In Re Estate Of: J. Thomas Bernard

2Q|IjAUG-1* AH 9:1}-/
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
In re the Estate of No. 69608-4-1
(Consolidated with
J. THOMAS BERNARD, No. 69702-1-1)
Deceased. DIVISION ONE
PUBLISHED
FILED: August 4, 2014
Cox, J. —A court's paramount duty in construing a testamentary
instrument is to give effect to the maker's intent.1 We determine that intent from
the instrument as a whole.2 Similarly, "[t]he 'touchstone of contract interpretation
is the parties' intent.'"3 We follow "the objective manifestation theory of contracts,
imputing an intention corresponding to the reasonable meaning of the words
used."4
Generally, a personal representative of an estate has the right to appeal
an adverse decision in a will contest, as it is the duty of the executor to take all
1 In re Estate of Riemcke. 80 Wash. 2d 722, 728, 497 P.2d 1319 (1972).
3 Realm. Inc. v. City of Olvmpia. 168 Wash. App. 1, 4-5, 277 P.3d 679
(quoting Durand v. HIMC Corp., 151 Wash. App. 818, 829, 214 P.3d 189 (2009)),
review denied. 175 Wash. 2d 1015 (2012).
4 Id. at 5.
No. 69608-4-1 (Consolidated with No. 69702-1 -l)/2
legitimate steps to uphold the testamentary instrument.5 Likewise, a trustee may
appeal an adverse ruling that goes to the validity of the trust itself.6
Here, a trial court judge decided on reconsideration of a motion for partial
summary judgment that the First Codicil to the Will of J. Thomas Bernard, dated
August 27, 2009, and the First Amendment to the J. Thomas Bernard Revocable
Trust Agreement of even date were null and void as a matter of law. We
conclude from our de novo review of these and other material documents that
this was error.
We also conclude that a different trial court judge erred in deciding that the
personal representative of the estate and the trustees of the trust did not have
the right to appeal the adverse ruling we described in the previous paragraph.
The circumstances of this case do not warrant that ruling.
We reverse and remand for further proceedings.
In 2008, James Bernard filed a petition for guardianship of his father, J.
Thomas Bernard, and his father's estate. James alleged in the petition that Tom
suffered from dementia and short-term memory loss.7 James also alleged that
Tom's reasoning and judgment were impaired and that Tom was vulnerable to
financial exploitation.
The following year, Tom executed the Will of J. Thomas Bernard and the
J. Thomas Bernard Revocable Trust Agreement, both of which are dated March
5 See In re Klein's Estate, 28 Wash. 2d 456, 475, 183 P.2d 518 (1947).
6 See In re Ferrall's Estate, 33 Cal. 2d 202, 205-06, 200 P.2d 1 (Cal.
1948).
7 For clarity, we refer to father and son by their first names.
No. 69608-4-1 (Consolidated with No. 69702-1-l)/3
25, 2009. On advice of counsel, Tom used a revocable living trust "to avoid any
negative tax consequences along with a notice requirement to [James] if Tom
wanted to modify the Trust."8
On March 27, 2009, the superior court dismissed the guardianship petition
that James filed the previous year.
The trust agreement provided that the residue of Tom's estate would pass
to James or his issue. It also provided that if James predeceased Tom and left
no issue, the estate would pass to Tom's niece and nephews, Rose Linger, Larry
Emery, and Richard Emery (the "Linger Beneficiaries"), and to various
organizations. Under this instrument, each of the Linger Beneficiaries was to
receive a 20 percent share.
Tom reserved in this revocable trust the power to revoke, withdraw
property from, or modify the trust. These rights are stated in Article 3.1 of the
trust instrument. Additionally, the instrument included provisions about
exercising these rights:
3.2 Effectiveness. Any revocation, withdrawal of property,
or modification shall be valid and fully effective whenever Trustee
shall receive from Trustor written notice thereof, except that the
powers and duties of Trustee shall not be changed without
Trustee's written consent. In the case of revocation or withdrawal
of property, Trustee shall have a reasonable time to transfer or
deliver the property.
3.3 Rights Personal to Trustor Subject to Binding Non-
Judicial Agreement. The rights reserved by the Trustor are
personal to Trustor and may not be exercised by Trustor's
attorneys-in-fact appointed under a duly executed durable power of
attorney or by any guardian of Trustor's estate absent court order of
8 Clerk's Papers at 423.
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a court of competent jurisdiction. Notwithstanding any other
provision of this Agreement, such rights are subject to that certain
Non-Judicial Agreement regarding the J. Thomas Bernard
Revocable Living Trust Agreement ("TEDRA") of even date
herewith and are not exercisable by Trustor unless and until Trustor
obtains the court order required by such agreement and otherwise
satisfies all of the requirements imposed by the TEDRA. If and to
the extent such TEDRA is determined to be unenforceable for any
reason, the restrictions on Trustor's right to revoke, modify, and/or
withdraw property from this Trust as stated therein shall be
incorporated in this Agreement by reference and shall remain fully
enforceable against the Trustor.191
Tom and James also executed the "Non-Judicial Agreement Re Trust
Pursuant to RCW 11.96A," effective as of March 27, 2009 (the "March TEDRA
agreement").10 They were the only parties to this agreement.
The agreement stated that it was "a compromise to certain disputes that
have arisen between Tom and James regarding the current management and
future disposition of Tom's assets."11 It also stated that the parties "agree that
establishing the Trust and agreeing to the terms of this Agreement is a mutually
acceptable less restrictive alternative to a guardianship of the estate and James
will forgo filing for a guardianship of Tom's estate so long as this Trust is in force
and functional."12
The agreement further provided three requirements to be met before Tom
exercised his modification powers:
9 Id. at 208 (emphasis added).
10 Id. at 427-32.
11 ]d at 428.
12 Id.
No. 69608-4-1 (Consolidated with No. 69702-1-l)/5
[Ajlthough both the Trust and the Will remain revocable and/or
modifiable by Tom during his lifetime, the Parties agree that no
exercise of Tom's Modification Powers over either or both of the
Trust and/or the Will shall be effective unless and until:
i. Tom files a petition for a hearing under RCW 11.96A in
King County Superior court which clearly and specifically sets forth
a particular proposal for an exercise of his Modification Powers,
ii. timely provides James with a summons for such hearing
pursuant to RCW 11.96A.100 (and otherwise complies with the
substantive and procedural provisions of RCW 11.96A), and
iii. as a result of such a hearing, the court issues an order
approving the exercise of some or all of the particular Modification
Power(s) expressly requested in Tom's petition.
Accordingly, the Parties expressly acknowledge and agree
that any exercise by Tom of his Modification Powers over the Trust
and/or the Will without first obtaining such a court order (and
otherwise complying with the terms of this Agreement) shall be null
and void.[13]
In June 2009, Tom's attorney filed with the superior court a memorandum
summarizing the terms of the March TEDRA agreement.
Tom's relationship with his niece, Rose Linger, deteriorated. In July 2009,
the trustees for the trust sued Linger and her husband to collect outstanding
loans.
