Opinion ID: 2570347
Heading Depth: 1
Heading Rank: 6

Heading: Trust Deviation Principles

Text: ¶ 20 The Restatement (Second) standard provides a relatively narrow standard for applying deviation: The court will direct or permit the trustee of a charitable trust to deviate from a term of the trust if it appears to the court that compliance is impossible or illegal, or that owing to circumstances not known to the settlor and not anticipated by him compliance would defeat or substantially impair the accomplishment of the purposes of the trust. RESTATEMENT (SECOND) OF TRUSTS § 381, cited with approval in In re Booker, 37 Wash. App. 708, 715, 682 P.2d 320 (1984). In Booker, the settlor left funds in trust for the construction of a 40-bed rest home in Columbia County. 37 Wash.App. at 709-11, 682 P.2d 320. The Court of Appeals applied this standard in permitting the construction of a 30-bed home, in spite of the contrary and specific trust terms. Id. at 712-13, 682 P.2d 320. In doing so, Booker held that a court may permit a trustee to perform acts forbidden by the trust in order to carry out the trust's purpose. Id. at 715, 682 P.2d 320 (citing RESTATEMENT (SECOND) OF TRUSTS § 381 cmt. d). For a court to allow deviation under this standard, compliance with the trust terms must defeat or substantially impair the trust's primary purpose. ¶ 21 The Restatement's most recent rendition of the rule grants courts broader discretion to permit deviation. The court may modify an administrative or distributive provision of a trust, or direct or permit the trustee to deviate from an administrative or distributive provision, if because of circumstances not anticipated by the settlor the modification or deviation will further the purposes of the trust. RESTATEMENT (THIRD) OF TRUSTS § 66(1). While the first prong of the most recent version is substantially similar to the Restatement (Second), the second prong requires only that modification or deviation will further the purposes of the trust. Id. By requiring a lower threshold finding for equitable relief, this standard gives courts broader discretion in permitting deviation. [10] ¶ 22 The Restatement (Third) is consistent with our own case law on trust deviation and reflects our consistent aim of giving effect to the settlor's intent. Cf. Reagh v. Hamilton, 194 Wash. 449, 456, 78 P.2d 555 (1938); Samuel & Jessie Kenney Presbyterian Home v. State, 174 Wash. 19, 55-59, 24 P.2d 403 (1933); City of Tacoma v. Tacoma Cemetery, 28 Wash. 238, 245-47, 68 P. 723 (1902). As such, we adopt it and apply it here. ¶ 23 Over 80 years ago we held that [i]n the execution of [trusts in perpetuity] the courts look rather to the intent of the testator than to the method or mode prescribed for its execution. Samuel & Jessie Kenney Presbyterian Home, 174 Wash. at 57-58, 24 P.2d 403 (upholding accounting methods allegedly contrary to trust instrument's direction). We have also stated that [w]hile courts, in construing the provisions of a charitable trust, ordinarily will not deviate from the plan outlined by the testator, they undoubtedly have the power to do so, if it is reasonably necessary in effectuating the primary purpose of the trust. Reagh, 194 Wash. at 456, 78 P.2d 555 (upholding trial court's transfer of trust management to a corporation and an increase in number of trustees) (emphasis added) (citing II JAIRUS WARE PERRY, A TREATISE ON THE LAW OF TRUSTS AND TRUSTEES § 729a (7th ed.1929)). The court premised its holding on its finding that the purpose of the trust will best be subserved and that such alteration does [not do] violence to the primary object of the testator. Id. (emphasis added). Thus, recognizing that trust settlors may possess a myriad of intentions in settling a trust, the court must concern itself with their primary objective. ¶ 24 The commentary accompanying the Restatements also provides insight into court's application of equitable deviation. It is important to recognize that the objective of equitable deviation is not to disregard the intention of the settlor, but rather to give effect to what the settlor's intent probably would have been had the circumstances in question been anticipated. RESTATEMENT (THIRD) OF TRUSTS § 66 cmt. a. Deviation may be allowed with regards to the provisions governing the management or administration of the trust estate. Id. at cmt. b. Both versions contemplate deviation from express terms either directing or forbidding the sale of certain properties. See also RESTATEMENT (SECOND) OF TRUSTS § 381 cmts. d, e. ¶ 25 The party seeking permission to deviate from the trust terms has the burden of showing either changed circumstances or that relevant circumstances were unknown to the settlor. RESTATEMENT (THIRD) OF TRUSTS § 66 cmt. b. A respondent can then refute this showing. Upon a finding of unanticipated changed circumstances, the court must then determine whether a proposed modification or deviation would tend to advance (or, instead, possibly detract from) the trust purposes. Id.