Estate Case Involves Removal of Executor

In this case, the beneficiaries of an estate filed a petition for the removal of a bank as executor of the estate. The bank resisted and stated that no positive purpose would be served by their removal at such a late stage in the probate proceedings. The wills involved in this case (executed by a husband and wife) included a residuary trust and appointed the bank as trustee and executor. The husband died in 1989, followed by the wife in 2007. The trust included real estate tracts and all of the stock of a farming corporation. The trust provided that the net income of the trust was to be paid to the wife during her life and, upon her death, the real estate was to go to the two sons of the marriage. The document further provided that the farm stock would go to one of the sons and the remainder of the assets would be divided equally between the sons. 

After the wife passed away, the bank filed its final trust report. At this point, one of the sons and his two children (as beneficiaries under the wife’s estate) filed objections to the report and asked the court to remove the bank as trustee. The trial court dismissed the son’s petition. The bank continued on as trustee and executor of the will. Next, the same son and his children filed a petition to remove the bank as executor and to dismiss the final report. The trial court, once again, dismissed the beneficiaries’ claims, stating that the estate had been pending for a substantial period of time and that the beneficiaries could litigate the issues directly against the bank, not as part of the estate proceedings.   

The beneficiaries appealed and the Iowa Court of Appeals found that there were no grounds for removal of the bank as executor under Iowa Code §633.65. Under this code section, mismanagement of the estate and failure to perform any duty imposed by law are grounds for removal of an executor. The bank argued that the estate did not have the assets to pay for the cost of a new executor and that the final report was already filed and the assets of the estate were already distributed. The court agreed that it made little sense to remove the bank as executor at such a late stage. There was no substantial evidence offered that the bank did not perform all legal duties and there was no adequate proof of mismanagement. Thus, the beneficiaries were free to litigate their claims against the bank in court, just not through the estate. In re Estate of Frye, No. 0-889/10-0778, 2011 Iowa App. LEXIS 53 (Iowa Ct. App. Jan 20, 2011).