In August 2009, Tom and his son, James, executed a second "Non-
Judicial Agreement Pursuant to RCW 11.96A," effective as of August 27, 2009
(the "August TEDRA agreement"). They were the only parties to this second
agreement.
13
Id. at 429.
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This August TEDRA agreement acknowledged the three modification
requirements set out in the March TEDRA agreement. It also stated that "this
Amended Agreement will satisfy the [March TEDRA] Agreement's requirement to
obtain a court order prior to any exercise of Tom's Modification Powers."
The August TEDRA agreement included, as attached exhibits,
unexecuted copies of the First Amendment to the J. Thomas Bernard Revocable
Trust Agreement and the First Codicil to the Will of J. Thomas Bernard.
The first amendment to trust and the first codicil state that they are also
effective as of August 27, 2009.
The substance of the changes from the March 2009 trust was to reduce
the shares of the Linger Beneficiaries from 20 percent each to $20,000 each.
Moreover, the first amendment to trust added additional contingent beneficiaries:
Leah Karp, Diane Viars, and Daniel Reina (collectively the "Karp Beneficiaries").
These beneficiaries are also to receive shares of the trust estate, two of them
receiving 15 percent shares each, and one receiving a 25 percent share.
This record indicates that the trust estate is substantial. Thus, the
distributive scheme—shares of $20,000 or percentages of the trust estate—has a
substantial impact on the amounts that the contingent beneficiaries may receive
from the estate.
In February 2010, Tom's attorney filed with the superior court a
memorandum summarizing the terms of the August TEDRA agreement.
James predeceased Tom in September 2010, leaving no issue. Tom died
in January 2011.
6
No. 69608-4-1 (Consolidated with No. 69702-1-l)/7
Afterthe filing of Tom's testamentary documents with the court, the Linger
Beneficiaries, by amended petition, contested the March TEDRA agreement, the
Will of J. Thomas Bernard dated March 25, 2009, the J. Thomas Bernard
Revocable Trust Agreement dated March 25, 2009, the First Codicil to the Will of
J. Thomas Bernard, dated August 27, 2009,14 and the First Amendment to the J.
Thomas Bernard Revocable Trust Agreement, dated August 27, 2009.
The Linger Beneficiaries moved for partial summary judgment. They
requested that the court invalidate the "March Agreement." They identified this
agreement as including the March TEDRA agreement, the will, and the revocable
trust. They also sought to invalidate the "August Agreement." They identified
this agreement as including the August TEDRA agreement, the first codicil, and
the first amendment to trust.
Alternatively, the Linger Beneficiaries argued that the "August 2009
Amendment"—the first amendment to trust and the first codicil—was void. The
personal representative of the estate, the trustees of the trust, and the Karp
Beneficiaries opposed the motion.
The trial court denied the motion for partial summary judgment, concluding
that there were genuine issues of material fact related to the March TEDRA
agreement. The court deferred making any decision "involving the validity and
14 The parties erroneously stated that these documents were dated August
22, 2009. The record indicates that the first amendment to trust and the first
codicil were executed on August 27, 2009 and that the effective date of the
August TEDRA agreement was also August 27, 2009. See Clerk's Papers at 11,
239-42, 422, 440.
No. 69608-4-1 (Consolidated with No. 69702-1-l)/8
effectiveness of subsequent agreements reached between the testator, [Tom],
and his son [James], specifically the August TEDRA agreement."
The Linger Beneficiaries moved for reconsideration of the denial of
summary judgment. They requested the court to reconsider its deferral of the
legal issues related to the validity of the August TEDRA agreement, the first
amendment to trust, and the first codicil.
By its order dated October 19, 2012, the trial court granted the motion for
reconsideration. It concluded that the first codicil, effective as of August 27,
2009, and the first amendment to trust of even date were "null and void as a
matter of law." This order incorporated the court's oral ruling of October 12,
2012.
The Karp Beneficiaries moved for reconsideration of the October 19, 2012
order. The personal representative of the estate and the trustees joined in their
motion. The court ultimately denied reconsideration.
The personal representative of the estate and the trustees of the trust
petitioned for instructions. They sought a determination whether they had a right
to appeal the October 19, 2012 order. The Karp Beneficiaries supported this
petition. A court commissioner decided that the personal representative and the
trustees "have an absolute right to appeal" this order.
The Linger Beneficiaries moved for revision of the commissioner's order,
and the matter came before a different superior court judge than the one who
entered the October 19, 2012 order. The revision judge granted this motion,
8
No. 69608-4-1 (Consolidated with No. 69702-1-l)/9
concluding that the personal representative and trustees "do not have the right to
appeal" the October 19, 2012 order.
The Karp Beneficiaries appeal. The personal representative of the estate
and trustees of the trust also appeal.
THE FIRST AMENDMENT TO TRUST AND FIRST CODICIL TO WILL
The Karp Beneficiaries argue that the trial court erred when it concluded
that the first amendment to trust, effective August 27, 2009, and first codicil to will
of even date are null and void as a matter of law. We agree.
We review de novo the grant or denial of a summary judgment motion.15
Summary judgment is appropriate only if there is no genuine issue of material
fact, and the moving party is entitled to judgment as a matter of law.16 The court
must consider all facts submitted and all reasonable inferences from the facts in
the light most favorable to the nonmoving party.17
We review de novo the interpretation of a will or trust instrument.18
"Where the meaning of an instrument evidencing a trust is unambiguous, the
15 Tiffany Family Trust Corp. v. City of Kent, 155 Wash. 2d 225, 230, 119
P.3d 325 (2005).
16
CR 56(c).
17 Yakima Fruit & Cold Storage Co. v. Cent. Heating & Plumbing Co., 81
Wash. 2d 528, 530, 503 P.2d 108 (1972).
18 In re Wash. Builders Benefit Trust, 173 Wash. App. 34, 75, 293 P.3d 1206
(citing In re Estate of Curry, 98 Wash. App. 107, 112-13, 988 P.2d 505 (1999)),
review denied, 177 Wash. 2d 1018 (2013).
9
No. 69608-4-1 (Consolidated with No. 69702-1-l)/10
instrument is not one requiring judicial construction or interpretation ... ,"19
When construing a testamentary instrument, our paramount duty is to give
effect to the maker's intent.20 That intent must be gathered from the instrument
as a whole, and specific provisions must be construed in light of the entire
document.21
Similarly, "[t]he 'touchstone of contract interpretation is the parties'
intent.'"22 "Washington courts follow the objective manifestation theory of
contracts, imputing an intention corresponding to the reasonable meaning of the
words used."23
Here, the trial court did not address whether Tom had the capacity to
make any of the testamentary documents or the two TEDRA agreements that are
before us. Neither do we. The question of his capacity is not properly before us
at this time, despite this argument in the appellate briefing by the Linger
Beneficiaries. Likewise, the question of whether Tom was subjected to undue
influence is not before us.
19 Templeton v. Peoples Nat'l Bank of Wash., 106 Wash. 2d 304, 309, 722
P.2d63(1986).
