for services that benefit the trust or beneficiary; denying compensation is not a required remedy absent a legally sufficient basis.
- A trustee may be reimbursed for reasonable expenditures to preserve or improve trust property when the expenditures benefit the trust and are supported by evidence.
- Attorney-fee awards in trust litigation may be revisited on appeal when the prevailing party determination changes, and the matter may be remanded to set reasonable fees consistent with the appellate outcome.

## Conclusion

Cook v. Brateng held that a trustee who became an incapacitated settlor’s full-time caregiver and later sought payment from the trust did not breach fiduciary duties merely by failing to give a remainder beneficiary advance notice of the deferred compensation plan or of the decision not to mortgage the trust residence; the trustee could recover reasonable caregiving compensation and reimbursement for home repairs, with redistribution of the trust estate and attorney’s fees recalculated on remand.


Cook v. Brateng, 262 P.3d 1228 (2010)