## Facts

- George X. Riddell and Irene A. Riddell created separate testamentary trusts for their son, Ralph A. Riddell, as trustee, benefiting Ralph’s children, Donald and Nancy (Nancy I. Dexter).
- The trusts directed that, after Ralph and his wife died, income would be paid to Donald and Nancy until age 35, when the trusts would terminate and distribute principal outright.
- After creation of the trusts, Nancy developed severe mental illness, experienced repeated institutionalization, and depended on public assistance for care; she was not expected to live independently.
- Ralph petitioned to consolidate the trusts and to modify the consolidated trust into a special-needs trust for Nancy to preserve eligibility for public benefits and reduce exposure to State reimbursement claims.
- The superior court granted consolidation but denied modification and denied reconsideration, reasoning that modification was improper absent unanticipated events that would defeat the trust’s purpose and that a special-needs structure would not further the trust purpose of support and medical care.

## Issues

1. Whether the court had authority under equitable deviation to modify testamentary trust terms based on a beneficiary’s later-developed, severe disability.
2. Whether Nancy’s permanent mental illness constituted an unanticipated circumstance for purposes of equitable deviation.
3. Whether converting the trust to a special-needs structure could further the trust purposes of support, maintenance, education, and medical care, despite preserving public-benefit eligibility and limiting State recoupment.

## Decision

- The Court of Appeals reversed the denial of modification and remanded.
- It held the superior court had authority to consider equitable deviation and applied an incorrect legal standard in treating modification as unavailable absent a showing that the existing terms would defeat the trust’s purpose.
- It concluded Nancy’s debilitating mental illness was an unanticipated circumstance the settlors could not reasonably have foreseen when the trusts were established.
- It rejected the view that a special-needs trust necessarily undermines a support-and-care purpose, explaining that such a structure may better meet long-term needs by preserving benefit eligibility and extending the practical value of trust assets.
- It did not order creation of a special-needs trust, but required the superior court to reconsider modification using the correct equitable framework.

## Legal Principles

- A court may apply equitable deviation to modify trust terms when unanticipated circumstances arise and deviation is necessary or appropriate to further the trust’s purposes.
- The governing inquiry focuses on the settlors’ primary purposes (such as support, maintenance, education, and medical care), not a rigid reading of distribution mechanics.
- A beneficiary’s later-arising, profound disability can qualify as an unanticipated circumstance supporting consideration of deviation.
- A special-needs trust structure is a legally recognized method to provide supplemental support to a disabled beneficiary while preserving eligibility for public assistance, and is not improper solely because it may reduce State reimbursement.

## Conclusion

The appellate court required reconsideration of a requested special-needs modification under equitable deviation, holding that unforeseen, permanent disability may justify altering distributive terms when doing so can better carry out the settlors’ support and care purposes.


In re Riddell, 138 Wn. App. 485, 157 P.3d 888 (Wash. Ct. App. 2007)