20 Riemcke, 80 Wash. 2d at 728.
21 jd
22 Realm, 168 Wash. App. at 4-5 (quoting Durand, 151 Wash. App. at 829).
23 Jd at 5.
10
No. 69608-4-1 (Consolidated with No. 69702-1-l)/11
Rather, the focus of our review is limited to the trial court's decision
declaring the first codicil to will, effective as of August 27, 2009, and the first
amendment to trust of even date void as a matter of law.
Terms of the March 25, 2009 Trust and Will
In order to determine whether Tom complied with the specific method of
modification when he executed the first amendment to trust, we first determine
the modification requirements imposed by the trust itself.
The following articles in the trust instrument are relevant to this inquiry:
3.2 Effectiveness. Any revocation, withdrawal of property,
or modification shall be valid and fully effective whenever Trustee
shall receive from Trustor written notice thereof, except that the
powers and duties of Trustee shall not be changed without
Trustee's written consent. In the case of revocation or withdrawal
of property, Trustee shall have a reasonable time to transfer or
deliver the property.
3.3 Rights Personal to Trustor Subject to Binding Non-
Judicial Agreement. The rights reserved by the Trustor are
personal to Trustor and may not be exercised by Trustor's
attorneys-in-fact appointed under a dully executed durable power of
attorney or by any guardian of trustor's estate absent court order of
a court of competent jurisdiction. Notwithstanding any other
provision of this Agreement, such rights are subject to that certain
Non-Judicial Agreement regarding the J. Thomas Bernard
Revocable Living Trust Agreement ('TEDRA") of even date
herewith and are not exercisable by Trustor unless and until Trustor
obtains the court order required by such agreement and otherwise
satisfies all of the requirements imposed by the TEDRA. If and to
the extent such TEDRA is determined to be unenforceable for
any reason, the restrictions on Trustor's right to revoke, modify,
and/or withdraw property from this Trust as stated therein shall be
incorporated in this Agreement by reference and shall remain
fully enforceable against the Trustor.[24]
24 Clerk's Papers at 208 (emphasis added).
11
No. 69608-4-1 (Consolidated with No. 69702-1-l)/12
Article 3.2 of this trust makes clear that Tom could modify the March 2009
trust and that such modifications "shall be valid and fully effective" on written
notice to the trustee.25 Of course, this provision is subject to other material
provisions of this trust.
Article 3.3 imposes additional conditions on modification of the trust
beyond written notice to the trustee. Specifically, the Trust instrument states that
modification is "subject to" the March TEDRA agreement.26
The Linger Beneficiaries point to Article 3.3 to assert that this provision
incorporates the terms of the March TEDRA agreement into the trust instrument.
We disagree.
"Considerable caution must be exercised in applying the doctrine of
incorporation by reference."27 The reference "must show an intention on the part
of the testator to incorporate or adopt the document referred to. The intention of
the testator to incorporate into a will a paper or document must clearly appear...
."28 Additionally, it "must clearly and definitely describe or identify the documents
intended to be incorporated, or render them capable of identification by extrinsic
evidence, so that no room for doubt can exist as to what papers were meant."29
25 ]d
26 ]d (emphasis added).
27 Baarslag v. Hawkins. 12 Wash. App. 756, 763, 531 P.2d 1283 (1975).
28 id (quoting 94 C.J.S. Wills § 163 (1956)).
29 id
12
No. 69608-4-1 (Consolidated with No. 69702-1 -l)/13
Here, Tom's decision to use the term "subject to" in Article 3.3 is
significant. It shows that he intended the primary relationship between the trust
instrument and the March TEDRA agreement to be conditional, not one of
incorporation.
This conclusion is supported by examining the definitions of these terms.
"Incorporate" is defined as "[t]o combine with something else" and "[t]o make the
terms of another (esp. earlier) document part of a document by specific
reference."30 "Subject" is defined as "[c]ontingent or dependent."31
Further, the plain words of this article also show that Tom intended that
incorporation of the provisions of the March TEDRA agreement into the trust was
conditioned on the happening of future events. The first clause of the last
sentence of this article conditions incorporation of the March agreement on "if
and to the extent such TEDRA is determined to be unenforceable."32 And the
use of the words "shall be incorporated in this Agreement by reference . . ."
further conditions incorporation on a future event following the effective date of
the trust.33
Thus, the plain language of the trust shows that the substantive
requirements of the March TEDRA agreement would not be combined into the
30 Black's Law Dictionary 834 (9th ed. 2009).
31 American Heritage Dictionary 1788 (3d ed. 1992).
32 Clerk's Papers at 208 (emphasis added).
33 k± (emphasis added).
13
No. 69608-4-1 (Consolidated with No. 69702-1-l)/14
trust instrument itself, absent a determination that the March TEDRA agreement
was unenforceable.
Accordingly, when we apply the plain meaning of "subject to" in this
context, we conclude that modification of this March 2009 trust was also
contingent on compliance with the provisions of the March TEDRA agreement as
it then existed or was later amended. Tom's intent in Article 3.3 was to require
compliance with such provisions of this agreement as a condition to modifying
the trust.
A necessary implication of this wording and structure is that the March
TEDRA agreement could be modified without modifying the terms of the trust.
The terms of the trust itself would only be modified upon incorporation, only
triggered by a determination that the agreement was unenforceable.
Our conclusion is consistent with Tom's counsel's, one of the drafting
attorneys, explanation of the reason for preparing these two instruments in the
ways stated:
The Three Steps [stated in the March TEDRA agreement] were
intentionally not incorporated into the [March 2009] Revocable
Living Trust agreement, except in the unlikely event [that] the
March TEDRA Agreement was determined to be unenforceable
(see Revocable Trust agreement, Paragraph 3.3). This was done
so that, provided the March TEDRA Agreement was not determined
to be unenforceable, the delivery by Tom to his trustees of "written
notice thereof" would be all that was required for Tom to
unequivocally manifest his intention to revoke or modify the Estate
Planning Documents (see Revocable Trust agreement, Paragraph
3.2), provided that any such amendment would be "subject to"the
contractual rights (if any) conferred upon James in the March
TEDRA Agreement, as it may be amended.[34]
34 Clerk's Papers at 786 (some emphasis added).
14
No. 69608-4-1 (Consolidated with No. 69702-1-l)/15
A related question is whether the March 2009 will incorporates the
provisions of the March 2009 TEDRA agreement. We conclude that the will does
not incorporate these provisions.
Tom's March 2009 will contains a similar provision to that in the March
2009 trust. Specifically, it states:
This Will is subject to that certain Non-Judicial Agreement regarding the
J. Thomas Bernard Revocable Living Trust Agreement of even date
herewith.[35]
Noticeably absent is any mention of incorporation of the provisions of the
Non-Judicial Agreement Re Trust Pursuant to RCW 11.96A, effective as of
March 27, 2009. For the reasons we already discussed with respect to the
March 2009 trust, the provisions of the March TEDRA agreement were never
incorporated into the will itself. We conclude that modification of the March 2009
will was also "subject to" compliance with the terms of the March 2009 TEDRA
agreement.
