In re Riddell
Court of Appeals of Washington
157 P.3d 888 (2007)
George and Irene Riddell created trusts for the benefit of their son Ralph Riddell (Ralph) and, after Ralph and his wife's deaths, for their children Donald and Nancy, with the trusts to terminate and distribute outright once each child turned 35. After the trusts were created, Nancy developed schizophrenia affective disorder and bipolar disorder requiring lifelong institutional care and public financial assistance, meaning an outright distribution to her would likely be seized by the state to recoup her medical costs. Ralph moved to consolidate the trusts and modify them to create a special needs trust for Nancy, arguing his parents intended the age-35 termination to ensure competent handling of the funds and were unaware of Nancy's future condition; the trial court consolidated the trusts but denied the special-needs modification, finding it would limit funds available for medical care and therefore not further the trust's stated purpose of supporting the beneficiaries' care. Ralph appealed.
Whether, where the settlors of a trust were unaware of the special needs of a beneficiary when creating the trust, the Restatement Third allows modification of the trust to create a special needs trust if this modification furthers the purpose of the trust.