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In re Marital Trust B Created Under The Last Will And Testament of Graham

Court of Appeals of Washington, Division 1

December 30, 2019

In the Matter of the MARITAL TRUST B CREATED UNDER THE LAST WILL AND TESTAMENT OF FELECIA A. GRAHAM DATED OCTOBER 26, 1998, F/B/O FREDERICK A. GRAHAM.
v.
BANK OF AMERICA, N.A., Respondent. FREDERICK A. GRAHAM, Appellant,

          LEACH, J.

         Frederick A. Graham appeals a trial court order denying his request for a declaration of his rights in a trust created by Felecia Graham's will. This trust creates a life interest in Frederick. On his death, the trust distributes its net assets as Frederick appoints or provides in his will. If he does neither, the assets are distributed to his estate. Frederick asked the court to declare that he owns the remainder interest in the trust assets and can bind that interest without it being separately represented. We disagree, affirm, and award the trustee attorney fees and costs against Frederick.

         FACTS

         Felecia Graham died in 2001. In her will, she established a trust benefitting her husband, Donald Graham Jr., for his life and giving a remainder interest to her two sons, Frederick Graham and Donald Graham III. In 2012, these three individuals signed a binding agreement[1] that ended Donald Jr.'s lifetime interest in the trust and divided it into two subtrusts, one for the benefit of each son. This appeal concerns the subtrust (hereinafter "the trust") for Frederick Graham.

         The trust directs the trustee to pay the trust income to Frederick annually for the rest of his life. It also permits the trustee to make distributions from the principal in certain circumstances:

If... in the judgment of the Trustee the aggregate income payable to any descendant, together with the other resources and income of such beneficiary which the Trustee deems to be reasonably available to him or to her for such purposes . . . shall be insufficient to provide for the proper support in his or her accustomed manner of living ..., the Trustee may distribute or expend for the benefit of such beneficiary such portion of the principal of [the trust] as the Trustee shall deem necessary for such purpose under the circumstances.

         The trust provides that when Frederick dies, his "share of the net assets of the trust estate shall be distributed as he shall appoint or provide by his will or, in the absence of such appointment or provision, to his estate."

         After Bank of America N.A. (the Bank) became the trustee, Frederick disagreed with the amount that the Bank distributed to him annually. He received an initial increase but asked the Bank for more.

         Frederick did not agree with the new amount that the bank suggested. The parties' efforts to negotiate an agreement under the Trust and Estate Dispute Resolution Act[2] (TEDRA) failed. The Bank then asked the trial court for guidance.

         The trial court affirmed the Bank's actions and agreed with it that there is "a separate remainder interest" in the trust. Frederick appealed this decision. He asked this court to determine as a matter of law that no separate remainder interest exists. We affirmed but did not decide the issue of whether the trust includes "a separate remainder interest" held by "unascertained remaindermen." We reasoned that the determination of a separate remainder interest was not necessary to the trial court's summary judgment decision.[3]

         Frederick then filed a second lawsuit, requesting a declaration of his rights over the remainder interest in the trust. The trial court denied Frederick's request, concluding, "A separate remainder interest exists in the Trust, as held by Judge Ramseyer. Mr. Graham may not virtually represent that interest in TEDRA litigation or Non Judicial Binding Agreement, which could negatively impact the remainder interest."

         Frederick appeals the trial court's order.

         STANDARD OF REVIEW

         An appellate court generally reviews de novo decisions based on declarations, affidavits, and written documents.[4] So we review the trial court's decision to deny Frederick's request for a declaration of rights de novo. When we conduct a de ...


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