Terms of the March TEDRA Agreement
As just discussed, modification of both the trust and will is conditioned on
satisfying the provisions of the separate March TEDRA agreement as it then
existed or was later modified. Accordingly, we must determine the terms of the
March TEDRA agreement at the time that Tom executed the first amendment to
trust and the first codicil.
The plain language of the March TEDRA agreement states:
35 id at 7 (emphasis added).
15
No. 69608-4-1 (Consolidated with No. 69702-1-l)/16
[Although both the Trust and the Will remain revocable and/or
modifiable by Tom during his lifetime, the Parties agree that no
exercise of Tom's Modification Powers over either or both of
the Trust and/or the Will shall be effective unless and until:
i. Tom files a petition for a hearing under RCW 11.96A in
King County Superior court which clearly and specifically sets forth
a particular proposal for an exercise of his Modification Powers,
ii. timely provides James with a summons for such hearing
pursuant to RCW 11.96A.100 (and otherwise complies with the
substantive and procedural provisions of RCW 11.96A), and
iii. as a result of such a hearing, the court issues an order
approving the exercise of some or all of the particular Modification
Power(s) expressly requested in Tom's petition.
Accordingly, the Parties expressly acknowledge and agree
that any exercise by Tom of his Modification Powers over the Trust
and/or Will without first obtaining such a court order (and otherwise
complying with the terms of this Agreement) shall be null and
void.t36]
This agreement imposes three further requirements for modification of the
trust beyond the requirement of written notification to the trustees imposed by
Article 3.2 of the trust. Namely, the March TEDRA agreement requires that Tom
petition for a hearing (specifically stating the proposed modifications), serve
James with a summons for that hearing, and obtain a court order as a result of
that hearing.
The next question is whether these terms were later modified by the
August TEDRA agreement. This inquiry involves two questions. First, whether
the March TEDRA could be modified by a second TEDRA agreement. Second,
36 id at 429 (emphasis added).
16
No. 69608-4-1 (Consolidated with No. 69702-1-l)/17
if so, whether the August TEDRA agreement modified the March TEDRA
agreement's three requirements.
First, we must determine whether the March TEDRA could be modified by
another TEDRA agreement. The Karp Beneficiaries argue that the trial court
erred when it concluded that the March TEDRA agreement expressly required a
court order to modify it and that the March TEDRA agreement could not be
nonjudicially amended. We agree.
As the trial court correctly recognized in its oral decision, "The case law is
clear that parties to an agreement setting forth restrictions or limitations on
modifications to a contract are free to later waive, supersede or revoke those
limitations and restrictions."37 The court cited to Smyth Worldwide Movers. Inc. v.
Whitney for the following proposition: "If the parties to an action made by
stipulation consent to the entry of a judgment, we know of no reason why they
cannot also consent to its vacation or modification ... ."38
But after acknowledging these general principles, the court commented,
"[T]hat is not the scenario here."39 It concluded that the March TEDRA
agreement could not be modified, stating:
The March TEDRA agreement expressly provided that
the parties could not modify that agreement without prior
court approval. Under TEDRA, upon filing the agreement, the
agreement is equivalent to a final court order, binding on all
persons interested in the estate or trust. Thus, this Court can only
37 Clerk's Papers at 810-11.
38 id at 810 (citing 6 Wash. App. 176, 179, 491 P.2d 1356 (1971).
39 id at 811.
17
No. 69608-4-1 (Consolidated with No. 69702-1-l)/18
construe the March agreement as a court order mandating that the
March agreement could not be modified or rescinded without prior
court approval. By invoking the jurisdiction and authority of the
court, the parties could not waive or rescind the court order
requiring prior court approval for modification.[40]
But the March TEDRA agreement is silent on whether the parties could
modify that agreement without prior court approval. The court misread this
agreement to say otherwise.
The plain language of the March TEDRA agreement provides that the
three requirements apply to an exercise of Tom's "Modification Powers" over
"either or both of the Trust and/or the 1V///."41 The March TEDRA agreement
is not either of these two.
The term "Modification Powers" is expressly defined in the March TEDRA
agreement:
b. Power to Revoke. Pursuant to Article 3 of the Trust, Tom
has reserved the right (a) to revoke the Trust in its entirety, (b) to
partially revoke or modify the Trust, and (c) to withdraw from the
operation of the Trust any part or all of the Trust estate. Moreover,
under Washington State law, Tom reserves the right at any time to
amend or revoke the will. Collectively, the rights described in
the immediately two preceding sentences shall be referred to
as Tom's "Modification Powers "[A2]
Accordingly, Tom's "Modification Powers" include: (1) the right to revoke
the Trust in its entirety, (2) the right to partially revoke or modify the Trust, (3) the
right to withdraw part or all of the Trust estate, and (4) the right to amend or
40 Id. (emphasis added).
41 id at 429 (emphasis added).
42 id 428-29 (emphasis added).
18
No. 69608-4-1 (Consolidated with No. 69702-1 -l)/19
revoke the will.43 Thus, modification ofthe underlying March TEDRA agreement
was not an exercise of these "Modification Powers."
Consequently, the plain language of the March TEDRA agreement
indicates that the three requirements do not apply to modification of the March
TEDRA agreement itself.
As the Karp Beneficiaries point out, this conclusion is consistent with the
purpose and policies of the TEDRA statute and Washington common law.
The legislature expressly stated that the "overall purpose" of TEDRA is "to
provide nonjudicial methods for the resolution of matters, such as mediation,
arbitration, and agreement."44 Moreover, this appears to be consistent with the
practice in trusts and estate, as illustrated by the following declaration from
Professor Karen E. Boxx of the University of Washington School of Law:
Allowing the parties who initially reached a non-judicial resolution to
a matter involving a trust or estate to subsequently change their
agreement regardless of whether the original agreement or a
memorandum of the agreement was filed with the court is without
question within the intent and purpose of TEDRA.[45]
The trial court erred when it concluded that the March TEDRA agreement
could not be modified by the August TEDRA agreement.
The Linger Beneficiaries argue that the express language placing
restrictions on modification also encompasses the March TEDRA agreement
itself. They focus on the words "any exercise" to argue that the March TEDRA
43
See id.
44RCW11.96A.010.
45 Clerk's Papers at 537.
19
No. 69608-4-1 (Consolidated with No. 69702-1-l)/20
agreement "explicitly restricted 'any exercise' of Tom's modification powers
without complying with the modification restrictions." But, as discussed
previously, the plain language of the March TEDRA agreement indicates that the
three-step process applies only to Tom's "Modification Powers" over the trust or
the will. The Linger Beneficiaries' argument to the contrary is not persuasive.
Second, because we conclude that the March TEDRA agreement could
be modified by a second TEDRA agreement, we look to the August TEDRA
agreement to determine if it modified the March TEDRA agreement's
modification requirements.
The August TEDRA agreement acknowledged the three requirements
imposed by the March TEDRA Agreement. It also recognized that TEDRA
permits parties to execute a written agreement and that upon filling the
agreement will be the equivalent of a final court order. It then stated:
5. Amendment. Tom desires, and James desires for Tom,
to modify Article 8 [of the March 2009 trust instrument] in the form
of the attached Exhibit A [first amendment to trust] and his Will in
the form of the attached Exhibit B [first codicil to will]. The Parties
agree and acknowledge that because the Modification Restrictions
are imposed solely by virtue of the Agreement between the Parties,
the Parties agree and represent that they are the sole necessary
parties and have the power to modify such restrictions by further
agreement. Additionally, and in any event, by virtue of RCW
11.96A.230, once this Amended [August TEDRA] Agreement (or a
summary memorandum of such agreement) is filed, this Amended
[August TEDRA] Agreement will satisfy the [March TEDRA]
Agreement's requirement to obtain a court order prior to any
exercise of Tom's Modification Powers. Accordingly, the
Parties agree that this Amended [August TEDRA] Agreement
is a more efficient method of enabling Tom to exercise such
powers.[46]
46 id. at 437 (emphasis added).
20
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Another provision stated:
b. Amendment. The Parties agree that the [March TEDRA]
Agreement is hereby amended to provide that notwithstanding any
provision of the Agreement, Trust or Will, the Parties agree that the
Trust and Will are hereby amended as of the effective dates of such
documents in the manner provided in the attached Exhibits A and
B, respectively. Following the execution of the First Amendment
and the First Codicil, the Modification Restrictions shall remain in
full force, subject to further unanimous amendment of the
PartiesJ47!
Overall, these provisions do not substantively change the three
requirements in the March TEDRA agreement. Rather, the use of the term
"satisfy" in the first of the two previous provisions shows that Tom and James
were not trying to change the March TEDRA agreement's requirements but
instead, were trying to comply with them. Thus, we consider whether they did so.
Substantial Compliance
The next question that we decide is whether Tom substantially complied
with the modification requirements set forth in the trust and in the March TEDRA
agreement. By executing the August TEDRA agreement and filing a
memorandum of this agreement, we hold that he did.
"The rule is that the settlor of a trust has the power to revoke the trust if
and to the extent that, by the terms of the trust, he reserved such a power.
Where the trust instrument specifies the method of revocation, only that method
can be used."48
47 ]d at 438.
48 In re Estate of Button. 79 Wash. 2d 849, 852, 490 P.2d 731 (1971)
(citations omitted).
21
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In Williams v. Bank of California N.A.. the supreme court held that the
doctrine of substantial compliance may be sufficient to validate a trust
amendment.49 The supreme court defined substantial compliance to mean
"closely in conformance."50
There, the supreme court concluded that there was substantial
compliance to uphold the trust amendment in question.51 The court stated that
"the procedure used in adopting the amendment followed rather closely the
method provided in the trust agreement."52 It also stated that "there is no
question concerning intent, requiring unyielding conformance to [the amendment
provision] in this instance would only frustrate intent."53
This court also considered the validity of an amendment under the
doctrine of substantial compliance in the case In re Estate of Tosh.54 There, the
trust provided that it could be amended by the trustor "by a duly executed
instrument filed with Trustee."55 The parties attempted to amend the trust by
"simply inserting a new page six into the previously executed document."56
49 96 Wash. 2d 860, 867-68, 639 P.2d 1339 (1982).
50 ]d at 866.
51 id at 868.
52 id
53 id at 866-67.
54 83 Wash. App. 158, 920 P.2d 1230 (1996).
55 id at 161-62.
56idat161.
22
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This court acknowledged that "[t]he record established] the clear intent of
the trustor to effect an amendment to the trust document, and a reasonable belief
on his part that he had done so."57 But it also stated:
[W]e are satisfied that merely substituting a page of a trust
agreement is not a 'duly executed instrument.' A more formal
procedure is required. The substituted page was not initialed,
signed, or witnessed in writing. The date at the bottom of the
substituted page remained unchanged. No addendum or
attachment was added to the trust instrument. Indeed, nothing on
the face of the document indicated that it had been amended.'581
In concluding that the amendment in that case was invalid, this court
distinguished Williams on the basis that "no close conformity occurred" and on
the basis that in Williams, "the requirements were eventually complied with."59
This court stated that "[c]lear evidence of both intent and belief cannot substitute
for actually, or substantially, doing what is required."60
Here, as we previously discussed in this opinion, Article 3.2 of the trust
required Tom to give written notice to the trustees. In this case, there is no
dispute that Tom gave proper written notice of modification of this trust to the
trustees. Thus, Article 3.2 is not at issue here.
Article 3.3 of the trust and the will both provide that Tom's right to modify
was also subject to the requirements of the March TEDRA agreement. This
agreement expressly required Tom to do three things. First, he had to petition
57 \±
58 id at 162.
59 id
60 Id.
23
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the court for a hearing under RCW 11.96A and "clearly and specifically" set forth
a particular proposal to exercise his reserved power to modify the March 2009
trust or will.61 Second, Tom was to provide James with a summons for the
hearing.62 This included otherwise complying with RCW 11.96A. Third, Tom
was required to obtain an order approving his exercise of his right to modify.63
Tom's compliance with these requirements is at issue.
Rather than utilizing the exact procedures set forth in the March TEDRA
agreement, Tom and James substantially complied with these requirements by
executing the August TEDRA agreement and later filing a memorandum of this
agreement. The record indicates that Tom deemed the procedures utilized in
August to be a more efficient method for him to modify the trust and will under
the circumstances.
In the August TEDRA agreement, the parties expressly acknowledged
"that Article 3.3 of the Trust and the [March TEDRA] Agreement require Tom to
[follow the three-step process] in order to exercise his retained right to modify the
terms of the Trust or Will."64 The August TEDRA agreement also stated:
5. Amendment. Tom desires, and James desires for Tom,
to modify Article 8 [of the March 2009 trust] in the form of the
attached Exhibit A [first amendment to trust] and his Will in the form
of the attached Exhibit B [first codicil]. The Parties agree and
acknowledge that because the Modification Restrictions are
61 Clerk's Papers at 429.
62 Id.
63 id
64 Id. at 436.
24
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imposed solely by virtue of the Agreement between the Parties, the
Parties agree and represent that they are the sole necessary
parties and have the power to modify such restrictions by further
agreement. Additionally, and in any event, by virtue of RCW
11.96A.230, once this Amended [August TEDRA] Agreement (or a
summary memorandum of such agreement) is filed, this [August
TEDRA] Agreement will satisfy the [March TEDRA]
Agreement's requirement to obtain a court order prior to any
exercise of Tom's Modification Powers. Accordingly, the
Parties agree that this Amended [August TEDRA] Agreement
is a more efficient method of enabling Tom to exercise such
powers.[65]
The emphasized language in this provision shows the parties' clear intent
to satisfy the modification requirements in the March TEDRA agreement. It also
shows that they believed this to be a more efficient method than petitioning the
court, conducting a hearing, and obtaining an order entered by a judge. This
election is completely consistent with the policy of TEDRA, which promotes
efficiency through nonjudicial methods for resolution of matters.66
Most importantly, the procedures stated in the August TEDRA agreement
and followed by the parties substantially comply with those stated in the March
TEDRA agreement.
First, Tom elected not to petition for a hearing under RCW 11.96A to
obtain approval to modify the trust and his will of March 25, 2009. Instead, he
and James agreed, in writing, to the express terms of the modifications to each,
as evidenced by both signing the August TEDRA agreement. This agreement
65 ]d at 437 (emphasis added).
66 See RCW 11.96A.010 ("The overall purpose of this chapter is ... to
provide nonjudicial methods for the resolution of matters, such as mediation,
arbitration, and agreement.").
25
No. 69608-4-1 (Consolidated with No. 69702-1-l)/26
includes as attachments unsigned copies of the first codicil and the first
amendment to trust, specifying the exact modification to each sought.
Second, Tom did not provide James with a summons for the hearing
described in the prior paragraph of this opinion. Instead, Tom and James
agreed, in writing, that both the will and the trust should be modified in
accordance with the express terms of the August TEDRA agreement. Because
the only parties to the agreement stipulated to the result, it is unclear what
purpose the hearing that the Linger Beneficiaries argue should have occurred
would have accomplished. We see none.
Third, there was no hearing and no court order entered by a judge
approving the modifications. Instead, the parties stipulated, in writing, that the
procedures of the August TEDRA agreement were sufficient to satisfy the
requirements of the March TEDRA agreement.
Significantly, counsel for Tom filed with the court a memorandum
summarizing this agreement. RCW 11.96A.230(2) states, "On filing the
agreement or memorandum, the agreement will be deemed approved by the
court and is equivalent to a final court order. . . ."67 Although this
memorandum is not in the record, the parties do not dispute that it was filed.
The filing with the superior court of the memorandum made the August
TEDRA agreement, by operation of law, one "deemed approved by the court"
and "equivalent to a final court order."68 Accordingly, the final requirement of the
67 (Emphasis added.)
68 RCW 11.96A.230.
26
No. 69608-4-1 (Consolidated with No. 69702-1-l)/27
March TEDRA agreement, obtaining a court order, was fulfilled by this filing
under the plain words of RCW 11.96A.230.
In sum, the August TEDRA agreement between Tom and James
substantially complied with the provisions of the March TEDRA agreement.
Although Tom utilized a different method than the one expressed in the March
TEDRA agreement, the method he utilized closely followed the March TEDRA
agreement's process. The first amendment to trust, effective as of August 27,
2009, and the first codicil of even date were not void as a matter of law.
The Linger Beneficiaries argue that there was no substantial compliance
with the provisions of the March TEDRA agreement. They are wrong.
First, they argue that the first requirement to petition a court for a hearing
was not substantially complied with because 'Tom desired that a court would
review the modifications sought to be made." That is possible.
But even if we agreed that Tom desired a court to review the proposed
modifications, it is clear that James reviewed and approved the changes. Why
court intervention under these circumstances would be required is left
unexplained. This is particularly true in view of the fact that TEDRA, to which
Tom specifically referred in both TEDRA agreements, permits an agreement to
be "deemed approved" on the filing with the court of the memorandum of the
agreement.69 In short, TEDRA contemplates that court review of all agreements
is not required.
69SeeRCW11.96A.230(2).
27
No. 69608-4-1 (Consolidated with No. 69702-1-l)/28
Second, the Linger Beneficiaries correctly concede that it "is conceivable
that James' execution of the August TEDRA agreement was substantial
compliance with the notice provision to James." But they then argue that the
notice requirement was not met because "all interested parties" must also receive
notice.
But the notice requirement in the March TEDRA agreement was imposed
solely by virtue of the March TEDRA agreement, and it only required notice to
James. It did not require notice to anyone else. It states that Tom must "timely
provide[ ] James with a summons for such hearing pursuant to RCW 11.96A.100
(and otherwise compl[y] with the substantive and procedural provisions of RCW
11.96A)." The Linger Beneficiaries fail to explain how the notice requirement of
the March TEDRA agreement requires notice to them. Thus, their argument is
not persuasive.
Third, they argue that the third requirement in the March TEDRA
agreement was not substantially complied with because the court did not issue
an order before the amendments occurred. They also argue that "equivalent" to
a court order is not the same as "obtaining a court order." This argument makes
little sense in the context of this discussion about the application of the doctrine
of substantial compliance. But as we already discussed, there was substantial
compliance with the court order requirement by the filing of the memorandum of
the August TEDRA agreement.
Fourth, the Linger Beneficiaries argue that substantial compliance requires
"near perfect compliance" and that the changes to the trust "substantially
28
No. 69608-4-1 (Consolidated with No. 69702-1-l)/29
changed Tom's estate plan." But substantial compliance does not look to the
substantive changes resulting from the amendment. Rather, it focuses on the
procedures used to institute those changes.70 Thus, this argument is not
analytically relevant.
Lastly, the Linger Beneficiaries make a number of arguments that the
August TEDRA agreement did not comply with the procedural and substantive
requirements of TEDRA. For the reasons that follow, we reject these arguments.
These arguments involve interpretation of the TEDRA statute. When
interpreting a statute, we seek to determine and follow the legislature's intent.71
"If the statute's meaning is plain, we give effect to that plain meaning as the
expression of the legislature's intent."72
First, the Linger Beneficiaries argue that the August TEDRA agreement
did not resolve a "matter" as defined by TEDRA. This is incorrect.
RCW 11.96A.030(2) states:
"Matter" includes any issue, question, or dispute involving:
(c) The determination of any question arising in the
administration of an estate or trust.. . that may include,
without limitation, questions relating to: (i) The construction
of wills, trusts . . . and other writings ....
70
See Williams, 96 Wash. 2d at 866.
71 See Bostain v. Food Express. Inc.. 159 Wash. 2d 700, 708, 153 P.3d 846
(2007).
72 \±
29
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The plain words of this definition of "matter" make clear the broad scope of
this term. There simply is no persuasive argument here that the subject of the
TEDRA agreement did not fall within this definition.
Even if we were required to go beyond the plain words that define the very
broad scope of this term, comments to the Senate Bill by the Washington State
Bar Association Real Property, Probate &Trust Section support this conclusion:
The term "matter" establishes the issues, questions and
disputes involving trusts and estates that can be resolved by
judicial or nonjudicial action under the Act. This term is meant to
apply broadly and is intended to encompass matters traditionally
within the exclusive province of the courts. This is consistent with
the overall purpose of the Act, which is to foster nonjudicial
resolution of issues confronting estates and trusts.[73]
Second, the Linger Beneficiaries argue that Tom did not give notice to or
obtain the signatures of "all parties" as required by TEDRA. Specifically, the
Linger Beneficiaries argue that they were entitled to notice under RCW
11.96A.110 and that their signatures were required to create a TEDRA
agreement under RCW 11.96A.220. They are again wrong.
RCW 11.96A.110 provides that in judicial proceedings requiring notice, the
notice must be personally served on all parties or the parties' virtual
representatives.
73 WSBA Real Property, Probate & Trust Section, Comments to the
Trust and Estate Dispute Resolution Act TEDRA § 104(1) (RCW 11.96A.030)
-Matterat 1, (1999), available at www.wsbarppt.com/comments/tedra99.pdf.
30
No. 69608-4-1 (Consolidated with No. 69702-1-1)731
RCW 11.96A.220 through 11.96A.250 provide "a binding nonjudicial
procedure to resolve matters through written agreements among the parties
interested in the estate or trust."74
Whether the Linger Beneficiaries were "parties" for purpose of the August
TEDRA agreement is the issue. We hold they were not.
TEDRA defines a "party" as any member of a listed category who "has an
interest in the subject of the particular proceeding ... ."75 One of the listed
categories is "trust beneficiaries."76
In In re Estate of Becker, the supreme court looked to the definition of
"party" in TEDRA and observed that was limited to one "'who has an interest in
the subject of the particular proceeding.'"77 There, the supreme court concluded
that a surviving spouse who received nothing under the decedent's will was a
person interested in the decedent's estate for purposes of TEDRA.78
Here, the Linger Beneficiaries are contingent trust beneficiaries. This
appears to fall within the category of "trust beneficiaries." But in order to be a
"party," the Linger Beneficiaries must also "[have] an interest in the subject of
74RCW11.96A.210.
75 RCW 11.96A.030(5).
76RCW11.96A.030(5)(e).
77 In re Estate of Becker, 177 Wash. 2d 242, 247, 298 P.3d 720 (2013)
(quoting RCW 11.96A.030(5)).
78 id
31
No. 69608-4-1 (Consolidated with No. 69702-1 -l)/32
the particular proceeding."79 The statutory language indicates that the interest
must be a present interest. It further indicates that the interest is specific to the
"particular proceeding" at issue. The Linger Beneficiaries had no such interest at
the time of the August TEDRA agreement, which was prior to James's death and
Tom's death.
In Pond v. Faust, the supreme court concluded that a court has no
authority to inquire into the validity of a will prior to the death of the maker, to
determine the competency of the maker.80 A Florida court cited Pond in
concluding that a guardian cannot contest the validity of a revocable trust during
the settlor's lifetime based on undue influence.81 This is because "a revocable
trust is a unique instrument which has no legal significance until the settlor's
death."82 This result arises from the same principle announced in Pond.
Further, California courts have noted a difference in a beneficiary's
interest in revocable and irrevocable trusts.83 "With the creation of an irrevocable
trust, trust beneficiaries acquire a vested and present beneficial interest in the
trust property, and their interests are not subject to divestment as with a
79RCW11.96A.030(5).
80 90 Wash. 117, 120-21, 155 P. 776 (1916).
81 Ullman v. Garcia. 645 So. 2d 168, 170 (Fla. Dist. Ct. App. 1994).
82 Jd
83 See, e.g., Empire Props, v. County of Los Angeles, 44 Cal. App. 4th
781, 787, 52 Cal. Rptr. 2d 69 (Cal. Ct. App. 1996).
32
No. 69608-4-1 (Consolidated with No. 69702-1-l)/33
revocable trust. Thus, the nature of a beneficiary's interest differs materially
depending on whether the trust is revocable or irrevocable."84
Here, it is undisputed that the subject of the August TEDRA agreement
dealt with Tom's first amendment to trust and his first codicil. It is also
undisputed that the trust was revocable and that this transaction was conducted
while the trustor was still alive. Accordingly, the Linger Beneficiaries did not then
have a legally cognizable interest at the time of the August TEDRA agreement.
Moreover, because the subject of the proceeding was modification of the trust
and will, the Linger Beneficiaries fail to show that they had an interest in this
particular proceeding.
For these reasons, they were not proper parties for purpose of this
agreement.
Finally, we address two other specific concerns that the trial court
identified when it invalidated the first amendment to trust and the first codicil as a
matter of law. The court stated: (1) "If this court gives full effect to Tom's intent
as set forth in the March TEDRA agreement, then it cannot enforce that August
agreement entered in contravention of the terms of the prior agreement"; and (2)
"[T]he modifications to the trust and will were made prior to the entry of the
TEDRA agreement allegedly giving the authority to modify or revoke."85 Each of
these concerns will be addressed in turn.
84 id at 787.
85 Clerk's Papers at 814-15, 811.
33
No. 69608-4-1 (Consolidated with No. 69702-1-l)/34
First, as discussed earlier in this opinion, the August TEDRA agreement
stated that it "will satisfy" the March TEDRA agreement requirements. The plain
language of the August TEDRA agreement indicates that Tom recognized the
process set out in March and intended to comply with it, using a more efficient
method. This is not a contradictory intent.
Second, the trial court concluded that the modifications to the trust and will
were invalid because they were made prior to the filing of the August TEDRA
agreement. In reaching this conclusion, the court noted that the memorandum of
the binding agreement was not filed with the court until February 2, 2010.86 The
trial court also noted that James did not sign the agreement until September 23,
2009.87 Neither reason supports the court's conclusion.
RCW 11.96A.230(1) states that any party "may file the written agreement
or a memorandum summarizing the written agreement with the court . . . ." It
also states that "[f]ailure to complete any action authorized or required under this
subsection does not cause the written agreement to be ineffective and the
agreement is nonetheless binding and conclusive on all persons interested in the
estate or trust."88
Accordingly, filing is permissive, not mandatory. But even if the
agreement was not filed until a later date, the plain language of TEDRA shows
that the filing date is irrelevant to the effectiveness of the agreement.
86idat812.
87 id
88RCW11.96A.230(1).
34
No. 69608-4-1 (Consolidated with No. 69702-1-l)/35
Further, although James did not sign the agreement until September 23,
by its express terms, the August TEDRA agreement expressly states that it is
effective as of August 27, 2009. The August TEDRA agreement, the first
amendment to the trust, and first codicil were all effective on the same day—
August 27, 2009.
In sum, the August TEDRA agreement substantially complied with the
modification process set out in the March TEDRA agreement. Further, it
complied with the relevant provisions of TEDRA.
The Karp Beneficiaries argue in the alternative that the August TEDRA
agreement modified the terms of the March TEDRA agreement and that Tom
strictly complied with the modification requirements. Because we conclude that
the August TEDRA agreement between Tom and James substantially complied
with the provisions of the March TEDRA agreement, we need not address this
argument.
RIGHT TO APPEAL
The Karp Beneficiaries, on behalf of themselves, the estate and the trust,
argue that the trial court erred when it concluded that the personal representative
and trustee cannot appeal a summary judgment ruling invalidating the first codicil
and first amendment to the trust. We agree.
As a threshold issue, the Linger Beneficiaries argue that the Karp
Beneficiaries do not have standing to appeal this ruling because it was the trust
and estate that petitioned for instructions from the court. But this argument
ignores several facts.
35
No. 69608-4-1 (Consolidated with No. 69702-1-l)/36
First, the Karp Beneficiaries supported the petition for instructions by the
personal representative of the estate and the trustees of the trust. Thus, they are
aggrieved parties by virtue of the superior court's order vacating the
commissioner's ruling.89 Second, their briefing on appeal covers their arguments
and those of the personal representative and trustees, who also timely appealed
the orders before us.90 Thus, the standing argument carries no weight.
For a ruling on a motion for revision, the superior court reviews the
commissioner's decisions de novo based on the evidence and issues before the
commissioner.91 On appeal, this court reviews the trial court's ruling, not the
commissioner's.92
Generally, a personal representative has a right to appeal an adverse
decision in a will contest. The supreme court has stated, "Where a will is
contested, whether before or after its probate, it is the duty of the executor to
take all legitimate steps to uphold the testamentary instrument. .. ."93
89 See State v. Taylor. 150 Wash. 2d 599, 603, 80 P.3d 605 (2003) (An
"aggrieved party" entitled to appeal is "one whose personal right or pecuniary
interests have been affected.").
90 See RAP 10.1 (g) "In cases consolidated for the purpose of review and
in a case with more than one party to a side, a party may (1) join with one or
more other parties in a single brief, or (2) filed a separate brief and adopt by
reference any part of the brief of another."
91 In re Marriage of Moody, 137 Wash. 2d 979, 992-93, 976 P.2d 1240
(1999).
92 In re Marriage of Fairchild. 148 Wash. App. 828, 831, 207 P.3d 449
(2009).
93 In re Klein's Estate, 28 Wash. 2d at 475.
36
No. 69608-4-1 (Consolidated with No. 69702-1-l)/37
Additionally, the supreme court has held, "A trustee, in his fiduciary or
representative capacity, is aggrieved by a judgment which threatens the
continuance of the trust in the form directed by the trustor, whether or not the
beneficiaries appeal. He is more than a mere stakeholder."94 Trustees "have
standing and indeed a duty to appeal to protect the integrity and fundamental
purpose of the trust."95 Further, "A trustee who is a party to an action in
representative capacity need not have a personal interest in the controversy to
have a right to appeal if it is his duty to appeal in order to protect the interest of
those whom he represents."96
In re Ferrall's Estate, a case from the Supreme Court of California, is also
instructive.97 There, Faye F. Hamilton petitioned the probate court for an order
requiring the trustees to pay her certain sums.98 The probate court ordered the
trustees to pay from the income and corpus of the trust until further notice, and
the trustees appealed.99 On appeal, the supreme court considered whether the
trustee could appeal such an order.100
94 Retail Store Emps. Union, Local 1001 Chartered By Retail Clerks Int'l
Ass'n. AFL-CIO v. Wash. Surveying & Rating Bureau. Wash. Bureau. 87 Wash. 2d
887, 893, 558 P.2d 215 (1976).
95 id at 894.
96 id
97 33 Cal. 2d 202, 200 P.2d 1 (1948).
98 Jd at 203.
99 Jd at 204.
37
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The court cited the general rule that "trustees acting in their representative
capacities cannot by an appeal litigate the conflicting claims of beneficiaries."101
But it stated that the rule "has generally been limited, however, to prohibiting
appeals by a trustee from orders merely determining which beneficiaries are
entitled to share in a particular fund."102 The court then stated:
The trustee is permitted to appeal from an order of termination
in order to give effect to trust purposes that can be served
only by the continued administration of the trust. An appeal
by a trustee may be necessary in order to determine whether
the trial court properly ordered its termination. If such an
appeal were not allowed, the trial court, when all beneficiaries
consent, could completely disregard the provisions of the trust,
even though there is no justification for a deviation from its terms.
There is no substantial difference in this respect between an order
that terminates a trust and an order that modifies it contrary to a
specific provision. In either case the litigation does not involve
merely the conflicting claims of beneficiaries to a particular
fund, but concerns the performance of a duty by the trustees
to protect the trust against an attack that goes to the very
existence of the trust itselfSW3]
Finally, the court concluded, 'To deny the trustees an appeal under these
circumstances would render them helpless to prevent invasions of the corpus
that might defeat the plan of the trustor or even destroy the trust itself."104
Here, under Washington law, it is the duty of the personal representative
of Tom's will to take legitimate steps to uphold the testamentary instrument,
including the first codicil.
101 id
102 id
103 id at 205-06.
104 Id. at 206.
38
No. 69608-4-1 (Consolidated with No. 69702-1-l)/39
Additionally, the motion for summary judgment was not litigation involving
conflicting claims of beneficiaries. Rather, the motion for summary judgment
sought to invalidate the first amendment to the trust as a matter of law.
Accordingly, the trustee had a similar duty—to protect the plan of the trustor and
protect the trust itself.
In sum, both the personal representative and the trustee had a right to
appeal the order that declared the first amendment to the trust and the first
codicil null and void as a matter of law.
The Karp Beneficiaries also rely on TEDRA for the proposition that the
personal representative and trustee have a right to appeal, but we need not rely
on this argument to conclude that they had this right.
The Linger Beneficiaries argue that "if the Trust were permitted to appeal
the trial court's grant of summary judgment, it would place the Trustees in direct
conflict with the beneficiaries of the Trust." But, as discussed previously, the
trustee has a right to protect the plan of the trustor or defend the trust itself.
The Linger Beneficiaries rely on In re Cannon's Estate to argue that
"where the dispute is about who has a right to receive, and there is no
impairment of the estate, the estate itself does not have a right to appeal."105 But
this is not a dispute about who has the right to receive. Rather, it is a dispute
about the validity of the first amendment to trust, a testamentary instrument. The
Linger Beneficiaries' argument is not persuasive.
105 Respondent's Brief at 46 (citing In re Cannon's Estate. 18 Wash. 101,
50 P. 1021 (1897)).
39
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ATTORNEY FEES
The Linger Beneficiaries request an award of attorney fees based on
RCW11.96A.150.
RCW 11.96A. 150(1) states that "any court on an appeal may, in its
discretion, order costs, including reasonable attorneys' fees, to be awarded to
any party: (a) From any party to the proceedings; (b) from the assets of the
estate or trust involved in the proceedings; or (c) from any nonprobate asset that
is the subject of the proceedings." Additionally, the court may consider any
factors it deems relevant and appropriate which may include "whether the
litigation benefits the estate or trust involved."106
Here, the Linger Beneficiaries do not provide any persuasive reason for an
award in their favor. Accordingly, we deny this request.
SUMMARY
To summarize, neither the first amendment to the trust effective on August
27, 2009 nor the first codicil of even date is void as a matter of law for the
reasons before us. Tom substantially complied with the modification provisions
of the trust and the March TEDRA agreement. Moreover, Tom filed a
memorandum of the August TEDRA agreement, making the agreement one
deemed approved by the court and equivalent to a court order. This agreement
also complied with the relevant provisions of TEDRA.
We do not address the capacity of Tom to either enter into the two TEDRA
agreements or make the testamentary instruments at issue in this case. Neither
106 RCW 11.96A.150(1).
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No. 69608-4-1 (Consolidated with No. 69702-1-l)/41
his capacity nor whether he was subject to undue influence at any relevant time
is properly before us at this time. These and other issues are to be determined,
in the first instance, by the trial court on remand.
We reverse the orders that are before us and remand for further
proceedings.
^K,T.
WE CONCUR:
tA-e«t^A
41